SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report July 15, 2002
RANGE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 34-1312571
(State of incorporation) (I.R.S. Employer
Identification No.)
777 MAIN STREET, FT. WORTH, TEXAS 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (817) 870-2601
ITEM 4. CHANGES IN REGISTRANTS CERTIFYING ACCOUNTANT.
The Audit Committee of the Board of Directors of Range Resources, a Delaware
Corporation (the "Company") sought proposals from independent accountants to
audit the company's financial statements. The Company received proposals from
and the Audit Committee conducted interviews with three of the largest four
accounting firms. On July 11, 2002 the Audit Committee recommended the
engagement of KPMG as the Company's independent auditors for the year ended
December 31, 2002, to replace Arthur Andersen LLP ("Arthur Andersen"), whose
engagement as the Company's auditors ended immediately. The Company's Board of
Directors approved the Audit Committee's recommendations. As a result of this
process, KPMG was selected as the Company's auditor for 2002.
Arthur Andersen's audit reports on the Company's financial statements as of or
for the years ended December 31, 2000 and 2001 did not contain an adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles.
During the two years ended December 31, 2000 and 2001 and the subsequent interim
period through March 31, 2002:
(i) there were no disagreements between the Company and Arthur
Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to Arthur
Andersen's satisfaction, would have caused Arthur Andersen to
make reference to the subject matter of the disagreement in
connection with its reports:
(ii) none of the reportable events described under Item
304(a)(1)(v) of Regulation S-K occurred; and
(iii) except as disclosed in the next sentence, the Company did not
consult with KPMG regarding any of the matters or events
described in item 304(a)(2)(i) and (ii) of Regulation S-K.
Prior to the official engagement as the Company's auditor, as
part of KPMG's client acceptance procedure, KPMG and the
Company discussed the accounting principles used upon the
formation of the Great Lakes LLC joint venture in 1999. The
Company has agreed to revise its accounting for the
transaction as more fully described in the Company's press
release attached hereto as Exhibit 99.1.
The Company provided Arthur Andersen with a copy of the foregoing statements and
requested that Arthur Andersen furnish a letter addressed to the SEC stating
whether or not it agrees with the above statements. The Company was unable to
obtain that letter. The Company was informed by Arthur Andersen that the SEC had
been notified that Arthur Andersen would no longer be providing such requested
letters from former clients. The letter from the Company is attached hereto as
Exhibit 16.1.
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
Attached and incorporated by reference as Exhibit 99.1 is a copy of a press
release of the Company dated July 15, 2002 regarding the appointment of KPMG,
the restatement of previously filed financial statements and the re-audit by
KPMG of the three years ended December 31, 2001.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit
Number Description
- ------- --------------------------------------------------------------
16.1 Letter from Range Resources to Arthur Andersen LLP regarding
request for letter.
99.1 Press Release of Range Resources Corporation dated July 15,
2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
RANGE RESOURCES CORPORATION
By: /s/ Eddie M. LeBlanc
-----------------------------------
Eddie M. LeBlanc
Chief Financial Officer
Date: July 15, 2002
EXHIBIT INDEX
EXHIBIT
NUMBER ITEM
------- --------------------------------------------------------------
16.1 Letter from Range Resources to Arthur Andersen LLP regarding
request for letter
99.1 Press Release of Range Resources Corporation dated July 15,
2002.
EXHIBIT 16.1
[RANGE RESOURCES LOGO]
[RANGE RESOURCES LETTERHEAD]
July 9, 2002
Client Code: RAN136
Arthur Andersen LLP
901 Main Street
Suite 5600
Dallas, TX 75202
Attn: Rick Howell
Dear Sirs:
Attached is a draft Form 8-K which Range Resources Corporation plans to
file with the SEC on or about July 15, 2002 under Item 4 - Changes in
Registrant's Certifying Accountant. Please review the document and provide Range
Resources with a letter addressed to the SEC stating that your firm is in
agreement with all comments regarding Arthur Andersen LLP. This letter along
with your response will be filed as an exhibit to the 8-K.
Our thanks for your assistance.
Sincerely yours,
/s/ Eddie M. LeBlanc
------------------------------------
Eddie M. LeBlanc
Chief Financial Officer
EXHIBIT 99.1
[RANGE RESOURCES LOGO]
NEWS RELEASE
RANGE APPOINTS NEW AUDITORS
FORT WORTH, TEXAS, JULY 15, 2002.............RANGE RESOURCES CORPORATION (NYSE:
RRC) today announced the appointment of new auditors. Over the past forty-five
days, the Audit Committee of the Company formally requested proposals from three
of the largest four accounting firms to audit the Company's financial
statements. As part of the process, the Audit Committee and Management indicated
to each of the proposing accounting firms that to provide additional assurance
to the Company's shareholders they had resolved to have the newly selected firm
perform a full reaudit of the prior three years. The Audit Committee reviewed
the proposals in detail and interviewed each of the firms. On July 11, 2002, the
Audit Committee recommended the engagement of KPMG LLP as the Company's
independent auditors to replace Arthur Andersen LLP, whose engagement as the
Company's auditors ended immediately. The Company's Board of Directors approved
the Audit Committee's recommendation.
As a part of the auditor selection process, KPMG performed its normal client
acceptance procedures with respect to the Company. In connection with these
procedures, KPMG advised the Company that it believes that the Company should
have used a different accounting principle to determine the amount of gain
recognized in 1999 upon the formation of the Great Lakes LLC joint venture.
Under this accounting principle, (i) the gain recognized in 1999 should be
reduced (from $39.8 million to $31.0 million) and (ii) income recognized in
periods subsequent to September 30, 1999 should be increased (by approximately
$125,000 in 1999 and $500,000 per year thereafter).
In September 1999, the Company and an unaffiliated third party formed Great
Lakes. The Company contributed all of its Appalachian oil and gas properties and
associated gas gathering and transportation systems to Great Lakes (which at the
time had an estimated fair value of $260.6 million and a net book value of
$195.0 million) in exchange for a 50% ownership interest in the joint venture
and $188.3 million in cash (which was funded under Great Lakes' newly
established bank credit facility). The other party contributed oil and gas
properties (with an estimated fair value of $70.4 million) and $2.0 million of
cash. The Company used the $188.3 million of proceeds to repay the majority of
its bank debt. In connection with the formation of the joint venture, the
Company recognized a gain of $39.8 million (including $7.0 million recognized on
the sale of gas marketing contracts) after consultation with its auditors at the
time. This represented full gain recognition attributable to the portion of the
net assets conveyed to Great Lakes in excess of the Company's 50% ownership
interest, pursuant to EITF 89-7, Exchange of Assets or Interest in a Subsidiary
for a Noncontrolling Equity Interest in a New Entity. The gain was calculated by
comparing the Company's financial advisor's estimate of the fair market value of
the assets conveyed to their net book value.
KMPG has advised the Company that, in its view, the amount of gain recognized on
the formation of Great Lakes should have been calculated under a different
accounting principle (i.e., SFAS 19, Financial Accounting and Reporting by Oil
and Gas Producing Companies and APB No. 29, Accounting for Nonmonetary
Transactions) than that previously used. Under this guidance, gain should be
recognized only to the extent oil and gas properties are sold for cash.
Therefore, the amount of the gain should be limited to the amount by which the
monetary consideration received exceeded a proportionate share of the net book
value of the assets conveyed, based on the ratio of the monetary consideration
to the fair value of the assets conveyed. The Company has agreed to revise its
accounting for the transaction. Using the revised accounting, the Company
estimates the gain on the transaction would have been $31.0 million (comprised
of $24.0 million on the sale of oil and gas assets and $7.0 million on the sale
of gas marketing contracts) rather than the $39.8 million previously recorded.
The Company intends to restate its previously filed financial statements to
adjust for the $8.8 million reduction in gain on the formation of Great Lakes in
1999. As a result, there will be a corresponding reduction in depletion expense
relating to Range's share of the Great Lakes assets for all periods subsequent
to September 30, 1999 and a corresponding increase in pre-tax income. The
increase approximated $125,000 in 1999 and $500,000 per year thereafter.
While it was not required, in order to provide additional assurance to its
shareholders, the Company engaged KPMG to reaudit the three years ended December
31, 2001. The reaudits are expected to be completed by the end of the third
quarter. Upon completion of the reaudits, there could be a change in the
Company's current estimate of the proper amounts to be recorded for the Great
Lakes transaction, as well as other adjustments for the years being reaudited.
The Company will host a conference call on Tuesday, July 16 at 10:30 a.m. ET to
discuss this release. Anyone interested in participating in the call is invited
to dial in at 719-457-2654. The confirmation code is 647786. A simultaneous
webcast of the call may be accessed over the Internet at www.rangeresources.com
or www.vcall.com.
The webcast will be archived for replay on the Company's website for 90 days. A
telephone replay of the call will be available through July 30 at 719-457-0820.
The access code for the replay is 647786.
RANGE RESOURCES CORPORATION is an independent oil and gas company operating in
the Permian, Midcontinent, Gulf Coast and Appalachian regions of the United
States.
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2002-8
Contact: Rodney Waller, Senior Vice President
(817) 870-2601
www.rangeresources.com
