<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File No. 1-8726
RPC, INC.
DELAWARE 58-1550825
(State of Incorporation) (I.R.S. Employer Identification Number)
2170 Piedmont Road, NE, Atlanta, Georgia 30324
Telephone Number -- (404) 321-2140
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of September 30, 1997, RPC, Inc. had 14,840,591 shares of common stock
outstanding (excluding 80,999 treasury shares).
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RPC, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1997, AND DECEMBER 31, 1996
(In thousands except share information)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
(UNAUDITED) (AUDITED)
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<S> <C> <C>
ASSETS
Cash and cash equivalents........................................................... $ 15,504 $ 13,124
Marketable securities............................................................... 10,831 8,149
Accounts receivable, net of allowance for doubtful accounts of $6,831 and $7,058,
respectively...................................................................... 34,328 24,156
Inventories, at lower of cost or market............................................. 15,110 15,427
Deferred income taxes............................................................... 7,520 7,623
Prepaid expenses and other current assets........................................... 472 1,663
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Current assets...................................................................... 83,765 70,142
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Equipment and property, net......................................................... 55,615 47,791
Marketable securities............................................................... 27,036 25,071
Intangible assets, net.............................................................. 8,511 8,105
Deferred income taxes............................................................... -- 86
Other assets........................................................................ 1,157 1,605
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TOTAL ASSETS........................................................................ $ 176,084 $ 152,800
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable.................................................................... $ 8,559 $ 6,756
Accrued payroll and related expenses................................................ 5,027 4,541
Accrued insurance expenses.......................................................... 7,167 6,679
Accrued state, local and other taxes................................................ 4,297 3,211
Federal income taxes payable........................................................ -- 88
Accrued discounts................................................................... 589 786
Current portion of long-term debt................................................... 847 --
Other accrued expenses.............................................................. 10,424 8,889
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Current liabilities................................................................. 36,910 30,950
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Long-term accrued insurance expenses................................................ 4,545 3,551
Long-term debt...................................................................... 1,413 500
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Total liabilities................................................................... 42,868 35,001
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Commitments and contingencies
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Common stock........................................................................ 1,484 1,471
Capital in excess of par value...................................................... 36,388 35,176
Earnings retained................................................................... 95,862 81,555
Common stock in treasury, at cost, 80,999 shares and 74,953 shares, respectively.... (518) (403)
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Total stockholders' equity.......................................................... 133,216 117,799
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......................................... $ 176,084 $ 152,800
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<TABLE>
<CAPTION>
RPC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND THE NINE MONTHS ENDED SEPTEMBER 30, 1997, AND 1996
(In thousands except share and per share data)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
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REVENUE.................................................. $ 57,857 $ 44,942 $ 183,092 $ 146,863
------------ ------------ ------------ ------------
Cost of goods sold....................................... 17,191 16,037 64,574 59,124
Operating expenses....................................... 29,539 22,674 86,985 68,062
Depreciation and amortization............................ 3,512 2,338 9,408 6,620
Interest income.......................................... (645) (479) (1,735) (1,331)
------------ ------------ ------------ ------------
Income before income taxes............................... 8,260 4,372 23,860 14,388
Income tax provision..................................... 2,850 1,559 8,232 4,964
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NET INCOME............................................... $ 5,410 $ 2,813 $ 15,628 $ 9,424
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
EARNINGS PER SHARE....................................... $ 0.36 $ 0.19 $ 1.06 $ 0.65
------------ ------------ ------------ ------------
Average shares outstanding............................... 14,882,877 14,569,786 14,775,954 14,560,662
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</TABLE>
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<TABLE>
<CAPTION>
RPC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997, and 1996
(In thousands)
(Unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
<S> <C> <C>
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES........................................................ $ 21,774 $ 16,789
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures........................................................................ (16,904) (16,236)
Proceeds from sale of equipment and property................................................ 1,932 1,434
Net (purchase) sale of marketable securities................................................ (4,647) (6,188)
Other....................................................................................... 712 (500)
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Net cash (used for) investing activities.................................................... (18,907) (21,490)
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CASH FLOWS FROM FINANCING ACTIVITIES
Dividend distributions...................................................................... (736) --
Proceeds from exercise of stock options..................................................... 249 32
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Net cash provided by financing activities................................................... (487) 32
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Net increase (decrease) in cash and cash equivalents........................................ 2,380 (4,669)
Cash and cash equivalents at beginning of period............................................ 13,124 18,126
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Cash and cash equivalents at end of period.................................................. $ 15,504 $ 13,457
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</TABLE>
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RPC, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. These consolidated financial statements should be read in
conjunction with the financial statements and related notes contained in
the Company's annual report on Form 10-K for the fiscal year ended December
31, 1996.
In the opinion of management, the consolidated financial statements
included herein contain all adjustments necessary to present fairly the
financial position of the Company as of September 30, 1997, the results of
operations for the quarter and nine months then ended and the cash flows
for the nine months then ended.
2. Earnings per share are computed by dividing net income by the weighted
average number of shares outstanding during the respective periods.
3. The results of operations for the quarter and the nine months ended
September 30, 1997, are not necessarily indicative of the results to be
expected for the full year.
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RPC, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THREE MONTHS ENDED SEPTEMBER 30, 1997, COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996
Revenue for the third quarter ended September 30, 1997, was $57,857,000 compared
with $44,942,000 for the quarter ended September 30, 1996, and $67,032,000 for
the previous quarter ended June 30, 1997. Revenue for the quarter ended
September 30, 1997, increased $12,915,000 or 29% from the same period one year
ago and decreased $9,175,000 or 14% from the quarter ended June 30, 1997. The
oil and gas services segment revenue of $35,512,000 increased 42% from last
year's third quarter primarily due to a 20% increase in the average natural gas
rig count and a 23% increase in the average U.S. rig count from September 30,
1996. This increase is attributable to a higher level of oil and gas exploration
and production activities by the major and independent oil companies, and
expansion of international operations. The oil and gas services segment revenue
increased 2% from the quarter ended June 30, 1997. The powerboat manufacturing
segment revenue for the quarter ended September 30, 1997, of $19,136,000
increased 13% from last year's third quarter of $16,961,000 as the result, we
believe, of an increase in Chaparral's market share. The powerboat manufacturing
segment revenue decreased 34% from the quarter ended June 30, 1997, as a result
of the normal seasonal decline.
Net income for the quarter ended September 30, 1997, was $5,410,000 or $0.36 per
share versus net income of $2,813,000 or $0.19 per share for the quarter ended
September 30, 1996, and net income of $5,912,000 or $0.41 per share for the
quarter ended June 30, 1997. The increase in earnings from the same period one
year ago was due to the revenue increase and improved profit margins for both
the oil and gas services and the powerboat manufacturing segments.
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RPC, INC. AND SUBSIDIARIES
ITEM 2. CONT'D
NINE MONTHS ENDED SEPTEMBER 30, 1997, COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996
Revenue for the nine months ended September 30, 1996, increased 25% to
$183,092,000 compared to $146,863,000 for the nine months ended September 30,
1996. An increase of 40% occurred in the oil and gas services segment and an
11% increase occurred in the powerboat manufacturing segment. The last nine
months have seen an upturn in the oil and gas industry as a whole. In
particular, natural gas prices have stabilized to the extent that investors,
drillers, and exploration companies have maintained a higher level of activity
than in previous years. Rising U.S. demand and reduced storage capacity has
allowed natural gas prices and the average U.S. rig count to increase. The
expansion of international operations has also contributed to the increase. The
powerboat manufacturing revenue increased despite an overall decline in sales in
the powerboat market. We believe this increase is the result of increased
market share.
Net income for the nine months ended September 30, 1997, was $15,628,000 or
$1.06 per share compared to net income of $9,424,000 or $0.65 per share for the
nine months ended September 30, 1996. The 66% increase in earnings from the
same period one year ago was due to the revenue increases and improved profit
margins for both the oil and gas services and the powerboat manufacturing
segments.
FINANCIAL CONDITION
The Company's current ratio remained strong as of September 30, 1997, with
current assets of $83,765,000 exceeding current liabilities of $36,910,000 by a
ratio of 2.3-to-1. This compares to a current ratio of 2.3-to-1 at December 31,
1996.
Capital expenditures during the first nine months of 1996 totaling $16,904,000
were primarily for revenue-producing equipment in the oil and gas services
segment. The remainder was spent on various purchases for the other business
segments. Funding for future capital requirements will be provided from
operations.
The Company's Board of Directors declared a split of its common stock on October
28, 1997 to be effective on December 10, 1997 of one share of common stock for
each share held of record at the close of business November 10, 1997. The
two-for-one stock split is being made at this time to not only broaden the
market for the stock but also due to the Company's continued strong financial
performance.
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RPC, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed or required to be filed during the
quarter ended September 30, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RPC, INC.
/s/ Richard A. Hubbell
----------------------------------------
Date: November 3, 1997 Richard A. Hubbell
President and Chief Operating Officer
/s/ Ben M. Palmer
----------------------------------------
Date: November 3, 1997 Ben M. Palmer
Treasurer and Chief Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-1-1997
<PERIOD-END> SEP-30-1997
<CASH> 15,504
<SECURITIES> 10,831
<RECEIVABLES> 41,159
<ALLOWANCES> 6,831
<INVENTORY> 15,110
<CURRENT-ASSETS> 83,765
<PP&E> 205,235
<DEPRECIATION> 149,620
<TOTAL-ASSETS> 176,084
<CURRENT-LIABILITIES> 36,910
<BONDS> 2,260
0
0
<COMMON> 1,484
<OTHER-SE> 131,732
<TOTAL-LIABILITY-AND-EQUITY> 176,084
<SALES> 0
<TOTAL-REVENUES> 183,092
<CGS> 64,574
<TOTAL-COSTS> 151,559
<OTHER-EXPENSES> 9,408
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 23,860
<INCOME-TAX> 8,232
<INCOME-CONTINUING> 15,628
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,628
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
