<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
x Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
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 No.)
2170 Piedmont Road, NE, Atlanta, Georgia 30324
Telephone Number -- (404) 888-2950
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
Common Stock, $0.10 Par Value The New York Stock Exchange
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 -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
As of February 28, 1997, RPC, Inc. had 14,689,738 shares of common stock
outstanding (excluding 78,253 treasury shares), and the aggregate market
value of this stock (based on the closing price on The New York Stock
Exchange of $14.75 per share) held by nonaffiliates was $83,240,000.
Documents Incorporated by Reference:
Portions of the Proxy Statement for the 1997 Annual Meeting of Stockholders
of RPC, Inc. are incorporated by reference into Part III, Items 10 through 13.
7
<PAGE>
PART I
ITEM 1. BUSINESS
PRINCIPAL PRODUCTS AND SERVICES
RPC, Inc. ("RPC") was incorporated as RPC Energy Services, Inc. in the
state of Delaware on January 20, 1984. RPC has two major business segments:
boat manufacturing and oil and gas services.
BOAT MANUFACTURING
Chaparral Boats, Inc. ("Chaparral"), a wholly owned subsidiary of RPC,
sells four lines of powerboats to a nationwide network of independent
dealers. These lines consist of two different run-about lines, a deckboat
line, and a cruiser line. New models are introduced each year. Operations are
seasonal in nature with the second quarter recording the highest sales volume
for the year. This business segment contributed 43 percent of RPC's
consolidated revenue in 1996, 44 percent in 1995, and 46 percent in 1994.
Research and development expenditures, totaling $1,951,000 in 1996,
$1,559,000 in 1995, and $1,514,000 in 1994, were necessary to generate new
product innovations.
OIL AND GAS SERVICES
The oil and gas services segment provides a variety of services,
equipment, and personnel to the oil and gas industry. Service locations
include Belle Chasse, Houma, Lafayette, Venice, Fourchon, and Morgan City,
Louisiana; Alice, Corpus Christi, Houston, Longview, and Odessa, Texas; Elk
City, Woodward, Lindsay, and McAlester, Oklahoma; Rock Springs, Wyoming;
Venezuela and Algeria. The oil and gas services business is not generally
seasonal. However, severe weather conditions will increase the demand for oil
and natural gas, which generally results in an increase in the demand for our
services. There were no material expenditures for research and development in
this business segment.
The services provided by the oil and gas services segment of RPC include
the following:
OIL FIELD SERVICES
Cudd Pressure Control, Inc. ("Cudd"), a wholly owned subsidiary of RPC,
provides a wide range of oil and gas well services throughout the
southwestern United States and other countries. These oil field services
include coiled tubing, snubbing, nitrogen pumping, wireline, marine, and well
control. This portion of the business segment contributed 29 percent of RPC's
consolidated revenue in 1996, 29 percent in 1995, and 26 percent in 1994.
During 1996, International Training Services was acquired to form Well
Control School, which provides training to oil field personnel using well
control simulation equipment.
EQUIPMENT RENTAL SERVICES
Patterson Services, Inc., a wholly owned subsidiary of RPC, offers
specialized tools and equipment on a rental basis. These include drill pipe,
drill collars, tubing, and blowout preventors. In addition, Patterson
Services provides experienced personnel to install and remove customer-owned
casing at well sites and operate company-owned, diesel-driven hammers and
welding machines used to weld and drive pipe into the ground. On average,
approximately 21 percent of rental equipment was rented on a daily basis in
1996 and 19 percent in 1995. In the rental business, maximum utilization is
approximately 50 percent due to transportation, inspection, and cleaning
requirements. This portion of the business segment contributed 13 percent of
RPC's consolidated revenue in 1996, 12 percent in 1995, and 14 percent in
1994.
TRANSPORTATION SERVICES
Patterson Truck Line, Inc., a wholly owned subsidiary of RPC, offers line
haul services on a 24-hour basis to customers primarily in Louisiana and
Texas. Line haul operations involve transportation of oil field pipe and
equipment as well as nonoil field liquid and dry bulk commodities.
8
<PAGE>
STORAGE AND INSPECTION SERVICES
Patterson Tubular Services, Inc. ("PTS"), a wholly owned subsidiary of
RPC, performs tubular inspections, stores pipe, and inventories pipe using an
on-line computerized inventory system. Waterfront dock facilities enable PTS
to service a wide variety of off-shore and inland vessels.
In January 1996 PTS opened a state-of-the-art internal pipe-coating
facility in Channelview, Texas. The plant uses CERAMKOTE 54 (Register Mark),
a high-performance ceramic-epoxy coating system, which provides abrasion and
corrosion protection.
Neither the boat manufacturing nor the oil and gas services business
segment are significantly affected by the availability of raw materials or
the existence of licenses, patents, and trademarks.
CUSTOMERS
RPC's business is not dependent on any one customer, but on a variety of
customers in both major business segments. No one customer accounts for more
than 10 percent of consolidated revenue.
The oil and gas services segment provides services to drilling
contractors, oil field supply stores and service companies, major oil and gas
producers, and independent exploration companies. Sales are generated by
RPC's sales force and from customer referrals. RPC has no written contracts of
a material nature with any of its oil and gas services segment customers.
Also, there is no material sales backlog due to the short-term nature of the
rental and services industry.
The boat manufacturing segment produces four lines of boats with
distribution to a nationwide network of independent dealers. Sales to these
dealers are generated by a five-person sales force. A five-year boat
structure warranty is provided for boats, beginning in the 1992 model year.
These warranty terms, though, have no material impact on working capital.
Although production is scheduled from orders placed by dealers, these are not
firm orders and are frequently changed or canceled. As a result, this segment
does not have an identifiable backlog of sales.
COMPETITION
There are many companies that compete with RPC's subsidiaries in each
segment, some of which are larger and have been established in the industries
for longer periods of time.
In the oil and gas services segment, intense competition exists and has
led to substantial price reductions for services offered. Industry conditions
are influenced by such factors as weather, economic and political conditions,
as well as worldwide demand for, and prices of, oil and natural gas. The
notable competitive factors in this segment are quality, availability, and
price of equipment and service. This segment's predominant markets are the
Gulf of Mexico, the southwestern United States, Venezuela, and Algeria.
The boat manufacturing segment's competition includes small independent
companies, as well as large vertically integrated companies that have both
engine and boat manufacturing capabilities. Major markets include the
southeastern and Gulf states, the northeastern states, and California.
Competitive factors in this industry are the quality of materials, the
quality of the construction process, the design features, and the selling
prices. Selling prices are set by management and vary from dealer to dealer
based upon volume. The sales prices of Chaparral's boats are similar to
equivalent competitors' models.
EMPLOYEES
At December 31, 1996, RPC employed 1,722 persons.
ENVIRONMENTAL CONSIDERATIONS
The capital expenditures, earnings, and competitive position of RPC are
not materially affected by compliance with federal, state, and local
provisions that have been enacted or adopted regulating the discharge of
materials into the environment, or otherwise relating to the protection of
the environment.
9
<PAGE>
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information about RPC's operations by segment, as well as financial
information about foreign and domestic operations for the three years ended
December 31, 1996, is set forth in Note 9 of the Financial Statements on page
23.
ITEM 2. PROPERTIES
RPC owns or leases 44 offices and operating facilities. Considered
individually, the only facility that represents a materially important
physical property is the boat manufacturing plant in Nashville,
Georgia. RPC believes its current operating facilities are suitable and
adequate to meet current and reasonably anticipated future needs.
Descriptions of the major facilities are as follows:
OWNED LOCATIONS
Houston, Texas -- Pipe storage terminal, inspection shed, and pipe coating
facility
Nashville, Georgia -- Boat manufacturing facility
Irving, Texas -- Crane fabrication plant
Houma, Louisiana -- Oil and gas administrative office
LEASED LOCATIONS
Morgan City, Louisiana -- Pipe storage terminal and inspection shed
Expiration date of lease: January 31, 2002
ITEM 3. LEGAL PROCEEDINGS
RPC is involved in various legal proceedings encountered in the ordinary
course of business. In the opinion of management, any judgment or settlement
arising from these proceedings will not, individually or in the aggregate,
have a material adverse effect on its business or its financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of 1996.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Each of the executive officers of RPC was elected by the Board of
Directors to serve until the Board of Directors' meeting immediately
following the next annual meeting of stockholders or until his or her earlier
removal by the Board of Directors or his or her resignation. The following
table lists the executive officers of RPC and their ages, offices, and terms
of office with RPC.
<TABLE>
<CAPTION>
NAME AND OFFICE DATE FIRST
WITH REGISTRANT AGE ELECTED TO OFFICE
- ---------------------------------------------------------------
<S> <C> <C>
R. Randall Rollins 65 1/24/84
Chairman of the Board
Chief Executive Officer
Richard A. Hubbell 52 1/27/87
President
Chief Operating Officer
Bobby Joe Cudd 67 1/24/84
Executive Vice President
James A. Lane, Jr. 54 1/27/87
Executive Vice President
William S. Pegg 54 1/27/87
Executive Vice President
Linda H. Graham 60 1/27/87
Vice President
Secretary
Ben M. Palmer 36 7/8/96
Chief Financial Officer
</TABLE>
10
<PAGE>
PART II
- ------------------------------------------------------------------------------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
RPC common stock is listed for trading on the New York Stock Exchange under
the symbol RES. At the close of business on December 31, 1996, there were
1,416 holders of record of common stock. Prices of RPC's common stock for
the years ended December 31, 1996 and 1995, were as follows:
<TABLE>
<CAPTION>
1996 1995
-----------------------------------------------------------
Quarter High Low High Low
-----------------------------------------------------------
<S> <C> <C> <C> <C>
First $ 10.625 $ 8.625 $ 7.875 $ 6.750
Second 13.500 9.875 9.250 7.125
Third 12.000 10.625 9.125 7.500
Fourth 16.250 11.250 9.625 7.500
-------- ------- ------- -------
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
RPC has not paid dividends on its common stock since its inception in 1984.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands except per share data)
- -----------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS SUMMARY
Revenue $200,833 $161,379 $155,765 $123,481 $100,731
Net costs and expenses 180,596 145,228 142,583 113,534 95,276
- -----------------------------------------------------------------------------------------------------------------------
Income before income taxes, extraordinary credit
and cumulative effect of accounting change 20,237 16,151 13,182 9,947 5,455
Income tax provision 6,982 5,396 4,404 3,270 2,116
- -----------------------------------------------------------------------------------------------------------------------
Income before extraordinary credit and cumulative
effect of accounting change 13,255 10,755 8,778 6,677 3,339
Extraordinary credit - utilization of loss
carryforward -- -- -- -- 765
Cumulative effect of a change in accounting for
income taxes -- -- -- 150 --
- -----------------------------------------------------------------------------------------------------------------------
Net income $ 13,255 $ 10,755 $ 8,778 $ 6,827 $ 4,104
- -----------------------------------------------------------------------------------------------------------------------
Earnings per share
Before extraordinary credit and accounting
change $ .91 $ .74 $ .61 $ .46 $ .23
After extraordinary credit and accounting
change $ .91 $ .74 $ .61 $ .47 $ .28
- -----------------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES $ 20,889 $ 15,529 $ 10,618 $ 6,630 $ 9,406
- -----------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Total assets $152,800 $132,656 $122,242 $109,992 $102,889
Working capital 39,192 41,943 37,827 33,943 32,965
Stockholders' equity 117,799 104,361 93,499 84,614 77,710
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Consolidated
RPC's revenue and net income increased in 1996. This was RPC's ninth
consecutive year of profitable operations. Consolidated revenue increased 24
percent in 1996 to $200,833,000 compared to $161,379,000 in 1995.
Consolidated revenue in 1995 was 4 percent higher than 1994 revenue of
$155,765,000. Both major business segments contributed to the growth
experienced in 1996. The oil and gas services segment increased revenue 27
percent in 1996. Investors, drillers, and exploration companies have
maintained a higher level of activity than in recent years. Rising demand in
the United States and limited storage capacity for natural gas has also
contributed to demand for our services. The boat manufacturing segment
increased revenue 23 percent. Chaparral has been able to increase its market
share and expand its revenues despite generally minimal growth in this
industry.
Income before income taxes was $20,237,000 in 1996, $16,151,000 in 1995,
and $13,182,000 in 1994. This represented an increase of $4,086,000 or 25
percent in 1996 and an increase of $2,969,000 or 23 percent in 1995. The oil
and gas services segment produced a 24 percent increase in income before
income taxes in 1996 due primarily to increased utilization of our equipment
and personnel, and improvement in results of international operations,
especially in Venezuela. The boat manufacturing segment generated a 33
percent increase in income before income taxes due primarily to an increase
in the volume of boats sold in all boat lines. In addition, there was a
slight improvement in margins at Chaparral in spite of continued price
competition in this segment.
Consolidated net income was $13,255,000 or 91 cents per share in 1996
compared to $10,755,000 or 74 cents per share in 1995. Consolidated net
income in 1994 was $8,778,000 or 61 cents per share. This represented an
increase of $2,500,000 or 23 percent in 1996 and an increase of $1,977,000 or
23 percent in 1995.
Revenue--Business Segments
Oil and Gas Services--The oil and gas services segment contributed
$101,741,000 or 51 percent of 1996 revenue. Revenue was $79,943,000 in 1995
and $73,098,000 in 1994. The 27 percent increase in 1996 can be attributed to
a number of factors, including higher utilization of our specialized
equipment and personnel coupled with modest price increases. This results
from an increase in the average U.S. oil and natural gas rig count. Patterson
Services' revenue increased 31 percent in 1996 as demand increased for its
specialized rental tools, especially in the off-shore Gulf of Mexico region.
Cudd Pressure Control's international operations experienced a 79 percent
increase in revenues in 1996 due to expanding business volume and the
acquisition of the remaining 50 percent ownership interest in SPA-Cudd in
January 1996 to form Cudd de Venezuela.
The revenue increase for the oil and gas services segment of 9 percent
in 1995 was due to increased domestic revenue as a result of Cudd Pressure
Control's workover programs and growth in the international operations and
Patterson Truck Line's
12
<PAGE>
commodities hauling, which is not dependent on drilling activity. Higher
utilization of equipment also contributed to the increase in revenue in 1995;
no significant price increases occurred.
Boat Manufacturing--The boat manufacturing segment reported a 23 percent or
$16,007,000 increase in revenue from $70,218,000 in 1995 to $86,225,000 in
1996. Revenue for 1994 was $72,229,000.
The total number of boats sold by Chaparral in 1996 increased 19 percent
due to a favorable reaction to newer models and additional gains in market
share. The SS line of family runabouts, introduced in 1993, and the Sunesta,
the deckboat line introduced in 1992, continued to be very popular. Revenues
also increased as a result of the favorable response to a new dealer
incentive schedule, which reduces the fluctuation in production levels. There
was also a price increase in July 1996 that averaged 2 percent as a result of
higher material costs.
The total number of boats sold by Chaparral in 1995 decreased 15 percent
compared to 1994 due to higher dealer inventory of prior year models. This
resulted in lower production levels of new models, especially during the
second half of 1995. The average price of boats sold in 1995 increased 13
percent due to price increases and a larger percentage of revenues generated
from higher priced cruiser models. The price increases, which ranged between
6 and 7 percent, were the result of higher material costs and upgrades of
model features.
Expenses
Cost of goods sold for the boat manufacturing segment was $67,426,000 in
1996 compared to $55,826,000 in 1995 and $57,594,000 in 1994. This represents
an increase of $11,600,000 or 21 percent in 1996, which approximates the
increase in revenue. As a percent of revenue, cost of goods sold for this
segment was 78 percent in 1996, and 80 percent in 1995 and 1994. The decrease
as a percentage of segment revenues can be attributed to better inventory
controls. The remaining cost of goods sold was incurred by subsidiaries in
other businesses.
Consolidated operating expenses were $95,820,000 in 1996, $76,412,000 in
1995, and $71,965,000 in 1994. Expenses were 25 percent higher in 1996 than
in 1995, primarily in the oil and gas services segment, in line with this
segment's revenue increase.
The oil and gas services segment's operating expenses were $79,421,000 or
78 percent of this segment's revenue in 1996. Operating expenses were
$62,622,000 or 78 percent of this segment's revenue in 1995 and $59,055,000
or 81 percent of this segment's revenue in 1994. The boat manufacturing
segment's operating expenses were $8,540,000 in 1996, which as a percent of
revenue was a 1 percent increase from 1995.
The portion of depreciation and amortization not included in cost of goods
sold was $9,210,000 in 1996, $6,843,000 in 1995, and $6,215,000 in 1994. The
majority of this expense represented the oil and gas services segment
depreciation of $8,126,000 in 1996, $5,961,000 in 1995, and $5,369,000 in
1994. The 1996 increase of
13
<PAGE>
Expenses--Continued
$2,165,000 or 36 percent was due primarily to increased capital
expenditures. Chaparral's depreciation expense for production equipment is a
component of cost of goods sold, therefore this category includes only
amortization of intangibles and depreciation of nonproduction assets.
Chaparral's depreciation and amortization was $734,000 for 1996, $769,000 for
1995, and $781,000 for 1994. Amortization of intangible assets was $797,000
in 1996, $709,000 in 1995, and $684,000 in 1994.
Interest Income
Interest income was $2,018,000 in 1996, $2,181,000 in 1995, and $1,489,000
in 1994. Despite the increase in total cash and marketable securities from
$41,874,000 at December 31, 1995, to $46,344,000 at December 31, 1996,
interest income decreased 7 percent in 1996 due to lower average balances
and lower yields.
Financial Condition
As of December 31, 1996, RPC's cash and cash equivalents and short-term
marketable securities decreased $1,321,000 to $21,273,000. Cash provided by
operating activities was $24,060,000 compared to $13,834,000 in 1995.
Accounts receivable were $24,156,000 at December 31, 1996, compared to
$20,802,000 at December 31, 1995, an increase of $3,354,000 due to the
increase in revenues. Inventories were $982,000 higher than the prior year
mainly due to a higher number of finished boats on hand. Inventory increased
due to the higher production levels for the boat manufacturing segment to
satisfy increased demand.
During 1996, current assets increased $3,212,000 and current liabilities
increased $5,963,000, a combined decrease in working capital of $2,751,000.
Working capital at December 31, 1996, was $39,192,000 compared to $41,943,000
in the prior year. The current ratio remained strong at the end of 1996 with
a ratio of 2.3-to-1, decreasing slightly from the 1995 ratio of 2.7-to-1. The
1994 current ratio was 2.5-to-1.
Capital expenditures for 1996 were $20,889,000, an increase of $5,360,000
from $15,529,000 in 1995. $19,191,000 of these expenditures were in the oil
and gas services segment for revenue-producing equipment. Capital
expenditures for the oil and gas services segment were $14,726,000 in 1995.
RPC expects that funding for future capital requirements will be provided
by available cash and marketable securities and cash generated from
operations.
14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Balance Sheets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands except share information)
- -------------------------------------------------------------------------------
AT DECEMBER 31, 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 13,124 $ 18,126
Marketable securities 8,149 4,468
Accounts receivable, net 24,156 20,802
Inventories 15,427 14,445
Deferred income taxes 7,623 7,241
Prepaid expenses and other current assets 1,663 1,848
- -------------------------------------------------------------------------------
Current assets 70,142 66,930
- -------------------------------------------------------------------------------
Equipment and property, net 47,791 36,225
Marketable securities 25,071 19,280
Intangibles, net of accumulated amortization
of $7,094 in 1996 and $6,297 in 1995 8,105 7,900
Deferred income taxes 86 714
Other assets 1,605 1,607
- -------------------------------------------------------------------------------
Total assets $ 152,800 $ 132,656
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 6,756 $ 5,035
Accrued payroll and related expenses 4,541 3,899
Accrued insurance expenses 6,679 5,039
Accrued state, local, and other taxes 3,211 2,315
Federal income taxes payable 88 38
Accrued discounts 786 635
Other accrued expenses 8,889 8,026
- -------------------------------------------------------------------------------
Current liabilities 30,950 24,987
- -------------------------------------------------------------------------------
Long-term accrued insurance expenses 3,551 3,308
Long-term debt 500 --
- -------------------------------------------------------------------------------
Total liabilities 35,001 28,295
- -------------------------------------------------------------------------------
Commitments and contingencies
- -------------------------------------------------------------------------------
Common stock, $.10 par value, 35,000,000 shares
authorized, 14,714,861 shares issued in 1996,
14,610,054 shares issued in 1995 1,471 1,461
Capital in excess of par value 35,176 34,599
Earnings retained 81,555 68,526
Common stock in treasury, at cost, 74,953
shares in 1996, 68,723 shares in 1995 (403) (225)
- -------------------------------------------------------------------------------
Total stockholders' equity 117,799 104,361
- -------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 152,800 $ 132,656
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
15
<PAGE>
Statements of Income
- ------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands except per share data)
- ------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 1996 1995 1994
- ------------------------------------------------------------------------------
REVENUE $200,833 $161,379 $155,765
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Cost of goods sold 77,584 64,154 65,892
Operating expenses 95,820 76,412 71,965
Depreciation and amortization 9,210 6,843 6,215
Interest income (2,018) (2,181) (1,489)
- ------------------------------------------------------------------------------
Income before income taxes 20,237 16,151 13,182
Income tax provision 6,982 5,396 4,404
- ------------------------------------------------------------------------------
Net income $13,255 $10,755 $8,778
- ------------------------------------------------------------------------------
EARNINGS PER SHARE $.91 $.74 $.61
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Statements of Stockholders' Equity
- ------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands)
- ------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 1996 1995 1994
- ------------------------------------------------------------------------------
COMMON STOCK
Balance at beginning of year $1,461 $1,461 $1,461
Stock issued for benefit plans, net 10 -- --
- ------------------------------------------------------------------------------
Balance at end of year $1,471 $1,461 $1,461
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
CAPITAL IN EXCESS OF PAR VALUE
Balance at beginning of year $34,599 $34,228 $34,228
Stock issued for benefit plans, net 577 371 --
- ------------------------------------------------------------------------------
Balance at end of year $35,176 $34,599 $34,228
- ------------------------------------------------------------------------------
EARNINGS RETAINED
Balance at beginning of year $68,526 $58,296 $49,518
Net income 13,255 10,755 8,778
Stock issued for benefit plans, net (226) (525) --
- ------------------------------------------------------------------------------
Balance at end of year $81,555 $68,526 $58,296
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TREASURY STOCK
Balance at beginning of year $225 $486 $593
Stock issued for benefits plans, net 178 (261) (107)
- ------------------------------------------------------------------------------
Balance at end of year $403 $225 $486
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
16
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands) Statements of
------------------------------------------------------------------------------------------------------- Cash Flows
YEARS ENDED DECEMBER 31, 1996 1995 1994
-------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 13,255 $ 10,755 $ 8,778
Noncash charges (credits) to earnings:
Depreciation and amortization 9,818 7,474 6,679
Gain on sale of equipment and property (1,316) (1,383) (1,517)
Deferred income tax provision (benefit) 246 (319) (1,744)
(Increase) decrease in assets:
Accounts receivable (3,354) (225) (2,619)
Inventories (982) (2,103) (2,106)
Prepaid expenses and other current assets 185 (374) 2,073
Other noncurrent assets 2 457 (565)
Increase (decrease) in liabilities:
Accounts payable 1,721 (352) 1,390
Accrued payroll and related expenses 642 458 924
Accrued insurance expenses 1,883 (323) (73)
Other accrued expenses 1,960 (231) 1,124
- -------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 24,060 13,834 12,344
- -------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures (20,889) (15,529) (10,618)
Proceeds from sale of equipment and property 1,769 2,866 2,684
Net (purchase) sale of marketable securities (9,472) 2,428 (2,775)
Other (502) (511) --
- -------------------------------------------------------------------------------------------------------
Net cash used for investing activities (29,094) (10,746) (10,709)
- -------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Cash received upon exercise of stock options 32 -- 107
- -------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 32 -- 107
- -------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (5,002) 3,088 1,742
Cash and cash equivalents at beginning of year 18,126 15,038 13,296
- -------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 13,124 $ 18,126 $ 15,038
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES
Years ended December 31, 1996, 1995, and 1994
Note 1: Significant Accounting Policies
Principles of Consolidation -- The consolidated financial statements include
the accounts of RPC, Inc. and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated.
Nature of Operations -- RPC is principally engaged in two businesses:
providing a variety of services, equipment, and personnel to the oil and gas
industry and manufacturing powerboats. The principal markets for the oil and
gas services segment are domestic customers comprised of drilling
contractors, oil field supply stores and service companies, major oil and gas
producers, and independent exploration companies. The boat manufacturing
segment distributes fiberglass boats to a nationwide network of independent
dealers.
Use of Estimates in the Preparation of Financial Statements -- The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue -- Revenue is recognized at the time services are performed or goods
are delivered.
Cash Equivalents -- Highly liquid investments with original maturities of 3
months or less are considered to be cash equivalents.
Marketable Securities -- Effective January 1, 1994, RPC adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Under this statement, RPC
determined that marketable securities should be classified as either
"trading" or "available-for-sale," which require reporting at fair value on
the balance sheet. Any unrealized gains and losses on trading securities are
included in earnings. For available-for-sale securities, any unrealized gains
and losses are excluded from earnings and reported in a separate component of
stockholders' equity. As of December 31, 1996 and 1995, the difference
between fair value and cost for both classifications was not material.
Investments with original maturities between 3 and 12 months are considered
to be current marketable securities. Investments with original maturities
greater than 12 months are considered to be noncurrent marketable securities.
Inventories -- Inventories are recorded at the lower of cost (first-in,
first-out basis) or market value.
Long-Lived Assets -- In March 1995, the Financial Accounting Standards Board
issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of." SFAS No. 121 requires that
long-lived assets and certain intangibles be reviewed whenever events or
changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The Company periodically reviews the values assigned to
long-lived assets, such as property and equipment and other assets, to
determine if any impairments are other than temporary. Management believes
that the long-lived assets in the accompanying balance sheets are
appropriately valued.
Equipment and Property -- Depreciation is provided principally on a
straight-line basis over the estimated useful lives of assets.
18
<PAGE>
Annual provisions for depreciation are computed using the following useful
lives: operating equipment and property, 3 to 10 years; buildings and
leasehold improvements, 15 to 30 years; furniture and fixtures, 5 to 7 years;
and vehicles, 3 to 5 years. The cost of assets retired or otherwise disposed
of and the related accumulated depreciation are eliminated from the accounts
in the year of disposal with the resulting gain or loss credited or charged
to income. Expenditures for additions, major renewals, and betterments are
capitalized. Depreciation expense on production equipment in the
manufacturing businesses is included in the "cost of goods sold" caption in
the income statement. All other depreciation is included in the "depreciation
and amortization" caption.
Intangibles--Intangibles represent the excess of the purchase price over the
fair value of net assets of businesses acquired and noncompete agreements
related to businesses acquired. Intangibles are presented net of accumulated
amortization and are amortized using the straight-line method over a period
not exceeding 20 years or the period of the noncompete agreement.
Stock-Based Compensation--During October 1995, the Financial Accounting
Standards Board issued SFAS No.123, "Accounting for Stock-Based
Compensation." This Statement establishes a fair value based method of
accounting for employee stock-based compensation. However, the Statement
allows companies to continue following the accounting prescribed by
Accounting Principles Board (APB) Opinion No. 25. The Company has adopted the
disclosure-only option of SFAS No.123 and will continue to use the accounting
treatment outlined in APB Opinion 25. If the accounting provisions of the new
Statement had been adopted as of the beginning of 1996, the effect on 1996 net
earnings would have been immaterial. Further, based on current and
anticipated use of stock-based compensation, it is not envisioned that the
impact of the Statement's accounting provisions would be material in any
future period.
Insurance Expenses--RPC self-insures, up to specified limits, certain risks
related to general liability, product liability, workers' compensation, and
vehicle liability. The estimated cost of claims under the self-insurance
program is accrued as the claims are incurred (although actual settlement of
the claims may not be made until future periods) and may subsequently be
revised based on developments relating to such claims. The noncurrent portion
of these estimated outstanding claims is classified as long-term accrued
insurance expenses.
Income Taxes--Income taxes are accounted for in accordance with SFAS No.109,
"Accounting for Income Taxes," which requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined based on the
difference between the financial and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are
expected to reverse. These differences are more inclusive in nature than
differences determined under previously applicable accounting principles.
Earnings per Share--Earnings per share have been calculated based on weighted
average shares outstanding of 14,571,339 for 1996, 14,528,561 for 1995, and
14,442,852 for 1994. Stock options and restricted stock outstanding do not
have a material dilutive effect.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
- ------------------------------------------------------------------------------
Note 2: Accounts Receivable
Accounts receivable, net, at December 31, 1996, of $24,156,000 and at
December 31, 1995, of $20,802,000 are net of allowances for doubtful accounts
of $7,058,000 in 1996, and $4,205,000 in 1995.
Note 3: Inventories
Inventories are recorded at the lower of cost (first-in, first-out basis)
or market value and are detailed as follows:
- ----------------------------------------------------
December 31, 1996 1995
- ----------------------------------------------------
(in thousands)
Raw materials and supplies $8,828 $8,478
Work in process 1,404 1,586
Finished goods 5,195 4,381
- ----------------------------------------------------
Total inventories $15,427 $14,445
- ----------------------------------------------------
Note 4: Equipment and Property
Equipment and property are presented at cost net of accumulated
depreciation and are detailed as follows:
- ----------------------------------------------------
December 31, 1996 1995
- ----------------------------------------------------
(in thousands)
Operating equipment
and property $154,835 $146,781
Buildings 15,147 12,476
Furniture and fixtures 4,344 3,500
Vehicles 14,980 12,878
Land 4,851 4,806
- ----------------------------------------------------
Gross equipment and
property 194,157 180,441
Less: accumulated
depreciation 146,366 144,216
- ----------------------------------------------------
Net equipment and property $47,791 $36,225
- ----------------------------------------------------
Note 5: Income Taxes
The following table lists the components of the provision for income
taxes:
- ----------------------------------------------------
December 31, 1996 1995 1994
- ----------------------------------------------------
(in thousands)
Current:
Federal $6,353 $5,475 $5,879
State 383 240 269
Deferred 246 (319) (1,744)
- ----------------------------------------------------
Total income tax
provision $6,982 $5,396 $4,404
- ----------------------------------------------------
A reconciliation between the federal statutory rate and RPC's effective
tax rate is as follows:
- ----------------------------------------------------
December 31, 1996 1995 1994
- ----------------------------------------------------
Federal statutory rate 35.0% 34.6% 34.2%
State income taxes 1.9 1.5 2.0
Other (2.4) (2.7) (2.8)
- ----------------------------------------------------
Effective tax rate 34.5% 33.4% 33.4%
- ----------------------------------------------------
The components of the net deferred tax assets are as follows:
- ----------------------------------------------------
December 31, 1996 1995
- ----------------------------------------------------
(in thousands)
Current deferred tax asset:
Self-insurance reserves $1,803 $1,689
Bad debt reserves 2,637 2,789
State, local, and other taxes 885 635
Payroll accruals 555 557
Warranty reserves 466 427
All others, net 1,277 1,144
Valuation allowance -- --
- ----------------------------------------------------
Total current deferred tax
asset $7,623 $7,241
- ----------------------------------------------------
Noncurrent deferred tax asset:
Self-insurance reserves $1,208 $1,125
Depreciation (1,226) (448)
All others, net 104 37
Valuation allowance -- --
- ----------------------------------------------------
Total noncurrent deferred
tax asset $85 $714
- ----------------------------------------------------
20
<PAGE>
Total income tax payments, net of refunds, were $4,510,000 in 1996,
$5,511,000 in 1995, and $5,494,000 in 1994.
NOTE 6: LONG-TERM DEBT
Long-term debt consists of a note payable for $500,000. The note bears
interest at 6.25 percent payable annually. Payments of $100,000 are due for
each of the next five years. The fair value of the long-term debt
approximates the carrying value.
NOTE 7: COMMITMENTS AND CONTINGENCIES
Minimum annual rentals, principally for noncancelable real estate and
truck leases with terms in excess of one year, in effect at December 31,
1996, are summarized in the following table:
- -------------------------------------------------------------------------
Year Amount
- -------------------------------------------------------------------------
(in thousands)
1997 $ 1,722
1998 1,433
1999 929
2000 725
2001 252
2002-2006 302
- -------------------------------------------------------------------------
Total rental commitments $ 5,363
- -------------------------------------------------------------------------
Total rental expense charged to operations was $3,517,000 in 1996,
$2,418,000 in 1995, and $2,002,000 in 1994.
RPC is a defendant in a number of lawsuits which allege that plaintiffs
have been damaged as a result of the rendering of services by RPC personnel
and equipment, in vehicle accidents, or from the use of RPC's products. RPC
is vigorously contesting these actions. Management is of the opinion that the
outcome of these lawsuits will not have a material adverse effect on the
financial position or results of operations or liquidity of RPC.
To assist dealers in obtaining financing for the purchase of its boats,
Chaparral has entered into agreements with various dealers and financing
institutions to guarantee varying amounts of the dealers' purchase debt
obligations. Chaparral's obligation under its guarantee becomes effective in
the case of default in payments by the dealer. The agreements provide for the
return of all repossessed boats to Chaparral in new condition, in exchange
for Chaparral's assumption of the unpaid debt obligation on those boats. As
of December 31, 1996, guarantees outstanding totaled $4,864,000.
NOTE 8: EMPLOYEE BENEFIT PLANS
Retirement Plan--RPC has a tax-qualified defined benefit, noncontributory,
trusteed retirement income plan which covers substantially all employees with
at least one year of service. Benefits are based on an employee's years of
service and compensation near retirement. RPC has the right to terminate or
modify the plan at any time.
Total retirement plan cost was $72,000 in 1996, $135,000 in 1995, and
$95,000 in 1994. The following table details the components of the cost:
- -----------------------------------------------------------------------
December 31, 1996 1995 1994
- -----------------------------------------------------------------------
(in thousands)
Service cost for benefits earned
during the period $ 540 $ 429 $ 482
Interest cost on projected benefit
obligation 991 907 842
Actual (return) loss on plan assets (1,719) (2,817) 68
Net amortization and deferral 260 1,616 (1,297)
- -----------------------------------------------------------------------
Total pension cost $ 72 $ 135 $ 95
- -----------------------------------------------------------------------
RPC's funding policy is to contribute to the retirement income plan the
amount required, if any, under the Employee Retirement Income Security Act of
1974. No contributions were required in 1996, 1995, or 1994.
21
<PAGE>
The funded status of the pension plan was as follows:
- ------------------------------------------------------------------------------
December 31, 1996 1995
- ------------------------------------------------------------------------------
(in thousands)
Actuarial present value of:
Vested benefits $11,153 $10,416
Non-vested benefits 519 431
- ------------------------------------------------------------------------------
Accumulated benefit obligation 11,672 10,847
Effect of projected future compensation
increases 2,333 1,875
- ------------------------------------------------------------------------------
Projected benefit obligation 14,005 12,722
Plan assets at fair value 14,752 13,543
- ------------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation 747 821
Unrecognized net losses 708 898
Unrecognized net transition asset (1,060) (1,252)
- ------------------------------------------------------------------------------
Prepaid pension cost $ 395 $ 467
- ------------------------------------------------------------------------------
In 1996 and 1995, the projected benefit obligation was calculated using a
discount rate of 7.5 percent. In 1996 and 1995, a 5.0 percent annual rate of
increase in future compensation levels was used. Plan assets are invested in
a diversified portfolio that consists of equity and debt securities,
including U.S. government obligations. The expected long-term rate of return
on plan assets is 9.5 percent.
401(k) PLAN--RPC sponsors a deferred compensation 401(k) plan that is
available to substantially all full-time employees with more than six months
of service. This plan allows employees to make tax-deferred contributions of
up to 15 percent of their annual compensation, not exceeding the permissible
deduction imposed by the Internal Revenue Code. RPC matches 40 percent of
each employee's contributions up to 3 percent of the employee's compensation.
Employees vest in the RPC contributions after five years of service. The
charges to expense for RPC's contributions were $276,000 in 1996, $238,000 in
1995, and $194,000 in 1994.
STOCK INCENTIVE PLANS--RPC has an Employee Incentive Stock Option Plan (the
"1984 Plan") under which 500,000 shares of common stock were reserved for
issuance. The 1984 Plan expired in October 1994. On January 25, 1994, RPC
adopted a new ten-year Employee Stock Incentive Plan (the "1994 Plan") under
which 500,000 shares of common stock were reserved for issuance. These plans
provide for the issuance of various forms of stock incentives, including,
among others, incentive stock options and restricted stock. As of December
31, 1996, there were 252,000 shares remaining for the granting of options or
other awards under the 1994 Plan.
INCENTIVE STOCK OPTIONS--There were incentive stock options (options)
outstanding to purchase 274,146 shares as of December 31, 1996, 335,488
shares as of December 31, 1995, and 344,488 as of December 31, 1994. The
weighted average exercise price at December 31, 1996, was $6.45. Options
granted totaled 40,000 in 1996 and 78,900 in 1994. There were no options
granted in 1995. Options totaling 179,746 were exercisable at December 31,
1996. During 1996, 86,442 options to purchase shares were exercised and
options to purchase 14,900 shares were canceled.
Options for 49,846 shares expire on January 27, 1997, 78,000 shares expire
on January 24, 1999, 38,300 shares expire on January 23, 2000, 68,000 shares
expire on April 26, 2004, and 40,000 shares expire on January 23, 2006.
RESTRICTED STOCK--RPC has granted employees two forms of restricted stock:
performance restricted and time lapse. The performance restricted shares are
granted, but not earned and issued, until certain five-year tiered
performance criteria are met. The performance criteria are predetermined
market prices of the Company stock. On the date the stock appreciates to each
level (determination date), 20 percent of performance shares are earned. Once
earned, the performance shares vest five years from the determination date.
Time lapse shares vest ten years from the grant date. There were 25,000
units granted under these
22
<PAGE>
restricted stock programs during 1996 and 115,000 units in 1994. There were
no units granted in 1995. During 1996, 18,400 performance shares were awarded
under the plans, 3,400 shares were forfeited, and 2,000 shares were canceled.
The agreements under which the restricted stock is issued provide that
shares awarded may not be sold or otherwise transferred until restrictions as
established under the Plan have lapsed. Upon termination of employment,
shares upon which restrictions have not lapsed must be returned to the
Company. As of December 31, 1996, none of the shares of restricted stock were
vested.
NOTE 9: BUSINESS SEGMENT INFORMATION
Certain information with respect to RPC's business segments is set forth
in the following table.
- -------------------------------------------------------------------------------
December 31, 1996 1995 1994
- -------------------------------------------------------------------------------
(in thousands)
Revenue:
Oil and gas services $101,741 $ 79,943 $ 73,098
Boat manufacturing 86,225 70,218 72,229
Other 12,867 11,218 10,438
- -------------------------------------------------------------------------------
Total revenue $200,833 $161,379 $155,765
- -------------------------------------------------------------------------------
Operating income (loss):
Oil and gas services $ 14,194 $ 11,360 $ 8,678
Boat manufacturing 9,524 7,096 6,866
Other (2,609) (1,971) (1,428)
- -------------------------------------------------------------------------------
Total operating income $ 21,109 $ 16,485 $ 14,116
- -------------------------------------------------------------------------------
Identifiable assets:
Oil and gas services $ 68,692 $ 51,145 $ 44,224
Boat manufacturing 26,167 23,019 23,601
Other, including
corporate assets 57,941 58,492 54,417
- -------------------------------------------------------------------------------
Total identifiable assets $152,800 $132,656 $122,242
- -------------------------------------------------------------------------------
Revenue from international operations in the oil and gas services segment
totaled $12,851,000 in 1996, $7,159,000 in 1995, and $4,161,000 in 1994. The
respective operating profits were $3,096,000 in 1996, $1,680,000 in 1995, and
$176,000 in 1994. There were $8,351,000 in identifiable assets attributable
to these operations in 1996, $4,709,000 in 1995, and $6,353,000 in 1994.
There were no material amounts of international operations in the boat
manufacturing segment.
NOTE 10: UNAUDITED QUARTERLY DATA
- -------------------------------------------------------------------------------
Quarter First Second Third Fourth
- -------------------------------------------------------------------------------
(in thousands except per share data)
1996
Revenue $ 49,717 $ 52,204 $ 44,942 $ 53,970
Net income 3,450 3,161 2,813 3,831
Earnings per share .24 .22 .19 .26
1995
Revenue $ 42,220 $44,576 $ 35,756 $ 38,827
Net income 2,567 2,606 2,262 3,320
Earnings per share .18 .18 .15 .23
- -------------------------------------------------------------------------------
23
<PAGE>
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
This item is not applicable to RPC because there has been no change in or
disagreements with independent auditors.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning directors and executive officers is included in the
RPC Proxy for its 1997 Annual Meeting of Stockholders, in the sections
entitled "Election of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance." This information is incorporated herein by reference.
Information about executive officers is contained on page 10.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation is included in the RPC Proxy
for its 1997 Annual Meeting of Stockholders, in the section entitled
"Executive Compensation." This information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership is included in the RPC Proxy for
its 1997 Annual Meeting of Stockholders, in the sections entitled "Capital
Stock" and "Election of Directors." This information is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is
included in the RPC Proxy for its 1997 Annual Meeting of Stockholders, in the
sections entitled "Certain Relationships and Related Transactions" and
"Compensation Committee Interlocks and Insider Participation." This
information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are filed as part of this report.
FINANCIAL STATEMENTS PAGE
- -------------------- -----
Balance Sheets as of December 31, 1996
and 1995 15
Statements of Income for the three years ended
December 31, 1996 16
Statements of Stockholders' Equity for the three
years ended December 31, 1996 16
Statements of Cash Flows for the three years
ended December 31, 1996 17
Notes to Financial Statements 18-23
SCHEDULES
Schedule II--Valuation and Qualifying Accounts 25
EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- -------- ------------------------------------------------------------------
(3)(i)(a) RPC's Certificate of Incorporation is incorporated herein by
reference to Exhibit (3)(a) to the fiscal 1992 Form 10-K.
(3)(i)(b) RPC's Certificate of Amendment of the Certificate of
Incorporation is incorporated herein by reference to Exhibit
(3)(i)(b) to the fiscal 1995 Form 10-K.
(3)(ii) By-laws of RPC are incorporated herein by reference to Exhibit
(3)(b) to the fiscal 1993 Form 10-K.
(10) RPC's 1994 Employee Stock Incentive Plan is incorporated herein
by reference to Exhibit A of the 1994 Proxy Statement.
(21) Subsidiaries of RPC.
(23) Consent of Arthur Andersen LLP.
(24) Powers of Attorney for Directors.
(27) Financial Data Schedule.
REPORTS ON FORM 8-K
No reports on Form 8-K were required to be filed by RPC for the quarter
ended December 31, 1996.
Any schedules or exhibits not shown above have been omitted because they
are not applicable.
24
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
- ------------------------------------------------------------------------------
---------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands)
---------------------------------------------------------------------------
For the years ended December 31, 1996, 1995, and 1994
---------------------------------------------------------------------------
Balance at Charged to Net Balance at
Beginning Costs and (Write-Offs) End of
Description of Period Expenses Recoveries Period
---------------------------------------------------------------------------
Year ended December 31, 1996
Allowance for Doubtful
Accounts $11,893 $2,624 $229 $14,288
---------------------------------------------------------------------------
Year ended December 31, 1995
Allowance for Doubtful
Accounts $7,120 $1,339 ($3,434) $11,893
---------------------------------------------------------------------------
Year ended December 31, 1994
Allowance for Doubtful
Accounts $2,279 $4,431 ($410) $7,120
---------------------------------------------------------------------------
25
<PAGE>
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Directors and Stockholders of RPC, Inc.:
We have audited the accompanying consolidated balance sheets of RPC, Inc.
(a Delaware corporation) and subsidiaries as of December 31, 1996 and 1995
and the related consolidated statements of income, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1996.
These financial statements and schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of RPC, Inc. and
subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14 is
presented for the purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements and, in
our opinion, fairly states in all material respects, the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
Arthur Andersen LLP
Atlanta, Georgia
March 14, 1997
26
<PAGE>
SIGNATURES
- ------------------------------------------------------------------------------
Pursuant to the requirements of Section 13 of the Securities 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.
By:
/s/ R. Randall Rollins
------------------------------
R. Randall Rollins
Chairman of the Board of Directors
(Principal Executive Officer)
March 14, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
/s/ R. Randall Rollins /s/ Ben M. Palmer
--------------------------- -------------------------------
R. Randall Rollins Ben M. Palmer
Chairman of the Board of Directors Chief Financial Officer
(Principal Executive Officer) (Principal Financial and Accounting
Officer)
March 14, 1997 March 14, 1997
The Directors of RPC, Inc. (listed below) executed a power of attorney
appointing Richard A. Hubbell their attorney-in-fact, empowering him to sign
this report on their behalf.
Bobby Joe Cudd, Director
James A. Lane, Jr., Director
Wilton Looney, Director
Gary W. Rollins, Director
John W. Rollins, Director
Henry B. Tippie, Director
James B. Williams, Director
/s/ Richard A. Hubbell
---------------------------------
Richard A. Hubbell
Director and as Attorney-in-fact
March 14, 1997
27
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF RPC, INC.
NAME STATE OF INCORPORATION
Cudd Pressure Control, Inc. Delaware
Pressure Control, Inc. Delaware
South Texas Swabbing, Inc. Texas
Coiled Tubing, Inc. Delaware
Patterson Services, Inc. Delaware
Patterson Truck Line, Inc. Louisiana
Patterson Tubular Services, Inc. Texas
Chaparral Boats, Inc. Georgia
RPC Investment Company Delaware
RPC Waste Management Services, Inc. Georgia
Anchor Crane & Hoist Service Company, Inc. Georgia
RPC Data Link, Inc. Georgia
International Training Services, Inc. Georgia
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 10-K, into RPC, Inc.'s previously filed
Form S-8 Registration Statement (No. 33-5527) and its previously filed Form
S-8 Registration Statement (No. 33-75652).
Arthur Andersen LLP
--------------------------
Arthur Andersen LLP
Atlanta, Georgia
March 14, 1996
- -----------------
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent
in any and all capacities to sign filings by RPC, Inc. of Form 10-K, Annual
Reports and any and all amendments thereto (including post-effective
amendments) and to file the same, with all exhibits, and any other documents
in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney,
in the capacities indicated, as of this 28th day of January, 1997.
---- -------
Bobby Joe Cudd, Director
---------------------------------
Bobby Joe Cudd, Director
Witness:
Anne Abouchar
- -----------------------
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent
in any and all capacities to sign filings by RPC, Inc. of Form 10-K, Annual
Reports and any and all amendments thereto (including post-effective
amendments) and to file the same, with all exhibits, and any other documents
in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in
the capacities indicated, as of this 28th day of January, 1997.
---- -------
James A. Lane, Jr., Director
----------------------------
James A. Lane, Jr., Director
Witness:
Anne Abouchar
- --------------
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent
in any and all capacities to sign filings by RPC, Inc. of Form 10-K, Annual
Reports and any and all amendments thereto (including post-effective
amendments) and to file the same, with all exhibits, and any other documents
in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in
the capacities indicated, as of this 27th day of January, 1997.
---- -------
Wilton Looney, Director
-----------------------
Wilton Looney, Director
Witness:
Norma Cook
- -----------
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent
in any and all capacities to sign filings by RPC., Inc. of Form 10-K, Annual
Reports and any and all amendments thereto (including post-effective
amendments) and to file the same, with all exhibits, and any other documents
in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in
the capacities indicated, as of this 23rd day of January, 1997.
---- -------
Gary W. Rollins, Director
-------------------------
Gary W. Rollins, Director
Witness:
Anne Abouchar
- -------------
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent
in any and all capacities to sign filings by RPC, Inc. of Form 10-K, Annual
Reports and any and all amendments thereto (including post-effective
amendments) and to file the same, with all exhibits, and any other documents
in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in
the capacities indicated, as of this 3rd day of February, 1997.
--- --------
John W. Rollins, Director
-------------------------
John W. Rollins, Director
Witness:
Cindy Alfano
- -------------
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent
in any and all capacities to sign filings by RPC, Inc. of Form 10-K, Annual
Reports and any and all amendments thereto (including post-effective
amendments) and to file the same, with all exhibits, and any other documents
in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in
the capacities indicated, as of this 28th day of January, 1997.
---- -------
Henry B. Tippie, Director
-------------------------
Henry B. Tippie, Director
Witness:
Linda M. Potts
- ------------------
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and
appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent
in any and all capacities to sign filings by RPC, Inc. of Form 10-K, Annual
Reports and any and all amendments thereto (including post-effective
amendments) and to file the same, with all exhibits, and any other documents
in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in
the capacities indicated, as of this 27th day of January, 1997.
---- -------
James B. Williams, Director
---------------------------
James B. Williams, Director
Witness:
Mary H. Walden
- ----------------
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