<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 March 31, 1998
[ ] 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 March 31, 1998, RPC, Inc. had 29,619,063 shares of common stock
outstanding (excluding 258,092 treasury shares).
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RPC, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1998, AND DECEMBER 31, 1997
(In thousands except share information)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(Unaudited) (Audited)
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $10,490 $17,409
Marketable securities 2,714 11,276
Accounts receivable, net of allowance for doubtful
accounts of $6,999 and $6,967, respectively 34,493 32,153
Inventories, at lower of cost or market 15,938 16,025
Deferred income taxes 9,035 8,626
Prepaid expenses and other current assets 2,892 2,390
- -----------------------------------------------------------------------------------------------------------------------------
Current assets 75,562 87,879
- -----------------------------------------------------------------------------------------------------------------------------
Equipment and property, net 57,849 55,673
Marketable securities 46,935 29,499
Intangibles, net 8,067 8,289
Other assets 1,098 1,178
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $189,511 $182,518
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $8,493 $7,437
Accrued payroll and related expenses 5,316 5,826
Accrued insurance expenses 7,253 7,422
Accrued state, local and other taxes 4,425 4,211
Federal income taxes payable 3,741 1,061
Accrued discounts 1,279 826
Current portion of long-term debt 587 857
Other accrued expenses 10,244 9,844
- -----------------------------------------------------------------------------------------------------------------------------
Current liabilities 41,338 37,484
- -----------------------------------------------------------------------------------------------------------------------------
Deferred income taxes 436 309
Long-term accrued insurance expenses 3,833 4,034
Long-term debt 1,014 1,315
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities 46,621 43,142
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- -----------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
- -----------------------------------------------------------------------------------------------------------------------------
Common stock 2,982 2,978
Capital in excess of par value 35,580 35,211
Earnings retained 105,963 101,805
Common stock in treasury, at cost, 258,092 shares
and 169,392 shares, respectively (1,635) (618)
- -----------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 142,890 139,376
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Total liabilities and stockholders' equity $189,511 $182,518
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</TABLE>
The accompanying notes are an integral part of these statements.
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RPC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998, AND 1997
(In thousands except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
-----------------------------------
1998 1997
<S> <C> <C>
Revenue $66,940 $58,203
- ---------------------------------------------------------------------------------------------------------
Cost of goods sold 23,121 22,414
Operating expenses 31,570 26,946
Depreciation and amortization 3,620 2,778
Interest income (489) (508)
- ---------------------------------------------------------------------------------------------------------
Income before income taxes 9,118 6,573
Income tax provision 3,464 2,266
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Net income $5,654 $4,307
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- ---------------------------------------------------------------------------------------------------------
Earnings per share
Basic $0.19 $0.15
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Diluted $0.19 $0.15
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Average shares outstanding
Basic 29,230,201 29,089,688
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Diluted 29,629,711 29,327,600
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</TABLE>
The accompanying notes are an integral part of these statements.
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RPC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998, and 1997
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------------------
1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $9,671 $6,677
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (5,775) (5,240)
Proceeds from sale of equipment and property 594 683
Net (purchase) sale of marketable securities (8,874) 412
Other (571) (120)
- ---------------------------------------------------------------------------------------------------------
Net cash used for investing activities (14,626) (4,265)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend distributions (1,037) 0
Purchase of treasury stock (968) 0
Proceeds from exercise of stock options 41 133
- ---------------------------------------------------------------------------------------------------------
Net cash (used for) provided by financing activities (1,964) 133
- ---------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (6,919) 2,545
Cash and cash equivalents at beginning of period 17,409 13,124
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $10,490 $15,669
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
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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, 1997.
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 March 31, 1998, the results of
operations and the cash flows for the three months then ended.
2. Basic and diluted earnings per share are computed by dividing net
income by the respective weighted average number of shares outstanding
during the respective periods.
3. The results of operations for the quarter ended March 31, 1998, are not
necessarily indicative of the results to be expected for the full year.
4. In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS No. 130), which establishes standards for displaying
comprehensive income and its components in a full set of general
purpose financial statements. SFAS No. 130 is effective for fiscal
years beginning after December 15, 1997. The adoption of SFAS No. 130
does not have a material impact.
5. Also, in June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (SFAS No. 131),
which establishes standards for reporting information about operating
segments in annual financial statements and requires reporting selected
information about operating segments in interim financial reports
issued to stockholders. SFAS No. 131 is effective for fiscal years
beginning after December 15, 1997. The adoption of SFAS No. 131 is not
expected to have a material impact.
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RPC, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
Certain information with respect to RPC's business segments is set forth in the
following table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
March 31, 1998 1997
-----------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Revenue:
Oil and gas services $ 35,591 $ 29,974
Powerboat manufacturing 26,487 24,935
Other segments 4,582 3,294
-----------------------------------------------------------------------------------
Total revenue $ 68,940 $ 58,203
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Operating income (loss):
Oil and gas services $ 6,254 $ 4,688
Powerboat manufacturing 3,610 2,699
Other segments (148) (545)
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Total operating income 9,716 6,842
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Corporate expenses, net (598) (269)
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Income before income taxes $ 9,118 $ 6,573
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</TABLE>
The identifiable assets for the powerboat manufacturing segment increased by
$3,738,000 from $25,076,000 at December 31, 1997 to $28,814,000 at March 31,
1998. The identifiable assets for the oil and gas segment increased by $383,000
from $86,578,000 at December 31, 1997 to $86,961,000 at March 31, 1998.
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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 MARCH 31, 1998, COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Revenue for the first quarter ended March 31, 1998, was $66,940,000 compared
with $58,203,000 for the quarter ended March 31, 1997. Revenue for the quarter
ended March 31, 1998, increased $8,737,000 or 15% from the same period one year.
The oil and gas services segment revenue of $35,891,000 increased 20% from last
year's first quarter primarily due to a 14% increase in the average natural gas
rig count and a 27% increase in natural gas prices. 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 powerboat manufacturing segment revenue for the
quarter ended March 31, 1998, of $26,487,000 increased 6% from last year's first
quarter of $24,935,000 as the result of an increase in Chaparral's market share.
Net income for the quarter ended March 31, 1998, was $5,654,000 or $0.19 diluted
earnings per share versus net income of $4,307,000 or $0.15 diluted earnings per
share for the quarter ended March 31, 1997. Basic earnings per share was the
same as diluted earnings per share at $0.19 cents per share versus $0.15 cents
per share last year. 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
FINANCIAL CONDITION
The Company's current ratio remained strong as of March 31, 1998, with current
assets of $75,562,000 exceeding current liabilities of $41,338,000 by a ratio of
1.8-to-1. This compares to a current ratio of 2.3-to-1 at December 31, 1997.
Capital expenditures during the first three months of 1998 totaling $5,775,000
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.
Management's discussion and analysis of results of operations and financial
condition include "forward looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
Private Securities Litigation Reform Act of 1995. All statements, other than
statements of historical facts, included or incorporated by reference which
address activities, events or developments which the Company expects or
anticipates will or may occur in the future, including statements regarding
trends in the boating industry, and anticipated trends and similar expressions
concerning matters that are not historical facts, are forward-looking
statements.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
and developments will conform with the Company's expectations, including
economic conditions, conditions in the industries in which the Company operates,
competition, and other factors, many of which are beyond the control of the
Company. Consequently, all of the forward-looking statements made are qualified
by these cautionary statements and there can be no assurance that the actual
results or developments anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected consequences to or
effects on the Company or its business or operations. The Company assumes no
obligation to update publicly any such forward-looking statements, whether as a
result of new information, future events, or otherwise.
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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 March 31, 1998.
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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: May 13, 1997 Richard A. Hubbell
President and Chief Operating Officer
/s/ Ben M. Palmer
-------------------------------------------
Date: May 13, 1997 Ben M. Palmer
Treasurer and Chief Financial Officer
10 of 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 10,490
<SECURITIES> 2,714
<RECEIVABLES> 41,492
<ALLOWANCES> 6,999
<INVENTORY> 15,938
<CURRENT-ASSETS> 75,562
<PP&E> 210,751
<DEPRECIATION> 152,902
<TOTAL-ASSETS> 189,511
<CURRENT-LIABILITIES> 41,338
<BONDS> 1,014
0
0
<COMMON> 2,982
<OTHER-SE> 139,908
<TOTAL-LIABILITY-AND-EQUITY> 189,511
<SALES> 0
<TOTAL-REVENUES> 66,940
<CGS> 23,121
<TOTAL-COSTS> 54,691
<OTHER-EXPENSES> 3,620
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,118
<INCOME-TAX> 3,464
<INCOME-CONTINUING> 5,654
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,654
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
