<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 June 30, 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 June 30, 1998, RPC, Inc. had 29,411,472 shares of common stock issued and
outstanding.
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RPC, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1998, AND DECEMBER 31, 1997
(In thousands except share information)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited) (Audited)
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 15,076 $ 17,409
Marketable securities 6,134 11,276
Accounts receivable, net of allowance for doubtful
accounts of $7,492 and $6,967, respectively 33,999 32,153
Inventories, at lower of cost or market 17,735 16,025
Deferred income taxes 9,070 8,626
Prepaid expenses and other current assets 2,071 2,390
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Current assets 84,085 87,879
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Equipment and property, net 61,784 55,673
Marketable securities 35,911 29,499
Intangibles, net 7,847 8,289
Other assets 1,075 1,178
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Total assets $ 190,702 $ 182,518
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 10,773 $ 7,437
Accrued payroll and related expenses 4,874 5,826
Accrued insurance expenses 6,324 7,422
Accrued state, local and other taxes 4,283 4,211
Federal income taxes payable 0 1,061
Accrued discounts 1,787 826
Current portion of long-term debt 578 857
Other accrued expenses 10,767 9,844
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Current liabilities 39,386 37,484
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Deferred income taxes 285 309
Long-term accrued insurance expenses 3,617 4,034
Long-term debt 911 1,315
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Total liabilities 44,199 43,142
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Commitments and contingencies
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Common stock 2,941 2,978
Capital in excess of par value 31,972 35,211
Earnings retained 111,590 101,805
Common stock in treasury, at cost, 0 shares
and 169,392 shares, respectively 0 (618)
Total stockholders' equity 146,503 139,376
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Total liabilities and stockholders' equity $ 190,702 $ 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 AND SIX MONTHS ENDED JUNE 30, 1998, AND 1997
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
1998 1997 1998 1997
--------------------------- -------------------------
<S> <C> <C> <C> <C>
Revenue $ 66,375 $ 67,032 $ 133,315 $ 125,235
--------- --------- --------- ---------
Cost of goods sold 24,710 24,969 47,831 47,383
Operating expenses 28,136 30,499 59,706 57,445
Depreciation and amortization 3,745 3,118 7,365 5,896
Interest income (554) (582) (1,043) (1,090)
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Income before income taxes 10,338 9,028 19,456 15,601
Income tax provision 3,928 3,116 7,392 5,382
--------- --------- --------- ---------
Net income $ 6,410 $ 5,912 $ 12,064 $ 10,219
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per share
Basic $ 0.22 $ 0.20 $ 0.41 $ 0.35
--------- --------- --------- ---------
Diluted $ 0.22 $ 0.20 $ 0.41 $ 0.35
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Average shares outstanding
Basic 29,269 29,076 29,243 29,142
--------- --------- --------- ---------
Diluted 29,685 29,443 29,649 29,599
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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 SIX MONTHS ENDED JUNE 30, 1998, and 1997
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
-----------------------
1998 1997
-----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ 15,598 $ 11,772
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (14,176) (11,816)
Proceeds from sale of equipment and property 2,350 1,391
Net (purchase) sale of marketable securities (1,270) (4,284)
Other 0 1,093
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Net cash used for investing activities (13,096) (13,616)
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CASH FLOWS FROM FINANCING ACTIVITIES
Dividend distributions (2,072) 0
Repayment of debt (683) 0
Cash paid for treasury stock (2,135) 0
Proceeds from exercise of stock options 55 152
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Net cash (used for) provided by financing activities (4,835) 152
-------- --------
Net (decrease) increase in cash and cash equivalents (2,333) (1,692)
Cash and cash equivalents at beginning of period 17,409 13,124
-------- --------
Cash and cash equivalents at end of period $ 15,076 $ 11,432
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</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 June 30, 1998, the results of
operations for the quarter and the six months ended June 30, 1998 and
1997, and the cash flows for the six months ended June 30, 1998 and
1997.
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 June 30, 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. 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.
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6. In June, 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS No. 133), which
establishes standards for reporting and disclosing information about
derivative instruments. SFAS No. 133 is effective for fiscal years
beginning after June 15, 1998. The adoption of SFAS No. 133 is not
expected to have a material impact.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THREE MONTHS ENDED JUNE 30, 1998, COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Revenue for the second quarter ended June 30, 1998, was $66,375,000 compared
with $67,032,000 for the quarter ended June 30, 1997, a decrease of $657,000 or
1%. The oil and gas services segment revenue of $33,603,000 decreased 4% from
last year's second quarter due, in large part, to decreased foreign activity,
primarily in Venezuela, offset by solid increases in domestic activity. In
addition, oil prices have decreased 30 percent compared to prior year and the
number of working rigs in the United States has decreased approximately 16
percent from the previous year. The powerboat manufacturing segment revenue for
the quarter ended June 30, 1998, of $29,056,000 increased 1% from last year's
first quarter of $28,846,000 as the result of an increase in Chaparral's market
share.
Net income for the quarter ended June 30, 1998, was $6,410,000 or $0.22 diluted
earnings per share versus net income of $5,912,000 or $0.20 diluted earnings per
share for the quarter ended June 30, 1997. Basic earnings per share was the same
as diluted earnings per share at $0.22 cents per share versus $0.20 cents per
share last year. The increase in earnings from the same period one year ago was
due to the improved profit margins for both the oil and gas services and the
powerboat manufacturing segments.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Revenue for the six months ended June 30, 1998 was $133,315,000 compared with
$125,235,000 for the six months ended June 30, 1997, an increase of $8,080,000
or 6%. The oil and gas services segment revenue increased 7% and the powerboat
manufacturing segment increased 3%. The oil and gas services revenue increased
for the six months, despite declines in oil prices and decreased foreign
activity, due to the higher level of oil and gas exploration and production
activities by the major and independent oil companies. The powerboat
manufacturing revenue increased despite an overall decline in sales in the
powerboat market. This increase is attributable to Chaparral's increased market
share.
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RPC, INC. AND SUBSIDIARIES
ITEM 2. CONT'D
Net income for the six months ended June 30, 1998 was $12,064,000 or $0.41
diluted earnings per share versus net income of $10,219,000 or $0.35 diluted
earnings per share for the six months ended June 30, 1997. Basic earnings per
share was the same as diluted earnings per share at $0.41 cents per share versus
$0.35 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.
FINANCIAL CONDITION
The Company's current ratio remained strong as of June 30, 1998, with current
assets of $84,085,000 exceeding current liabilities of $39,386,000 by a ratio of
2.1-to-1. This compares to a current ratio of 2.3-to-1 at December 31, 1997.
Capital expenditures during the first six months of 1998 totaling $14,176,000
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
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RPC, INC. AND SUBSIDIARIES
ITEM 2. CONT'D
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 June 30, 1998.
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SIGNATURES
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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: August 13, 1998 Richard A. Hubbell
President and Chief Operating Officer
/s/ Ben M. Palmer
-----------------------------------
Date: August 13, 1998 Ben M. Palmer
Treasurer and Chief Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 15,076
<SECURITIES> 6,134
<RECEIVABLES> 41,491
<ALLOWANCES> 7,492
<INVENTORY> 17,735
<CURRENT-ASSETS> 84,085
<PP&E> 207,992
<DEPRECIATION> 146,208
<TOTAL-ASSETS> 190,702
<CURRENT-LIABILITIES> 39,386
<BONDS> 911
0
0
<COMMON> 2,941
<OTHER-SE> 143,562
<TOTAL-LIABILITY-AND-EQUITY> 190,702
<SALES> 0
<TOTAL-REVENUES> 66,375
<CGS> 24,710
<TOTAL-COSTS> 52,846
<OTHER-EXPENSES> 3,745
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,338
<INCOME-TAX> 3,928
<INCOME-CONTINUING> 6,410
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,410
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
