<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, 1997
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 1-8726
RPC, INC.
Delaware 58-1550825
(State of Incorporation) (I.R.S. Employer Identification No.)
2170 Piedmont Road, NE, Atlanta, Georgia 30324
Telephone Number-(404) 321-2140
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 March 2, 1998, RPC, Inc. had 29,644,990 shares of common stock outstanding
(excluding 169,392 treasury shares), and the aggregate market value of this
stock (based on the closing price on The New York Stock Exchange of $11.3125 per
share) held by nonaffiliates was $115,273,289.
Documents Incorporated by Reference:
Portions of the Proxy Statement for the 1998 Annual Meeting of Stockholders of
RPC, Inc. are incorporated by reference into Part III, Items 10 through 13.
<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 runabout 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 39 percent of RPC's consolidated revenue in
1997, 43 percent in 1996, and 44 percent in 1995. Research and development
expenditures, totaling $2,122,000 in 1997, $1,951,000 in 1996, and $1,559,000 in
1995, 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. During 1997,
1996, and 1995 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 32 percent of RPC's consolidated
revenue in 1997, 29 percent in 1996, and 29 percent in 1995. During 1997, Cudd
began operations of two new divisions: Energy Personnel International and
Thru-Tubing Solutions. Energy Personnel International specializes in well site
consulting. Thru-Tubing Solutions supplies tools and personnel for downhole work
related to the coiled tubing service line.
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, blowout preventors, and torque-turning equipment. 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 26 percent of rental equipment was rented on a
daily basis in 1997 and 21 percent in 1996. In the rental business, maximum
utilization is approximately 50 percent due to transportation, inspection, and
cleaning requirements. This portion of the business segment contributed 15
percent of RPC's consolidated revenue in 1997, 13 percent in 1996, and 12
percent in 1995.
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 offshore and inland vessels.
In January 1996 PTS opened a state-of-the-art internal pipe-
coating facility in Channelview, Texas. The plant uses CERAM-KOTE
54(r), a high-performance ceramic-epoxy coating system, which
provides abrasion and corrosion protection.
<PAGE>
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.
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 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. 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.
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.
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.
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.
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.
Employees
At December 31, 1997, RPC employed 1,811 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.
<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, 1997, is set forth in Note 9 of the Financial Statements on page
23.
Item 2. Properties
RPC owns or leases 60 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 1997.
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 66
Chairman of the Board 1/24/84
Chief Executive Officer
Richard A. Hubbell 53
President 1/27/87
Chief Operating Officer
Bobby Joe Cudd 68
Executive Vice President 1/24/84
James A. Lane, Jr. 55
Executive Vice President 1/27/87
William S. Pegg 55
Executive Vice President 1/27/87
Linda H. Graham 61
Vice President 1/27/87
Secretary
Ben M. Palmer 37
Chief Financial Officer 7/8/96
Treasurer
</TABLE>
<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. All prices have been adjusted to reflect the two-for-one
stock split, effective December 11, 1997. At the close of business on December
31, 1997, there were 1,346 holders of record of common stock. The high and low
prices of RPC's common stock for each quarter in the years ended December 31,
1997 and 1996, were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1997 1996
- ------------------------------------------------------------------------------------
Quarter High Low High Low
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First $ 7.688 $ 7.188 $ 5.313 $ 4.322
Second 7.407 6.188 6.750 4.938
Third 16.219 7.344 6.000 5.313
Fourth 15.313 11.125 8.125 5.625
- ------------------------------------------------------------------------------------
</TABLE>
During 1997, RPC declared and paid a cash dividend of $0.025 cents per
common share payable September 10, 1997, and December 10, 1997. Prior to 1997,
no dividends were declared or paid.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands except per share data)
- ----------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS SUMMARY
Revenue $245,799 $200,833 $161,379 $155,765 $123,481
Net costs and expenses 211,836 180,596 145,228 142,583 113,534
- ----------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative
effect of accounting change 33,963 20,237 16,151 13,182 9,947
Income tax provision 11,718 6,982 5,396 4,404 3,270
- ----------------------------------------------------------------------------------------------------------
Income before cumulative effect
of accounting change 22,245 13,255 10,755 8,778 6,677
Cumulative effect of a change in
accounting for income taxes -- -- -- -- 150
- ----------------------------------------------------------------------------------------------------------
Net income $ 22,245 $ 13,255 $ 10,755 $ 8,778 $ 6,827
- ----------------------------------------------------------------------------------------------------------
Per share:
Earnings before accounting change
Basic .76 .46 .37 .31 .23
Diluted .75 .46 .37 .31 .23
Earnings after accounting change
Basic .76 .46 .37 .31 .24
Diluted .75 .46 .37 .31 .24
Cash dividends declared .05 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES $ 20,479 $ 20,889 $ 15,529 $ 10,618 $ 6,630
- ----------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Total assets $182,518 $152,800 $132,656 $122,242 $109,992
Working capital 50,395 39,192 41,943 37,827 33,943
Stockholders' equity 139,376 117,799 104,361 93,499 84,614
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<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 1997. This was RPC's tenth
consecutive year of profitable operations. Consolidated revenue increased 22
percent in 1997 to $245,799,000 compared to $200,833,000 in 1996. Consolidated
revenue in 1996 was 24 percent higher than 1995 revenue of $161,379,000. Both
major business segments contributed to the growth experienced in 1997. The boat
manufacturing segment increased revenue 10 percent. Chaparral has been able to
increase its market share and expand its revenues despite minimal growth in this
industry. The oil and gas services segment increased revenue 35 percent in 1997.
A rising world energy demand and a favorable economic climate in the United
States have had a favorable effect on the oil and gas industry.
Income before income taxes was $33,963,000 in 1997, $20,237,000 in
1996, and $16,151,000 in 1995. This represented an increase of $13,726,000 or 68
percent in 1997 and an increase of $4,086,000 or 25 percent in 1996. The boat
manufacturing segment generated a 30 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. The oil and gas services
segment produced a 93 percent increase in income before income taxes in 1997 due
primarily to increased utilization of our equipment and personnel, coupled with
effective cost controls and improvement in results of international operations,
especially in Venezuela.
Consolidated net income was $22,245,000 or $0.75 diluted earnings per
share in 1997 compared to $13,255,000 or $0.46 diluted earnings per share in
1996. This compares to $0.76 basic earnings per share in 1997 versus $0.46 basic
earnings per share in 1996. Consolidated net income in 1995 was $10,755,000 or
$0.37 diluted and basic earnings per share. This represented an increase of
$8,990,000 or 68 percent in 1997 and an increase of $2,500,000 or 23 percent in
1996.
Revenue-Business Segments
Boat Manufacturing-The boat manufacturing segment reported a 10 percent or
$8,804,000 increase in revenue from $86,225,000 in 1996 to $95,029,000 in 1997.
Revenue for 1995 was $70,218,000. A five year boat structure warranty is
provided for boats, beginning in the 1992 model year. These warranty terms,
though, have no material effect on working capital.
The total number of boats sold by Chaparral in 1997 increased 5 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
continued to increase as a result of the favorable response to the dealer
incentive schedule, which reduces the fluctuation in production levels, and
increased production of higher priced models to meet dealer demands. There were
<PAGE>
price increases in July 1997 and December 1997 that averaged 2 percent and 3
percent, respectively, as a result of higher material costs.
The total number of boats sold by Chaparral in 1996 increased 19
percent compared to 1995. The increase was due to increased sales from new model
changes coupled with a favorable response to the new dealer incentive schedule.
Oil and Gas Services-The oil and gas services segment contributed $137,599,000
or 56 percent of 1997 revenue. Revenue was $101,741,000 in 1996 and $79,943,000
in 1995. The 35 percent increase in 1997 can be attributed to a number of
factors, including higher utilization of our specialized equipment and personnel
coupled with modest price increases. This resulted from increased spending on
exploration and production by the major and independent oil companies. Patterson
Services' revenue increased 52 percent in 1997 as demand increased for its
specialized rental tools, especially in the offshore Gulf of Mexico region. Cudd
Pressure Control's international operations experienced a 32 percent increase in
revenues in 1997 due to expanding business volume and select international
opportunities related to blowouts, well control, and other special project work.
The revenue increase for the oil and gas services segment of 27 percent
in 1996 was due to increased equipment utilization for Patterson Services
coupled with increases in Cudd Pressure Control's international revenues from
the acquisition of the remaining 50 percent ownership interest in SPA-Cudd in
January 1996 to form Cudd de Venezuela.
Expenses
Cost of goods sold for the boat manufacturing segment was $72,899,000
in 1997 compared to $67,426,000 in 1996 and $55,826,000 in 1995. This represents
an increase of $5,473,000 or 8 percent in 1997, which approximates the increase
in revenue. As a percent of revenue, cost of goods sold for this segment was 77
percent in 1997 and 78 percent in 1996 and 80 percent in 1995. 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 $117,777,000 in 1997, $95,820,000
in 1996, and $76,412,000 in 1995. Expenses were 23 percent higher in 1997 than
in 1996, primarily in the oil and gas services segment, in line with this
segment's revenue increase.
The boat manufacturing segment's operating expenses were $9,595,000 in
1997, which as a percent of revenue was comparable to 1996. The oil and gas
services segment's operating expenses were $99,981,000 or 73 percent of this
segment's revenue in 1997. Operating expenses were $79,421,000 or 78 percent of
this segment's revenue in 1996 and $62,622,000 or 78 percent of this segment's
revenue in 1995.
The portion of depreciation and amortization not included in cost of
goods sold was $12,877,000 in 1997, $9,210,000 in 1996, and $6,843,000 in 1995.
The majority of this expense represented the oil and gas services segment
depreciation of $11,521,000 in 1997, $8,126,000 in 1996, and $5,961,000
<PAGE>
in 1995. The 1997 increase of $3,667,000 or 40 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 $780,000 for 1997, $734,000 for
1996, and $769,000 for 1995. Amortization of intangible assets was $865,000 in
1997, $797,000 in 1996, and $709,000 in 1995.
Interest Income
Interest income was $2,376,000 in 1997, $2,018,000 in 1996, and
$2,181,000 in 1995. The increase in total cash and marketable securities from
$46,344,000 at December 31, 1996, to $58,184,000 at December 31, 1997, resulted
in an increase in interest income of 18 percent in 1997 due to higher average
balances offset by moderately lower yields.
Financial Condition
As of December 31, 1997, RPC's cash and cash equivalents and short-term
marketable securities increased $7,412,000 to $28,685,000. Cash provided by
operating activities was $30,196,000 compared to $24,060,000 in 1996. Accounts
receivable were $32,153,000 at December 31, 1997, compared to $24,156,000 at
December 31, 1996, an increase of $7,997,000 due to the increase in revenues.
Inventories were $598,000 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 1997, current assets increased $17,737,000 and current
liabilities increased $6,534,000, a combined increase in working capital of
$11,203,000. Working capital at December 31, 1997, was $50,395,000 compared to
$39,192,000 in the prior year. The current ratio remained strong at the end of
1997 with a ratio of 2.3-to-1, which is unchanged from the end of 1996. The 1995
current ratio was 2.7-to-1.
Capital expenditures for 1997 were $20,479,000, a decrease of $410,000
from $20,889,000 in 1996. $19,668,000 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 $19,191,000 in 1996.
RPC expects that funding for capital requirements over the next twelve
months will be provided by available cash and marketable securities and cash
generated from operations.
<PAGE>
Item 8. Financial Statements and Supplementary Data
Balance Sheets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands except stock information)
- --------------------------------------------------------------------------
At December 31, 1997 1996
- --------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 17,409 $ 13,124
Marketable securities 11,276 8,149
Accounts receivable, net 32,153 24,156
Inventories 16,025 15,427
Deferred income taxes 8,626 7,623
Prepaid expenses and other current assets 2,390 1,663
- --------------------------------------------------------------------------
Current assets 87,879 70,142
- --------------------------------------------------------------------------
Equipment and property, net 55,673 47,791
Marketable securities 29,499 25,071
Intangibles, net of accumulated amortization
of $7,959 in 1997 and $7,094 in 1996 8,289 8,105
Deferred income taxes -- 86
Other assets 1,178 1,605
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Total assets $ 182,518 $ 152,800
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- --------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 7,437 $ 6,756
Accrued payroll and related expenses 5,826 4,541
Accrued insurance expenses 7,422 6,679
Accrued state, local and other taxes 4,211 3,211
Federal income taxes payable 1,061 88
Accrued discounts 826 786
Current portion of long-term debt 857 --
Other accrued expenses 9,844 8,889
- --------------------------------------------------------------------------
Current liabilities 37,484 30,950
- --------------------------------------------------------------------------
Deferred income taxes 309 --
Long-term accrued insurance expenses 4,034 3,551
Long-term debt 1,315 500
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Total liabilities 43,142 35,001
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Commitments and contingencies
- --------------------------------------------------------------------------
Common stock, $.10 par value, 35,000,000 shares
authorized, 29,780,382 shares issued in 1997,
14,714,861 shares issued in 1996 2,978 1,471
Capital in excess of par value 35,211 35,176
Earnings retained 101,805 81,555
Common stock in treasury, at cost, 169,392
shares in 1997, 74,953 shares in 1996 (618) (403)
- --------------------------------------------------------------------------
Total stockholders' equity 139,376 117,799
- --------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 182,518 $ 152,800
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Statements of Income
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands except per share data)
- -------------------------------------------------------------------------------
Years ended December 31, 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $ 245,799 $ 200,833 $ 161,379
- -------------------------------------------------------------------------------
Cost of goods sold 83,558 77,584 64,154
Operating expenses 117,777 95,820 76,412
Depreciation and amortization 12,877 9,210 6,843
Interest income (2,376) (2,018) (2,181)
- -------------------------------------------------------------------------------
Income before income taxes 33,963 20,237 16,151
Income tax provision 11,718 6,982 5,396
- -------------------------------------------------------------------------------
Net income $ 22,245 $ 13,255 $ 10,755
- -------------------------------------------------------------------------------
EARNINGS PER SHARE
Basic $ .76 .46 .37
- -------------------------------------------------------------------------------
Diluted $ .75 .46 .37
- -------------------------------------------------------------------------------
</TABLE>
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands)
- -------------------------------------------------------------------------------
Years ended December 31, 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK
Balance at beginning of year $ 1,471 $ 1,461 $ 1,461
Two-for-one stock split 1,487 -- --
Stock issued for benefit plans, net 20 10 --
- -------------------------------------------------------------------------------
Balance at end of year 2,978 1,471 1,461
- -------------------------------------------------------------------------------
CAPITAL IN EXCESS OF PAR VALUE
Balance at beginning of year $ 35,176 $ 34,599 $ 34,228
Two-for-one stock split (1,487) -- --
Stock issued for benefit plans, net 1,522 577 $ 371
- -------------------------------------------------------------------------------
Balance at end of year $ 35,211 $ 35,176 $ 34,599
- -------------------------------------------------------------------------------
EARNINGS RETAINED
Balance at beginning of year $ 81,555 $ 68,526 $ 58,296
Net income 22,245 13,255 10,755
Cash dividends declared (1,475) -- --
Stock issued for benefit plans, net (520) (226) (525)
- -------------------------------------------------------------------------------
Balance at end of year $ 101,805 $ 81,555 $ 68,526
- -------------------------------------------------------------------------------
TREASURY STOCK
Balance at beginning of year $ 403 $ 225 $ 486
Stock issued for benefit plans, net 215 178 (261)
- -------------------------------------------------------------------------------
Balance at end of year $ 618 $ 403 $ 225
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Statements of Cash Flows
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES
- ---------------------------------------------------------------------------------------
Years ended December 31, 1997 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 22,245 $ 13,255 $ 10,755
Noncash charges (credits) to earnings:
Depreciation and amortization 13,510 9,818 7,474
Gain on sale of equipment and property (2,216) (1,316) (1,383)
Deferred income tax (benefit) provision (608) 246 (319)
(Increase) decrease in assets:
Accounts receivable (7,997) (3,354) (225)
Inventories (598) (982) (2,103)
Prepaid expenses and other current assets (727) 185 (374)
Other noncurrent assets 427 2 457
Increase (decrease) in liabilities:
Accounts payable 681 1,721 (352)
Accrued payroll and related expenses 1,285 642 458
Insurance expenses 1,226 1,883 (323)
Other accrued expenses 2,968 1,960 (231)
- ---------------------------------------------------------------------------------------
Net cash provided by operating activities 30,196 24,060 13,834
- ---------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures (20,479) (20,889) (15,529)
Proceeds from sale of equipment and property 2,510 1,769 2,866
Net (purchase) sale of marketable securities (7,555) (9,472) 2,428
Other 623 (502) (511)
- ---------------------------------------------------------------------------------------
Net cash used for investing activities (24,901) (29,094) (10,746)
- ---------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Cash dividends paid (1,475) - -
Cash received upon exercise of stock options 465 32 --
- ---------------------------------------------------------------------------------------
Net cash (used for) provided by financing activities (1,010) 32 --
- ---------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 4,285 (5,002) 3,088
Cash and cash equivalents at beginning of year 13,124 18,126 15,038
- ---------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 17,409 $ 13,124 $ 18,126
- ---------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
RPC, INC. AND SUBSIDIARIES
Years ended December 31, 1997, 1996, and 1995
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: manufacturing
powerboats and providing a variety of services, equipment, and personnel to the
oil and gas industry. The boat manufacturing segment manufactures and
distributes fiberglass boats to a nationwide network of independent dealers. 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.
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-RPC adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
(SFAS No. 115). 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, if significant,
reported in a separate component of stockholders' equity. As of December 31,
1997 and 1996, 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
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of " (SFAS No. 121). 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. 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
<PAGE>
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.
Common Stock Split-On October 28, 1997, the Board of Directors declared a
two-for-one stock split of the Company's common stock which was effective by the
distribution on December 10, 1997, of one share of common stock for each share
held of record at the close of business November 10, 1997. Common stock and paid
in capital at December 31, 1997, have been restated to reflect this split.
The number of shares issued at December 31, 1997, after giving effect
to the split was 29,780,382. All share and per share data, including stock
option information, has been restated to reflect the split.
Stock-Based Compensation-During 1995, the Financial Accounting Standards Board
issued SFAS No. 123 which defines a fair value-based method of accounting for an
employee stock option plan or similar equity instrument. However, it also allows
an entity to continue to measure compensation cost for those plans using the
method of accounting prescribed by APB 25. Entities electing to remain with the
accounting in APB 25 must make pro forma disclosures of net income and earnings
per share, as if the fair value-based method of accounting defined in the
statement had been applied.
The Company has elected to account for its stock-based compensation
plans under APB 25; however, the Company has computed for pro forma disclosure
purposes the value of all options granted during 1997 and 1996 using the
Black-Scholes option pricing/model as prescribed by SFAS No. 123 using the
following weighted average assumptions for grants in 1997 and 1996:
<TABLE>
<S> <C>
Risk free interest rate 5.3-6.2%
Expected dividend yield 0%
Expected lives 7 years
Expected volatility 24-31%
</TABLE>
The total fair value of the options granted during the years ended December 31,
1997 and 1996, were computed as approximately $524,000 and $148,000,
respectively, which would be amortized over the vesting period of the options.
If the Company had accounted for these plans in accordance with SFAS No. 123,
the Company's reported pro forma net income and pro forma net income per share
for the years ended December 31, 1997 and 1996, would have been as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------
December 31, 1997 1996
- ---------------------------------------------------
<S> <C> <C>
Net Income (in thousands)
As Reported $ 22,245 $ 13,255
Pro forma 22,163 13,238
Basic EPS
As Reported $ 0.76 $ 0.46
Pro forma 0.76 0.46
Diluted EPS
As Reported $ 0.75 $ 0.46
Pro forma 0.75 0.45
- ---------------------------------------------------
</TABLE>
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.
<PAGE>
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-RPC has adopted SFAS No. 128, "Earnings Per Share," in 1997
which requires a basic earnings per share and diluted earnings per share
presentation. The two calculations differ as a result of common stock
equivalents and restricted shares included in diluted earnings per share, but
excluded in basic earnings per share. A reconciliation of the weighted shares
outstanding is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------
<S> <C> <C> <C>
Basic EPS 29,181,668 28,942,180 28,904,035
Common stock
equivalents and
restricted shares 423,195 200,498 153,087
- ----------------------------------------------------------
Diluted EPS 29,604,863 29,142,678 29,057,122
- ----------------------------------------------------------
</TABLE>
New Accounting Standards-In February 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure " (SFAS No. 129), which establishes
standards for disclosing information about an entity's capital structure. SFAS
No. 129 is effective for fiscal years beginning after December 15, 1997. The
adoption of SFAS No. 129 is not expected to have a material impact.
Also, 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 is not expected to have a material impact.
Note 2: Accounts Receivable
Accounts receivable, net, at December 31, 1997, of $32,153,000 and at
December 31, 1996, of $24,156,000 are net of allowances for doubtful accounts of
$6,967,000 in 1997, and $7,058,000 in 1996.
Note 3: Inventories
Inventories are recorded at the lower of cost (first-in, first-out
basis) or market value and are detailed as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------
December 31, 1997 1996
- ----------------------------------------------
(in thousands)
<S> <C> <C>
Raw materials and supplies $10,392 $ 8,828
Work in process 1,262 1,404
Finished goods 4,371 5,195
- ----------------------------------------------
Total inventories $16,025 $15,427
- ----------------------------------------------
</TABLE>
Note 4: Equipment and Property
Equipment and property are presented at cost net of accumulated
depreciation and are detailed as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------
December 31, 1997 1996
- ------------------------------------------------------
(in thousands)
<S> <C> <C>
Operating equipment and property $164,584 $154,835
Buildings 15,991 15,147
Furniture and fixtures 4,546 4,344
Vehicles 17,506 14,980
Land 4,941 4,851
- ------------------------------------------------------
Gross equipment and property 207,568 194,157
Less: accumulated depreciation 151,895 146,366
- ------------------------------------------------------
Net equipment and property $ 55,673 $ 47,791
- ------------------------------------------------------
</TABLE>
Note 5: Income Taxes
The following table lists the components of the provision for income
taxes:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
December 31, 1997 1996 1995
- ------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Current:
Federal $ 11,838 $ 6,353 $ 5,475
State 488 383 240
Deferred (608) 246 (319)
- ------------------------------------------------------------
Total income tax provision $ 11,718 $ 6,982 $ 5,396
- ------------------------------------------------------------
</TABLE>
<PAGE>
A reconciliation between the federal statutory rate and RPC's effective
tax rate is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------
December 31, 1997 1996 1995
- --------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 34.6%
State income taxes 1.4 1.9 1.5
Other (1.9) (2.4) (2.7)
- --------------------------------------------------
Effective tax rate 34.5% 34.5% 33.4%
- --------------------------------------------------
</TABLE>
The components of the net deferred tax assets (liabilities) are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
December 31, 1997 1996
- ----------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Current deferred tax asset:
Self-insurance reserves $ 2,088 $ 1,803
Bad debt reserves 2,503 2,637
State, local & other taxes 852 885
Payroll accruals 703 555
Warranty reserves 795 466
All others 1,685 1,277
Valuation allowance -- --
- ----------------------------------------------------------------------
Total current deferred tax asset $ 8,626 $ 7,623
- ----------------------------------------------------------------------
Noncurrent deferred tax asset (liability):
Self-insurance reserves $ 1,452 $ 1,208
Depreciation (1,592) (1,226)
All others (169) 104
Valuation allowance -- --
- ----------------------------------------------------------------------
Total noncurrent deferred tax asset (liability): ($ 309) $ 86
- ----------------------------------------------------------------------
</TABLE>
Total income tax payments, net of refunds, were $11,260,000 in 1997,
$4,510,000 in 1996, and $5,511,000 in 1995.
Note 6: Long-Term Debt
The fair value of the long-term debt approximates the carrying value.
All obligations are collateralized by property, plant, and equipment.
At December 31, 1997, future minimum lease payments on long-term debt
and capitalized lease obligations were as follows:
<TABLE>
<CAPTION>
(in thousands)
- ------------------------------------------
<C> <C>
1998 $ 857
1999 650
2000 305
2001 230
2002 130
- ------------------------------------------
Total minimum principal payments $ 2,172
- ------------------------------------------
</TABLE>
The long-term debt of RPC as of December 31, 1997, and December 31,
1996, is summarized as follows:
<TABLE>
<CAPTION>
(in thousands) Range of
Maturity Interest
Type Dates Rates 1997 1996
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Notes Payable 2001-2002 6.25-8.50% $1,300 $ 500
Capital Leases 2000 10.99% 872 --
- ----------------------------------------------------------------
Total Debt 2,172 500
Less Current Portion 857 --
- ----------------------------------------------------------------
Long-Term Debt $1,315 $ 500
- ----------------------------------------------------------------
</TABLE>
The net book value of equipment under capital lease was $1,428,000 at
December 31, 1997.
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, 1997,
are summarized in the following table:
<TABLE>
<CAPTION>
- ------------------------------------
Year Amount
- ------------------------------------
<C> <C>
(in thousands)
1998 $1,902
1999 1,442
2000 1,036
2001 591
2002 217
2003-2007 338
- ------------------------------------
Total rental commitments $5,526
- ------------------------------------
</TABLE>
Total rental expense charged to operations was $3,610,000 in 1997,
$3,517,000 in 1996, and $2,418,000 in 1995.
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
<PAGE>
exchange for Chaparral's assumption of the unpaid debt obligation on those
boats. As of December 31, 1997, guarantees outstanding totaled $5,720,000.
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 $86,000 in 1997, $72,000 in 1996, and
$135,000 in 1995. The following table details the components of the cost:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
December 31, 1997 1996 1995
- -------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Service cost for benefits earned
during the period $ 602 $ 540 $ 429
Interest cost on projected benefit
obligation 1,053 991 907
Actual (return) loss on plan assets (2,243) (1,719) (2,817)
Net amortization and deferral 674 260 1,616
- -------------------------------------------------------------------
Total pension cost $ 86 $ 72 $ 135
- -------------------------------------------------------------------
</TABLE>
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 1997, 1996, or 1995.
The funded status of the retirement income plan was as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------
December 31, 1997 1996
- --------------------------------------------------------
(in thousands)
<S> <C> <C>
Actuarial present value of:
Vested benefits $ 13,236 $ 11,153
Non-vested benefits 561 519
- --------------------------------------------------------
Accumulated benefit obligation 13,797 11,672
Effect of projected future
compensation increases 2,375 2,333
- --------------------------------------------------------
Projected benefit obligation 16,172 14,005
Plan assets at fair value 16,493 14,752
- --------------------------------------------------------
Plan assets in excess of
projected benefit obligation 321 747
Unrecognized net losses 854 708
Unrecognized net transition asset (867) (1,060)
- --------------------------------------------------------
Prepaid pension cost $ 308 $ 395
- --------------------------------------------------------
</TABLE>
In 1997 and 1996, the projected benefit obligation was calculated using
a discount rate of 7.5 percent. In 1997, a 4.5 percent annual rate of increase
in future compensation levels was used compared to a 5.0 percent annual rate in
1996. 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 $315,000 in 1997, $276,000 in 1996, and $238,000 in
1995.
Stock Incentive Plans-RPC has an Employee Incentive Stock Option Plan (the "1984
Plan") under which 1,000,000 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 1,000,000
shares of common stock were reserved for issuance. During 1997, an additional
1,600,000 shares 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, 1997, there
were 1,904,000 shares remaining for the granting of options or other awards
under the 1994 Plan.
Incentive Stock Options-Transactions involving the incentive stock option plans
were as follows:
<TABLE>
<CAPTION>
Weighted
Average
Option Price Exercise
Shares (Per Share) Price
- -------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding January 1, 1995 694,976 $1.63-$4.00 $ 2.74
Granted -- -- --
Canceled (18,000) 3.00-4.00 3.34
Exercised -- -- --
-----------------------------------
Outstanding December 31, 1995 676,976 $1.63-$4.00 $ 2.72
Granted 80,000 4.44 4.44
Canceled (29,800) 3.00-4.00 3.40
Exercised (172,884) 1.63-4.00 1.76
-----------------------------------
Outstanding December 31, 1996 554,292 $1.63-$4.44 $ 3.23
Granted 158,000 7.50 7.50
Canceled (5,232) 1.63-7.50 6.12
Exercised (264,260) 1.63-4.44 2.58
-----------------------------------
Outstanding December 31, 1997 442,800 $3.00-$7.50 $ 5.11
- -------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Exerciseable at December 31 151,120 360,692 416,200
Weighted Average Exercise Price
of exerciseable options $ 3.51 $ 2.94 $ 2.51
Weighted Average grant date
fair value of options
granted during the year $ 3.40 $ 1.85 --
- -------------------------------------------------------------------------
</TABLE>
The weighted average remaining contractual life of options outstanding
at December 31, 1997, was 6.7 years.
Options for 58,800 shares expire on January 24, 1999, 25,600 shares
expire on January 23, 2000, 126,800 shares expire on April 26, 2004, 77,600
shares expire on January 23, 2006, and 154,000 shares expire on January 28,
2007.
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 52,000 units granted under
these restricted stock programs during 1997 and 50,000 units during 1996. There
were no units granted in 1995. During 1997, 66,000 performance shares were
awarded under the plans. No shares were forfeited or 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, 1997, none of the shares of restricted stock were vested.
Note 9: Business Segment Information
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). SFAS No. 131 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.
Certain information with respect to RPC's business segments is set
forth in the following table:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
December 31, 1997 1996 1995
- ---------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Revenue:
Oil and gas services $ 137,599 $ 101,741 $ 79,943
Boat manufacturing 95,029 86,225 70,218
Other 13,171 12,867 11,218
- ---------------------------------------------------------------
Total revenue $ 245,799 $ 200,833 $ 161,379
- ---------------------------------------------------------------
Operating income(loss):
Oil and gas services $ 23,106 $ 16,631 $ 9,233
Boat manufacturing 11,742 8,035 5,980
Other (3,261) (6,447) (1,243)
- ---------------------------------------------------------------
Total operating income $ 31,587 $ 18,219 $ 13,970
- ---------------------------------------------------------------
Identifiable assets:
Oil and gas services $ 86,578 $ 68,692 $ 51,145
Boat manufacturing 25,076 26,167 23,019
Other, including
corporate assets 70,864 57,941 58,492
- ---------------------------------------------------------------
Total identifiable assets $ 182,518 $ 152,800 $ 132,656
- ---------------------------------------------------------------
</TABLE>
Revenue from international operations in the oil and gas services
segment totaled $17,407,000 in 1997, $12,851,000 in 1996, and $7,159,000 in
1995. The respective operating profits were $2,720,000 in 1997, $3,096,000 in
1996, and $1,680,000 in 1995. There were $9,987,000 in identifiable assets
attributable to these operations in 1997, $8,351,000 in 1996, and $4,709,000 in
1995. There were no material amounts of international operations in the boat
manufacturing segment.
Note 10: Unaudited Quarterly Data
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Quarter First Second Third Fourth
- ----------------------------------------------------------------------
(in thousands except per share data)
<S> <C> <C> <C> <C>
1997
Revenue $ 58,203 $ 67,032 $ 57,857 $ 62,707
Net income 4,307 5,912 5,410 6,616
Earnings per share
Basic .15 .20 .19 .23
Diluted .15 .20 .18 .22
1996
Revenue $ 49,717 $ 52,204 $ 44,942 $ 53,970
Net income 3,450 3,161 2,813 3,831
Earnings per share
Basic .12 .11 .10 .13
Diluted .12 .11 .10 .13
</TABLE>
<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 its independent public accountants.
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors and executive officers is included in
the RPC Proxy for its 1998 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 1998 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 1998 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 1998 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.
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS PAGE
<S> <C>
Balance Sheets as of December 31, 1997 15
and 1996
Statements of Income for the three years ended 16
December 31, 1997
Statements of Stockholders' Equity for the three 16
years ended December 31, 1997
Statements of Cash Flows for the three years 17
ended December 31, 1997
Notes to Financial Statements 18-23
SCHEDULES
Schedule II-Valuation and Qualifying Accounts 25
</TABLE>
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
<PAGE>
Reports on Form 8-K
No reports on Form 8-K were required to be filed by RPC for the quarter
ended December 31, 1997. Any schedules or exhibits not shown above have been
omitted because they are not applicable.
Schedule II-Valuation and Qualifying Accounts
RPC, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 (in thousands of dollars)
<TABLE>
<CAPTION>
Balance at Charged to Net Balance at
Beginning Costs and (Write-Offs) End of
Description of Period Expenses Recoveries Period
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Allowance for Doubtful Accounts $ 7,058 $ 137 ($ 228) $ 6,967
- -----------------------------------------------------------------------------------------------
Year ended December 31, 1996
Allowance for Doubtful Accounts $ 4,205 $ 2,624 $ 229 $ 7,058
- -----------------------------------------------------------------------------------------------
Year ended December 31, 1995
Allowance for Doubtful Accounts $ 6,300 $ 1,339 ($3,434) $ 4,205
- -----------------------------------------------------------------------------------------------
</TABLE>
<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, 1997 and 1996,
and the related consolidated statements of income, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1997.
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, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, 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. This
schedule has been subjected to the auditing procedures applied in our audit 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.
Atlanta, Georgia /s/ Arthur Andersen LLP
March 12, 1998
<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 12, 1998
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
March 12, 1998 Accounting Officer)
March 12, 1998
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 12, 1998
<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
Spindletop Tubular 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), its previously filed Form S-8 Registration
Statement (No. 33-75652), and its previously filed Form S-8 Registration
Statement (No. 333-40223).
/s/ Arthur Andersen LLP
Atlanta, Georgia
March 26, 1998
<PAGE>
EXHIBIT 24
<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 22nd day of January, 1998.
Bobby Joe Cudd, Director
-------------------------
Bobby Joe Cudd, Director
Witness:
Anne Hamilton 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 22nd day of January, 1998.
James A. Lane, Jr., Director
-----------------------------
James A. Lane, Jr., Director
Witness:
Ann Baldree
- --------------------
<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, 1998.
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, 1998.
Gary W. Rollins, Director
---------------------------
Gary W. Rollins, Director
Witness:
Anne Hamilton 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 29th day of January, 1998.
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 27th day of January, 1998.
Henry B. Tippie, Director
---------------------------
Henry B. Tippie, Director
Witness:
Linda H. Graham
- --------------------------
<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, 1998.
James B. Williams, Director
-----------------------------
James B. Williams, Director
Witness:
Mary H. Walden
- --------------------------
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