-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T8MLdzyZOpWs61e+DNNpKCS58fNTFZwDPOMfEp4ecl9ZbFriXQfVlAIU1Drt0o7a NR/zB10RruRdLvRkmXWTGQ== 0000912057-99-005744.txt : 19991117 0000912057-99-005744.hdr.sgml : 19991117 ACCESSION NUMBER: 0000912057-99-005744 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RPC INC CENTRAL INDEX KEY: 0000742278 STANDARD INDUSTRIAL CLASSIFICATION: SHIP & BOAT BUILDING & REPAIRING [3730] IRS NUMBER: 581550825 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08726 FILM NUMBER: 99752715 BUSINESS ADDRESS: STREET 1: 2170 PIEDMONT RD NE CITY: ATLANTA STATE: GA ZIP: 30324 BUSINESS PHONE: 4048882950 MAIL ADDRESS: STREET 1: 2170 PIEDMONT ROAD CITY: ATLANTA STATE: GA ZIP: 30324 FORMER COMPANY: FORMER CONFORMED NAME: RPC ENERGY SERVICES INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /X/ Quarterly report pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999 / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File No. 1-8726 RPC, INC. (exact name of registrant as specified in its charter)
DELAWARE 58-1550825 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
2170 PIEDMONT ROAD, NE, ATLANTA, GEORGIA 30324 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code -- (404) 321-2140 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of September 30, 1999, RPC, Inc. had 28,563,763 shares of common stock outstanding. RPC, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1999, AND DECEMBER 31, 1998 (In thousands except share information)
SEPTEMBER 30, December 31, 1999 1998 (UNAUDITED) (Audited) - ----------------------------------------------------------------------------------------------------------- ASSETS Cash and cash equivalents $10,750 $10,029 Marketable securities 4,718 3,414 Accounts receivable, net of allowance for doubtful accounts of $5,150 and $7,004, respectively 28,320 25,266 Inventories, at lower of cost or market 19,999 17,446 Deferred income taxes 9,155 10,787 Federal income taxes receivable 1,875 3,673 Prepaid expenses and other current assets 1,436 1,909 - ----------------------------------------------------------------------------------------------------------- Current assets 76,253 72,524 - ----------------------------------------------------------------------------------------------------------- Equipment and property, net 69,253 70,206 Marketable securities 30,742 29,507 Intangibles, net 9,299 7,401 Other assets 1,280 1,053 - ----------------------------------------------------------------------------------------------------------- TOTAL ASSETS $186,827 $180,691 =========================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $10,276 $5,859 Accrued payroll and related expenses 5,457 4,192 Accrued insurance expenses 6,578 6,329 Accrued state, local and other taxes 4,458 4,063 Accrued discounts 722 1,053 Current portion of long-term debt 403 659 Other accrued expenses 8,912 10,270 - ----------------------------------------------------------------------------------------------------------- Current liabilities 36,806 32,425 - ----------------------------------------------------------------------------------------------------------- Long-term accrued insurance expenses 4,542 3,308 Long-term debt 1,535 636 Deferred income taxes 941 1,256 - ----------------------------------------------------------------------------------------------------------- Total liabilities 43,824 37,625 - ----------------------------------------------------------------------------------------------------------- Commitments and contingencies - ----------------------------------------------------------------------------------------------------------- Common stock 2,857 2,888 Capital in excess of par value 24,402 26,538 Earnings retained 115,744 113,640 - ----------------------------------------------------------------------------------------------------------- Total stockholders' equity 143,003 143,066 - ----------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $186,827 $180,691 ===========================================================================================================
The accompanying notes are an integral part of these statements. 2 of 12 RPC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1999, AND 1998 (In thousands except per share data) (Unaudited)
Three months ended September 30, Nine months ended September 30, ------------------------------------------ ----------------------------------------- 1999 1998 1999 1998 - ------------------------------------------------------------------------------------- ----------------------------------------- REVENUE $53,105 $56,977 $168,018 $190,292 - ---------------------------------------------------------------------------------------------------------------------------------- Cost of goods sold 21,924 20,405 76,310 68,236 Operating expenses 25,320 27,053 71,833 86,759 Depreciation and amortization 4,153 4,074 12,350 11,439 Interest income (548) (610) (1,396) (1,653) - ---------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 2,256 6,055 8,921 25,511 Income tax provision 856 2,302 3,388 9,694 - ---------------------------------------------------------------------------------------------------------------------------------- NET INCOME $1,400 $3,753 $5,533 $15,817 ================================================================================================================================== EARNINGS PER SHARE Basic $0.05 $0.13 $0.20 $0.54 - ---------------------------------------------------------------------------------------------------------------------------------- Diluted $0.05 $0.13 $0.19 $0.54 - ---------------------------------------------------------------------------------------------------------------------------------- AVERAGE SHARES OUTSTANDING Basic 28,150 29,030 28,211 29,110 - ---------------------------------------------------------------------------------------------------------------------------------- Diluted 28,449 29,387 28,462 29,507 - ----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements. 3 of 12 RPC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999, and 1998 (In thousands) (Unaudited)
Nine months ended September 30, -------------------------------------------- 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $5,533 $15,817 Noncash charges (credits) to earnings: Depreciation and amortization 13,001 12,012 (Gain) on sale of equipment and property (1,279) (1,938) Deferred income tax provision (benefit) 1,317 (614) (Increase) decrease in assets: Accounts receivable (3,054) (1,005) Federal income tax receivable 1,798 (2,963) Inventories (2,553) (1,257) Prepaid expenses and other current assets 473 1,071 Other non-current assets (294) 50 Increase (decrease) in liabilities: Accounts payable 4,451 (1,334) Accrued payroll and related expenses 1,265 (681) Accrued insurance expenses 1,483 (2,068) Other accrued expenses (1,295) (325) - ---------------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 20,846 16,765 - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (11,604) (24,360) Proceeds from sale of equipment and property 1,722 3,132 Net purchase of marketable securities (2,538) 6,245 Other (2,564) - - ---------------------------------------------------------------------------------------------------------------------------------- Net cash used for investing activities (14,984) (14,983) - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Payment of dividends (3,002) (3,094) Reduction of long-term debt (474) (779) Increase in long-term debt 1,168 - Cash paid for common stock purchased and retired (2,885) (7,038) Proceeds from exercise of stock options 52 73 - ---------------------------------------------------------------------------------------------------------------------------------- Net cash used for financing activities (5,141) (10,838) - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 721 (9,056) Cash and cash equivalents at beginning of period 10,029 17,409 - ---------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $10,750 $8,353 ==================================================================================================================================
The accompanying notes are an integral part of these statements. 4 of 12 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, 1998. In the opinion of management, the consolidated financial statements included herein contain all adjustments necessary to present fairly the financial position of the Company as of September 30, 1999, the results of operations for the quarter and the nine months ended September 30, 1999 and 1998, and the cash flows for the nine months ended September 30, 1999 and 1998. 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 September 30, 1999, are not necessarily indicative of the results to be expected for the full year. 4. In June 1998, the Financial Accounting Standards Board (FASB) 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. In the second quarter of 1999, the FASB voted to delay the effective date of this standard to fiscal years beginning after June 15, 2000. The adoption of SFAS No. 133 is not expected to have a material impact. 5. RPC has two reportable segments: oil and gas services and boat manufacturing. The oil and gas services segment provides a variety of services, equipment, and personnel to the oil and gas industry. The boat manufacturing segment manufactures and sells powerboats to a nationwide network of independent dealers. RPC evaluates performance based on profit or loss from operations before income taxes. RPC accounts for intersegment sales and transfers as if the sales or 5 of 12 RPC, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS transfers were to third parties, that is, at current market prices. RPC's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies. Each of these businesses was acquired as a unit, and the management at the time of acquisition was retained. Certain information with respect to RPC's business segments is set forth in the following table:
Three months ended September 30, Nine months ended September 30, -------------------------------- ------------------------------- 1999 1998 1999 1998 -------------------------- ----------------------------- (IN THOUSANDS) (IN THOUSANDS) REVENUE: Oil and gas services $ 24,918 $ 30,633 $ 67,191 $ 100,127 Boat manufacturing 25,224 22,420 91,592 77,963 Other segments 2,963 3,924 9,235 12,202 - ------------------------------- -------- -------- --------- --------- Total revenue $ 53,105 $ 56,977 $ 168,018 $ 190,292 =============================== ======== ======== ========= ========= OPERATING INCOME (LOSS): Oil and gas services $ 20 $ 4,642 $ (1,424) $ 18,771 Boat manufacturing 2,955 2,780 12,375 10,348 Other segments (306) (1,173) (629) (2,321) - ------------------------------- -------- -------- --------- --------- Total operating income 2,669 6,249 10,322 26,798 - ------------------------------- -------- -------- --------- --------- CORPORATE EXPENSES (961) (804) (2,797) (2,940) INTEREST INCOME 548 610 1,396 1,653 - ------------------------------- -------- -------- --------- --------- Income before income taxes $ 2,256 $ 6,055 $ 8,921 $ 25,511 =============================== ======== ======== ========= =========
The identifiable assets for the powerboat manufacturing segment increased by $3,022,000 from $28,085,000 at December 31, 1998 to $31,107,000 at September 30, 1999. The identifiable assets for the oil and gas services segment increased by $5,016,000 from $89,891,000 at December 31, 1998 to $94,907,000 at September 30, 1999. 6 of 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION THREE MONTHS ENDED SEPTEMBER 30, 1999, COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1998 Revenue for the third quarter ended September 30, 1999, was $53,105,000 compared with $56,977,000 for the quarter ended September 30, 1998, a decrease of $3,872,000 or 7%. The oil and gas services segment revenue of $24,918,000 decreased 19% from last year's third quarter. During the last year, oilfield services revenues have significantly declined and have remained at these lower levels. In 1999, oil prices have increased to levels above last year's third quarter while natural gas prices have remained relatively stable. Despite this improved commodity price environment, exploration and production spending has remained approximately the same while the number of active drilling rigs in the United States is 3 percent less than the number of drilling rigs at September 30, 1998. Recently, there has been modest improvement in the demand for our equipment and services; however, pricing remains highly competitive. The powerboat manufacturing segment revenue for the quarter ended September 30, 1999, of $25,224,000 increased 13% from last year's third quarter of $22,420,000 as the result of an increase in the average unit sales price. The increase in the average unit sales price is the result of an overall price increase and an increase in the number of larger, higher priced boats sold versus prior year, while sales of smaller model boats have decreased versus prior year. Cost of goods sold for the third quarter ended September 30, 1999, was $21,924,000 compared to $20,405,000 for the third quarter ended September 30, 1998, an increase of $1,519,000 or 7%. Cost of goods sold relates primarily to the powerboat manufacturing segment. This increase is somewhat less than the increase in sales due to a change in product mix with a greater percentage of larger, higher margin boats being sold. Net income for the quarter ended September 30, 1999, was $1,400,000 or $0.05 diluted earnings per share versus net income of $3,753,000 or $0.13 diluted earnings per share for the quarter ended September 30, 1998. Basic earnings per share was the same as diluted earnings per share at $0.05 cents per share versus $0.13 cents per share last year. The decrease in earnings per share from the same period one year ago was due to the decreased operating income for the oil and gas services segment offset to some extent by the increase in operating income for the powerboat manufacturing segment. NINE MONTHS ENDED SEPTEMBER 30, 1999, COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1998 Revenue for the nine months ended September 30, 1999 was $168,018,000 compared with $190,292,000 for the nine months ended September 30, 1998, a decrease of $22,274,000 or 12%. The oil and gas services segment revenue decreased 33% and the 7 of 12 RPC, INC. AND SUBSIDIARIES ITEM 2. CONT'D powerboat manufacturing segment increased 18%. The oil and gas services revenue decreased for the reasons discussed above. The powerboat manufacturing revenue increased despite an overall decline in sales in the powerboat market. The increase in revenue for the powerboat manufacturing segment is attributable to an increase in the average unit sales price versus the prior year for the reasons discussed above. Cost of goods sold for the nine months was $76,310,000 compared to $68,236,000 for the prior year, an increase of $8,074,000 or 12%. Cost of goods sold relates primarily to the powerboat manufacturing segment. The increase is somewhat less than the increase in sales due to a change in product mix with a greater percentage of larger, higher margin boats being sold. Net income for the nine months ended September 30, 1999 was $5,533,000 or $0.19 diluted earnings per share versus net income of $15,817,000 or $0.54 diluted earnings per share for the nine months ended September 30, 1998. Basic earnings per share was $0.20 cents per share versus $0.54 cents per share last year. The decrease in earnings per share from the same period one year ago was due to the decreased operating income for the oil and gas services segment offset to some extent by the increase in operating income for the powerboat manufacturing segment. FINANCIAL CONDITION The Company's current ratio remained strong as of September 30, 1999, with current assets of $76,253,000 exceeding current liabilities of $36,806,000 by a ratio of 2.1-to-1. This compares to a current ratio of 2.2-to-1 at December 31, 1998. Capital expenditures during the first nine months of 1999 were $11,604,000 compared to $24,360,000 in the prior year. The capital expenditures for 1999 were primarily for various types of revenue-producing equipment in the oil and gas services segment. During the first nine months of 1998, there were several large capital expenditures including the purchase of oilfield rental items and the delivery of the first of two marine liftboats constructed during 1998. Funding for future capital requirements will be provided by cash flow from operations. 8 of 12 RPC, INC. AND SUBSIDIARIES ITEM 2. CONT'D YEAR 2000 ISSUE The Company began its assessment and remediation processes related to the Year 2000 (Y2K) information technology programming issue in 1997. RPC's assessment activities have included (1) identifying all software and operating systems -both information technology (IT) and non-IT systems with embedded technology, which are critical to operations and/or financial reporting, (2) testing of such software and systems for Y2K compliance, and (3) obtaining assurances from its vendors and its large commercial customers. RPC's remediation activities have included replacing certain software and operating systems, followed by testing to ensure the Y2K compliance of the replacements. Based on its assessment and remediation activities to date, RPC believes that its critical internal software and operating systems are Y2K compliant with the exception of a subsidiary billing system. The total cost of Y2K expenditures to date have not been material. The remaining Y2K remediation costs are anticipated to be less than $50,000. RPC is taking all reasonable steps (including obtaining written Y2K compliance assurances from the majority of vendors that RPC believes to be critical to its operations and/or financial reporting) to mitigate the risk of major interruptions in day-to-day operations due to Y2K issues. Nevertheless, due to the uncertainty inherent in Y2K issues generally and those that are beyond RPC's control in particular (e.g. the final Y2K readiness of RPC's large commercial customers and its vendors, including banks and other financial institutions; the U.S. Postal Service; common freight, parcel and communications carriers, and electric, gas, water and other public utilities), there can be no assurance that a failure of RPC and/or its major suppliers or customers to adequately address the Y2K issue would not have a material impact on RPC's results of operations, liquidity or financial condition. RPC believes the worst case scenario will be the widespread failure of electrical, gas, water and similar supplies by utilities serving RPC, its suppliers and customers; widespread disruption of the services of banks and other financial institutions, the U.S. Postal Service, and common freight, parcel and communications carriers; widespread disruption in the operations of RPC's commercial customers; widespread disruption to the means and modes of transportation used by RPC and its suppliers' and commercial customers' ability to gain access to, and remain working in, office buildings and other facilities; the failure of a substantial number of RPC's critical information hardware and software systems; and the failure of outside systems, the effects of which would have a cumulative material adverse impact on RPC's critical systems. RPC believes that the scenario described above is unlikely in some or many respects and that the most reasonable likely worst case scenario will be temporary delays in billing and collection of customer receivables. RPC expects to have contingency plans in place by the end of 1999 that address any potential Y2K issues. FORWARD-LOOKING STATEMENTS 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 the impact of the year 2000 programming issue, funding of future capital requirements, potential exposure to market risk, 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 9 of 12 RPC, INC. AND SUBSIDIARIES ITEM 2. CONT'D conform with the Company's expectations are influenced by a number of factors, including economic conditions, conditions in the industries in which the Company operates including the impact of the worldwide supply and demand for oil and natural gas, competition, unanticipated failure of the Company's or its vendors' or customers' financial or other systems as a result of Y2K issues, 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK RPC maintains an investment portfolio, comprised of U.S. Government and corporate debt securities, which is subject to interest rate risk exposure. This risk is managed through conservative policies to invest in high-quality obligations. RPC has performed an interest rate sensitivity analysis using a duration model over the near term with a 10 percent change in interest rates. RPC's portfolio is not subject to material interest rate risk exposure based on this analysis. RPC does not expect any material changes in market risk exposures or how those risks are managed. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None 10 of 12 RPC, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION CONT'D ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits
EXHIBIT NUMBER DESCRIPTION -------------- ----------- 3(i)(a) RPC's Certificate of Incorporation is incorporated herein by reference to Exhibit (3)(1)(a) to the 1998 Third Quarter Form 10-Q. 3(i)(b) RPC's Certificate of Amendment of the Certificate of Incorporation is incorporated herein by reference to Exhibit (3)(1)(b) to the 1998 Third Quarter Form 10-Q. 3(ii) By-laws of RPC are incorporated herein by reference to the 1999 First Quarter Form 10-Q. 4 RPC's Form of Stock Certificate is incorporated herein by reference to the 1998 Form 10-K. 27 Financial Data Schedule
(b) Reports on Form 8-K No reports on Form 8-K were filed or required to be filed during the quarter ended September 30, 1999. 11 of 12 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RPC, INC. /s/ Richard A. Hubbell ---------------------------------- Date: November 15, 1999 Richard A. Hubbell President and Chief Operating Officer /s/ Ben M. Palmer ---------------------------------- Date: November 15, 1999 Ben M. Palmer Vice President, Treasurer and Chief Financial Officer 12 of 12 EX-27.1 2 EXHIBIT 27.1
5 1,000 3-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 10,750 4,718 33,470 5,150 19,999 76,253 226,959 157,706 186,827 36,806 1,535 0 0 2,857 140,146 186,827 0 53,105 21,924 47,244 4,153 0 0 2,256 856 1,400 0 0 0 1,400 0.05 0.05
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