-----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, GCvkoDKjBgAANeoJ4x67wVT3JuAoVATaLkd9rzAatgkdHaDiVPUbS82R1BcfUaAW 4dsJWqYOWI82QGzP/6TGCg== 0001188112-04-000707.txt : 20040505 0001188112-04-000707.hdr.sgml : 20040505 20040504173732 ACCESSION NUMBER: 0001188112-04-000707 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RPC INC CENTRAL INDEX KEY: 0000742278 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 581550825 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08726 FILM NUMBER: 04778861 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 t10q.txt 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004 [ ] 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 (I.R.S. Employer incorporation or organization) 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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No --- --- 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 April 15, 2004, RPC, Inc. had 28,641,092 shares of common stock outstanding.
RPC, INC. AND SUBSIDIARIES TABLE OF CONTENTS PAGE NO. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated balance sheets - As of March 31, 2004 and December 31, 2003 3 Consolidated statements of operations - For the three months ended March 31, 2004 and 2003 4 Consolidated statements of cash flows - For the three months ended March 31, 2004 and 2003 5 Notes to consolidated financial statements 6-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures about Market Risk 19 Item 4. Controls and Procedures 19-20 PART II. OTHER INFORMATION Item 1. Legal Proceedings 21 Item 2. Changes in Securities, Use of Proceeds and Issuer purchases of Equity Securities 21 Item 3. Defaults upon Senior Securities 21 Item 4. Submission of Matters to a Vote of Security Holders 21 Item 5. Other Information 21 Item 6. Exhibits and Reports on Form 8-K 22 SIGNATURES 23
2 RPC, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2004 AND DECEMBER 31, 2003 (In thousands) (Unaudited) MARCH 31, December 31, 2004 2003 - -------------------------------------------------------------------------------- ASSETS Cash and cash equivalents $ 13,229 $ 22,302 Accounts receivable, net 66,338 53,719 Inventories 10,838 10,057 Deferred income taxes 5,250 6,394 Taxes receivable 2,074 4,149 Prepaid expenses and other current assets 3,363 3,614 - -------------------------------------------------------------------------------- Total current assets 101,092 100,235 Equipment and property, net 108,916 109,163 Intangibles, net 15,905 15,488 Other assets 1,870 1,864 - -------------------------------------------------------------------------------- TOTAL ASSETS $ 227,783 $ 226,750 ================================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 22,038 $ 19,603 Accrued payroll and related expenses 6,227 8,526 Accrued insurance expenses 3,130 2,852 Accrued state, local and other taxes 950 1,549 Current portion of long-term debt 700 1,110 Other accrued expenses 3,793 3,369 - -------------------------------------------------------------------------------- Total current liabilities 36,838 37,009 Long-term accrued insurance expenses 5,798 5,856 Long-term debt 4,800 4,800 Pension liabilities 9,220 12,972 Deferred income taxes 13,415 13,296 Other long-term liabilities 1,598 1,711 - -------------------------------------------------------------------------------- Total liabilities 71,669 75,644 - -------------------------------------------------------------------------------- Common stock 2,863 2,862 Capital in excess of par value 26,833 26,796 Retained earnings 133,766 128,824 Deferred compensation (1,015) (1,076) Accumulated other comprehensive loss (6,333) (6,300) - -------------------------------------------------------------------------------- Total stockholders' equity 156,114 151,106 - -------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 227,783 $ 226,750 ================================================================================ The accompanying notes are an integral part of these consolidated financial statements. 3 RPC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003 (In thousands except per share data) (Unaudited) Three months ended March 31, -------------------------------- 2004 2003 - -------------------------------------------------------------------------------- REVENUES $ 80,002 $ 60,700 - ------------------------------------------------------------------------------ Cost of services rendered and goods sold 47,107 39,926 Selling, general and administrative expenses 15,126 11,953 Depreciation and amortization 8,536 7,996 - ------------------------------------------------------------------------------ Operating profit 9,233 825 Interest expense, net 25 15 Other income (expense), net 149 (318) - ------------------------------------------------------------------------------ Income before income taxes 9,357 492 Income tax provision 3,556 187 - ------------------------------------------------------------------------------ NET INCOME $ 5,801 $ 305 ============================================================================== EARNINGS PER SHARE Basic $ 0.21 $ 0.01 =========== =========== Diluted 0.20 0.01 =========== =========== DIVIDENDS PER SHARE $ 0.030 $ 0.025 =========== =========== AVERAGE SHARES OUTSTANDING Basic 28,267 28,257 =========== =========== Diluted 28,714 28,657 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. 4 RPC, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2004 and 2003 (In thousands) (Unaudited) Three months ended March 31, ---------------------------- 2004 2003 - ------------------------------------------------------------------------------- OPERATING ACTIVITIES NET INCOME $ 5,801 $ 305 Noncash charges (credits) to earnings: Depreciation and amortization 8,555 8,022 (Gain) loss on sale of equipment and property (65) 587 Deferred income tax provision (benefit) 1,283 (570) (Increase) decrease in assets: Accounts receivable (12,619) (5,147) Taxes receivable 2,075 (72) Inventories (781) 460 Prepaid expenses and other current assets 182 22 Other non-current assets 10 215 Increase (decrease) in liabilities: Accounts payable 2,435 185 Accrued payroll and related expenses (2,299) (2,904) Pension liabilities (3,752) 0 Accrued insurance expenses 220 633 Accrued state, local and other expenses (599) (208) Other accrued expenses (116) 488 - ------------------------------------------------------------------------------- Net cash provided by operating activities 330 2,016 - ------------------------------------------------------------------------------- INVESTING ACTIVITIES Capital expenditures (8,625) (8,253) Purchase of businesses 0 (625) Proceeds from sale of assets 453 210 - ------------------------------------------------------------------------------- Net cash used in investing activities (8,172) (8,668) - ------------------------------------------------------------------------------- FINANCING ACTIVITIES Payment of dividends (859) (715) Payments on debt (410) (474) Cash paid for common stock purchased and retired (6) (7) Proceeds received upon exercise of stock options 44 11 - ------------------------------------------------------------------------------- Net cash used in financing activities (1,231) (1,185) - ------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (9,073) (7,837) Cash and cash equivalents at beginning of period 22,302 11,533 - ------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 13,229 $ 3,696 =============================================================================== The accompanying notes are an integral part of these consolidated financial statements. 5 RPC, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL The accompanying unaudited condensed consolidated financial statements include the accounts of RPC, Inc. and its wholly-owned subsidiaries ("RPC" or the "Company") and have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2003. 2. EARNINGS PER SHARE Basic and diluted earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the respective periods. A reconciliation of the weighted average shares outstanding is as follows: THREE MONTHS ENDED MARCH 31, (In thousands) 2004 2003 ---- ---- Basic 28,267 28,257 Dilutive effect of stock options and restricted shares 447 400 ---------------- -------------- Diluted 28,714 28,657 ================ ============== 6 RPC, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. RECENT ACCOUNTING PRONOUNCEMENTS In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation (FIN) No. 46, "Consolidation of Variable Interest Entities." The Interpretation requires that a variable interest entity, as defined, be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to entities created prior to January 31, 2003 in the first fiscal year or interim period ending after December 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The Company has not entered into any agreements subject to FIN 46 since January 31, 2003 and does not have any agreements in place that were executed prior to January 31, 2003 that are subject to the Interpretation's provisions. As a result, the Company believes that the adoption of the Interpretation did not have an impact on the financial position, results of operations or liquidity of the Company. In December 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accountings Standard No. 132 (revised 2003) ("SFAS 132R"), "Employers' Disclosures about Pensions and Other Post-Retirement Benefits." SFAS 132R does not change the measurement or recognition provisions for defined benefit pensions and other post-retirement benefits; however, it requires additional annual disclosures about assets, obligations, cash flows and net periodic benefit cost of those plans. SFAS 132R also requires interim disclosure of the elements of net periodic benefit cost and the total amount of contributions paid or expected to be paid during the current fiscal year if significantly different from previous amounts disclosed. The disclosure rules apply to annual financial statements for fiscal years ending after December 15, 2003 and for interim periods beginning after December 15, 2003. The Company has adopted the provisions of SFAS 132R and presented the disclosures in Note 8 to the consolidated financial statements. 7 RPC, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. COMPREHENSIVE INCOME The components of comprehensive income are as follows: Three months ended ------------------ March 31, --------- (In thousands) 2004 2003 ---- ---- Net income as reported $ 5,801 $ 305 Change in unrealized gain on marketable securities, net of taxes of ($20) and ($43) (33) (70) ------------------------------ Comprehensive income $ 5,768 $ 235 ============================== 5. STOCK-BASED COMPENSATION RPC accounts for its stock incentive plan using the intrinsic value method prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The Company has computed for pro forma disclosure purposes the value of all options granted during the three months ended March 31, 2004 and 2003 using the Black-Scholes option pricing model as prescribed by SFAS No. 123 "Accounting for Stock-Based Compensation. If RPC had accounted for the stock incentive plans in accordance with SFAS No. 123, RPC's reported net income per share would have been as follows: 8 RPC, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Three months ended March 31, - ------------------------------------------------------------------------------- 2004 2003 ---- ---- (IN THOUSANDS) Net income - as reported $ 5,801 $ 305 Add: Stock-based employee compensation cost, included in reported net income, net of related tax effect 38 37 Deduct: Stock-based employee compensation cost, computed using the Black Scholes option pricing model, for all awards, net of related tax (227) (239) effect - ------------------------------------------------------------------------------- Pro forma net income $ 5,612 $ 103 =============================================================================== Earnings per share, as reported Basic $ 0.21 $ 0.01 Diluted 0.20 0.01 Pro forma earnings per share Basic $ 0.20 $ 0.00 Diluted 0.20 0.00 6. BUSINESS SEGMENT INFORMATION RPC has two reportable segments: Technical Services and Support Services. Technical Services includes RPC's oil and gas service lines that utilize people and equipment to perform value-added completion, production and maintenance services directly to a customer's well. These services are generally directed toward improving the flow of oil and natural gas from producing formations or to address well control issues. The Technical Services business segment consists primarily of snubbing, coiled tubing, pressure pumping, nitrogen, well control, downhole tools, wire line, fluid pumping, surface production equipment and casing installation services. The principal markets for this business segment include the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and selected international locations. Customers include major multi-national and independent oil and gas producers, and selected nationally owned oil companies. Support Services includes RPC's oilfield service lines that primarily provide equipment for customer use 9 RPC, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS or services to assist customer operations. The equipment and services include drill pipe and related tools, pipe handling, inspection and storage services, work platform vessels, and oilfield training services. The demand for these services tends to be influenced primarily by customer drilling-related activity levels. The principal markets for this segment include the United States, Gulf of Mexico and mid-continent regions. Customers include domestic operations of major multi-national and independent oil and gas producers. Certain information with respect to RPC's business segments is set forth in the following table: Three months ended March 31, 2004 2003 (IN THOUSANDS) REVENUES: Technical Services $ 65,486 $ 47,818 Support Services 11,700 9,698 Other 2,816 3,184 --------------------------------------- ------------ ------------- Total revenues $ 80,002 $ 60,700 ======================================= ============ ============= OPERATING PROFIT (LOSS): Technical Services $ 11,150 $ 2,717 Support Services 139 (25) Other (211) (238) Corporate expenses (1,845) (1,629) --------------------------------------- ------------ ------------- Total operating profit (loss) $ 9,233 $ 825 --------------------------------------- ------------ ------------- Other income (expense), net 149 (318) Interest expense, net 25 15 --------------------------------------- ------------ ------------- Income before income taxes $ 9,357 $ 492 ======================================= ============ ============= 10 RPC, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. INVENTORIES Inventories consist of the following:
MARCH 31, 2004 December 31, 2003 ---------------------------------------------------------------------------------------------- (IN THOUSANDS) Raw materials and supplies $ 10,203 $ 8,251 Work in process 420 317 Finished goods 215 1,489 ---------------------------------------------------------------------------------------------- Total inventories $ 10,838 $ 10,057 ==============================================================================================
8. EMPLOYEE BENEFIT PLAN The following represents the net periodic defined benefit cost and related components in accordance with SFAS 132R described in Note 3.
Three months ended March 31 2004 2003 ----------------------------------------------------------------------------------------------------------- (IN THOUSANDS) Service cost $ - $ - Interest cost 437 484 Expected return on plan assets (361) (341) Amortization of: Prior service cost - - Unrecognized net (gains) and losses 230 257 ----------------------------------------------------------------------------------------------------------- Net periodic benefit cost $ 306 $ 400 ===========================================================================================================
RPC disclosed in its most recent Form 10K that it expected to contribute $4,800,000 to its defined benefit plan in 2004. As of March 31, 2004, the Company has contributed approximately $4,200,000 to the pension plan. The Company is currently evaluating its funding obligations for the remainder of 2004 under the Pension Funding Equity Act of 2004 legislation that was passed in April 2004 and will then re-evaluate the level of additional funding for the remainder of the year. 11 RPC, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION OVERVIEW - -------- RPC provides a broad range of specialized oilfield services primarily to independent and major oilfield companies engaged in exploration, production and development of oil and gas properties throughout the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and selected international locations. RPC's business is affected by geopolitical factors such as political instability in the petroleum-producing regions of the world, overall economic conditions and weather in the United States, the prices of oil and natural gas, and our customers' drilling and production activities. The Company's revenues are earned by providing equipment and services to customers who operate oil and gas properties and invest capital to drill new wells and enhance production or perform maintenance on existing wells. RPC's management is presently focused on opportunities to increase its revenues and earnings through expansion in the Middle East and selected domestic markets, as well as assessing current operations and focusing on means to reduce costs. The Company's management also continues to monitor factors that impact the level of current and expected customer activities, such as the price of oil and natural gas, among other factors. CRITICAL ACCOUNTING POLICIES - ---------------------------- The discussion on Critical Accounting Polices is incorporated herein by reference from the Company's annual report on Form 10-K for the fiscal year ended December 31, 2003. There have been no significant changes in the critical accounting policies since year-end. GENERAL - ------- The Company's operations are influenced by U.S. domestic oil and natural gas well drilling, which relates to new wells, and production activity, which relates to existing wells. Factors within the drilling and production industry that impact the Company's business include the geographic location of wells, the conditions under which they are drilled, and the production enhancement services which they require. The Technical Services segment provides completion, production, and maintenance services to a customer's well. The demand for these services is more influenced by production activities than drilling activities; however, production activity typically increases at the same time drilling activity increases. The Support Services segment primarily provides equipment for customer operations, and the demand for these services tends to depend more on drilling activities than production activities. Drilling activity is influenced by the price of oil and natural gas. We believe that our activity levels are affected more by natural gas prices than oil prices, due to the nature of our services and our current geographic concentration in the domestic U.S. market. The prices of oil and natural gas are influenced by a wide variety of factors 12 RPC, INC. AND SUBSIDIARIES and can be very volatile. This volatility can cause a great deal of fluctuation in the Company's revenues, profitability, and cash flow. Although the Company has historically generated revenues internationally, the majority of revenues generated during the three months ended March 31, 2004 were from the U.S. domestic oilfields. Domestic drilling activity, as measured by the weekly active rig count, reached its most recent cyclical peak in July 2001 with 1,293 active oil and gas rigs in operation. Activity began to decline in the third and fourth quarter of 2001 due to decreased demand and high natural gas storage levels. This depressed rig count continued in early 2002 and reached a weekly low of 738 during the third quarter of 2002. The average weekly rig count for the three months ended March 31, 2004 was 1,119, which was 25.3 percent higher than the average weekly rig count during the three months ended March 31, 2003. The Company believes that the rig count has stabilized for the near term, but is susceptible to further fluctuation based on the strength and timing of the economic recovery, near term weather conditions in the United States, the actions of the OPEC cartel, the supply of oil and natural gas in the United States, and the prospect of continued tensions in the oil-producing countries of the Middle East. RESULTS OF OPERATIONS - ---------------------
- ------------------------------------------------------------------------------------------------------- 2004 2003 THREE MONTHS ENDED MARCH 31, - ------------------------------------------------------------------------------------------------------- Consolidated revenues [IN THOUSANDS] $ 80,002 $ 60,700 Revenues by business segment [IN THOUSANDS] : Technical $ 65,486 $ 47,818 Support 11,700 9,698 Other 2,816 3,184 Consolidated operating profit [IN THOUSANDS] $ 9,233 $ 825 Operating profit (loss) by business segment [IN THOUSANDS]: Technical $ 11,150 $ 2,717 Support 139 (25) Other (211) (238) Corporate expenses $ (1,845) $ (1,629) Percentage cost of services rendered & goods sold to revenues 58.9% 65.8% Percentage selling, general & administrative expenses to revenues 18.9% 19.7% Percentage depreciation and amortization expense to revenues 10.7% 13.2% Average U.S. domestic rig count 1,119 893 Average natural gas price (per thousand cubic feet (mcf)) $ 5.63 $ 6.13 Average oil price (per barrel) $ 34.14 $ 35.12 - -------------------------------------------------------------------------------------------------------
13 RPC, INC. AND SUBSIDIARIES THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THREE MONTHS ENDED MARCH 31, 2003 - ------------------------------------------------------------------------------- REVENUES for the three months ended March 31, 2004 increased $19,302,000 or 31.8 percent compared to the three months ended March 31, 2003. The Technical Services segment revenues increased 37.0 percent from last year's first quarter revenues. The Support Services segment revenues for the quarter ended March 31, 2004 increased 20.6 percent from last year's first quarter revenues. Revenues increased compared to prior year due to higher overall activity and pricing levels, despite slightly lower oil and gas prices, in most of our service lines. Domestic revenues increased during the quarter due to higher customer drilling activity. The average domestic rig count during the first quarter was 25.3 percent higher than the same period in 2003. Our consolidated revenues grew at a higher rate than the overall domestic rig count, principally because of the effect of our new operations in Kuwait and our Bronco Oilfield Services acquisition, which was closed in the second quarter of 2003. These increases were partially offset by continued weakness in the Gulf of Mexico market. At the end of the quarter, the Gulf of Mexico rig count was 88, or 10 percent lower than the prior year. In addition, the average price of natural gas declined by 8 percent during the period as compared to the prior year. We believe that our activity levels are affected more by natural gas prices than by the price of oil. Foreign revenues increased significantly during the three months ended March 31, 2004 as compared to the prior year due to the inception of our new operations in Kuwait; however, foreign revenues remain a small percentage of total revenues. COST OF SERVICES RENDERED AND GOODS SOLD for the three months ended March 31, 2004 was $47,107,000 compared to $39,926,000 for the three months ended March 31, 2003, an increase of $7,181,000 or 18.0 percent. This increase was due to higher activity levels, which resulted in increased direct employment costs and increases in other operational expenses such as materials and supplies expenses, sub-rental expense and fuel costs partially offset by lower casualty insurance expenses due to improved claims experience during the first quarter of 2004 compared to 2003. Cost of services rendered and goods sold, as a percent of revenues, decreased from the first quarter of 2003 compared to the first quarter of 2004 as a result of improved leverage due to overall higher utilization of personnel and operating equipment and increased revenues. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES for the three months ended March 31, 2004 were $15,126,000 compared to $11,953,000 for the three months ended March 31, 2003, an increase of $3,173,000 or 26.5 percent. These expenses increased primarily due to higher employment costs mainly as a result of an increase in number of employees and 14 RPC, INC. AND SUBSIDIARIES higher incentive compensation expenses consistent with improved operating results. Selling, general and administrative expenses as a percent of revenues decreased from the first quarter of 2003 compared to the first quarter of 2004 due primarily to a large amount of fixed costs leveraged over a higher revenue base. DEPRECIATION AND AMORTIZATION was $8,536,000 for the three months ended March 31, 2004, an increase of $540,000 or 6.8 percent compared to $7,996,000 for the quarter ended March 31, 2003. This increase in depreciation and amortization resulted from various capital expenditures during the previous twelve months within Support Services and Technical Services, and from the effect of the acquisition completed during the second quarter of 2003. OPERATING PROFIT for the three months ended March 31, 2004 increased $8,408,000 compared to the three months ended March 31, 2003. This improvement is the result of increased revenues because of higher customer activity levels, partially offset by the increases in costs of services rendered and goods sold, selling, general and administrative expenses, and depreciation and amortization, as discussed above. OTHER INCOME (EXPENSE), NET for the three months ended March 31, 2004 was $149,000, an increase of $467,000 compared to expense of $318,000 for the three months ended March 31, 2003. For the three months ended March 31, 2004 and 2003, other income (expense), net primarily reflects net gains and losses related to the sale of operating equipment. INTEREST EXPENSE, NET was $25,000 for the three months ended March 31, 2004 compared to $15,000 for the quarter ended March 31, 2003. The increase in interest expense, net resulted primarily from interest expense on promissory notes issued in connection with acquisitions. RPC generates interest income from investment of its available cash primarily in highly liquid investments with original maturities of three months or less. Interest income did not vary in the current period compared to the prior year. INCOME TAX PROVISION was $3,556,000 during the three months ended March 31, 2004, compared to $187,000 in 2003. This increase was due to the increase in operating profit during the period, as the effective tax rate was the same for the three months ended March 31, 2004 and 2003. 15 RPC, INC. AND SUBSIDIARIES LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- ----------------------------------------------------------------------------- (IN THOUSANDS) 2004 2003 ----------------------------------------------------------------------------- Net cash provided by operating activities $ 330 $ 2,016 Net cash used for investing activities (8,172) (8,668) Net cash used for financing activities (1,231) (1,185) ----------------------------------------------------------------------------- The Company's decisions about the amount of cash to be used for investing and financing purposes are influenced by its capital position and the expected amount of cash to be provided by operations. Cash provided by operating activities for the three months ended March 31, 2004 decreased $1,686,000 or 83.6 percent compared to the three months ended March 31, 2003. Although net income improved $5,496,000, cash provided from operating activities decreased due to increased working capital requirements consistent with the Company's recent revenue increases. Working capital increases during the period compared to the prior year were caused principally by increases in accounts receivable and inventory offset partially by increases in accounts payable and a decrease in income taxes receivable. Also contributing to the decline was a $4.2 million contribution to the pension plan during the first quarter of 2004 and increases in accrued payroll and related expenses and accrued state taxes. Cash used in investing activities for the three months ended March 31, 2004 decreased by $496,000, compared to the three months ended March 31, 2003, primarily as a result of a slight increase in proceeds from sale of assets in the current period slightly offset by an increase in capital expenditures during the current period. Also contributing to the decline in proceeds used for investing activities during the current period is the acquisition made during the three months ended March 31, 2003. Cash used in financing activities for the three months ended March 31, 2004 increased by $46,000, compared to the three months ended March 31, 2003, primarily as a result of a 20 percent increase in dividends paid per share partially offset by slightly lower debt service requirements. The prices for oil and natural gas remain historically strong, but until recently, have failed to drive any increase in drilling activity. Prices of oil and natural gas have also been volatile in the last several quarters, due to uncertainties over the conflict in the Middle East and fluctuating natural gas storage levels. Although the weekly domestic rig count has recently increased, the Company still believes that the operating environment for our services is uncertain in the near term. As a result of this uncertainty, RPC is monitoring customer exploration and production activity levels very closely, and is only making capital expenditures to support known customer requirements or to maintain our existing fleet of operating equipment. The Company currently expects that capital expenditures during 16 RPC, INC. AND SUBSIDIARIES 2004 will be approximately $40 million, of which $8.6 million has been spent as of March 31, 2004, but the actual amount will be highly dependent upon our financial results for the remainder of 2004. The Company's Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees. In the first quarter of 2002, the Company's Board of Directors approved a resolution to cease all future retirement benefit accruals under the Retirement Income Plan effective March 31, 2002. However, the adverse conditions in the equity markets, along with the low interest rate environment, have had an unfavorable impact on the funded status of the Company's defined benefit pension plan. As expected the Company's pension expense increased in 2004 compared to 2003 primarily because of the decline in the discount rate used to calculate plan liabilities offset slightly by improved pension asset performance in 2003. As of March 31, 2004, the Company has contributed approximately $4,200,000 to the pension plan. The Company is currently evaluating its funding obligations for the remainder of 2004 under the Pension Funding Equity Act of 2004 legislation that was passed in April 2004 and will then re-evaluate the level of additional funding for the remainder of the year. We believe the liquidity provided by our existing cash and cash equivalents, our overall strong capitalization, which includes access to a $25 million credit facility with a financial institution, of which $14 million was available as of March 31, 2004, and cash expected to be generated from operations, will provide sufficient capital to meet our requirements for at least the next twelve months. The portion of the credit facility that is not currently available supports letters of credit relating to self-insurance programs or contract bids. We believe our liquidity will allow us to grow our asset base and revenues as business conditions and customer activity levels increase. SHARE REPURCHASES - ----------------- Under a plan authorized by its Board of Directors, the Company has purchased an aggregate of 1,839,000 shares of its common stock on the open market during prior periods and can purchase up to 161,000 additional shares. In January 2004, the Board approved an increase of 1,500,000 shares to the previous stock repurchase program to a total of 1,651,000 shares available for repurchase. There were no repurchases of stock during the three months ended March 31, 2004. OFF BALANCE SHEET ARRANGEMENTS - ------------------------------ The Company does not have any material off balance sheet arrangements. 17 RPC, INC. AND SUBSIDIARIES SEASONALITY - ----------- Oil and natural gas prices affect demand throughout the oil and natural gas industry, including the demand for the Company's products and services. The Company's business depends in large part on the conditions of the oil and gas industry, and specifically on the capital expenditures of its customers related to the exploration and production of oil and natural gas. When these expenditures fluctuate, customers' demand for the Company's services fluctuates as well. These fluctuations depend on the current and projected prices of oil and natural gas and resulting drilling activity, and are not seasonal to any material degree. INFLATION - --------- RPC purchases its equipment and materials from suppliers who provide competitive prices and the Company believes that the labor markets from which it hires employees are not experiencing significant upward wage pressures. If inflation in the general economy increases, however, the Company's costs for equipment, materials and labor could increase as well. During the three months ending March 31, 2004, the price of steel, for both the commodity and for products manufactured with steel, rose dramatically due to increased worldwide demand. This affected the Company's operations through delays in scheduled deliveries of new equipment. If steel prices remain high, it is likely that the cost of the Company's new equipment will increase. These increases would result in higher capital expenditures and depreciation expense. RPC may not be able to recover such increased costs through price increases to its customers, thereby reducing the Company's future profits. The Company operates in highly competitive areas of the oilfield services industry. The products and services of each of the Company's principal industry segments are sold in highly competitive markets, and its revenues and earnings may be affected by the following factors: changes in competitive prices, fluctuations in the level of activity and major markets, general economic conditions, and governmental regulation. FORWARD-LOOKING STATEMENTS - -------------------------- Certain statements made in this report that are not historical facts are "forward-looking statements" under Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements that relate to our business strategy, plans and objectives, market risk exposure, adequacy of capital resources and funds, opportunity for growth, anticipated pension funding payments, and our beliefs and expectations regarding future demand for our products and services and other events and conditions that may influence the oilfield services market and our performance in the future. The words "may," "will," "expect," "believe," "anticipate," "project," "estimate," and similar expressions generally identify forward-looking statements. Such statements are based on 18 RPC, INC. AND SUBSIDIARIES certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. We caution you that such statements are only predictions and not guarantees of future performance and that actual results, developments and business decisions may differ from those envisioned by the forward-looking statements. Risk factors that could cause such future events not to occur as expected include those described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and the following: the volatility of oil and natural gas prices, continued downturn in the economy leading to decreased oil and gas exploration, inability to identify or complete acquisitions, adverse weather conditions, inability to attract and retain skilled employees, personal injury or property damage claims, and the changes in the supply and demand for oil and gas. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK RPC maintains an investment portfolio, comprised of U.S. Government, corporate and municipal debt securities, which is subject to interest rate risk exposure. As of March 31, 2004, we are not subject to material interest rate risk exposure on these securities since they are highly liquid with maturities of three months or less. The Company has been affected by the impact of lower interest rates on interest income from its short-term investments. This risk is managed through conservative policies to invest in high-quality obligations. Also, as of March 31, 2004, RPC had debt with variable interest rates that exposes RPC to certain market risks. In the prior year, RPC performed an interest rate sensitivity analysis related to the debt instruments using a duration model over the near term of the securities and the term of the debt with a 10 percent change in interest rates. RPC is not subject to material interest rate risk exposure based on this analysis, and no material changes in market risk exposures or how those risks are managed is expected. As of March 31, 2004, RPC had accounts receivable of approximately $66.3 million (net of an allowance for doubtful accounts of approximately $2.3 million). RPC is subject to a concentration of credit risk because most of the accounts receivable are due from companies in the oil and gas industry. ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES - The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, and that such information is accumulated and communicated to its management, including the President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. 19 RPC, INC. AND SUBSIDIARIES As of the end of the period covered by this report, March 31, 2004 (the "Evaluation Date"), the Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of the Evaluation Date. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING - There were no changes in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 20 RPC, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS RPC is involved in litigation from time to time in the ordinary course of its business. RPC does not believe that the outcome of such litigation will have a material adverse effect on the financial position or results of operations of RPC. ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None 21 RPC, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K a) Exhibits EXHIBIT NUMBER DESCRIPTION - -------------------------------------------------------------------------------- 3.1 Restated certificate of incorporation of RPC, Inc. (incorporated herein by reference to exhibit 3.1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999). 3.2 Bylaws of RPC, Inc. 4 Form of Stock Certificate (incorporated herein by reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998). 31.1 Section 302 certification for Chief Executive Officer. 31.2 Section 302 certification for Chief Financial Officer. 32.1 Section 906 certifications for Chief Executive Officer and Chief Financial Officer. b) Reports on Form 8-K during the quarter ended March 31, 2004 - -------------------------------------------------------------------------------- Date of Date filed earliest event Description of event - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- January 9, 2004 January 9, 2004 Item 5 and Item 7: Press release announcing repurchase of 102,800 shares of RPC, Inc. common stock during the fourth quarter 2003. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- January 20, 2004 January 20, 2004 Item 5 and Item 7: Press release announcing the date that RPC, Inc. will release its fourth quarter and year end 2003 results and host conference call February 17, 2004. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- January 28, 2004 January 27, 2004 Item 5 and Item 7: Press release announcing increased quarterly dividend to $0.03 and expansion of the stock buyback program by 1.5 million shares. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- February 17, 2004 February 17, 2004 Item 7 and Item 12: Press release announcing 2003 fourth quarter and full year results. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- February 17, 2004 February 17, 2004 Item 7 and Item 12: To amend previously filed press release dated February 17, 2004 in order to include reference to non-GAAP financial measure known as earnings before interest, taxes depreciation and amortization (EBITDA). - -------------------------------------------------------------------------------- 22 RPC, INC. AND SUBSIDIARIES SIGNATURES ---------- Pursuant to the requirements 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. /s/ Richard A. Hubbell ---------------------- Date: May 4, 2004 Richard A. Hubbell President and Chief Executive Officer (Principal Executive Officer) /s/ Ben M. Palmer ----------------- Date: May 4, 2004 Ben M. Palmer Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 23 EX-3.2 2 tex3_2-2532.txt EX-3.2 EXHIBIT 3.2 BYLAWS OF RPC, INC. --------- OFFICES ------- FIRST: The executive offices of RPC, Inc. (the "Corporation") shall be located at 2170 Piedmont Road, N.E., in the City of Atlanta, GA. The registered office in the State of Delaware is located at 32 Lockerman Square, Suite L-100, in the city of Dover, County of Kent, and the registered agent in charge of said office shall be C.T. Corporation. CORPORATE SEAL -------------- SECOND: The corporate seal shall have inscribed thereon the name of the Corporation and the year and state of its incorporation. MEETINGS OF STOCKHOLDERS ------------------------ THIRD: The annual meeting of stockholders for the election of directors shall be held on the fourth Tuesday of April at such office of the Corporation as may be designated by the Board of Directors and included in the notice of such meeting, in each year, or if that day be a legal holiday, on the next succeeding day not a legal holiday, at which meeting they shall elect by ballot, by plurality vote, a board of directors and may transact such other business as may come before the meeting. Special meetings of the stockholders may be called at any time by the chairman and shall be called by the chairman or secretary on the request in writing or by vote of a majority of the directors or at the request in writing of stockholders of record owning a majority in the amount of the capital stock outstanding and entitled to vote. All such special meetings of the stockholders shall be held at such place or places, within or without the State of Delaware, as may from time to time be fixed by the board of directors or as shall be specified and fixed in the respective notices or waivers of notice thereof. 2 Each stockholder of each class entitled to vote shall, at every meeting of the stockholders, be entitled to one vote in person or by proxy, signed by him, for each share of voting stock held by him, but no proxy shall be voted after the meeting of stockholders for which such proxy was solicited and which has been adjourned sine die. Such right to vote shall be subject to the right of the board of directors to fix a record date for voting stockholders as hereinafter provided and if the directors shall not have exercised such right, no share of stock which shall have been transferred on the books of the Corporation within twenty days next preceding such election shall be voted on at any election for directors. Notice of all meetings shall be mailed by the secretary to each stockholder of record entitled to vote, at his or her last known post office address, not less than ten nor more than sixty days before any annual or special meeting. The holders of a majority of each class of stock outstanding and entitled to vote shall constitute a quorum, but the holders of a smaller amount may adjourn from time to time without further notice until a quorum is secured. DIRECTORS --------- FOURTH: The property and business of this Corporation shall be managed by a board of not less than six (6) nor more than eleven (11) directors; except that where all the shares of Common Stock of the Corporation are owned beneficially and of record by one stockholder, the property and business of the Corporation may be managed by a sole director. The directors shall be divided into three classes. The first class (Class I) shall consist of at lease two (2) directors and the initial term of office of such class shall expire at the first annual meeting of stockholders. The second class (Class II) shall consist of at least two (2) directors and the initial term of office of such class shall expire at the second annual meeting of stockholders. The third class (Class 3 III) shall consist of at least two (2) directors and the initial term of office of such third class shall expire at the third annual meeting of stockholders. Should the number of directors be increased or decreased in the future, no class of directors shall have more than one director more than any other class of directors. At each annual election commencing at the first annual meeting of stockholders, the successors to the class of directors whose term expires at that time shall be elected to hold office for a term of three years to succeed those whose term expires, so that the term of office of one class of directors shall expire in each year. Each director shall hold office for the term for which he is elected or appointed or until his successor shall be elected and qualified, or until his death or until he shall resign. POWERS OF DIRECTORS ------------------- FIFTH: The board of directors shall have, in addition to such powers as are hereinafter expressly conferred on it, all such powers as may be exercised by the Corporation, subject to the provisions of the General Corporation Law of Delaware, the certificate of incorporation and the bylaws. The board of directors shall have power: To purchase or otherwise acquire property, rights or privileges for the Corporation, which the Corporation has power to take, at such prices and on such terms as the board of directors may deem proper. To pay for such property, rights or privileges in whole or in part with money, stock, bonds, debentures or other securities of the Corporation, or by the delivery of other property of the Corporation. 4 To create, make and issue mortgages, bonds, deeds of trust, trust agreements and negotiable or transferable instruments and securities, secured by mortgages or otherwise, and to do every other act and thing necessary to effectuate the same. To appoint agents, clerks, assistants, factors, employees and trustees, and to dismiss them at its discretion, to fix their duties and emoluments and to change them from time to time and to require security as it may deem proper. Any employee appointed by the board may be given such designation or title as the board shall determine; however, any such designation or title given any such employee shall not be deemed to constitute such employee a corporate officer under Article EIGHTH of these bylaws. To confer on any officer of the Corporation the power of selecting, discharging or suspending such employee. To determine by whom and in what manner the Corporation's bills, notes, receipts, acceptances, endorsement, checks, releases, contracts or other documents shall be signed. MEETINGS OF DIRECTORS --------------------- SIXTH: After each annual election of directors, the newly elected directors may meet for the purpose of organization, the election of officers and the transaction of other business, immediately after such meeting of stockholders or at such place and time as the directors may determine, and, if a majority of the directors be present at such place and time, no prior notice of such meeting shall be required to be given to the directors. The place and time of such meeting may also be fixed by written consent of the directors. Regular meetings of the directors shall be held annually following the stockholders meeting on the fourth Tuesday of April and quarterly on the fourth Tuesday of January, July and 5 October of each year at the executive offices of the corporation in Atlanta, Georgia, or elsewhere. Meetings may be held at other times as may be fixed by resolution of the board. Special meetings of the directors may be called by the chairman on two days' notice in writing or on one day's notice orally, by telegraph, telephone or otherwise to each director and shall be called by the chairman in like manner on the written request of two directors. Special meetings of the directors may be held within or without the State of Delaware at such places as is indicated in the notice or waiver of notice thereof. A majority of the directors shall constitute a quorum, but a smaller number may adjourn from time to time, without further notice, until a quorum is secured. The board may, by resolution passed by a majority of the whole board, designate one or more committees, including without limitation an Executive Committee, an Audit Committee and an Executive Compensation Committee, each committee to consist of one or more directors of the Corporation. Any such committee to the extent provided in the directors' resolution or in these bylaws, shall have and may exercise all the powers and authority of the board in managing the affairs and business of the Corporation, including without limitation the power and authority to declare a dividend or to authorize the issuance of stock, and may authorize affixation of the corporate seal to all papers that require it, but no such committee shall have the power or authority of the board in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all, or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the bylaws of the Corporation. 6 COMPENSATION OF DIRECTORS ------------------------- AND MEMBERS OF COMMITTEES ------------------------- SEVENTH: Directors and members of standing committees shall receive such compensation for attendance at each regular or special meeting of the board or such committees as the board shall from time to time prescribe. OFFICERS OF THE CORPORATION --------------------------- EIGHTH: The officers of the Corporation shall be a chairman, a president, a secretary, a treasurer and such other officers as may from time to time be chosen by the board of directors. The chairman and the president shall be chosen from among the directors. One person may hold more than one office. The officers of the Corporation shall hold office until their successors are chosen and qualify in their stead. Any officer chosen or appointed by the board of directors may be removed either with or without cause at any time by the affirmative vote of a majority of the whole board of directors. If the office of any officer or officers becomes vacant for any reason, the vacancy shall be filled by the affirmative vote of a majority of the whole board of directors. DUTIES OF THE CHAIRMAN ---------------------- NINTH: It shall be the duty of the chairman to preside at all meetings of stockholders and directors; to have general and active management of the business of the Corporation; and to see that all orders and resolutions of the board of directors are carried into effect. The chairman shall be vested with all the powers and be required to perform all the duties of the president in his absence or disability. The chairman shall perform such other duties as shall be assigned to him by the board of directors. 7 DUTIES OF THE PRESIDENT ----------------------- TENTH: The president shall be the chief executive officer of the corporation. It shall be the duty of the president to execute, unless otherwise delegated, all contracts, agreements, deeds, bonds, mortgages and other obligations and instruments, in the name of the corporation and to affix the corporate seal thereto when authorized by the board. The president shall supervise and direct the other officers of the Corporation and shall see that their duties are properly performed. The president shall be vested with all the powers and be required to perform all the duties of the chairman in his absence or disability. The president shall perform such other duties as shall be assigned to him by the chairman of the board of directors or the board of directors. CHAIRMAN PRO TEM ---------------- ELEVENTH: In the absence or disability of the chairman and the president, the board may appoint from their own number a chairman pro tem. SECRETARY --------- TWELFTH: The secretary shall attend all meetings of the board of directors, and all other meetings as directed by the board of directors. He shall act as clerk thereof and shall record all of the proceedings of such meetings in a book kept for that purpose. He shall give proper notice of meetings of stockholders and shall perform such other duties as shall be assigned to him by the president or the chairman of the board of directors. TREASURER --------- THIRTEENTH: The treasurer shall have custody of the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name 8 and to the credit of the Corporation in such depositories as may be designated by the board of directors. He shall keep an account of stock registered and transferred in such manner and subject to such regulations as the board of directors may prescribe. He shall give the Corporation a bond, if required by the board of directors, in such sum and in form and with security satisfactory to the board of directors for the faithful performance of the duties of his office and the restoration to the Corporation, in case of his death, resignation or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession, belonging to the Corporation. He shall perform such other duties as the board of directors may from time to time prescribe or require. DUTIES OF OFFICERS MAY HE DELEGATED ----------------------------------- FOURTEENTH: In the case of the absence or disability of any officer of the Corporation or far any other reason deemed sufficient by a majority of the board, the board of directors may delegate his powers or duties, to any other officer or to any director for the duration of such absence or disability. CERTIFICATES OF STOCK --------------------- FIFTEENTH: Certificates of stock shall be signed by either the chairman or vice-chairman of the board of directors, or the president or vice-president, and either the treasurer, assistant treasurer, secretary or assistant secretary. If a certificate of stock be lost or destroyed, another may be issued in its stead upon proof of such loss or destruction and the giving of a satisfactory bond of indemnity, in an amount sufficient to indemnify the Corporation against any claim. A new certificate may be issued without requiring bond when, in the judgment of the 9 directors, it is proper to do so. Certificates may be signed by facsimile signature if so ordered by the board of directors. TRANSFER OF STOCK ----------------- SIXTEENTH: All transfers of stock of the Corporation shall be made upon its books by the holder of the shares in person or by his lawfully constitutes representative, upon surrender of certificates of stock for cancellation. The Corporation shall have authority to appoint transfer agents and registrars by resolution of the board of directors. STOCKHOLDERS OF RECORD ---------------------- SEVENTEENTH: The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, save as expressly provided by the laws of Delaware. FISCAL YEAR ----------- EIGHTEENTH: The fiscal year of the Corporation shall end on the last day of December in each year. DIVIDENDS --------- NINETEENTH: Dividends upon the capital stock of any class may be declared by the board of directors at any regular or special meeting and may be paid in cash or in property or in shares of the capital stock. Before paying any dividend or making any distribution of profits, the directors may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may alter or abolish any such reserve or reserves. 10 CHECKS FOR MONEY ---------------- TWENTIETH: All checks, drafts or orders for the payment of money shall be signed by the treasurer or by such other officer or officers as the board of directors may from time to time designate. No check shall be signed in blank. The board of directors also from time to time may authorized specified employees to sign checks on the Corporation's accounts. BOOKS AND RECORDS ----------------- TWENTY-FIRST: The books, accounts and records of the Corporation except as otherwise required by the laws of the State of Delaware, may be kept within or without the State of Delaware, at such place or places as may from time to time be designated by the bylaws or by resolution of the directors. NOTICES ------- TWENTY-SECOND: Notice required or permitted to be given under the provisions of these bylaws to any director, officer or stockholder shall not be construed to mean personal notice, but may be given in writing by depositing the same in a post office or letter-box, in a postpaid sealed wrapper, addressed to such stockholder, officer ox director at such address as appears on the books of the Corporation, and such notice shall be deemed to be given at the time when the some shall be thus mailed. Any stockholder, officer. or director may waive, in writing, any notice, required to be given under these bylaws whether before or after the time stated therein. AMENDMENTS OF BYLAWS -------------------- TWENTY-THIRD: These bylaws may be amended, altered, repealed, or added to at any meeting of the stockholders or board of directors, by affirmative vote of a majority of each class 11 of stock issued and outstanding and entitled to vote thereon or of a majority of the directors in office, as the case may be. INDEMNIFICATION OF DIRECTORS OFFICERS AND EMPLOYEES --------------------------------------------------- TWENTY-FOURTH: The Corporation shall indemnify, in the manner and to the fullest extent now or hereafter permitted by the General Corporation Law of the State of Delaware, any person(or the estate of any person) who was or is a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a directors, officer or General Counsel of the Corporation, or is or was serving at the request of the Corporation as a director, officer or General counsel of another corporation, partnership joint venture, trust or other enterprise. The indemnification provided herein shall be made if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, has no reasonable cause to believe his conduct was unlawful; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been determined to be liable for gross negligence or willful misconduct in the performance of his duty to the Corporation. Such determination may be made by a majority of a committee composed of the directors not involved in the matter in controversy (whether or not a quorum). To the full extent permitted by law, the indemnification provided herein shall include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement, and, in the manner provided by law, any such expenses may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding. The indemnification provided herein shall not be deemed to limit the right of the Corporation to 12 indemnify any other employee for any such expense to the full extent provided by law, nor shall it be deemed exclusive of an other rights to which any person seeking indemnification from the Corporation may be entitled under any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. The Corporation may, to the full extent permitted by law, purchase and maintain insurance on behalf of any such person against any liability which may be asserted against him. NON-DISCRIMINATION STATEMENT ---------------------------- TWENTY-FIFTH: Consistent with the Corporation's equal employment opportunity policy, nominations for the election of directors shall be made by the Board of Directors and voted upon by the stockholders in a manner consistent with these bylaws and without regard to the nominee's race, color, ethnicity, religion, sex, age, national origin, veteran status, or disability. TWENTY-SIXTH: INTENTIONALLY LEFT BLANK NOTICE OF NOMINATION OF DIRECTORS --------------------------------- TWENTY-SEVENTH: Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the 13 date of the giving of the notice provided for in this Section 27th and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 27th.. Shareholders will not be entitled to nominate any candidate for director at any annual or special meeting unless the shareholder shall have first provided notice in writing, delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation so that it is received (a) not less than ninety days prior to the anniversary of the prior year's annual meeting of stockholders with respect to an annual meeting; provided, however, that in the event the annual meeting is scheduled to be held on a date more than 30 days prior to or delayed by more than 60 days after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the later of the close of business 90 days prior to such annual meeting or the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs (and in no event shall the public announcement of an adjournment of the meeting commence a new time period for a giving of a stockholder's notice under this Section). Each such notice shall set forth (a) with respect to the nominee, (i) the name, age, business address and, if known, residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee for the past five years, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that 14 would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (c) whether such stockholder or beneficial owner has delivered or intends to deliver a proxy statement and form of proxy to holders of a sufficient number of holders of the Corporation's voting shares to elect such nominee or nominees. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. The Chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a shareholder failed to provide notice of a nomination in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. 15 EX-31.1 3 tex31_1.txt EX-31.1 Exhibit 31.1 CERTIFICATIONS I, Richard A. Hubbell, President and Chief Executive Officer of registrant, certify that: 1. I have reviewed this quarterly report on Form 10-Q of RPC, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ RICHARD A. HUBBELL --------------------------------------- Date: May 4, 2004 Richard A. Hubbell President and Chief Executive Officer (Principal Executive Officer) EX-31.2 4 tex31_2.txt EX-31.2 Exhibit 31.2 I, Ben M. Palmer, Vice President, Chief Financial Officer, and Treasurer certify that: 1. I have reviewed this quarterly report on Form 10-Q of RPC, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. ` /s/ BEN M. PALMER -------------------------------------------- Date: May 4, 2004 Ben M. Palmer Vice President, Chief Financial Officer, and Treasurer (Principal Financial and Accounting Officer) EX-32.1 5 tex32_1.txt EX-32.1 EXHIBIT 32.1 CERTIFICATION OF PERIODIC FINANCIAL REPORTS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 To the best of their knowledge the undersigned hereby certify that the Quarterly Report on Form 10-Q of RPC, Inc. for the period ended March 31, 2004, fully complies with the requirements of Section 13(a) of The Securities Exchange Act of 1934 (15 U.S.C.78m) and that the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of RPC, Inc. Date: May 4, 2004 ----------------------------------------------------- Richard A. Hubbell President and Chief Executive Officer (Principal Executive Officer) Date: May 4, 2004 ----------------------------------------------------- Ben M. Palmer Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----