Delaware | 58-1550825 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number)
|
Large accelerated filer x | Accelerated filer o | ||
Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o
|
Part I. Financial Information
|
Page No.
|
|
Item 1.
|
Financial Statements (Unaudited)
|
|
Consolidated Balance Sheets –As of March 31, 2015 and December 31, 2014
|
3
|
|
Consolidated Statements of Operations – For the three months ended March 31, 2015 and 2014
|
4
|
|
Consolidated Statements of Comprehensive Income – For the three months ended March 31, 2015 and 2014
|
5
|
|
Consolidated Statement of Stockholders’ Equity – For the three months ended March 31, 2015
|
6
|
|
Consolidated Statements of Cash Flows – For the three months ended March 31, 2015 and 2014
|
7
|
|
Notes to Consolidated Financial Statements
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8 – 18
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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19 – 26
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Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
26
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Item 4.
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Controls and Procedures
|
27
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Part II. Other Information
|
||
Item 1.
|
Legal Proceedings
|
27
|
Item 1A.
|
Risk Factors
|
27
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Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
28
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Item 3.
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Defaults upon Senior Securities
|
28
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Item 4.
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Mine Safety Disclosures
|
28
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Item 5.
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Other Information
|
28
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Item 6.
|
Exhibits
|
29
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Signatures
|
30
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RPC, INC. AND SUBSIDIARIES
|
||||||||
PART I. FINANCIAL INFORMATION
|
||||||||
ITEM 1. FINANCIAL STATEMENTS
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
AS OF MARCH 31, 2015 AND DECEMBER 31, 2014
|
||||||||
(In thousands)
|
||||||||
(Unaudited)
|
||||||||
March 31,
|
December 31,
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|||||||
2015
|
2014
|
|||||||
ASSETS
|
(Note 1)
|
|||||||
Cash and cash equivalents
|
$ | 15,476 | $ | 9,772 | ||||
Accounts receivable, net
|
430,612 | 634,730 | ||||||
Inventories
|
153,698 | 155,611 | ||||||
Deferred income taxes
|
8,470 | 9,422 | ||||||
Income taxes receivable
|
14,512 | 29,115 | ||||||
Prepaid expenses
|
8,507 | 9,135 | ||||||
Other current assets
|
2,958 | 3,843 | ||||||
Total current assets
|
634,233 | 851,628 | ||||||
Property, plant and equipment, less accumulated depreciation of $1,289,333 in 2015 and $1,239,163 in 2014
|
857,632 | 849,383 | ||||||
Goodwill
|
32,150 | 32,150 | ||||||
Other assets
|
25,965 | 26,197 | ||||||
Total assets
|
$ | 1,549,980 | $ | 1,759,358 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Accounts payable
|
$ | 91,349 | $ | 175,416 | ||||
Accrued payroll and related expenses
|
27,625 | 49,798 | ||||||
Accrued insurance expenses
|
6,494 | 5,632 | ||||||
Accrued state, local and other taxes
|
5,980 | 6,821 | ||||||
Income taxes payable
|
1,727 | 944 | ||||||
Other accrued expenses
|
384 | 401 | ||||||
Total current liabilities
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133,559 | 239,012 | ||||||
Long-term accrued insurance expenses
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10,868 | 10,099 | ||||||
Notes payable to banks
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155,600 | 224,500 | ||||||
Long-term pension liabilities
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34,561 | 34,399 | ||||||
Deferred income taxes
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137,774 | 156,977 | ||||||
Other long-term liabilities
|
15,523 | 15,989 | ||||||
Total liabilities
|
487,885 | 680,976 | ||||||
Common stock
|
21,707 | 21,654 | ||||||
Capital in excess of par value
|
- | - | ||||||
Retained earnings
|
1,059,105 | 1,074,561 | ||||||
Accumulated other comprehensive loss
|
(18,717 | ) | (17,833 | ) | ||||
Total stockholders’ equity
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1,062,095 | 1,078,382 | ||||||
Total liabilities and stockholders’ equity
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$ | 1,549,980 | $ | 1,759,358 | ||||
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, 2015 AND 2014
|
||||||||
(In thousands except per share data)
|
||||||||
(Unaudited)
|
||||||||
Three months ended March 31,
|
||||||||
|
2015
|
2014
|
||||||
Revenues
|
$ | 406,270 | $ | 501,692 | ||||
Cost of revenues (exclusive of items shown below)
|
292,445 | 330,015 | ||||||
Selling, general and administrative expenses
|
42,637 | 48,708 | ||||||
Depreciation and amortization
|
65,976 | 55,505 | ||||||
(Gain) loss on disposition of assets, net
|
(958 | ) | 2,232 | |||||
Operating profit
|
6,170 | 65,232 | ||||||
Interest expense
|
(691 | ) | (337 | ) | ||||
Interest income
|
6 | 4 | ||||||
Other income, net
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5,789 | 80 | ||||||
Income before income taxes
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11,274 | 64,979 | ||||||
Income tax provision
|
3,726 | 25,591 | ||||||
Net income
|
$ | 7,548 | $ | 39,388 | ||||
Earnings per share
|
||||||||
Basic
|
$ | 0.04 | $ | 0.18 | ||||
Diluted
|
$ | 0.04 | $ | 0.18 | ||||
Dividends per share
|
$ | 0.105 | $ | 0.105 | ||||
Weighted average shares outstanding
|
||||||||
Basic
|
213,492 | 215,175 | ||||||
Diluted
|
213,585 | 216,214 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
4 |
RPC, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
|
(In thousands)
|
(Unaudited)
|
Three months ended March 31,
|
||||||||
2015
|
2014
|
|||||||
Net income
|
$ | 7,548 | $ | 39,388 | ||||
Other comprehensive income (loss):
|
||||||||
Pension adjustment and reclassification adjustment, net of taxes
|
125 | 84 | ||||||
Foreign currency translation
|
(1,029 | ) | (471 | ) | ||||
Unrealized gain (loss) on securities, net of taxes
|
20 | (36 | ) | |||||
Comprehensive income
|
$ | 6,664 | $ | 38,965 |
5 |
RPC, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
|
FOR THE THREE MONTHS ENDED MARCH 31, 2015
|
(In thousands)
|
(Unaudited)
|
Common Stock |
Capital in
Excess of
Par Value
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||
Balance, December 31, 2014
|
216,539 | $ | 21,654 | $ | — | $ | 1,074,561 | $ | (17,833 | ) | $ | 1,078,382 | ||||||||||||
Stock issued for stock incentive plans, net
|
869 | 87 | 2,357 | — | — | 2,444 | ||||||||||||||||||
Stock purchased and retired
|
(339 | ) | (34 | ) | (3,817 | ) | (242 | ) | — | (4,093 | ) | |||||||||||||
Net income
|
— | — | — | 7,548 | — | 7,548 | ||||||||||||||||||
Pension adjustment, net of taxes
|
— | — | — | — | 125 | 125 | ||||||||||||||||||
Foreign currency translation
|
— | — | — | — | (1,029 | ) | (1,029 | ) | ||||||||||||||||
Unrealized loss on securities, net of taxes
|
— | — | — | — | 20 | 20 | ||||||||||||||||||
Dividends declared
|
— | — | — | (22,762 | ) | — | (22,762 | ) | ||||||||||||||||
Excess tax benefits for share-based payments
|
— | — | 1,460 | — | — | 1,460 | ||||||||||||||||||
Balance, March 31, 2015
|
217,069 | $ | 21,707 | $ | — | $ | 1,059,105 | $ | (18,717 | ) | $ | 1,062,095 |
6 |
RPC, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014
|
(In thousands)
|
(Unaudited)
|
Three months ended March 31,
|
||||||||
2015
|
2014
|
|||||||
OPERATING ACTIVITIES
|
||||||||
Net income
|
$ | 7,548 | $ | 39,388 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation, amortization and other non-cash charges
|
67,555 | 56,280 | ||||||
Stock-based compensation expense
|
2,523 | 2,320 | ||||||
(Gain) loss on disposition of assets, net
|
(958 | ) | 2,232 | |||||
Deferred income tax benefit
|
(18,413 | ) | (10,192 | ) | ||||
Excess tax benefits for share-based payments
|
(1,460 | ) | (4,455 | ) | ||||
(Increase) decrease in assets:
|
||||||||
Accounts receivable
|
203,706 | (31,043 | ) | |||||
Income taxes receivable
|
16,063 | 8,076 | ||||||
Inventories
|
1,217 | (9,421 | ) | |||||
Prepaid expenses
|
621 | 506 | ||||||
Other current assets
|
806 | 1,692 | ||||||
Other non-current assets
|
225 | (117 | ) | |||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
|
(57,944 | ) | 19,508 | |||||
Income taxes payable
|
783 | 6,593 | ||||||
Accrued payroll and related expenses
|
(22,346 | ) | (6,181 | ) | ||||
Accrued insurance expenses
|
862 | 302 | ||||||
Accrued state, local and other taxes
|
(841 | ) | 1,503 | |||||
Other accrued expenses
|
(17 | ) | 60 | |||||
Pension liabilities
|
359 | 396 | ||||||
Long-term accrued insurance expenses
|
769 | 958 | ||||||
Other long-term liabilities
|
(466 | ) | (537 | ) | ||||
Net cash provided by operating activities
|
200,592 | 77,868 | ||||||
INVESTING ACTIVITIES
|
||||||||
Capital expenditures
|
(103,492 | ) | (40,295 | ) | ||||
Proceeds from sale of assets
|
2,899 | 2,862 | ||||||
Net cash used for investing activities
|
(100,593 | ) | (37,433 | ) | ||||
FINANCING ACTIVITIES
|
||||||||
Payment of dividends
|
(22,762 | ) | (22,986 | ) | ||||
Borrowings from notes payable to banks
|
265,400 | 216,400 | ||||||
Repayments of notes payable to banks
|
(334,300 | ) | (188,900 | ) | ||||
Debt issue costs for notes payable to banks
|
- | (667 | ) | |||||
Excess tax benefits for share-based payments
|
1,460 | 4,455 | ||||||
Cash paid for common stock purchased and retired
|
(4,093 | ) | (13,144 | ) | ||||
Net cash used for financing activities
|
(94,295 | ) | (4,842 | ) | ||||
Net increase in cash and cash equivalents
|
5,704 | 35,593 | ||||||
Cash and cash equivalents at beginning of period
|
9,772 | 8,700 | ||||||
Cash and cash equivalents at end of period
|
$ | 15,476 | $ | 44,293 | ||||
Supplemental cash flows disclosure:
|
||||||||
Interest paid, net of amounts capitalized
|
$ | 608 | $ | 256 | ||||
Income taxes paid, net
|
$ | 4,423 | $ | 19,999 | ||||
Supplemental disclosure of noncash investing activities:
|
||||||||
Capital expenditures included in accounts payable
|
$ | 13,413 | $ | 22,432 |
7 |
1.
|
GENERAL
|
2.
|
REVENUES
|
3.
|
RECENT ACCOUNTING PRONOUNCEMENTS
|
|
●
|
ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU require that only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The Company adopted these provisions in the first quarter of 2015 and the adoption did not have a material impact on the Company’s consolidated financial statements.
|
8 |
|
●
|
ASU No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (i.e., debt issuance cost asset and the debt liability). The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments is permitted for financial statements that have not been previously issued. The Company plans to adopt the provisions in the first quarter of 2016 and currently does not expect the adoption to have a material impact on its consolidated financial statements.
|
|
●
|
ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The amendments in this ASU are intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions).The ASU reduces the number of consolidation models from four to two, thereby simplifying the criteria for consolidation by:
|
|
●
|
ASU No. 2015-01, Income Statement —Extraordinary and Unusual
Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items This
ASU eliminates from U.S. GAAP the concept of extraordinary items. The amendments in this ASU are effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance
is applied from the beginning of the fiscal year of adoption. The Company plans to adopt these provisions in the first quarter
of 2016 and currently does not expect the adoption to have a material impact on its consolidated financial statements.
|
9 |
|
●
|
ASU No. 2014-15, Presentation of Financial Statements —Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The provisions in this ASU are intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Currently, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. This going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. This ASU provides guidance regarding management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern and the related footnote disclosures. The amendments are effective for the year ending December 31, 2016, and for interim periods beginning the first quarter of 2017, with early application permitted. The Company plans to adopt these provisions in the first quarter of 2016 and will provide such disclosures as required if there are conditions and events that raise substantial doubt about its ability to continue as a going concern. The Company currently does not expect the adoption to have a material impact on its consolidated financial statements.
|
|
●
|
ASU 2014-09, Revenue from Contracts with Customers (Topic 606).
This ASU affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services
or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards
(e.g., insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply a five
step process – (i) identifying the contract(s) with a customer, (ii) identifying the performance obligations in the contract,
(iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations in the contract
and (v) recognizing revenue when (or as) the entity satisfies a performance obligation. The Company is currently evaluating the
impact of these provisions on its financial statements.
|
4.
|
EARNINGS PER SHARE
|
10 |
Three months ended
March 31
|
||||||||
(In thousands except per share data )
|
2015
|
2014
|
||||||
Net income available for stockholders:
|
$ | 7,548 | $ | 39,388 | ||||
Less: Dividends paid
|
(22,762 | ) | (22,986 | ) | ||||
Undistributed earnings
|
$ | (15,214 | ) | $ | 16,402 | |||
Basic shares outstanding:
|
||||||||
Common stock
|
210,069 | 211,434 | ||||||
Restricted shares of common stock
|
3,423 | 3,741 | ||||||
Total basic shares
|
213,492 | 215,175 | ||||||
Diluted shares outstanding:
|
||||||||
Common stock
|
210,069 | 211,434 | ||||||
Dilutive effect of stock based awards
|
93 | 1,039 | ||||||
210,162 | 212,473 | |||||||
Restricted shares of common stock
|
3,423 | 3,741 | ||||||
Total diluted shares
|
213,585 | 216,214 |
Three months ended
March 31
|
||||||||
2015
|
2014
|
|||||||
Basic Earnings per share
|
||||||||
Common stock
|
$ | 0.04 | $ | 0.18 | ||||
Restricted shares of common stock
|
0.02 | 0.16 |
5.
|
PROPERTY, PLANT AND EQUIPMENT
|
11 |
6.
|
STOCK-BASED COMPENSATION
|
Three months ended
|
||||||||
March 31
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Pre-tax expense
|
$ | 2,523 | $ | 2,320 | ||||
After tax expense
|
$ | 1,602 | $ | 1,473 |
Shares
|
Weighted Average
Grant-Date Fair Value |
|||||||
Non-vested shares at December 31, 2014
|
3,575,150 | $ | 12.04 | |||||
Granted
|
895,725 | 12.30 | ||||||
Vested
|
(1,054,625 | ) | 8.66 | |||||
Forfeited
|
(26,950 | ) | 13.84 | |||||
Non-vested shares at March 31, 2015
|
3,389,300 | $ | 13.15 |
7.
|
BUSINESS SEGMENT INFORMATION
|
12 |
Three months ended March 31
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Revenues:
|
||||||||
Technical Services
|
$ | 378,093 | $ | 466,970 | ||||
Support Services
|
28,177 | 34,722 | ||||||
Total revenues
|
$ | 406,270 | $ | 501,692 | ||||
Operating profit:
|
||||||||
Technical Services
|
$ | 5,862 | $ | 64,896 | ||||
Support Services
|
3,907 | 7,457 | ||||||
Corporate
|
(4,557 | ) | (4,889 | ) | ||||
Gain (loss) on disposition of assets, net
|
958 | (2,232 | ) | |||||
Total operating profit
|
$ | 6,170 | $ | 65,232 | ||||
Interest expense
|
(691 | ) | (337 | ) | ||||
Interest income
|
6 | 4 | ||||||
Other income, net
|
5,789 | 80 | ||||||
Income before income taxes
|
$ | 11,274 | $ | 64,979 |
13 |
Three months ended March 31, 2015
|
Technical
Services |
Support
Services |
Corporate
|
Total
|
||||||||||||
(in thousands)
|
||||||||||||||||
Depreciation and amortization
|
$ | 57,676 | $ | 8,166 | $ | 134 | $ | 65,976 | ||||||||
Capital expenditures
|
96,387 | 6,583 | 522 | 103,492 | ||||||||||||
Identifiable assets at March 31, 2015
|
$ | 1,331,402 | $ | 141,498 | $ | 77,080 | $ | 1,549,980 |
Three months ended March 31, 2014
|
Technical
Services |
Support
Services |
Corporate
|
Total
|
||||||||||||
(in thousands)
|
||||||||||||||||
Depreciation and amortization
|
$ | 47,344 | $ | 7,989 | $ | 172 | $ | 55,505 | ||||||||
Capital expenditures
|
30,302 | 9,973 | 20 | 40,295 | ||||||||||||
Identifiable assets at March 31, 2014
|
$ | 1,180,519 | $ | 156,836 | $ | 96,940 | $ | 1,434,295 |
8.
|
INVENTORIES
|
9.
|
EMPLOYEE BENEFIT PLAN
|
Three months ended
March 31
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Interest cost
|
$ | 474 | $ | 486 | ||||
Expected return on plan assets
|
(565 | ) | (560 | ) | ||||
Amortization of net losses
|
198 | 133 | ||||||
Net periodic benefit cost
|
$ | 107 | $ | 59 |
14 |
Three months ended
March 31
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Gains (losses), net
|
$ | 204 | $ | 184 |
10.
|
NOTES PAYABLE TO BANKS
|
|
●
|
the Base Rate, which is the highest of Bank of America’s “prime rate” for the day of the borrowing, a fluctuating rate per annum equal to the Federal Funds Rate plus 0.50%, and a rate per annum equal to the one (1) month LIBOR rate plus 1.00%; in each case plus a margin that ranges from 0.125% to 1.125% based on a quarterly debt covenant calculation; or
|
|
●
|
with respect to any Eurodollar borrowings, Adjusted LIBOR (which equals LIBOR as increased to account for the maximum reserve percentages established by the U.S. Federal Reserve) plus a margin ranging from 1.125% to 2.125%, based upon a quarterly debt covenant calculation.
|
15 |
Three months ended
March 31
|
||||||||
2015
|
2014
|
|||||||
(in thousands except interest rate data)
|
||||||||
Interest incurred
|
$ | 844 | $ | 414 | ||||
Capitalized interest
|
$ | 179 | $ | 97 | ||||
Weighted average interest rate
|
1.6 | % | 3.4 | % |
11.
|
INCOME TAXES
|
12.
|
FAIR VALUE DISCLOSURES
|
|
1.
|
Level 1 – Quoted market prices in active markets for identical assets or liabilities.
|
|
2.
|
Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
3.
|
Level 3 – Unobservable inputs developed using the Company’s estimates and assumptions, which reflect those that market participants would use.
|
16 |
Fair value measurements at March 31, 2015 with:
|
||||||||||||
(in thousands)
|
Quoted prices in
active markets for identical assets |
Significant other
observable inputs |
Significant
unobservable inputs |
|||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||
Assets:
|
||||||||||||
Trading securities
|
$ | - | $ | 16,695 | $ | - | ||||||
Available for sale securities
|
307 | - | - |
Fair value measurements at December 31, 2014 with:
|
||||||||||||
(in thousands)
|
Quoted prices in
active markets for identical assets |
Significant other
observable inputs |
Significant
unobservable inputs |
|||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||
Assets:
|
||||||||||||
Trading securities
|
$ | - | $ | 16,491 | $ | - | ||||||
Available for sale securities
|
275 | - | - |
17 |
13.
|
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
|
Pension
Adjustment
|
Unrealized
Gain (Loss) On
Securities
|
Foreign Currency Translation
|
Total
|
|||||||||||||
Balance at December 31, 2014
|
$ | (16,246 | ) | $ | (98 | ) | $ | (1,489 | ) | $ | (17,833 | ) | ||||
Change during the period:
|
||||||||||||||||
Before-tax amount
|
- | 31 | (1,029 | ) | (998 | ) | ||||||||||
Tax benefit
|
- | (11 | ) | - | (11 | ) | ||||||||||
Reclassification adjustment, net of taxes:
|
||||||||||||||||
Amortization of net loss (1)
|
125 | - | - | 125 | ||||||||||||
Total activity for the period
|
125 | 20 | (1,029 | ) | (884 | ) | ||||||||||
Balance at March 31, 2015
|
$ | (16,121 | ) | $ | (78 | ) | $ | (2,518 | ) | $ | (18,717 | ) |
(1)
|
Reported as part of selling, general and administrative expenses.
|
Pension
Adjustment
|
Unrealized
Gain (Loss) On
Securities
|
Foreign Currency Translation
|
Total
|
|||||||||||||
Balance at December 31, 2013
|
$ | (9,760 | ) | $ | 10 | $ | (365 | ) | $ | (10,115 | ) | |||||
Change during the quarter:
|
||||||||||||||||
Before-tax amount
|
- | (56 | ) | (471 | ) | (527 | ) | |||||||||
Tax benefit
|
- | 20 | - | 20 | ||||||||||||
Reclassification adjustment, net of taxes:
|
||||||||||||||||
Amortization of net loss (1)
|
84 | - | - | 84 | ||||||||||||
Total activity for the period
|
84 | (36 | ) | (471 | ) | (423 | ) | |||||||||
Balance at March 31, 2014
|
$ | (9,676 | ) | $ | (26 | ) | $ | (836 | ) | $ | (10,538 | ) |
(1)
|
Reported as part of selling, general and administrative expenses.
|
14.
|
SUBSEQUENT EVENT
|
18 |
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
19 |
20 |
Three months ended
March 31
|
||||||||
2015
|
2014
|
|||||||
Consolidated revenues [in thousands]
|
$ | 406,270 | $ | 501,692 | ||||
Revenues by business segment [in thousands]:
|
||||||||
Technical
|
$ | 378,093 | $ | 466,970 | ||||
Support
|
28,177 | 34,722 | ||||||
Consolidated operating profit [in thousands]
|
$ | 6,170 | $ | 65,232 | ||||
Operating profit by business segment [in thousands]:
|
||||||||
Technical
|
$ | 5,862 | $ | 64,896 | ||||
Support
|
3,907 | 7,457 | ||||||
Corporate
|
(4,557 | ) | (4,889 | ) | ||||
Gain (loss) on disposition of assets, net
|
958 | (2,232 | ) | |||||
Percentage of cost of revenues to revenues
|
72.0 | % | 65.8 | % | ||||
Percentage of selling, general & administrative expenses to revenues
|
10.5 | % | 9.7 | % | ||||
Percentage of depreciation and amortization expense to revenues
|
16.2 | % | 11.1 | % | ||||
Average U.S. domestic rig count
|
1,403 | 1,779 | ||||||
Average natural gas price (per thousand cubic feet (mcf))
|
$ | 2.82 | $ | 4.86 | ||||
Average oil price (per barrel)
|
$ | 48.99 | $ | 98.70 |
21 |
22 |
Three months ended March 31
|
||||||||
(In thousands)
|
2015
|
2014
|
||||||
Net cash provided by operating activities
|
$ | 200,617 | $ | 77,868 | ||||
Net cash used for investing activities
|
(100,618 | ) | (37,433 | ) | ||||
Net cash used for financing activities
|
(94,295 | ) | (4,842 | ) |
23 |
24 |
25 |
26 |
27 |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total
Number of
Shares
(or Units)
Purchased
|
Average Price
Paid Per
Share
(or Unit)
|
Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced Plans
or Programs
|
Maximum Number
(or Approximate
Dollar Value) of
Shares (or Units)
that May Yet Be
Purchased Under
the Plans or
Programs (1)
|
||||||||||||
Month #1
|
||||||||||||||||
January 1, 2015 to January 31, 2015
|
339,318 | (2) | $ | 12.06 | - | 2,050,154 | ||||||||||
Month #2
|
||||||||||||||||
February 1, 2015 to February 28, 2015
|
- | - | - | 2,050,154 | ||||||||||||
Month #3
|
||||||||||||||||
March 1, 2015 to March 31, 2015
|
- | - | - | 2,050,154 | ||||||||||||
Totals
|
339,318 | $ | 12.06 | - | 2,050,154 |
(1)
|
The Company has a stock buyback program initially adopted in 1998 and subsequently amended in 2013 that authorizes the repurchase of up to 31,578,125 shares. There were no shares repurchased as part of this program during the first quarter of 2015. As of March 31, 2015, there are 2,050,154 shares available to be repurchased under the current authorization. Currently the program does not have a predetermined expiration date.
|
|
(2)
|
Represents shares repurchased by the Company in connection with taxes related to vesting of restricted shares.
|
28 |
Exhibit
Number
|
Description
|
|
3.1(a)
|
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).
|
|
3.1(b)
|
Certificate of amendment of the certificate of incorporation of RPC, Inc. (incorporated by reference to Exhibit 3.1(b) to Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2006).
|
|
3.1(c)
|
Certificate of amendment of the certificate of incorporation of RPC, Inc. (incorporated by reference to Exhibit 3.1(c) to the Registrant’s Quarterly Report on Form 10-Q filed on August 2, 2011).
|
|
3.2
|
Amended and Restated Bylaws of RPC, Inc. (incorporated by reference to Exhibit 3.2 to Registrant’s Quarterly Report on Form 10-Q filed on November 3, 2014).
|
|
4
|
Form of Stock Certificate (incorporated herein by reference to Exhibit 4 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
|
|
18 | Preferability Letter from Independent Registered Public Accounting Firm. | |
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.
|
|
95.1
|
Mine Safety Disclosures
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
29 |
RPC, INC.
|
|
/s/ Richard A. Hubbell | |
Date: May 1, 2015
|
Richard A. Hubbell |
President and Chief Executive Officer
|
|
(Principal Executive Officer) |
/s/ Ben M. Palmer | |
Date: May 1, 2015
|
Ben M. Palmer |
Vice
President, Chief Financial Officer and Treasurer
|
|
(Principal Financial and Accounting Officer) |
30 |
EXHIBIT 18
May 1, 2015
Board of Directors
RPC, Inc.
2801 Buford Highway NE, Suite 520
Atlanta, Georgia 30329
Dear Directors:
We are providing this letter solely for inclusion as an exhibit to RPC, Inc.’s (the "Company") Form 10-Q filing pursuant to Item 601 of Regulation S-K.
As stated in Note 5 to the unaudited condensed consolidated financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015, as a result of a change in estimate related to the useful life of a specific component of the Company’s pressure pumping equipment, the Company has concluded that this component is no longer a long-lived asset, but instead a consumable supply inventory item. Accordingly, the cost of this component is being expensed as repairs and maintenance within cost of revenues at the time of installation. Note 5 also states management’s belief that the change is preferable in the circumstances because it more closely reflects the pattern of consumption of this component as a result of continual increases in the wear and tear experienced by these items due to harsher geological environments.
With regard to the aforementioned accounting change, it should be understood that authoritative criteria have not been established for evaluating the preferability of one acceptable method of accounting over another acceptable method and, in expressing our concurrence below, we have relied on management’s business planning and judgment and on management’s determination that this change in accounting estimate effected by a change in accounting principle is preferable.
Based on our reading of management’s stated reasons and justification for this change in accounting estimate effected by a change in accounting principle in the Form 10-Q, and our discussions with management as to their judgment about the relevant business planning factors and changing business conditions relating to this change, we concur with management that the newly adopted method of accounting is preferable in the Company’s circumstances.
We have not audited the application of the aforementioned accounting change to the financial statements included in Part I of the Company’s Form 10-Q. We also have not audited any consolidated financial statements of the Company as of any date or for any period subsequent to December 31, 2014. Accordingly, we do not express an opinion on whether the accounting for the change in accounting estimate effected by a change in accounting principle has been properly applied or whether the aforementioned financial statements are fairly presented in conformity with accounting principles generally accepted in the United States of America.
Very truly yours,
/s/ GRANT THORNTON LLP
|
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 registrant’s other certifying officer 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;
|
|||
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|||
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 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 functions):
|
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 1, 2015 | Richard A. Hubbell | ||
President and Chief Executive Officer | |||
(Principal Executive Officer)
|
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 registrant’s other certifying officer 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;
|
|||
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|||
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 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 functions):
|
|||
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 1, 2015 | Ben M. Palmer | ||
Vice President, Chief Financial Officer and Treasurer | |||
(Principal Financial and Accounting Officer) |
Date: May 1, 2015 | /s/ Richard A. Hubbell | ||
Richard A. Hubbell | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: May 1, 2015 | /s/ Ben M. Palmer | ||
Ben M. Palmer | |||
Vice President, Chief Financial Officer and Treasurer | |||
(Principal Financial and Accounting Officer) | |||
EMPLOYEE BENEFIT PLAN - Net periodic benefit cost and related components (Details) (Multiple Employers Retirement Income Plan, USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2015
|
Mar. 31, 2014
|
|
Multiple Employers Retirement Income Plan
|
||
Multiemployer Plans [Line Item] | ||
Interest cost | $ 474 | $ 486 |
Expected return on plan assets | (565) | (560) |
Amortization of net losses | 198 | 133 |
Net periodic benefit cost | $ 107 | $ 59 |
FAIR VALUE DISCLOSURES (Detail Textuals) (Revolving credit facility, USD $)
In Millions, unless otherwise specified |
Mar. 31, 2015
|
Dec. 31, 2014
|
---|---|---|
Revolving credit facility
|
||
Line of Credit Facility [Line Items] | ||
Outstanding borrowings under the facility | $ 155.6 | $ 224.5 |
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