t65395_10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549


FORM 10-Q


Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


For the quarterly period ended March 31, 2009

Commission File No. 1-8726

RPC, INC.
(Exact name of registrant as specified in its charter)

Delaware
58-1550825
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)

2801 Buford Highway, Suite 520, Atlanta, Georgia  30329
(Address of principal executive offices)    (zip code)

Registrant’s telephone number, including area code -- (404) 321-2140

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.      (Check one):

Large accelerated filer o
Accelerated filer x
Non-accelerated filer o
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

As of April 24, 2009, RPC, Inc. had 98,426,892 shares of common stock outstanding.


RPC, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Part I. Financial Information
Page
No.
 
Item 1.
Financial Statements (Unaudited)
  
 
 
Consolidated Balance Sheets – As of March 31, 2009 and December 31, 2008
3
 
 
   
 
 
Consolidated Statements of Operations – For the three months ended March 31, 2009 and 2008
4
 
 
   
 
 
Consolidated Statement of Stockholders’ Equity – For the three months ended March 31, 2009
5
 
 
   
 
 
Consolidated Statements of Cash Flows – For the three months ended March 31, 2009 and 2008
6
 
 
   
 
 
Notes to Consolidated Financial Statements
7 – 19
 
 
   
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20 – 30
 
 
   
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
30
 
 
   
 
Item 4.
Controls and Procedures
31
 
 
   
Part II.  Other Information
  
 
Item 1.
Legal Proceedings
32
 
 
 
 
 
Item 1A.
Risk Factors
32
 
 
   
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
32
 
 
   
 
Item 3.
Defaults upon Senior Securities
33
 
 
   
 
Item 4.
Submission of Matters to a Vote of Security Holders
33
 
 
   
 
Item 5.
Other Information
33
 
 
   
 
Item 6.
Exhibits
34
 
 
   
Signatures
  
35
 
2
 
RPC, INC. AND SUBSIDIARIES
  
PART I. FINANCIAL INFORMATION
  
ITEM 1. FINANCIAL STATEMENTS
  
   
CONSOLIDATED BALANCE SHEETS
  
AS OF MARCH 31, 2009 AND DECEMBER 31, 2008
  
(In thousands)
  
(Unaudited)
  
             
   
March 31,
    
December 31,
  
   
2009
    
2008
  
ASSETS
        
(Note 1)
  
             
Cash and cash equivalents
   $ 2,312     $ 3,037  
Accounts receivable, net
     153,307       210,375  
Inventories
     56,611       49,779  
Deferred income taxes
     6,004       6,187  
Income taxes receivable
     12,279       15,604  
Prepaid expenses and other current assets
     4,294       7,841  
Total current assets
     234,807       292,823  
Property, plant and equipment, net
     461,480       470,115  
Goodwill
     24,093       24,093  
Other assets
     7,217       6,430  
Total assets
   $ 727,597     $ 793,461  
                 
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
Accounts payable
   $ 50,633     $ 61,217  
Accrued payroll and related expenses
     12,888       20,398  
Accrued insurance expenses
     4,764       4,640  
Accrued state, local and other taxes
     3,196       2,395  
Income taxes payable
     1,007       3,359  
Other accrued expenses
     315       320  
Total current liabilities
     72,803       92,329  
Long -term accrued insurance expenses
     8,377       8,398  
Notes payable to banks
     132,500       174,450  
Long-term pension liabilities
     12,034       11,177  
Other long-term liabilities
     2,065       3,628  
Deferred income taxes
     53,706       54,395  
Total liabilities
     281,485       344,377  
Common stock
     9,843       9,770  
Capital in excess of par value
     3,322       3,990  
Retained earnings
     443,018       445,356  
Accumulated other comprehensive loss
     (10,071 )     (10,032 )
Total stockholders' equity
     446,112       449,084  
Total liabilities and stockholders' equity
   $ 727,597     $ 793,461  
                 
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, 2009 and 2008
  
(In thousands except per share data)
  
(Unaudited)
  
             
             
             
   
Three months ended March 31,
  
   
2009
    
2008
  
             
Revenues
   $ 176,271     $ 197,227  
Cost of revenues
     109,970       117,670  
Selling, general and administrative expenses
     27,606       28,317  
Depreciation and amortization
     32,020       27,326  
Gain on disposition of assets, net
     (1,722 )     (1,527 )
Operating profit
     8,397       25,441  
Interest expense
     (594 )     (1,471 )
Interest income
     33       22  
Other income (expense), net
     143       (7 )
Income before income taxes
     7,979       23,985  
Income tax provision
     3,513       9,228  
Net income
   $ 4,466     $ 14,757  
                 
                 
Earnings per share
                
Basic
   $ 0.05     $ 0.15  
Diluted
   $ 0.05     $ 0.15  
                 
Dividends per share
   $ 0.07     $ 0.06  
                 
Average shares outstanding
                
Basic
     96,178       96,586  
Diluted
     96,729       98,091  
                 
                 
                 
The accompanying notes are an integral part of these consolidated financial statements.
  
4
 
RPC, INC. AND SUBSIDIARIES
  
   
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
  
FOR THE THREE MONTHS ENDED MARCH 31, 2009
  
(In thousands)
  
(Unaudited)
  
   
   
   
Comprehensive
    
Common Stock
    
Capital in
Excess of
   
Retained
    
Accumulated Other Comprehensive
  
 
  
   
Income (Loss)
    
Shares
    
Amount
    
Par Value
    
Earnings
    
Loss
    
Total
  
Balance, December 31, 2008
           97,705     $ 9,770     $ 3,990     $ 445,356     $ (10,032 )   $ 449,084  
Stock issued for stock incentive
                                                      
plans, net
           925       93       (230 )     —       —       (137 )
Stock purchased and retired
           (202 )     (20 )     (1,640 )     —       —       (1,660 )
Net income
   $ 4,466       —       —       —       4,466       —       4,466  
Pension adjustment, net of taxes
     309       —       —       —       —       309       309  
Loss on cash flow hedge,
                                                        
net of taxes
     (114 )     —       —       —       —       (114 )     (114 )
Foreign currency translation,
                                                        
net of taxes
     (164 )     —       —       —       —       (164 )     (164 )
Unrealized loss on securities,
                                                        
net of taxes
     (70 )     —       —       —       —       (70 )     (70 )
Comprehensive income
   $ 4,427                                                  
Dividends declared
             —       —       —       (6,804 )     —       (6,804 )
Stock-based compensation
             —       —       1,015       —       —       1,015  
Excess tax benefits for share-
                                                        
based payments
             —       —       187       —       —       187  
Balance, March 31, 2009
             98,428     $ 9,843     $ 3,322     $ 443,018     $ (10,071 )   $ 446,112  
                                                         
                                                         
The accompanying notes are an integral part of this consolidated financial statement.
          
5
 
RPC, INC. AND SUBSIDIARIES
  
             
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
FOR THE THREE MONTHS ENDED MARCH 31, 2009 and 2008
  
(In thousands)
  
(Unaudited)
  
             
   
Three months ended March 31,
  
   
2009
    
2008
  
OPERATING ACTIVITIES
            
Net income
   $ 4,466     $ 14,757  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation, amortization and other non-cash charges
     31,999       27,327  
Stock-based compensation expense
     1,015       889  
Gain on disposition of assets, net
     (1,722 )     (1,527 )
Deferred income tax (benefit) provision
     (1,173 )     586  
Excess tax benefits for share-based payments
     (187 )     (421 )
Changes in current assets and liabilities:
                
Accounts receivable
     57,029       2,179  
Income taxes receivable
     3,512       5,095  
Inventories
     (6,871 )     (4,851 )
Prepaid expenses and other current assets
     3,431       789  
Accounts payable
     (15,334 )     4,847  
Income taxes payable
     (2,352 )     490  
Accrued payroll and related expenses
     (7,510 )     (3,512 )
Accrued insurance expenses
     124       156  
Accrued state, local and other taxes
     801       562  
Other accrued expenses
     (3 )     (27 )
Changes in working capital
     32,827       5,728  
Changes in other assets and liabilities:
                
Accrued pension
     1,344       543  
Accrued insurance expenses
     (21 )     755  
Other non-current assets
     (784 )     (631 )
Other non-current liabilities
     (1,743 )     (1,279 )
Net cash provided by operating activities
     66,021       46,727  
                 
INVESTING ACTIVITIES
                
Capital expenditures
     (19,475 )     (46,335 )
Proceeds from sale of assets
     2,571       2,466  
Net cash used for investing activities
     (16,904 )     (43,869 )
                 
FINANCING ACTIVITIES
                
Payment of dividends
     (6,804 )     (5,794 )
Borrowings from notes payable to banks
     68,300       99,000  
Repayments of notes payable to banks
     (110,250 )     (86,350 )
Excess tax benefits for share-based payments
     187       421  
Cash paid for common stock purchased and retired
     (1,349 )     (5,193 )
Proceeds received upon exercise of stock options
     74       210  
Net cash (used for) provided by financing activities
     (49,842 )     2,294  
                 
Net (decrease) increase in cash and cash equivalents
     (725 )     5,152