UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______ to ______ .
Commission File No. 1-8726
RPC, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 58-1550825
(State of Incorporation) (I.R.S. Employer Identification No.)
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Registrant's telephone number, including area code--(404) 321-2140
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
COMMON STOCK, $0.10 PAR VALUE THE NEW YORK STOCK EXCHANGE
Securities registered pursuant to section 12(g) of the Act:
NONE
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x]
As of February 29, 2000, RPC, Inc. had 28,242,263 shares of common stock outstanding and the aggregate market value of this stock (based on the closing price on The New York Stock Exchange of $7.625 per share) held by nonaffiliates was $67,999,544.
Documents Incorporated by Reference:
Portions of the Proxy Statement for the 2000 Annual Meeting of Stockholders of RPC, Inc. are incorporated by reference into Part III, Items 10 through 13.
PART I
Item 1. Business
Principal Products and Services
RPC, Inc. ("RPC") was incorporated as RPC Energy Services, Inc. in the state of Delaware on January 20, 1984. RPC has two major business segments: boat manufacturing and oil and gas services.
Boat Manufacturing
Chaparral Boats, Inc. ("Chaparral"), a wholly owned subsidiary of RPC, sells three lines of powerboats to a nationwide network of independent dealers. These lines consist of a sportboat line, a deckboat line, and a cruiser line. New models are introduced each year. Operations are seasonal in nature with the second quarter recording the highest sales volume for the year. This business segment contributed 53 percent of RPC's consolidated revenue in 1999, 42 percent in 1998, and 39 percent in 1997. Research and development expenditures, totaling $2,948,000 in 1999, $2,499,000 in 1998, and $2,122,000 in 1997, were necessary to generate new product innovations.
Oil and Gas Services
The oil and gas services segment provides a variety of services, equipment, and personnel to the oil and gas industry. Service locations include Belle Chasse, Houma, Lafayette, Fourchon, and Morgan City, Louisiana; Alice, Corpus Christi, Houston, Longview, and Odessa, Texas; Elk City, Woodward, Lindsay, and McAlester, Oklahoma; Rock Springs, Wyoming; Venezuela and Algeria. The oil and gas services business is not generally seasonal. However, severe weather conditions will increase the demand for oil and natural gas, which generally results in an increase in the demand for our services. During 1999, 1998, and 1997 there were no material expenditures for research and development in this business segment.
The services provided by the oil and gas services segment of RPC include the following:
Oil Field Services
Cudd Pressure Control, Inc. ("Cudd"), a wholly owned subsidiary of RPC, provides a wide range of oil and gas well services throughout the southwestern United States and other countries. These oil field services include coiled tubing, snubbing, nitrogen and fluid pumping, wireline, marine, well control, and engineering consulting. This portion of the oil and gas services business segment contributed 28 percent of RPC's consolidated revenue in 1999, 30 percent in 1998, and 32 percent in 1997.
Equipment Rental Services
Patterson Services, Inc. a wholly owned subsidiary of RPC, offers specialized tools and equipment on a rental basis. These include drill pipe, drill collars, tubing, blowout preventors, and torque-turning equipment. In addition, Patterson Services provides experienced personnel to install and remove customer-owned casing at well sites and operate company-owned, diesel-driven hammers and welding machines used to weld and drive pipe into the ground. On average, approximately 15 percent of its rental equipment was rented on a daily basis in 1999, 23 percent in 1998, and 26 percent in 1997. In the rental business, maximum utilization is approximately 50 percent due to transportation, inspection, and cleaning requirements. This portion of the oil and gas services business segment contributed 10 percent of RPC's consolidated revenue in 1999, 15 percent in 1998, and 15 percent in 1997.
Storage and Inspection Services
Patterson Tubular Services, Inc. ("PTS"), a wholly owned subsidiary of RPC, performs tubular inspections, coats tubular, stores pipe, and inventories pipe using an on-line computerized inventory system. Waterfront dock facilities enable PTS to service a wide variety of offshore and inland vessels.
This portion of the oil and gas services business segment contributed 2 percent of RPC's consolidated revenue in 1999, 6 percent in 1998, and 8 percent in 1997.
Neither the boat manufacturing nor the oil and gas services business segment is significantly affected by the availability of raw materials or the existence of licenses, patents, and trademarks.
Customers
RPC's business is not dependent on any one customer, but on a variety of customers in both major business segments. No one customer accounts for more than 10 percent of consolidated revenue.
The boat manufacturing segment produces three lines of boats with distribution to a nationwide network of independent dealers. Sales to these dealers are generated by a seven-person sales force. Although production is scheduled from orders placed by dealers, these are not firm orders and are frequently changed or canceled. As a result, this segment does not have an identifiable backlog of sales.
The oil and gas services segment provides services to drilling contractors, oil field supply stores and service companies, major oil and gas producers, and independent exploration companies. Sales are generated by RPC's sales force and from customer referrals. RPC has no written contracts of a material nature with any of its oil and gas services segment customers. Also, there is no material sales backlog due to the short-term nature of the rental and services industry.
Competition
There are many companies that compete with RPC's subsidiaries in each segment, some of which are larger and have been established in the industries for longer periods of time.
The boat manufacturing segment's competition includes small independent companies, as well as large vertically integrated companies that have both engine and boat manufacturing capabilities. Major markets include the southeastern and Gulf states, the northeastern states, and California. Competitive factors in this industry are the quality of materials, the quality of the construction process, the design features, and the selling prices. Selling prices are set by management and vary from dealer to dealer based upon volume. The sales prices of Chaparral's boats are similar to equivalent competitors' models.
In the oil and gas services segment, intense competition exists and has led to substantial price reductions for services offered. Industry conditions are influenced by such factors as weather, economic and political conditions, as well as worldwide demand for, and prices of, oil and natural gas. The notable competitive factors in this segment are quality, availability, and price of equipment and services. This segment's predominant markets are the Gulf of Mexico, southwestern United States, Venezuela, and Algeria.
Employees
As of December 31, 1999, RPC employed 1,732 persons.
Environmental Considerations
The capital expenditures, earnings, and competitive position of RPC are not materially affected by compliance with federal, state, and local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment.
Anticipated Spin-off of Chaparral Boats
On January 14, 2000, RPC announced it had taken the initial steps to spin-off its 100 percent ownership in Chaparral Boats. The transaction, expected to be completed during the third quarter of 2000, will be structured as a tax-free distribution of Chaparral Boats stock to RPC shareholders. The spin-off is subject to various approvals including a favorable tax ruling from the Internal Revenue Service and final approval of RPC's Board of Directors.
Industry Segment's Financial Information
Information about RPC's operations by segment, as well as financial information about foreign and domestic operations for the three years ended December 31, 1999, is set forth in Note 9 of the Financial Statements on page 22.
Item 2. Properties
RPC owns or leases 65 offices and operating facilities. Considered individually, the only facility that represents a materially important physical property is the boat manufacturing plant in Nashville, Georgia. RPC believes its current operating facilities are suitable and adequate to meet current and reasonably anticipated future needs. Descriptions of the major facilities are as follows:
OWNED LOCATIONS
Houston, Texas--Pipe storage terminal, inspection shed, and pipe coating
facility
Nashville, Georgia--Boat manufacturing facility
Irving, Texas--Crane fabrication plant
Houma, Louisiana--Oil and gas administrative office
LEASED LOCATIONS
Morgan City, Louisiana--Pipe storage terminal and inspection shed Expiration date of lease: January 31, 2002
Item 3. Legal Proceedings
RPC is involved in various legal proceedings encountered in the ordinary course of business. In the opinion of management, any judgment or settlement arising from these proceedings will not, individually or in the aggregate, have a material adverse effect on its business or its financial position.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth quarter of 1999.
Item 4A. Executive Officers of the Registrant
Each of the executive officers of RPC was elected by the Board of Directors to serve until the Board of Directors' meeting immediately following the next annual meeting of stockholders or until his or her earlier removal by the Board of Directors or his or her resignation. The following table lists the executive officers of RPC and their ages, offices, and terms of office with RPC.
Name and Office Date First With Registrant Age Elected to Office R. Randall Rollins 68 1/24/84 Chairman of the Board Chief Executive Officer Richard A. Hubbell 55 1/27/87 President Chief Operating Officer James A. Lane, Jr. 57 1/27/87 Executive Vice President Jonathan W. Moss 69 5/1/99 Executive Vice President Linda H. Graham 63 1/27/87 Vice President Secretary Ben M. Palmer 39 7/8/96 Vice President Chief Financial Officer Treasurer |
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
RPC common stock is listed for trading on the New York Stock Exchange under the symbol RES. At the close of business on December 31, 1999, there were 1,191 holders of record of common stock. The high and low prices of RPC's common stock for each quarter in the years ended December 31, 1999 and 1998 were as follows:
1999 1998
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Quarter High Low High Low
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First $ 7.688 $ 5.750 $ 13.500 $ 10.875
Second 9.813 5.875 14.250 12.250
Third 8.875 6.500 12.625 8.750
Fourth 7.735 5.688 9.938 7.000
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During 1999, RPC declared and paid quarterly cash dividends of $0.035 per common share payable March 10, June 10, September 10, and December 10, 1999. Dividends were first paid in the third quarter of 1997.
Item 6. Selected Financial Data
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RPC, INC. AND SUBSIDIARIES (in thousands except per share data)
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1999 1998 1997 1996 1995
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OPERATIONS SUMMARY
Revenue $230,463 $244,274 $245,799 $200,833 $161,379
Net costs and expenses 217,316 218,428 211,836 180,596 145,228
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Income before income taxes 13,147 25,846 33,963 20,237 16,151
Income tax provision 4,996 9,821 11,718 6,982 5,396
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Net income $ 8,151 $ 16,025 $ 22,245 $ 13,255 $ 10,755
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Earnings per share:
Basic $ 0.29 $ 0.55 $ 0.76 $ 0.46 $ 0.37
Diluted .29 .55 .75 .46 .37
Cash dividends declared .14 .14 .05 -- --
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CAPITAL EXPENDITURES $ 22,129 $ 30,124 $ 20,479 $ 20,889 $ 15,529
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FINANCIAL POSITION
Total assets $190,575 $180,691 $182,518 $152,800 $132,656
Working capital 38,365 40,099 50,395 39,192 41,943
Stockholders' equity 142,808 143,066 139,376 117,799 104,361
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Consolidated
Consolidated revenue in 1999 was $230,463,000 a 6 percent decrease compared to $244,274,000 in 1998. In 1999, revenue in the boat manufacturing segment increased 19 percent compared to 1998 due primarily to increases in both the average sales price and the number of boats sold. The oil and gas services segment revenue in 1999 decreased 24 percent compared to 1998 because of significant decreases in customer drilling-related and production-related activity. Consolidated revenue in 1998 decreased less than 1 percent compared to 1997 revenue of $245,799,000. The boat manufacturing segment revenue increased $8,468,000 or 9 percent in 1998, however, this increase was offset by the decrease in the oil and gas services segment revenue of $13,650,000 or 10 percent.
Consolidated income before income taxes was $13,147,000 in 1999, $25,846,000 in 1998, and $33,963,000 in 1997. This represented a decrease of $12,699,000 or 49 percent in 1999 and a decrease of $8,117,000 or 24 percent in 1998. In 1999, the boat manufacturing segment generated a $2,552,000 or 18 percent increase in operating profit to $16,472,000. The increase was achieved because Chaparral was able to increase boat sales revenue and maintain its pricing structure and margins, despite continued price competition and significant product enhancements. The oil and gas services segment operating profit decreased $17,749,000 because of the reasons discussed more fully below. In 1998, the boat manufacturing segment increased operating profit $2,165,000 or 18 percent as a result of increased revenue and margin improvements, while operating profit decreased $8,799,000 or 34 percent in the oil and gas services segment because of the reasons discussed below. Corporate expenses and interest income in 1999 were comparable to 1998.
Consolidated net income was $8,151,000 or $0.29 diluted earnings per share in 1999 compared to $16,025,000 or $0.55 diluted earnings per share in 1998. This represented a decrease of $7,874,000 or 49 percent in 1999, which was comparable with the decrease in income before income taxes. Consolidated net income in 1997 was $22,245,000 or $0.75 diluted earnings per share. Net income decreased $6,220,000 or 28 percent in 1998 compared to 1997. This decrease was higher than the decrease in income before income taxes because the effective income tax rate increased in 1998 compared to 1997. This increase was the result of all remaining state tax net operating loss benefits having been recognized prior to 1998.
Revenue--Business Segments
Boat Manufacturing--The boat manufacturing segment generated a 19 percent or $19,381,000 increase in revenue from $103,497,000 in 1998 to $122,878,000 in 1999. Revenue for 1997 was $95,029,000.
The total number of boats sold by Chaparral in 1999 increased 8 percent compared to 1998 while the average sales price also increased 8 percent. The average sales price increase resulted from selling a larger number of higher priced Cruisers and Sunestas in 1999 compared to 1998. In addition, revenue in 1999 increased compared to 1998 as a result of increased sales of parts and accessories and the favorable response to the dealer incentive programs. Lastly, there were price increases in July 1999 and December 1999 that averaged approximately 2 percent each, as a result of higher material costs, product upgrades and other product changes. The increase in revenue during 1999 was similar to the overall industry growth.
The total number of boats sold by Chaparral in 1998 decreased less than 1 percent compared to 1997 while the average sales price increased 10 percent. The increase in the average sales price in 1999 compared to 1998 was due to increased sales of larger, higher priced boats coupled with favorable response to the dealer incentive programs.
Oil and Gas Services-- The oil and gas services segment revenue decreased 24 percent in 1999 compared to 1998. Segment revenue was $94,864,000 in 1999, $123,949,000 in 1998, and $137,599,000 in 1997.
Customer activity levels in the first half of 1998 were strong, but declined dramatically in the second half of 1998. Customer activity remained weak during most of 1999. This decline in activity resulted from a perceived world-wide imbalance between the supply and demand for oil and natural gas. Beginning in the second quarter of 1999, oil and natural gas prices began to increase from the low levels experienced in late 1998 and early 1999. Despite significant improvement in the commodity price environment during 1999, exploration and production spending increased only modestly. While the demand for our equipment and services began increasing during the third quarter of 1999, pricing remained highly competitive. At the end of 1999, the number of active drilling rigs in the United States had increased 24 percent over the prior year.
Patterson Services' revenue in 1999 decreased 38 percent compared to 1998. The significant decrease in drilling-related activity resulted in lower demand for Patterson's specialized rental tools. Cudd Pressure Control's revenue in 1999 decreased 11 percent compared to 1998 because of decreased customer expenditures toward enhancing production of existing wells. However, Cudd's international operations experienced a 17 percent increase in revenue in 1999 due to increased activity levels in Venezuela and a new service contract in the North Sea.
Oil and gas services segment revenue in 1998 decreased 10 percent compared to 1997 because of the dramatic decline in customer activity levels in the second half of 1998 as discussed above.
Expenses
Cost of goods sold for the boat manufacturing segment was $93,247,000 in 1999 compared to $77,776,000 in 1998 and $72,899,000 in 1997. Cost of goods sold in 1999 for this segment increased $15,471,000 or 20 percent compared to 1998, which is comparable to the increase in this segment's revenue. As a percent of revenue, cost of goods sold for this segment was 76 percent in 1999, 75 percent in 1998, and 77 percent in 1997. The 1 percent increase as a percentage of segment revenue in 1999 compared to 1998 can be attributed to the introduction of several new boat models in 1999 with enhanced features, which were somewhat more expensive to manufacture. The 2 percent decrease in 1998 compared to 1997 results from an emphasis on inventory pricing controls. The remaining portion of consolidated cost of goods sold was incurred by subsidiaries in other businesses.
Consolidated operating expenses were $99,523,000 in 1999, $113,994,000 in 1998, and $117,777,000 in 1997. Operating expenses were 13 percent lower in 1999 than in 1998, primarily because of lower costs incurred in the oil and gas services segment as a result of the decline in oil and gas services revenue.
Operating expenses in the boat manufacturing segment were $12,403,000 or 10 percent of segment revenue in 1999 which is comparable to $11,024,000 or 11 percent of segment revenue in 1998. The oil and gas services segment operating expenses were $79,835,000 or 84 percent of segment revenue in 1999 compared to $92,118,000 or 74 percent of segment revenue in 1998. Operating expenses within the oil and gas services segment could not be reduced enough in 1999 to offset the significant decreases in segment revenue. Operating expenses in 1997 of $99,981,000 or 73 percent of segment revenue was comparable to 1998.
Depreciation and amortization, excluding the portion included in cost of goods sold, was $16,614,000 in 1999, $15,661,000 in 1998, and $12,877,000 in 1997. Included in these totals were the oil and gas services segment depreciation and amortization of $15,314,000 in 1999,
$14,368,000 in 1998, and $11,521,000 in 1997. Depreciation and amortization in 1999 increased $953,000 or 6 percent as a result of depreciation on purchases of revenue related equipment in the oil and gas services segment. Chaparral's depreciation expense for production-related equipment is a component of cost of goods sold, therefore this category includes only amortization of intangibles and depreciation of non-production assets. Chaparral's depreciation and amortization was $778,000 for 1999, $776,000 for 1998, and $780,000 for 1997. Consolidated amortization of intangible assets was $960,000 in 1999, $888,000 in 1998, and $865,000 in 1997.
Interest Income
Interest income was $1,718,000 in 1999, $2,023,000 in 1998, and $2,376,000 in 1997. Total cash and marketable securities were $37,947,000 at December 31, 1999, compared to $42,950,000 at December 31, 1998. As a result of lower average balances and moderately lower yields, interest income decreased 15 percent in 1999 compared to 1998, and 15 percent in 1998 compared to 1997.
Financial Condition
As of December 31, 1999, RPC's cash and cash equivalents and short-term marketable securities totaled $13,076,000, a $367,000 decrease from $13,443,000 at December 31, 1998. Cash provided by operating activities was $25,642,000 compared to $24,496,000 in 1998. Accounts receivable were $34,871,000 at December 31, 1999, compared to $25,266,000 at December 31, 1998, an increase of $9,605,000. The increases in accounts receivable and accounts payable are due to the increased revenue and related activity levels experienced in the fourth quarter of 1999 compared to decreasing activity levels and revenue in the fourth quarter of 1998. Inventories were $2,185,000 higher than the prior year mainly due to an increase in the value of finished boats on hand for the boat manufacturing segment. Inventory of finished boats increased because of higher production levels to satisfy increased customer demand.
Working capital at December 31, 1999, was $38,365,000 compared to $40,099,000 in the prior year. The current ratio remained strong at the end of 1999 with a ratio of 1.9-to-1 as compared to 2.2-to-1 in 1998.
Capital expenditures for 1999 were $22,129,000, a decrease of $7,995,000 from $30,124,000 in 1998. The oil and gas services segment had capital expenditures in 1999 primarily for revenue-producing equipment totaling $19,175,000. Capital expenditures for the oil and gas services segment were $27,814,000 in 1998.
RPC expects that funding for capital requirements over the next twelve months will be provided by available cash and marketable securities and cash generated from operations.
Anticipated Spin-off of Chaparral Boats
On January 14, 2000, RPC announced it had taken the initial steps to spin-off its 100 percent ownership in Chaparral Boats. The transaction, expected to be completed during the third quarter of 2000, will be structured as a tax-free distribution of Chaparral Boats stock to RPC shareholders. The spin-off is subject to various approvals including a favorable tax ruling from the Internal Revenue Service and final approval of RPC's Board of Directors.
As more fully discussed in Note 11 of the Financial Statements on page 23, an after-tax gain of approximately $4,200,000, or $.15 diluted earnings per share, will be recorded by Chaparral Boats in the first quarter of 2000 in connection with a non-refundable settlement of a claim.
Forward-Looking Statements
This Annual Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included or incorporated by reference in this Annual Report which address activities, events, or developments which RPC expects or anticipates will or may occur in the future, including statements regarding RPC's competitive position, future capital requirements, the anticipated impact of legal proceedings, plans to increase revenue and profit margins, trends in the boating industry, plans to increase boat sales, future acquisitions, the impact of year 2000 programming issues, RPC's ability to take advantage of current conditions and opportunities in the oil and gas businesses and boat manufacturing business, the impact of consolidation in the oil and gas and boat manufacturing industries on RPC's business, market risk exposure and risk management, and other statements regarding future plans and strategies, anticipated trends and similar expressions concerning matters
that are not historical facts, are forward-looking statements. These statements are based on certain conditions and analyses made by RPC in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate under the circumstances. However, whether actual results and developments will conform to RPC's expectations and predictions is subject to a number of risks and uncertainties which could cause actual results to differ materially from RPC's expectations, including economic conditions, the price of oil and natural gas, conditions in the industries in which RPC operates, competition, the availability of acquisition candidates, the ability of RPC to obtain financing on reasonable terms and conditions, and other factors, many of which are beyond the control of RPC. Consequently, all of the forward-looking statements made in this Annual Report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by RPC will be realized or, even if substantially realized, that they will have the expected consequences to or effects on RPC or its business or operations. RPC assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.
Year 2000 Issue
Aware that the Year 2000 (Y2K) information technology programming issue
could have a significant potential impact on its future operations and financial
reporting, RPC began its assessment and remediation processes regarding its
primary financial and operating systems in 1997. RPC's assessment activities
included (1) identifying critical systems, (2) testing for Y2K compliance, (3)
obtaining assurances from its vendors and its large commercial customers, and
(4) developing contingency plans to address Y2K issues which could occur. RPC's
remediation activities included replacing certain software and operating
systems, followed by testing to ensure Y2K compliance of the replacements. No
negative or materially significant impact has yet been experienced internally
with RPC's systems or from any supplier due to the Y2K related issue, nor is any
such impact anticipated. No contingency plans have yet been invoked.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
RPC maintains an investment portfolio, comprised of U.S. Government and corporate debt securities, which is subject to interest rate risk exposure. This risk is managed through conservative policies to invest in high-quality obligations. RPC has performed an interest rate sensitivity analysis using a duration model over the near term with a 10 percent change in interest rates. RPC's portfolio is not subject to material interest rate risk exposure based on this analysis, and no material changes in market risk exposures or how those risks are managed is expected.
Item 8. Financial Statements and Supplementary Data
Balance Sheets
-------------------------------------------------------------------------------- RPC, INC. AND SUBSIDIARIES (in thousands except share information) -------------------------------------------------------------------------------- At December 31, 1999 1998 -------------------------------------------------------------------------------- ASSETS Cash and cash equivalents $ 8,278 $ 10,029 Marketable securities 4,798 3,414 Accounts receivable, net 34,871 25,266 Inventories 19,631 17,446 Deferred income taxes 8,254 10,787 Federal income taxes receivable 1,806 3,673 Prepaid expenses and other current assets 2,337 1,909 -------------------------------------------------------------------------------- Current assets 79,975 72,524 -------------------------------------------------------------------------------- Equipment and property, net 75,472 70,206 Marketable securities 24,871 29,507 Intangibles, net of accumulated amortization of $9,807 in 1999 and $8,847 in 1998 9,006 7,401 Other assets 1,251 1,053 -------------------------------------------------------------------------------- Total assets $190,575 $180,691 ================================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 13,728 $ 5,859 Accrued payroll and related expenses 5,725 4,192 Accrued insurance expenses 7,689 6,329 Accrued state, local and other taxes 4,106 4,063 Accrued discounts 1,131 1,053 Current portion of long-term debt 255 659 Other accrued expenses 8,976 10,270 -------------------------------------------------------------------------------- Current liabilities 41,610 32,425 -------------------------------------------------------------------------------- Long-term accrued insurance expenses 3,684 3,308 Long-term debt 1,547 636 Deferred income taxes 926 1,256 -------------------------------------------------------------------------------- Total liabilities 47,767 37,625 -------------------------------------------------------------------------------- Commitments and contingencies -------------------------------------------------------------------------------- Common stock, $.10 par value, 79,000,000 shares authorized, 28,262,463 shares issued in 1999, 28,887,872 shares issued in 1998 2,826 2,888 Capital in excess of par value 22,548 26,538 Earnings retained 117,434 113,640 -------------------------------------------------------------------------------- Total stockholders' equity 142,808 143,066 -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $190,575 $180,691 ================================================================================ |
The accompanying notes are an integral part of these statements.
Statements of Income
-------------------------------------------------------------------------------- RPC, INC. AND SUBSIDIARIES (in thousands except per share data) -------------------------------------------------------------------------------- Years ended December 31, 1999 1998 1997 -------------------------------------------------------------------------------- REVENUE $230,463 $244,274 $245,799 -------------------------------------------------------------------------------- Cost of goods sold 102,897 90,796 83,558 Operating expenses 99,523 113,994 117,777 Depreciation and amortization 16,614 15,661 12,877 Interest income (1,718) (2,023) (2,376) -------------------------------------------------------------------------------- Income before income taxes 13,147 25,846 33,963 Income tax provision 4,996 9,821 11,718 -------------------------------------------------------------------------------- Net income $ 8,151 $ 16,025 $ 22,245 ================================================================================ EARNINGS PER SHARE ================================================================================ Basic $ 0.29 $ 0.55 $ 0.76 ================================================================================ Diluted $ 0.29 $ 0.55 $ 0.75 ================================================================================ |
Statements of Stockholders' Equity
---------------------------------------------------------------------------------------------------------- RPC, INC. AND SUBSIDIARIES (in thousands) ---------------------------------------------------------------------------------------------------------- Three Years ended Common Capital in Excess Earnings Treasury December 31, 1999 Stock of Par Value Retained Stock ---------------------------------------------------------------------------------------------------------- Balance December 31, 1996 $ 1,471 $ 35,176 $ 81,555 $ 403 Two-for-one stock split 1,487 (1,487) -- -- Stock issued for stock incentive plans, net 20 1,522 (520) 215 Net income -- -- 22,245 -- Dividends declared -- -- (1,475) -- ---------------------------------------------------------------------------------------------------------- Balance December 31, 1997 2,978 35,211 101,805 618 Stock issued for stock incentive plans, net 5 437 (82) 19 Stock purchased and retired (95) (9,110) -- (637) Net income -- -- 16,025 -- Dividends declared -- -- (4,108) -- ---------------------------------------------------------------------------------------------------------- Balance December 31, 1998 2,888 26,538 113,640 0 Stock issued for stock incentive plans, net 14 758 (355) -- Stock purchased and retired (76) (4,748) -- -- Net income -- -- 8,151 -- Dividends declared -- -- (4,002) -- ---------------------------------------------------------------------------------------------------------- Balance December 31, 1999 $ 2,826 $ 22,548 $ 117,434 $ 0 ========================================================================================================== |
The accompanying notes are an integral part of these statements.
Statements of Cash Flows
-------------------------------------------------------------------------------------------------- RPC, INC. AND SUBSIDIARIES (in thousands) -------------------------------------------------------------------------------------------------- Years ended December 31, 1999 1998 1997 -------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income $ 8,151 $ 16,025 $ 22,245 Noncash charges (credits) to earnings: Depreciation and amortization 17,507 16,430 13,510 Gain on sale of equipment and property (1,615) (2,350) (2,216) Deferred income tax provision (benefit) 2,203 (1,213) (608) (Increase) decrease in assets: Accounts receivable (9,605) 6,887 (7,997) Inventories 1,867 (1,421) (598) Federal income taxes receivable (2,185) (3,673) -- Prepaid expenses and other current assets (428) 606 (727) Other noncurrent assets (244) 23 427 Increase (decrease) in liabilities: Accounts payable 7,895 (2,809) 681 Accrued payroll and related expenses 1,533 (1,634) 1,285 Accrued insurance expenses 1,736 (1,819) 1,226 Other accrued expenses (1,173) (556) 2,968 -------------------------------------------------------------------------------------------------- Net cash provided by operating activities 25,642 24,496 30,196 -------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Capital expenditures (22,129) (30,124) (20,479) Proceeds from sale of equipment and property 2,248 3,657 2,510 Net sale (purchase) of marketable securities 3,252 7,854 (7,555) Other (2,564) -- 623 -------------------------------------------------------------------------------------------------- Net cash used for investing activities (19,193) (18,613) (24,901) -------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Payment of dividends (4,002) (4,108) (1,475) Reduction of long-term debt (680) (877) -- Increase in long-term debt 1,187 -- -- Cash paid for common stock purchased and retired (4,814) (8,351) -- Proceeds received upon exercise of stock options 109 73 465 -------------------------------------------------------------------------------------------------- Net cash used for financing activities (8,200) (13,263) (1,010) -------------------------------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents (1,751) (7,380) 4,285 Cash and cash equivalents at beginning of year 10,029 17,409 13,124 -------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 8,278 $ 10,029 $ 17,409 ================================================================================================== |
The accompanying notes are an integral part of these statements.
Notes to Financial Statements
RPC, Inc. and Subsidiaries
Years ended December 31, 1999, 1998, and 1997
Note 1: Significant Accounting Policies
Principles of Consolidation--The consolidated financial statements include the accounts of RPC, Inc. and its wholly owned subsidiaries ("RPC" or the "Company"). All material intercompany accounts and transactions have been eliminated.
Nature of Operations--RPC is principally engaged in two businesses:
manufacturing powerboats and providing a variety of services, equipment, and
personnel to the oil and gas industry. The boat manufacturing segment
manufactures and distributes fiberglass boats to a nationwide network of
independent dealers. The principal markets for the oil and gas services segment
are domestic customers comprised of drilling contractors, oil field supply
stores and service companies, major oil and gas producers, and independent
exploration companies.
Use of Estimates in the Preparation of Financial Statements--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue--Revenue is recognized at the time services are performed or goods are delivered.
Cash Equivalents--Highly liquid investments with original maturities of 3 months or less are considered to be cash equivalents.
Marketable Securities--Marketable securities should be classified as either "trading" or "available-for-sale," which requires reporting at fair value on the balance sheet. Any unrealized gains and losses on trading securities are included in earnings. For available-for-sale securities, any unrealized gains and losses are excluded from earnings and, if significant, reported in a separate component of stockholders' equity. As of December 31, 1999 and 1998, the difference between fair value and cost for both classifications was not material.
Investments with original maturities between 3 and 12 months are considered to be current marketable securities. Investments with original maturities greater than 12 months are considered to be noncurrent marketable securities.
Inventories--Inventories are recorded at the lower of cost (first-in, first-out basis) or market value.
Long-Lived Assets--Long-lived assets and certain intangibles are reviewed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company periodically reviews the values assigned to long-lived assets, such as property and equipment and other assets, to determine if any impairments are other than temporary. Management believes that the long-lived assets in the accompanying balance sheets are appropriately valued.
Equipment and Property--Depreciation is provided principally on a straight-line basis over the estimated useful lives of assets. Annual provisions for depreciation are computed using the following useful lives: operating equipment and property, 3 to 10 years; buildings and leasehold improvements, 15 to 30 years; furniture and fixtures, 5 to 7 years; and vehicles, 3 to 5 years. The cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal with the resulting gain or loss credited or charged to income. Expenditures for additions, major renewals, and betterments are capitalized. Depreciation expense on production equipment in the manufacturing businesses is included in the "cost of goods sold" caption in the income statement. All other depreciation is included in the "depreciation and amortization" caption.
Intangibles--Intangibles represent the excess of the purchase price over the fair value of net assets of businesses acquired and noncompete agreements related to businesses acquired. Intangibles are presented net of accumulated amortization and are amortized using the straight-line method over a period not exceeding 20 years or the period of the noncompete agreement.
Stock-Based Compensation--Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" defines a fair value-based method of accounting for an employee stock option plan or similar equity instrument. However, it also allows an entity
to continue to measure compensation cost for those plans using the method of accounting prescribed in Accounting Principles Board ("APB") Opinion No. 25. Entities electing to remain with the accounting in APB 25 must make pro forma disclosures of net income and earnings per share, as if the fair value-based method of accounting defined in the statement had been applied.
RPC has elected to account for its stock-based compensation plans under APB 25; however, the Company has computed for pro forma disclosure purposes the value of all options granted during 1999, 1998, and 1997 using the Black-Scholes option pricing model as prescribed by SFAS No. 123 using the following weighted assumptions for grants:
1999 1998 1997
---------------------------------------------------------------------------------
Risk free interest rate 4.6% 5.4% 6.2%
Expected dividend yield 1% 2% 0%
Expected lives 7 years 7 years 7 years
Expected volatility 34-37% 31-34% 26-31%
---------------------------------------------------------------------------------
|
The total fair value of the options granted during the years ended December 31, 1999, 1998, and 1997, were computed as approximately $742,000, $1,092,000 and $524,000, respectively, which would be amortized over the vesting period of the options. If the Company had accounted for these plans in accordance with SFAS No. 123, the Company's reported pro forma net income and pro forma net income per share would have been as follows:
December 31, 1999 1998 1997 -------------------------------------------------------------------------------- Net Income (in thousands) As reported $ 8,151 $ 16,025 $ 22,245 Pro forma 7,848 15,818 22,163 Basic EPS As reported $ 0.29 $ 0.55 $ 0.76 Pro forma 0.28 0.55 0.76 Diluted EPS As reported $ 0.29 $ 0.55 $ 0.75 Pro forma 0.28 0.54 0.75 -------------------------------------------------------------------------------- |
Insurance Expenses--RPC self insures, up to specified limits, certain risks related to general liability, product liability, workers' compensation, and vehicle liability. The estimated cost of claims under the self-insurance program is accrued as the claims are incurred (although actual settlement of the claims may not be made until future periods) and may subsequently be revised based on developments relating to such claims. The noncurrent portion of these estimated outstanding claims is classified as long-term accrued insurance expenses.
Income Taxes--Deferred tax liabilities and assets are determined based on the difference between the financial and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Earnings per Share--SFAS No. 128, "Earnings Per Share," requires a basic earnings per share and diluted earnings per share presentation. The two calculations differ as a result of common stock equivalents and restricted shares included in diluted earnings per share, but excluded in basic earnings per share. A reconciliation of the weighted shares outstanding is as follows:
1999 1998 1997
--------------------------------------------------------------------------------
Basic EPS 28,177,251 28,987,345 29,181,668
Common stock
equivalents and
restricted shares 256,089 377,870 423,195
--------------------------------------------------------------------------------
Diluted EPS 28,433,340 29,365,215 29,604,863
================================================================================
|
New Accounting Standards--In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133," which defers the effective date of SFAS No. 133 to all fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," establishes accounting and reporting standards for derivative instruments including certain derivative instruments embedded in other contracts, and for hedging activities. It requires entities to recognize all instruments as either assets or liabilities in the balance sheet and measure those instruments at fair value. The Company does not anticipate the adoption of these standards to have a material impact on its financial position or results of operations.
Note 2: Accounts Receivable
Accounts receivable, net, at December 31, 1999, of $34,871,000 and at December 31, 1998, of $25,266,000 are net of allowances for doubtful accounts of $4,659,000 in 1999, and $7,004,000 in 1998.
Note 3: Inventories
Inventories are recorded at the lower of cost (first-in, first-out basis) or market value and are detailed as follows:
December 31, 1999 1998
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------
Raw materials and supplies $11,382 $ 9,942
Work in process 1,843 1,414
Finished goods 6,406 6,090
--------------------------------------------------------------------------------
Total inventories $19,631 $17,446
================================================================================
|
Note 4: Equipment and Property
Equipment and property are presented at cost net of accumulated depreciation and are detailed as follows:
December 31, 1999 1998
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------
Operating equipment
and property $188,380 $175,842
Buildings 17,816 17,142
Furniture and fixtures 4,322 4,233
Vehicles 20,747 18,999
Land 4,927 4,941
--------------------------------------------------------------------------------
Gross equipment and property 236,192 221,157
Less: accumulated depreciation 160,720 150,951
--------------------------------------------------------------------------------
Net equipment and property $ 75,472 $ 70,206
================================================================================
|
Note 5: Income Taxes
The following table lists the components of the provision for income taxes:
December 31, 1999 1998 1997
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------
Current:
Federal $ 1,783 $ 10,264 $ 11,838
State 1,010 770 488
Deferred 2,203 (1,213) (608)
--------------------------------------------------------------------------------
Total income tax provision $ 4,996 $ 9,821 $ 11,718
--------------------------------------------------------------------------------
|
A reconciliation between the federal statutory rate and RPC's effective tax rate is as follows:
December 31, 1999 1998 1997 -------------------------------------------------------------------------------- Federal statutory rate 35.0% 35.0% 35.0% State income taxes 3.0% 1.9% 1.4% Other 0.0% 1.1% (1.9) -------------------------------------------------------------------------------- Effective tax rate 38.0% 38.0% 34.5% ================================================================================ |
The components of the net deferred tax assets (liabilities) are as follows:
December 31, 1999 1998
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------
Current deferred tax asset:
Self-insurance reserves $ 2,116 $ 2,158
Bad debt reserves 1,752 2,278
State, local & other taxes 967 1,015
Payroll accruals 903 985
Warranty reserves 1,139 1,051
All others 1,377 3,300
Valuation allowance -- --
--------------------------------------------------------------------------------
Total current deferred tax asset $ 8,254 $10,787
================================================================================
Noncurrent deferred tax asset (liability):
Self-insurance reserves $ 1,933 $ 1,585
Depreciation (2,669) (2,562)
All others (190) (279)
Valuation allowance -- --
--------------------------------------------------------------------------------
Total noncurrent deferred
tax (liability): $ (926) $(1,256)
================================================================================
|
Total income tax payments, net of refunds, were $1,616,000 in 1999, $12,765,000 in 1998, and $11,260,000 in 1997.
Note 6: Long-Term Debt
The fair value of the long-term debt approximates the carrying value. All obligations are collateralized by equipment and property.
At December 31, 1999, future minimum payments on long-term debt and capitalized lease obligations were as follows:
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------
2000 $ 255
2001 626
2002 526
2003 395
2004 --
--------------------------------------------------------------------------------
Total $1,802
================================================================================
|
The long-term debt of RPC as of December 31, 1999, and December 31, 1998, is summarized as follows:
(in thousands) Range of
Maturity Interest
Type Dates Rates 1999 1998
--------------------------------------------------------------------------------
Notes payable 2001-2002 6.25-8.50% $1,703 $ 820
Capital leases 2003 10.99% 99 475
--------------------------------------------------------------------------------
Total debt 1,802 1,295
Less current portion 255 659
--------------------------------------------------------------------------------
Long-term debt $1,547 $ 636
================================================================================
|
The net book value of equipment under capital leases was $801,000 at December 31, 1999.
Note 7: Commitments and Contingencies
Minimum annual rentals, principally for noncancelable real estate and truck leases with terms in excess of one year, in effect at December 31, 1999, are summarized in the following table:
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------
2000 $1,089
2001 699
2002 365
2003 262
2004 174
Thereafter 18
--------------------------------------------------------------------------------
Total rental commitments $2,607
================================================================================
|
Total rental expense charged to operations was $2,014,000 in 1999, $2,514,000 in 1998, and $3,610,000 in 1997.
RPC is a defendant in a number of lawsuits which allege that plaintiffs have been damaged as a result of the rendering of services by RPC personnel and equipment, in vehicle accidents, or from the use of RPC's products. RPC is vigorously contesting these actions. Management is of the opinion that the outcome of these lawsuits will not have a material adverse effect on the financial position or results of operations or liquidity of RPC.
To assist dealers in obtaining financing for the purchase of its boats, Chaparral has entered into agreements with various dealers and financing institutions to guarantee varying amounts of the dealers' purchase debt obligations. Chaparral's obligation under its guarantee becomes effective in the case of default in payments by the dealer. The agreements provide for the return of all repossessed boats to Chaparral in new condition, in exchange for Chaparral's assumption of the unpaid debt obligation on those boats. As of December 31, 1999, guarantees outstanding totaled $1,308,000.
Note 8: Employee Benefit Plans
Retirement Plan--In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," which establishes standards for disclosures for pensions and other postretirement benefit plans. SFAS No. 132 is effective for fiscal years beginning after December 15, 1997. All prior years have been restated to conform to current year presentation.
RPC has a tax-qualified defined benefit, noncontributory, trusteed retirement income plan that covers substantially all employees with at least one year of service. Benefits are based on an employee's years of service and compensation near retirement. RPC has the right to terminate or modify the plan at any time.
The following table sets forth the funded status of the plan and the amounts recognized in RPC's consolidated balance sheet:
December 31, 1999 1998
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning
of year $ 20,126 $ 16,172
Service cost 1,031 914
Interest cost 1,453 1,343
Actuarial (gain) loss (2,115) 2,244
Benefits paid (699) (547)
--------------------------------------------------------------------------------
Benefit obligation at end of year 19,796 20,126
--------------------------------------------------------------------------------
|
CHANGE IN PLAN ASSETS: Fair value of plan assets at beginning of year 18,107 16,493 Actual return on plan assets 1,136 2,161 Benefits paid (699) (547) -------------------------------------------------------------------------------- Fair value of plan assets at end of year 18,544 18,107 -------------------------------------------------------------------------------- Funded status (1,252) (2,019) Unrecognized net asset (482) (674) Unrecognized net loss 824 2,458 Unrecognized prior service cost (14) (25) -------------------------------------------------------------------------------- Net accrued benefit $ (924) $ (260) ================================================================================ ACTUARIAL PRESENT VALUE OF BENEFIT OBLIGATIONS: Accumulated benefit obligation $ 16,192 $ 16,928 -------------------------------------------------------------------------------- Plan assets at fair value $ 18,544 $ 18,107 ================================================================================ |
RPC's funding policy is to contribute to the retirement income plan the amount required, if any, under the Employee Retirement Income Security Act of 1974. No contributions were required in 1999, 1998, and 1997.
Total retirement plan cost was $663,000 in 1999, $569,000 in 1998, and $86,000 in 1997. The components of net periodic benefit cost are summarized as follows:
December 31, 1999 1998 1997
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------
Service cost for benefits earned
during the period $ 1,031 $ 914 $ 602
Interest cost on projected
benefit obligation 1,453 1,342 1,053
Expected return on
plan assets (1,680) (1,531) (2,243)
Net amortization and
deferral (141) (156) 674
--------------------------------------------------------------------------------
Net periodic benefit cost $ 663 $ 569 $ 86
================================================================================
|
The weighted average assumptions were as follows:
December 31, 1999 1998 1997 --------------------------------------------------------------------------------- Discount rate 8.00% 7.00% 7.50% Expected return on plan assets 9.50% 9.50% 9.50% Rate of compensation increase 5.00% 4.00% 4.50% --------------------------------------------------------------------------------- |
401(k) Plan--RPC sponsors a deferred compensation 401(k) plan that is available to substantially all full-time employees with more than six months of service. This plan allows employees to make tax-deferred contributions of up to 15 percent of their annual compensation, not exceeding the permissible deduction imposed by the Internal Revenue Code. RPC matches 40 percent of each employee's contributions up to 3 percent of the employee's compensation. Employees vest in the RPC contributions after five years of service. The charges to expense for RPC's contributions were $356,000 in 1999, $392,000 in 1998, and $315,000 in 1997.
Stock Incentive Plans--RPC has an Employee Incentive Stock Option Plan (the "1984 Plan") under which 1,000,000 shares of common stock were reserved for issuance. The 1984 Plan expired in October 1994. On January 25, 1994, RPC adopted a new ten-year Employee Stock Incentive Plan (the "1994 Plan") under which 1,000,000 shares of common stock were reserved for issuance. During 1997, an additional 1,600,000 shares were reserved for issuance. These plans provide for the issuance of various forms of stock incentives, including, among others, incentive stock options and restricted stock. As of December 31, 1999, there were 1,323,900 shares available for the granting of options or other awards under the 1994 Plan.
Incentive Stock Options--Transactions involving the incentive stock option plans were as follows:
Weighted
Average
Option Price Exercise
Shares (Per Share) Price
---------------------------------------------------------------------------------
Outstanding
12/31/96 554,292 $1.625-$4.438 $ 3.23
Granted 158,000 7.500 7.50
Canceled (5,232) 1.625-7.500 6.12
Exercised (264,260) 1.625-4.438 2.58
---------------------------------------------------------------------------------
Outstanding
12/31/97 442,800 3.000-7.500 5.11
Granted 218,000 12.750 12.75
Canceled (28,400) 3.063-12.750 4.44
Exercised (30,300) 3.063-7.500 3.63
---------------------------------------------------------------------------------
Outstanding
12/31/98 602,100 3.063-12.750 7.85
Granted 246,500 6.875 6.88
Exercised (65,200) 3.063-7.500 3.21
---------------------------------------------------------------------------------
Outstanding
12/31/99 783,400 $3.000-$12.750 $ 7.93
================================================================================
|
1999 1998 1997
-----------------------------------------------------------------------------------
Exerciseable at December 31 232,600 210,660 151,120
Weighted average exercise price
of exerciseable options $ 6.51 $ 4.27 $ 3.51
Per share weighted average grant
date fair value of options
granted during the year $ 3.01 $ 5.20 $ 3.40
-----------------------------------------------------------------------------------
|
The weighted average remaining contractual life of options outstanding at December 31, 1999 was 7 years.
Restricted Stock--RPC has granted employees two forms of restricted stock:
performance restricted and time lapse. The performance restricted shares are
granted, but not earned and issued, until certain five-year tiered performance
criteria are met. The performance criteria are predetermined market prices of
the Company stock. On the date the stock appreciates to each level
(determination date), 20 percent of performance shares are earned. Once earned,
the performance shares vest five years from the determination date. Time lapse
shares vest ten years from the grant date. There were 90,000 units granted under
these restricted stock programs during 1999, 52,000 units granted during 1998
and 52,000 units granted during 1997. There were 7,600 performance shares
awarded under the plans in 1999. No shares were forfeited or canceled.
The agreements under which the restricted stock is issued provide that shares awarded may not be sold or otherwise transferred until restrictions as established under the Plan have lapsed. Upon termination of employment, shares upon which restrictions have not lapsed must be returned to the Company. As of December 31, 1999, none of the shares of restricted stock were vested.
Note 9: Business Segment Information
In June 1997, SFAS Number 131, "Disclosures about Segments of an Enterprise and Related Information" was adopted. SFAS Number 131 establishes standards for reporting information about operating segments in annual financial statements and requires reporting selected information about operating segments in interim financial reports issued to stockholders. SFAS Number 131 is effective for fiscal years beginning after December 15, 1997. All prior years have been restated to conform with current year presentation.
RPC has two reportable segments: oil and gas services and boat manufacturing. The oil and gas services segment provides a variety of services, equipment, and personnel to the oil and gas industry. The boat manufacturing segment manufactures and sells powerboats to a nationwide network of independent dealers.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. RPC evaluates performance based on profit or loss from operations before income taxes. RPC accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices.
RPC's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies. Each of these businesses was acquired as a business unit, and the management at the time of acquisition was retained.
Certain information with respect to RPC's business segments is set forth in the following table:
December 31, 1999 1998 1997
--------------------------------------------------------------------------------
(in thousands)
--------------------------------------------------------------------------------
Revenue:
Oil and gas services $ 94,864 $ 123,949 $ 137,599
Boat manufacturing 122,878 103,497 95,029
Other 12,721 16,828 13,171
--------------------------------------------------------------------------------
Total revenue $ 230,463 $ 244,274 $ 245,799
================================================================================
Operating income (loss):
Oil and gas services $ (284) $ 17,465 $ 26,264
Boat manufacturing 16,472 13,920 11,755
Other (817) (3,519) (3,212)
--------------------------------------------------------------------------------
Total operating income 15,371 27,866 34,807
--------------------------------------------------------------------------------
Corporate expenses (3,942) (4,043) (3,220)
Interest income 1,718 2,023 2,376
--------------------------------------------------------------------------------
Income before
income taxes $ 13,147 $ 25,846 $ 33,963
================================================================================
Identifiable assets:
Oil and gas services $ 107,893 $ 89,891 $ 86,578
Boat manufacturing 30, 850 28,085 25,076
Other, including
corporate assets 51,832 62,715 70,864
--------------------------------------------------------------------------------
Total identifiable assets $ 190,575 $ 180,691 $ 182,518
================================================================================
|
Revenue from international operations in the oil and gas services segment totaled $11,523,000 in 1999, $9,822,000 in 1998, and $17,407,000 in 1997. The respective operating profits were $1,977,000 in 1999, $608,000 in 1998, and $2,720,000 in 1997. There were $10,385,000 in identifiable assets attributable to these operations in 1998, $6,450,000 in 1998, and $9,987,000 in 1997. There were no material amounts of international operations in the boat manufacturing segment.
Note 10: Unaudited Quarterly Data
Quarter First Second Third Fourth
----------------------------------------------------------------------------------
(in thousands except per share data)
----------------------------------------------------------------------------------
1999
Revenue $ 54,935 $ 59,978 $ 53,105 $ 62,445
Net income 1,229 2,904 1,400 2,618
Earnings per share
Basic .04 .10 .05 .09
Diluted .04 .10 .05 .09
1998
Revenue $ 66,940 $ 66,375 $ 56,977 $ 53,982
Net income 5,654 6,410 3,753 208
Earnings per share
Basic .19 .22 .13 .01
Diluted .19 .22 .13 .01
|
Note 11: Subsequent Events
Spin-offTransaction: On January 14, 2000, RPC announced it had taken the initial steps to spin-off its 100% ownership in Chaparral Boats. The transaction, expected to be completed during the third quarter of 2000, will be structured as a tax-free distribution of Chaparral Boats stock to RPC shareholders. The spin-off is subject to various approvals including a favorable tax ruling from the Internal Revenue Service and final approval of RPC's Board of Directors.
Gain on Settlement of Claim: In the first quarter of 2000, RPC will record an after-tax gain of approximately $4,200,000, or $0.15 diluted earnings per share, in its powerboat manufacturing business segment. The gain is a result of Chaparral Boats' receipt, in the first quarter of 2000, of its share of a non-refundable $35 million settlement payment made by Brunswick Corporation (Brunswick), a major engine supplier, to the members of the American Boatbuilders Association (ABA), a buying group which includes Chaparral Boats. Under the terms of this agreement between the ABA and Brunswick, additional payments will be made to ABA depending on the final judgment or settlement of a lawsuit brought by Independent Boatbuilders Association (IBBI), another buying group supplied engines by Brunswick. If Brunswick ultimately makes a payment to IBBI in excess of $35 million in connection with a final judgment or settlement, Brunswick will make an equal payment to ABA, less the $35 million already paid. Chaparral Boats would be entitled to receive its share of any additional payments, less expenses, in a similar proportion to the initial $35 million payment.
PART III
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
This item is not applicable to RPC because there has been no change in or disagreements with its independent public accountants.
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors and executive officers is included in the RPC Proxy for its 2000 Annual Meeting of Stockholders, in the sections entitled "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance." This information is incorporated herein by reference. Information about executive officers is contained on page 9.
Item 11. Executive Compensation
Information concerning executive compensation is included in the RPC Proxy for its 2000 Annual Meeting of Stockholders, in the section entitled "Executive Compensation." This information is incorporated herein by reference.
Item 12. Security ownership of certain beneficial owners and management
Information concerning security ownership is included in the RPC Proxy for its 2000 Annual Meeting of Stockholders, in the sections entitled "Capital Stock" and "Election of Directors." This information is incorporated herein by reference.
Item 13. Certain relationships and related transactions
Information concerning certain relationships and related transactions is included in the RPC Proxy for its 2000 Annual Meeting of Stockholders, in the sections entitled "Certain Relationships and Related Transactions" and "Compensation Committee Interlocks and Insider Participation." This information is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement schedules, and reports on Form 8-K
The following documents are filed as part of this report.
FINANCIAL STATEMENTS PAGE Balance Sheets as of December 31, 1999 14 and 1998 Statements of Income for the three years ended 15 December 31, 1999 Statements of Stockholders' Equity for the three 15 years ended December 31, 1999 Statements of Cash Flows for the three years 16 ended December 31, 1999 Notes to Financial Statements 17-23 SCHEDULES Schedule II--Valuation and Qualifying Accounts 25 |
EXHIBITS
Exhibit
Number Description
3.1 Restated certificate of incorporation of RPC, Inc.
3.2 Bylaws of RPC (incorporated herein by reference to Exhibit (3)(b) to
the Annual Report on form 10-K for the fiscal year ended December 31,
1993).
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).
10.1 RPC's 1994 Employees Stock Incentive Plan (incorporated herein by
reference to Exhibit A of the definitive Proxy Statement dated March
20, 1994).
10.2 Compensation agreement with James Lane.
21 Subsidiaries of RPC.
23 Consent of Arthur Andersen LLP.
24 Powers of Attorney for Directors.
27 Financial Data Schedule (for Commission use only).
|
REPORTS ON FORM 8-K
No reports on Form 8-K were required to be filed by RPC for the quarter ended
December 31, 1999. Any schedules or exhibits not shown above have been omitted
because they are not applicable.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
--------------------------------------------------------------------------------------
RPC, INC. AND SUBSIDIARIES (in thousands of dollars)
--------------------------------------------------------------------------------------
For the years ended December 31, 1999, 1998, and 1997
--------------------------------------------------------------------------------------
Balance at Charged to Balance at
Beginning Costs and Net End of
Description of Period Expenses Write-Offs Period
--------------------------------------------------------------------------------------
Year ended December 31, 1999
Allowance for Doubtful Accounts $ 7,004 $ 123 $(2,468) $ 4,659
--------------------------------------------------------------------------------------
Year ended December 31, 1998
Allowance for Doubtful Accounts $ 6,967 $ 1,675 $(1,638) $ 7,004
--------------------------------------------------------------------------------------
Year ended December 31, 1997
Allowance for Doubtful Accounts $ 7,058 $ 137 $ (228) $ 6,967
--------------------------------------------------------------------------------------
|
Report of Independent Public Accountants
To the Directors and Stockholders of RPC, Inc.:
We have audited the accompanying consolidated balance sheets of RPC, Inc. (a Delaware corporation) and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. These financial statements and schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of RPC, Inc. and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in Item 14 is presented for the purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, fairly states in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
Atlanta, Georgia Arthur Andersen LLP March 10, 2000
Signatures
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RPC, INC.
By:
/s/ R. Randall Rollins R. Randall Rollins Chairman of the Board of Directors (Principal Executive Officer) March 24, 2000 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ R. Randall Rollins /s/ Ben M. Palmer R. Randall Rollins Ben M. Palmer Chairman of The Board of Directors Chief Financial Officer (Principal Executive Officer) (Principal Financial and Accounting Officer) March 24, 2000 March 24, 2000 |
The Directors of RPC, Inc. (listed below) executed a power of attorney appointing Richard A. Hubbell their attorney-in-fact, empowering him to sign this report on their behalf.
James A. Lane, Jr., Director
Wilton Looney, Director
Gary W. Rollins, Director
John W. Rollins, Director
Henry B. Tippie, Director
James B. Williams, Director
/s/ Richard A. Hubbell Richard A. Hubbell Director and as Attorney-in-fact March 24, 2000 |
Officers and Directors
OFFICERS
R. Randall Rollins
Chairman of the Board
and Chief Executive Officer
Richard A. Hubbell
President and Chief
Operating Officer
James A. Lane, Jr.
Executive Vice President
Jonathan W. Moss
Executive Vice President
Linda H. Graham
Vice President and Secretary
Ben M. Palmer
Vice President, Chief
Financial Officer
and Treasurer
DIRECTORS
R. Randall Rollins
Chairman of the Board and
Chief Executive Officer,
Rollins, Inc. (consumer services)
Henry B. Tippie*+
Chairman of the Board and
Chief Executive Officer,
Tippie Services, Inc.
(management services)
Wilton Looney*
Honorary Chairman of the
Board, Genuine Parts Company
(automotive parts distributor)
John W. Rollins
Chairman of the Board
Rollins Truck Leasing Corp.
(vehicle leasing and transportation),
and Chairman of the Board,
Dover Downs Entertainment, Inc.
(entertainment complex)
James B. Williams*
Chairman of the Executive
Committee, SunTrust Banks, Inc.
(bank holding company)
Gary W. Rollins
President and Chief Operating
Officer, Rollins, Inc. (consumer
services)
Richard A. Hubbell
James A. Lane, Jr.
* Member of the Audit Committee and Executive Compensation Committee
+ Chairman of the Audit Committee and Executive Compensation Committee
STOCKHOLDER INFORMATION
CORPORATE OFFICES
RPC, Inc.
2170 Piedmont Road, NE
Atlanta, Georgia 30324
Telephone: (404) 321-2140
STOCK LISTING
The New York Stock Exchange
TICKER SYMBOL--RES
NEWSPAPER STOCK TABLE--RPC
INVESTOR RELATIONS WEB-SITE
www.rpc.net
TRANSFER AGENT AND REGISTRAR
For inquiries related to stock certificates,
including changes of address, please contact:
SunTrust Bank, Atlanta
Stock Transfer Department
PO Box 4625
Atlanta, GA 30302
Telephone: (404) 588-7817
ANNUAL MEETING
The Annual Meeting of RPC will be held at
9:00 am, April 25, 2000, at the corporate
offices in Atlanta, Georgia.
RPC
INCORPORATED
2170 Piedmont Road, NE
Atlanta, Georgia 30324
MARCH 17, 2000
RPC, INC.
EXHIBITS INDEX
EXHIBIT NUMBER DESCRIPTION
3.1 RESTATED CERTIFICATE OF
INCORPORATION OF RPC, INC.
3.2 BYLAWS OF RPC (INCORPORATED
HEREIN BY REFERENCE TO EXHIBIT
(3)(B) TO THE ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1993).
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).
10.1 RPC'S 1994 EMPLOYEES STOCK
INCENTIVE PLAN (INCORPORATED
HEREIN BY REFERENCE TO EXHIBIT
A OF THE DEFINITIVE PROXY
STATEMENT DATED MARCH 20,
1994).
10.2 COMPENSATION AGREEMENT WITH
JAMES LANE.
21 SUBSIDIARIES OF RPC
23 CONSENT OF ARTHUR ANDERSEN LLP.
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24 POWERS OF ATTORNEY FOR DIRECTORS.
27 FINANCIAL DATA SCHEDULE (FOR
COMMISSION USE ONLY).
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EXHIBIT 3.1 RESTATED CERTIFICATE OF INCORPORATION
OF
RPC, INC.
FIRST. The name of this corporation is RPC, Inc.
SECOND. Its registered office in the State of Delaware is located at 32 Loockerman Square, Suite L-100, Dover, Delaware 19901, County of Kent, and the name of its registered agent at such address in charge thereof is The Prentice-Hall Corporation System, Inc.
THIRD. The nature of the business and the objects and purposes to be transacted, promoted and carried out are to do any or all of the things herein mentioned as fully and to the same extent as natural persons might or could do, and in any part of the world, viz.:
To carry on business in the United States or elsewhere as consignees, factors, agents, commission merchants or merchants to buy, sell, manipulate and deal in at wholesale or retail, drilling muds, chemicals, cements, and/or other additives used by or in connection with the business of exploring, mining, drilling for oil, gas, sulphur, liquid and gaseous hydrocarbons and other minerals. To purchase, acquire, or dispose of, construct, lease, maintain and operate in this state and elsewhere, factories, plants, machinery, equipment, supplies, warehouses, trucks, tugs, barges, ships, or marsh equipment which may be necessary, convenient or incidental to engage in the business of oil field drilling.
To engage in the general manufacturing (or contracting) business and especially the business of designing, building and erecting barges, boats, tugs, ships, or vessels, marsh equipment, including but not limited to marsh buggies, sleds, tractors, and plows; to engage in the general building business and to obtain, buy, sell, lease or otherwise deal in patents, patent rights, equipment, engines, and machinery of all kinds; to acquire, purchase, construct, manufacture, fabricate, process and prepare in any fashion whatsoever all of the above named or any other buildings, machines, machinery, equipment, in any and all manners, methods or ways whatsoever, whether now in existence or hereafter conceived, patented, developed or devised.
To search for, explore, mine, drill and otherwise seek oil, gas, sulphur, liquid and gaseous hydrocarbons and other minerals in any manner whatsoever, either for its own account as owners, mineral owners or lessees, or for the account of others under contracts or otherwise, and generally to do all and everything necessary, desirable or proper in connection with the exploration for or production of oil, gas and other minerals.
To purchase, construct, devise, maintain, operate, lease, lend or borrow oil and gas well machinery, equipment, rigs, derricks, barges, dredges, boats, mining machinery and equipment of any nature or kind, whether now in existence or hereafter devised, designed or invented;
To refine, distill, and otherwise process oil, gas and all other minerals in any fashion whatsoever, either by contract or by construction, operation and maintenance of refineries, distilling units or other plants, factories or methods, whether now in existence or hereafter conceived, developed, patented or devised.
To engage in the leasing, rental, handling and servicing of pipe, equipment and tools used by drilling contractors and oil and gas companies, and in connection therewith, to invent, design, develop, exploit, improve, alter, manufacture, fabricate, assemble, install, repair, service, maintain, buy, sell, import, export, license as licensor or licensee, lease as lessor or lessee, distribute, job, enter into, negotiate, execute, acquire, receive, obtain, hold, grant, assign, and transfer contracts, selling rights, licensing arrangements, options, franchises, and other rights, in respect of, and generally deal in and with, at wholesale and retail, as
agent, representative, broker, merchant, distributor, jobber, advisor, or in any other lawful capacity, goods, wares, merchandise, commodities, and unimproved, improved, finished, processed, and other real, personal, and mixed property of any and all kinds, and without limiting the generality of the foregoing, oil field, pipe line and refinery tools, dies, instruments, machinery, appliances, devices, accessories, and related and unrelated products and objects of all kinds, together with the components thereof, and machines, facilities, devices, supplies and equipment for fabricating, preparing, sharpening, repairing, altering, and producing oil field, pipe line and refinery tools, dies, instruments, machinery, appliances, devises, accessories, and related and unrelated products and objects of all kinds.
To engage in and conduct the business of swabbing, to remove fluids and solids from well bores to stimulate the natural flow of oil and to provide related services necessary or appropriate to the general business of the corporation.
To engage in the oil service industry generally and to work with all materials, machinery, implements and articles necessary or appropriate thereto.
To purchase, take, own, hold, deal in, mortgage or otherwise lien and to lease, sell, exchange, convey, transfer or in any manner whatsoever dispose of real property, within or without the State of Delaware.
To manufacture, purchase or otherwise acquire and to hold, own, mortgage or otherwise lien, pledge, lease, sell, assign, exchange, transfer or in any manner dispose of, and to invest, deal and trade in and with goods, wares, merchandise and personal property of any and every class and description, within or without the State of Delaware.
To acquire the good will, rights and property and to undertake the whole or any part of the assets and liabilities of any person, firm, association or corporation; to pay for the same in cash, the stock of this company, bonds or otherwise; to hold or in any manner to dispose of the whole or any part of the property so purchased; to conduct in any lawful manner the whole or any part of any business so acquired and to exercise all the powers necessary or convenient in and about the conduct and management of such business.
To guarantee, purchase or otherwise acquire, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of shares of the capital stock, bonds or other evidences of indebtedness created by other corporations and while the holder of such stock to exercise all the rights and privileges of ownership, including the right to vote thereon, to the same extent as a natural person might or could do.
To purchase or otherwise acquire, apply for, register, hold, use, sell or in any manner dispose of and to grant licenses or other rights in and in any manner deal with patents, inventions, improvements, processes, formulas, trademarks, trade names, rights and licenses secured under letters patent, copyrights or otherwise.
To enter into, make and perform contracts of every kind for any lawful purpose, with any person, firm, association or corporation, town, city, county, body politic, state, territory, government or colony or dependency thereof.
To borrow money for any of the purposes of the corporation and to draw, make, accept, endorse, discount, execute, issue, sell, pledge or otherwise dispose of promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable, transferable or non-transferable instruments and evidences of indebtedness and to secure the payment thereof and the interest thereon by mortgage or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation at the time owned or thereafter acquired.
To purchase, hold, sell and transfer the shares of its capital stock.
To engage in any business or transaction permitted by the General Corporation Law of Delaware.
To have one or more offices and to conduct any and all of its operations and business and to promote its objects, within or without the State of Delaware, without restriction as to place or amount.
To carry on any other business in connection therewith.
To do any or all of the things herein set forth as principal, agent, contractor, trustee or otherwise, alone or in company with others.
The objects and purposes specified herein shall be regarded as independent objects and purposes and, except where otherwise expressed, shall be in no way limited nor restricted by reference to or inference from the terms of any other clause or paragraph of this Certificate of Incorporation.
The foregoing shall be construed both as objects and powers and the enumeration thereof shall not be held to limit or restrict in any manner the general powers conferred on this corporation by the laws of the State of Delaware.
FOURTH. The total number of shares of stock which this corporation shall have authority to issue is Eighty Million (80,000,000) shares, divided into two (2) classes, namely, Preferred Stock and Common Stock. This corporation is authorized to issue One Million (1,000,000) shares of Ten Cents ($0.10) par value Preferred Stock, and Seventy-Nine Million (79,000,000) shares of Ten Cents ($0.10) par value Common Stock.
There is hereby expressly granted to the board of directors of the corporation the power and authority to issue the Preferred Stock as a class without series, or if so determined from time to time, in one or more series, and to fix the voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights of the class of the Preferred Stock or of one or more series thereof and the qualifications, limitations or restrictions thereof with respect to the Preferred Stock authorized herein in a resolution or resolutions adopted by the board of directors providing for the issue of said stock. The holders of Preferred Stock shall have no preemptive rights to subscribe for any shares of any class of stock of the corporation whether now or hereafter authorized.
The board of directors is further authorized to provide that the Preferred Stock, when issued, may be convertible into or exchangeable for shares of any other class or classes of stock of the corporation or of any series of the same at such price or prices or rates of exchange and with such adjustments as shall be stated and expressed in the resolution or resolutions providing for the issue of such Preferred Stock adopted by the board of directors as hereinabove provided.
Each and every resolution adopted by the board of directors providing for the issuance of the Preferred Stock as a class or in series within such class from time to time shall be, under certificate of the proper officers of the corporation, filed with the Secretary of State of Delaware and a certified copy thereof shall be recorded in the same manner as certificates of incorporation are required to be filed and recorded.
No holder of Common Stock shall be entitled as such, as a matter of right, to subscribe for or to purchase any part of any new or additional issue of stock of any class whatsoever.
FIFTH. The minimum amount of capital with which the Corporation will commence business is one thousand dollars ($1,000).
SIXTH. This corporation is to have perpetual existence.
SEVENTH. The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever.
EIGHTH. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the board of directors is expressly authorized:
To make, alter, amend and repeal the bylaws;
To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to alter or abolish any such reserve; to authorize and cause to be executed mortgages and liens upon the property and franchises of this corporation;
To designate, by resolution passed by a majority of the whole board, one or more committees, each to consist of one or more directors, which committees, to the extent provided in such resolution or in the bylaws of the corporation, shall have and may exercise any or all of the powers of the board of directors in the management of the business and affairs of this corporation and have power to authorize the seal of this corporation to be affixed to all papers which may require it.
From time to time to determine whether and to what extent and at what times and places and under what conditions and regulations the books and accounts of this corporation, or any of them other than the stock ledger, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account or book or document of the corporation, except as conferred by law or authorized by resolution of the directors or of the stockholders.
To sell, lease or exchange all of its property and assets, including its good-will and its corporate franchises, upon such terms and conditions and for such consideration, which may be in whole or in part shares of stock in, and/or other securities of, any other corporation or corporations, when and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for that purpose.
This corporation may in its bylaws confer powers additional to the foregoing upon the directors, in addition to the powers and authorities expressly conferred upon them by law.
NINTH. If the bylaws so provide, the stockholders and directors shall have power to hold their meetings, to have an office or offices and to keep the books of this corporation (subject to the provisions of the statute) outside of the State of Delaware at such places as may from time to time be designated by the bylaws or by resolution of the directors.
TENTH: This corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation in the manner now or hereafter prescribed by law and all rights conferred on officers, directors and stockholders herein are granted subject to this reservation.
ELEVENTH: Any action required or permitted to be taken at any annual or special meeting of stockholders shall be taken only at such a meeting and shall not be taken by the written consent of stockholders in lieu of a meeting.
TWELFTH. (1) For purposes of this Article, the following terms shall have the following meanings:
(a) Acquiring Entity means any corporation, person, group, firm, trust, partnership or other entity, or any parent, subsidiary or other affiliate of such entity, which is the beneficial owner, directly or indirectly, of 20% or more of this corporation's outstanding voting securities (taken together as a single class) and which first becomes a beneficial owner of 20% or more of such securities after August 1, 1984. Any corporation, person, group, firm, trust, partnership or other entity will be deemed to be the beneficial owner of any voting securities of this corporation:
(i) which it owns directly, whether or not of record,
(ii) which it has the right to acquire pursuant to any agreement or arrangement or understanding or upon exercise of conversion rights, exchange rights, warrants or options or otherwise,
(iii) which are beneficially owned, directly or indirectly (including shares deemed to be owned through application of clause (ii) above), by any `affiliate' or `associate' as those terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on February 1, 1984, or
(iv) which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (ii) above), by any other corporation, person, group, firm, trust, partnership or other entity with which it or any of its subsidiaries, `affiliates' or `associates' has any agreement or arrangement or understanding for the purpose of acquiring, holding, voting or disposing of this corporation's voting securities.
For the purpose of this Article FOURTEENTH, in determining whether a corporation, person, group, firm, trust, partnership or other entity owns beneficially, directly or indirectly, 20% or more of this corporation's outstanding voting securities, this corporation's outstanding voting securities will be deemed to include any voting securities that may be issuable pursuant to any agreement, arrangement or understanding or upon exercise of conversion rights, exchange rights, warrants, options or otherwise which are deemed to be beneficially owned by such corporation, person, group, firm, trust, partnership or other entity pursuant to the foregoing provisions of this paragraph 1 notwithstanding the inability of such entity to vote such shares.
(b) Continuing Director' means any member of the Board of Directors of this corporation who is unaffiliated with the Acquiring Entity and who was a member of the Board of Directors of the Corporation prior to the time that the Acquiring Entity became an Acquiring Entity, and any successor of a Continuing Director who is unaffiliated with the Acquiring Entity and is recommended to succeed a Continuing Director by a majority of Continuing Directors then on the Board of Directors of this corporation.
(c) Special Business Combination' means:
(i) any merger or consolidation of this corporation with or into an Acquiring Entity;
(ii) any sale, lease, exchange or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of this corporation to an Acquiring Entity;
(iii) any sale, lease, exchange or other disposition (in one transaction or a series of related transactions) by an Acquiring Entity to this corporation or any subsidiary of this corporation of any assets (except assets having an aggregate fair market value at the time of such transaction of less than $10,000,000) in exchange for any voting securities (or securities convertible into or exchangeable for voting securities, or options, warrants or rights to purchase voting securities or securities convertible into or exchangeable for voting securities) of this corporation or any subsidiary of this corporation; or
(iv) any reclassification of securities, reverse stock split or combination of shares, recapitalization or other transaction designed to decrease the number of holders of this corporation's voting securities remaining after any other corporation, person, group, firm, trust, partnership or other entity has become an Acquiring Entity. Notwithstanding the foregoing, any transaction which would otherwise constitute a Special Business Combination shall not constitute a Special Business Combination if the conditions specified in subsection (x) or subsection (y) of this paragraph 1(c) are satisfied:
(x) a majority of the Continuing Directors approve the transaction, provided that this condition (x) shall not be capable of satisfaction unless there is at least one Continuing Director; or
(y) the transaction
(i) does not change any voting security holder's percentage ownership of voting securities in any successor to this corporation from the percentage of voting securities beneficially owned by such holder in this corporation; and
(ii) provides that the provisions of this Article, without any amendment, change, alteration or deletion, will apply to any successor to this corporation; and
(iii) does not transfer all or substantially all of this corporation's assets, other than to a wholly owned subsidiary of this corporation.
(2) No Special Business Combination shall be effected unless it is approved at a meeting of this corporation's stockholders called for that purpose. The presence in person or by proxy of the holders of at least 80% of the outstanding voting securities of this corporation entitled to vote at such meeting shall be required to constitute a quorum at any such meeting. The affirmative vote of the holders of at least 75% of the outstanding voting securities of this corporation entitled to vote at such meeting shall be required for approval of any such Special Business Combination.
(3) The quorum and affirmative vote required by this Article will be in addition to any vote of this corporation's security holders otherwise required by law, this Certificate of Incorporation, a resolution providing for the issuance of a class or series of stock which has been adopted by the Board of Directors or any agreement between this corporation and any national securities exchange.
(4) No amendment, alteration, change or repeal of any provision of this Article may be effected unless it is approved at a meeting of this corporation's stockholders called for that purpose. The presence in person or by proxy of the holders of at least 80% of the outstanding voting securities of this corporation entitled to vote at such meeting shall be required to constitute a quorum at any such meeting. Notwithstanding any other provision of this Certificate of Incorporation, the affirmative vote of the holders of at least 75% of the outstanding voting securities entitled to vote at such meeting shall be required to amend, alter, change, or repeal, directly or indirectly, any provision of this Article.
THIRTEENTH. A director of this corporation shall not be personally liable to this corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, as the same exists or hereafter may be amended, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of this corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Delaware General Corporation Law. Any repeal or modification of this paragraph by the stockholders of this corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of this corporation existing at the time of such repeal or modification.
IN WITNESS WHEREOF, the undersigned executes this Certificate of Incorporation this ____ day of ____________, 2000.
EXHIBIT 10.2 PERFORMANCE-BASED
COMPENSATION AGREEMENT
THIS AGREEMENT, entered into as of this 4th day of November, 1993, between CHAPARRAL BOATS, INC., a Georgia corporation (hereinafter called the "Company"), and JAMES A. LANE, JR. (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Employee and Employee desires to accept employment on the terms and conditions hereinafter stated; and
NOW, THEREFORE, in consideration of the employment of Employee by the Company, and the promises and mutual covenants and agreements herein contained, the parties agree as follows:
1. Definitions
a) The term "Pre-tax Profits" as used herein means the profits of the Company determined in accordance with generally accepted accounting principles consistently applied prior to:
(i) any provision being made for a Special Payment (as defined in
Section 1(c);
(ii) any recognition of an extraordinary gain or loss;
(iii) any provision for federal and state income taxes;
(iv) any provision being made for the bonus provided for in Section 3(b) hereof and any bonus provided for in Section 3(b) of the performance based compensation agreement between the Company and William S. Pegg dated the date hereof; and
The parties acknowledge that in determining Pre-tax Profits (i) the cost of payments referred to in Section 3(b) hereof shall be expensed in the period accrued; (ii) interest on the amount of working capital employed for expansion through acquisitions and/or for Capital Improvements shall accrue for the account of Parent at the rate of one-half percent (1/2%) over the prime rate charged by SunTrust Bank, Atlanta, Georgia at the date of such employment of funds, which interest shall accrue from the date such funds are contributed or designated for such employment through the date on which such funds are deemed repaid to Parent; and (iii) such profit shall be determined by the independent certified public accountant regularly employed by the Company in accordance with generally accepted accounting principles consistently applied except as herein modified; and, in particular, a sale of goods by the Company shall not be deemed to occur until the purchaser accepts delivery thereof.
(b) The term "Parent" as used herein means RPC Energy Services, Inc., a Delaware corporation.
(c) The term "Special Payment" as used herein means any management fee or charge assessed by Parent against the Company other than charges (which are no greater than would be charged by an unrelated third party) for goods and services furnished to the Company by Parent of a type which the Company customarily obtains or requests and which the Company would require or would desire to obtain from a third party but for their availability from or through Parent. Additionally, the term "Special Payment" shall include intercompany overhead allocation or general accounting fee.
2. Term and Duties
(a) Employee shall serve the Company as its President, Chief Executive Officer, Chief Financial Officer and Treasurer for a term of seven years beginning November 4, 1993 and ending November 3, 2000 unless earlier terminated as provided herein.
(b) In addition to those duties and responsibilities set forth in the corporate bylaws of the Company, Employee shall have the duties of leadership and responsibility normally associated with the offices President, Chief Executive Officer, Chief Financial Officer and Treasurer of and shall be responsible for marketing, dealer relations, accounting and administration. He shall use his best efforts to perform his duties in a manner which is in the best interest of the Company. His responsibilities shall include the negotiation and execution of contracts on behalf of the Company in the ordinary course of business, and the employment and supervision of personnel required for the operation of the Company, and such other duties consistent with his position with the Company as may from time to time be assigned to him by the Chairman of the Board of Directors of the Company or the President of the Parent if the Board of Directors of the Company shall so designate.
(c) For so long as Employee is employed by the Company, Employee agrees
(i) to devote all his time, energy and skill during regular business
hours to the performance of the duties of his employment (accrued
vacations and reasonable absences due to illness excepted), and (ii)
not to engage directly or indirectly in any active work for which he
receives compensation or other emolument without the prior written
consent of the Chairman of the Board of Directors of the Company or
such other person as the Board of Directors of the Company shall
designate from time to time, provided that nothing contained herein
shall be deemed to preclude Employee from owning 1% or less of the
outstanding shares of any publicly traded company or from serving on
the board of directors of any company in which Employee invests in
accordance with the terms of this Agreement.
3. Compensation
(a) Employee shall receive a base salary of $67,841 per year paid in approximately equal weekly installments in arrears and in accordance with the Company's normal payroll and withholding procedures.
(b) In addition to the compensation provided for in Section 3(a) hereof, Employee shall be paid an incentive bonus equal to ten (10%) percent of Pre-tax Profits. The Pre-tax Profits for each fiscal year (or part thereof) during the term of this Agreement shall be estimated at the end of each calendar month and an advance payment of the amount of the estimated incentive bonus which has been earned during such fiscal year (less previous advances) shall be paid to Employee following such determination and prior to the end of the next following month. The definitive amount of the incentive bonus shall be determined by the firm of certified public accountants employed by the Parent in connection with their examination of the financial statements of the Company for each fiscal year during the term of this Agreement which determination shall be final and binding on Employee and the Company. Following such determination the Company shall pay Employee any additional incentive bonus due him or Employee shall reimburse the Company for any over-payments of the incentive bonus, as the case may be.
4. Notices
Any notice required or permitted to be given to one party by the other party hereto pursuant to this Agreement shall be in writing and shall be personally delivered or sent by United States Mail, certified or registered,
return receipt requested, first class postage and charges prepaid, in envelopes addressed to the parties as follows:
Employee: James A. Lane, Jr.
Industrial Park Blvd.
Nashville, Georgia 31639
Company: Chaparral Boats, Inc.
c/o RPC Energy Services, Inc.
2170 Piedmont Road, N.E.
Atlanta, Georgia 30329
Attention: Richard A. Hubbell
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or at such other addresses as shall be designated in writing as aforesaid by either party to the other party hereto. Notices delivered in person shall be effective on the date of delivery. Notices sent by United States Mail shall be effective upon the date of actual receipt.
5. Assignment
The assignment by Employee of this Agreement or any interest herein, or of any money due or to become due by reason of the terms hereof, without the prior written consent of the Company, shall be void. This Agreement may be assigned by the Company to any subsidiary or successor; provided, that in the event of any such assignment, the Company shall obtain an instrument in writing from such assignee assuming the obligations of the Company hereunder and shall deliver an executed copy thereof to Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and have affixed their seals as of the date first above written.
COMPANY:
CHAPARRAL BOATS, INC.
By: /s/Richard A. Hubbell
------------------------------------
Richard A. Hubbell
Its: Vice President
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(CORPORATE SEAL)
Attest or Witness:
By: /s/Stanley Cole ------------------------------- Title: |
EMPLOYEE:
/s/James A Lane, Jr. ________________________________(SEAL) James A. Lane, Jr. |
EXHIBIT 21
SUBSIDIARIES OF RPC, INC.
NAME STATE OF
INCORPORATION
Cudd Pressure Control, Inc. Delaware
Pressure Control, Inc. Delaware
South Texas Swabbing, Inc. Texas
Coiled Tubing, Inc. Delaware
Patterson Services, Inc. Delaware
Patterson Tubular Services, Inc. Texas
Chaparral Boats, Inc. Georgia
RPC Investment Company Delaware
RPC Waste Management Services, Inc. Georgia
Anchor Crane and Hoist Service Company, Inc. Georgia
RPC Data Link, Inc. Georgia
International Training Services, Inc. Georgia
RPC Energy International, Inc. U.S. Virgin
Islands
Patterson Truck Line, Inc. Louisiana
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EXHIBIT 23
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 10-K, into RPC, Inc.'s previously filed Form S-8 Registration Statement (No. 33-5527), its previously filed Form S-8 Registration Statement (No. 33-75652), and its previously filed Form S-8 Registration Statement (No. 333-40223).
/s/ Arthur Andersen LLP
---------------------------------------
Atlanta, Georgia
March 24, 2000
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EXHIBIT 24 POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this day of , 2000.
/s/ John W. Rollins, Director --------------------------------------- John W. Rollins, Director |
Witness:
/s/ Cindy Arfaw ------------------------------------- |
EXHIBIT 24 POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this day of , 2000.
/s/ Gary W. Rollins --------------------------------------- Gary W. Rollins, Director |
Witness:
EXHIBIT 24 POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this day of , 2000.
/s/ Wilton Looney --------------------------------------- Wilton Looney, Director |
Witness:
EXHIBIT 24 POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this day of , 2000.
/s/ James B. Williams --------------------------------------- James B. Williams, Director |
Witness:
/s/ Louise Holliner ------------------------------------- |
EXHIBIT 24 POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this day of , 2000.
/s/ Henry B. Tippie --------------------------------------- Henry B. Tippie, Director |
Witness:
/s/ Terri L.Whetstori ------------------------------------- |
EXHIBIT 24 POWER OF ATTORNEY
Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this day of , 2000.
/s/ James A. Lane, Jr. --------------------------------------- James A. Lane, Jr., Director |
Witness:
/s/ Bittina Lynn Griffin ------------------------------------- |
| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | DEC 31 1999 |
| PERIOD START | JAN 01 1999 |
| PERIOD END | DEC 31 1999 |
| CASH | 8278 |
| SECURITIES | 4798 |
| RECEIVABLES | 34871 |
| ALLOWANCES | 0 |
| INVENTORY | 19631 |
| CURRENT ASSETS | 79975 |
| PP&E | 75472 |
| DEPRECIATION | 0 |
| TOTAL ASSETS | 190575 |
| CURRENT LIABILITIES | 41610 |
| BONDS | 1547 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 2826 |
| OTHER SE | 139982 |
| TOTAL LIABILITY AND EQUITY | 190575 |
| SALES | 0 |
| TOTAL REVENUES | 230463 |
| CGS | 102897 |
| TOTAL COSTS | 219034 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 0 |
| INCOME PRETAX | 13147 |
| INCOME TAX | 4996 |
| INCOME CONTINUING | 0 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 8151 |
| EPS BASIC | 0.29 |
| EPS DILUTED | 0.29 |