UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C.  20549
 
 
 FORM
10-Q
 
 
 Quarterly
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 
 
 For
the quarterly period ended March 31, 2008
 
 Commission
File No. 1-8726
 
 RPC,
INC.
 (Exact
name of registrant as specified in its charter)
 
 Delaware
              58-1550825(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification Number)
 
 
 2801
Buford Highway, Suite 520, Atlanta, Georgia  30329
 (Address
of principal executive offices)    (zip code)
 
 Registrant’s
telephone number, including area code -- (404) 321-2140
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No__
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.      (Check one):
 Large accelerated filer___ Accelerated filer
­­X Non-Accelerated
Filer___
 Smaller reporting
company___
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes__ NoX
 
 As of
April 22, 2008, RPC, Inc. had 98,626,109 shares of common stock
outstanding.
 
 
  RPC,
INC. AND SUBSIDIARIES
 TABLE OF
CONTENTS
 Part
      I. Financial Information
              Page
                No.Item
      1.
              Financial
      Statements (Unaudited)Consolidated
      Balance Sheets –As
      of March 31, 2008 and December 31, 2007
              3Consolidated
      Statements of Operations –For
      the three months ended March 31, 2008 and 2007
              4Consolidated
      Statement of Stockholders’ Equity –For
      the three months ended March 31, 2008
              5Consolidated
      Statements of Cash Flows –For
      the three months ended March 31, 2008 and 2007
              6Notes
      to Consolidated Financial Statements
              7 –
      16Item
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              17
      – 25Item
      3.
              Quantitative
      and Qualitative Disclosures about Market Risk
              26Item
      4.
              Controls
      and Procedures
              26Part
      II.  Other InformationItem
      1.
              Legal
      Proceedings
              27Item
      1A.
              Risk
      Factors
              27Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              27Item
      3.
              Defaults
      upon Senior Securities
              28Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              28Item
      5.
              Other
      Information
              28Item
      6.
              Exhibits
              29Signatures
              
              30
  2
  RPC,
      INC. AND SUBSIDIARIESPART
      I. FINANCIAL INFORMATIONITEM
      1. FINANCIAL STATEMENTSCONSOLIDATED
      BALANCE SHEETSAS
      OF MARCH 31, 2008 AND DECEMBER 31, 2007(In
      thousands)(Unaudited)March
      31,
                
                
                December
      31,2008
                
                
                2007ASSETSCash
      and cash equivalents
                
                $
                11,490
                
                
                $
                6,338Accounts
      receivable, net
                
                
                173,912
                
                
                
                176,154Inventories
                
                
                34,418
                
                
                
                29,602Deferred
      income taxes
                
                
                4,594
                
                
                
                3,974Income
      taxes receivable
                
                
                7,622
                
                
                
                12,296Prepaid
      expenses and other current assets
                
                
                5,901
                
                
                
                6,696Total
      current assets
                
                
                237,937
                
                
                
                235,060Property,
      plant and equipment, net
                
                
                465,957
                
                
                
                433,126Goodwill
                
                
                24,093
                
                
                
                24,093Other
      assets
                
                
                9,372
                
                
                
                8,736Total
      assets
                
                $
                737,359
                
                
                $
                701,015LIABILITIES
      AND STOCKHOLDERS' EQUITYLIABILITIESAccounts
      payable
                
                $
                80,965
                
                
                $
                61,371Accrued
      payroll and related expenses
                
                
                14,460
                
                
                
                17,972Accrued
      insurance expenses
                
                
                4,909
                
                
                
                4,753Accrued
      state, local and other taxes
                
                
                2,281
                
                
                
                1,719Income
      taxes payable
                
                
                4,830
                
                
                
                4,340Other
      accrued expenses
                
                
                513
                
                
                
                567Total
      current liabilities
                
                
                107,958
                
                
                
                90,722Accrued
      insurance expenses
                
                
                8,921
                
                
                
                8,166Notes
      payable to banks
                
                
                169,050
                
                
                
                156,400Long-term
      pension liabilities
                
                
                5,070
                
                
                
                4,527Other
      long-term liabilities
                
                
                1,413
                
                
                
                2,692Deferred
      income taxes
                
                
                30,531
                
                
                
                29,236Total
      liabilities
                
                
                322,943
                
                
                
                291,743STOCKHOLDERS'
      EQUITYCommon
      stock
                
                
                9,858
                
                
                
                9,804Capital
      in excess of par value
                
                
                12,792
                
                
                
                16,728Retained
      earnings
                
                
                394,244
                
                
                
                385,281Accumulated
      other comprehensive loss
                
                
                (2,478
                )
                
                
                (2,541
                )Total
      stockholders' equity
                
                
                414,416
                
                
                
                409,272Total
      liabilities and stockholders' equity
                
                $
                737,359
                
                
                $
                701,015The
      accompanying notes are an integral part of these consolidated financial
      statements.
  3
  RPC,
      INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007(In
      thousands except per share data)(Unaudited)Three
      months ended March 31,2008
                
                
                2007Revenues
                
                $
                197,227
                
                
                $
                171,045Cost
      of services rendered and goods sold
                
                
                117,670
                
                
                
                87,521Selling,
      general and administrative expenses
                
                
                28,317
                
                
                
                25,825Depreciation
      and amortization
                
                
                27,326
                
                
                
                15,263Gain
      on disposition of assets, net
                
                
                (1,527
                )
                
                
                (1,549
                )Operating
      profit
                
                
                25,441
                
                
                
                43,985Interest
      expense
                
                
                (1,471
                )
                
                
                (754
                )Interest
      income
                
                
                22
                
                
                
                18Other
      (expense) income, net
                
                
                (7
                )
                
                
                897Income
      before income taxes
                
                
                23,985
                
                
                
                44,146Income
      tax provision
                
                
                9,228
                
                
                
                16,101Net
      income
                
                $
                14,757
                
                
                $
                28,045Earnings
      per shareBasic
                
                $
                0.15
                
                
                $
                0.29Diluted
                
                $
                0.15
                
                
                $
                0.29Dividends
      per share
                
                $
                0.060
                
                
                $
                0.050Average
      shares outstandingBasic
                
                
                96,586
                
                
                
                95,859Diluted
                
                
                98,091
                
                
                
                98,386The
      accompanying notes are an integral part of these consolidated financial
      statements.
  4
  RPC,
      INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF STOCKHOLDERS'
      EQUITYFOR
      THE THREE MONTHS ENDED MARCH 31, 2008(In
      thousands)(Unaudited)AccumulatedCapital
      in
                
                
                
                
                
                OtherComprehensive
                
                
                Common
      Stock
                
                
                Excess
      of
                
                
                Retained
                
                
                ComprehensiveIncome
      (Loss)
                
                
                Shares
                
                
                Amount
                
                
                Par
      Value
                
                
                Earnings
                
                
                Loss
                
                
                TotalBalance,
      December 31, 2007
                
                
                
                
                
                98,040
                
                
                $
                9,804
                
                
                $
                16,728
                
                
                $
                385,281
                
                
                $
                (2,541
                )
                
                $
                409,272Stock
      issued for stock incentive plans, net
                
                
                
                1,188
                
                
                
                119
                
                
                
                1,536
                
                
                
                —
                
                
                
                —
                
                
                
                1,655Stock
      purchased and retired
                
                
                
                
                
                (646
                )
                
                
                (65
                )
                
                
                (6,782
                )
                
                
                —
                
                
                
                —
                
                
                
                (6,847
                )Net
      income
                
                $
                14,757
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                14,757
                
                
                
                —
                
                
                
                14,757Foreign
      currency translation, net of taxes
                
                
                44
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                44
                
                
                
                44Unrealized
      gain on securities, net of taxes
                
                
                19
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                19
                
                
                
                19Comprehensive
      income
                
                $
                14,820Dividends
      declared
                
                
                
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (5,794
                )
                
                
                —
                
                
                
                (5,794
                )Stock-based
      compensation
                
                
                
                
                
                
                —
                
                
                
                —
                
                
                
                889
                
                
                
                —
                
                
                
                —
                
                
                
                889Excess
      tax benefits for share- based payments
                
                
                
                —
                
                
                
                —
                
                
                
                421
                
                
                
                —
                
                
                
                —
                
                
                
                421Balance,
      March 31, 2008
                
                
                
                
                
                
                98,582
                
                
                $
                9,858
                
                
                $
                12,792
                
                
                $
                394,244
                
                
                $
                (2,478
                )
                
                $
                414,416The
      accompanying notes are an integral part of these consolidated financial
      statements.
  5
  RPC,
      INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE THREE MONTHS ENDED MARCH 31, 2008 and 2007(In
      thousands)(Unaudited)Three
      months ended March 31,2008
                
                
                2007OPERATING
      ACTIVITIESNet
      income
                
                $
                14,757
                
                
                $
                28,045Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation,
      amortization and other non-cash charges
                
                
                27,327
                
                
                
                15,263Stock-based
      compensation
                
                
                889
                
                
                
                735Gain
      on disposition of assets, net
                
                
                (1,527
                )
                
                
                (1,549
                )Deferred
      income tax provision
                
                
                586
                
                
                
                2,055Excess
      tax benefits for share-based payments
                
                
                (421
                )
                
                
                (670
                )Changes
      in current assets and liabilities:Accounts
      receivable
                
                
                2,179
                
                
                
                (14,419
                )Income
      taxes receivable
                
                
                5,095
                
                
                
                (3,006
                )Inventories
                
                
                (4,851
                )
                
                
                (2,811
                )Prepaid
      expenses and other current assets
                
                
                789
                
                
                
                860Accounts
      payable
                
                
                4,847
                
                
                
                5,688Income
      taxes payable
                
                
                490
                
                
                
                1,304Accrued
      payroll and related expenses
                
                
                (3,512
                )
                
                
                (785
                )Accrued
      insurance expenses
                
                
                156
                
                
                
                364Accrued
      state, local and other taxes
                
                
                562
                
                
                
                117Other
      accrued expenses
                
                
                (27
                )
                
                
                (25
                )Changes
      in working capital
                
                
                5,728
                
                
                
                (12,713
                )Changes
      in other assets and liabilities:Accrued
      pension
                
                
                543
                
                
                
                (3,943
                )Accrued
      insurance expenses
                
                
                755
                
                
                
                480Other
      non-current assets
                
                
                (631
                )
                
                
                (543
                )Other
      non-current liabilities
                
                
                (1,279
                )
                
                
                (2,875
                )Net
      cash provided by operating activities
                
                
                46,727
                
                
                
                24,285INVESTING
      ACTIVITIESCapital
      expenditures
                
                
                (46,335
                )
                
                
                (63,662
                )Proceeds
      from sale of assets
                
                
                2,466
                
                
                
                1,822Net
      cash used for investing activities
                
                
                (43,869
                )
                
                
                (61,840
                )FINANCING
      ACTIVITIESPayment
      of dividends
                
                
                (5,794
                )
                
                
                (4,886
                )Borrowings
      from notes payable to banks
                
                
                99,000
                
                
                
                162,450Repayments
      of notes payable to banks
                
                
                (86,350
                )
                
                
                (118,600
                )Excess
      tax benefits for share-based payments
                
                
                421
                
                
                
                670Cash
      paid for common stock purchased and retired
                
                
                (5,193
                )
                
                
                (1,165
                )Proceeds
      received upon exercise of stock options
                
                
                210
                
                
                
                344Net
      cash provided by financing activities
                
                
                2,294
                
                
                
                38,813Net
      increase  in cash and cash equivalents
                
                
                5,152
                
                
                
                1,258Cash
      and cash equivalents at beginning of period
                
                
                6,338
                
                
                
                2,729Cash
      and cash equivalents at end of period
                
                $
                11,490
                
                
                $
                3,987
 The
      accompanying notes are an integral part of these consolidated financial
      statements.
  6
  RPC,
INC. AND SUBSIDIARIES
   1. GENERAL
 
 The
accompanying unaudited consolidated financial statements include the accounts of
RPC, Inc. and its wholly-owned subsidiaries (“RPC” or the “Company”) and have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation
S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments
(all of which consisted of normal recurring accruals) considered necessary for a
fair presentation have been included.  Operating results for the three
month period ended March 31, 2008 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2008.
 
 The
balance sheet at December 31, 2007 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
  For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company’s annual report on Form 10-K for the
year ended December 31, 2007.
 
 2. REVENUE
RECOGNITION
  RPC’s
revenues are generated from services, equipment rentals and product
sales.  Service revenues and equipment rental are recognized when the
services are rendered and collectibility is reasonably
assured.  Revenues from services, equipment rentals and product sales
are based on fixed or determinable priced purchase orders or contracts with the
customer and do not include the right of return.  The Company
recognizes revenue from product sales when title passes to the customer, the
customer assumes risks and rewards of ownership, and collectibility is
reasonably assured.  Rates for services and rentals are priced on a
per day, per unit of measure, per man hour or similar basis.  Sales
tax charged to customers is presented on a net basis within the consolidated
statement of operations and excluded from revenues.
 
 3. EARNINGS
PER SHARE
 
 Statement
of Financial Accounting Standard (“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 the dilutive effect of stock options
and time lapse restricted shares and performance restricted shares included in
diluted earnings per share, but excluded from basic earnings per share. Basic
and diluted earnings per share are computed by dividing net income by the
weighted average number of shares outstanding during the respective
periods.  A reconciliation of weighted average shares outstanding is
as follows:
  7
 
 RPC,
INC. AND SUBSIDIARIES
 
 
 Three
      months ended
                March
      31(In
      thousands except per share data )
              
              2008
              
              
              2007Net
      income available for stockholders (numerator for basic and
      diluted  earnings per share):
              
              $
              14,757
              
              
              $
              28,045Shares
      (denominator):Weighted-average
      shares outstanding (denominator for basic earnings per
    share)
              
              
              96,586
              
              
              
              95,859Effect
      of dilutive securities:Employee
      stock options and restricted stock
              
              
              1,505
              
              
              
              2,527Adjusted
      weighted average shares (denominator for diluted earnings per
      share)
              
              
              98,091
              
              
              
              98,386Earnings
      per share:Basic
              
              $
              0.15
              
              
              $
              0.29Diluted
              
              $
              0.15
              
              
              $
              0.29
 
 
 4. RECENT
ACCOUNTING PRONOUNCEMENTS
 
 In March
2008, the FASB issued SFAS 161, “Disclosures about Derivative Instruments and
Hedging Activities - an Amendment of FASB Statement 133.” SFAS 161 requires
enhanced disclosures regarding how: (a) an entity uses derivative instruments;
(b) derivative instruments and related hedged items are accounted for under FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities;
and (c) derivative instruments and related hedged items affect an entity's
financial position, financial performance, and cash
flows.  SFAS 161 is effective for fiscal years and interim
periods beginning after November 15, 2008 with early application being
encouraged.  The Company does not have any derivative instruments nor
is currently involved in hedging activities and therefore adoption of SFAS 161
is not expected to have a material impact on the Company’s consolidated
financial statements.
 
 In
February 2008, the FASB issued FASB Staff Position (FSP) FAS 157-1, “Application
of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting
Pronouncements that Address Fair Value Measurements for Purposes of Lease
Classification or Measurement under Statement 13,” and FSP FAS 157-2, “Effective
Date of FASB Statement No. 157.” These FSPs:
  ●          Exclude
certain leasing transactions accounted for under FASB Statement No. 13,
Accounting for Leases, from the scope of FASB Statement No. 157, Fair Value
Measurements (Statement 157). The exclusion does not apply to fair value
measurements of assets and liabilities recorded as a result of a lease
transaction but measured pursuant to other pronouncements within the scope of
Statement 157.
  8
  RPC,
INC. AND SUBSIDIARIES
  ●          Defer
the effective date in Statement 157 for one year for certain nonfinancial
assets and nonfinancial liabilities, except those that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually).
  FSP FAS
157-1 is effective upon the initial adoption of Statement 157.  FSP
FAS 157-2 is effective February 12, 2008.  The Company has adopted the
provisions of FSP 157-1 and 157-2 in the first quarter of 2008.  See
Note 13 for details regarding impact of adoption.
 
 5. COMPREHENSIVE
INCOME
 
 The components of comprehensive
income are as follows:
 
 Three
      months ended
                March
      31,(In
      thousands)
              
              2008
              
              
              2007Net
      income as reported
              
              $
              14,757
              
              
              $
              28,045Change
      in unrealized gain (loss) on securities,net
      of taxes
              
              
              19
              
              
              
              223Change
      in foreign currency translation,net
      of taxes
              
              
              44
              
              
              
              -Comprehensive
      income
              
              $
              14,820
              
              
              $
              28,268
   6. STOCK-BASED
COMPENSATION
 
 The
Company reserved 5,062,500 shares of common stock under the 2004 Plan which
expires ten years from the date of approval.  This plan provides for
the issuance of various forms of stock incentives, including, among others,
incentive and non-qualified stock options and restricted stock.  As of
March 31, 2008, there were approximately 2,859,000 shares available for
grants.
  Pre-tax
stock-based employee compensation expense was $889,000 ($576,000 after tax) for
the three months ended March 31, 2008 and $735,000 ($505,000 after tax) for the
three months ended March 31, 2007.
 
 Stock
Options
  Transactions
involving RPC’s stock options for the three months ended March 31, 2008 were as
follows:
  9
 RPC,
INC. AND SUBSIDIARIES
  Shares
              
              
              Weighted
                Average
                Exercise
      Price
              
              
              Weighted
                Average
                Remaining
      Contractual
                Life
              
              
              Aggregate
                Intrinsic
      ValueOutstanding
      at January 1, 2008
              
              
              1,878,252
              
              
              $
              3.11
              
              
              3.32
      yearsGranted
              
              
              -
              
              
              
              -
              
              
              
              N/AExercised
              
              
              (609,575
              )
              
              
              3.06
              
              
              
              N/AForfeited
              
              
              (8,776
              )
              
              
              3.88
              
              
              
              N/AExpired
              
              
              -
              
              
              
              -
              
              
              
              N/AOutstanding
      and exercisable  at March 31, 2008
              
              
              1,259,901
              
              
              $
              3.13
              
              
              3.54
      years
              
              
              $
              15,194,000
 
 The total
intrinsic value of stock options exercised was $4,666,000 during the three
months ended March 31, 2008 and $3,552,000 during the three months ended March
31, 2007.  The tax benefit related to options exercised totaled
$277,000 during the three months ended March 31, 2008 and have been classified
as financing cash flows in accordance with SFAS 123(R), “Shared-Based
Payments.”  There were no recognized excess tax benefits associated
with the exercise of stock options during the three months ended March 31, 2007
since all of the stock options exercised were incentive stock options which do
not generate tax deductions for the Company.
 
 Restricted
Stock
  The
following is a summary of the changes in non-vested restricted shares for the
three months ended March 31, 2008:
 
 Shares
              
              
              Weighted
      Average
                Grant-Date
      Fair
                ValueNon-vested
      shares at January 1, 2008
              
              
              1,570,232
              
              
              $
              11.01Granted
              
              
              608,500
              
              
              
              9.81Vested
              
              
              (239,112
              )
              
              
              8.44Forfeited
              
              
              (29,553
              )
              
              
              18.29Non-vested
      shares at March 31, 2008
              
              
              1,910,067
              
              
              $
              10.92
 
 The total
fair value of shares vested during the three months ended March 31, 2008 was
$2,057,000 and during the three months ended March 31, 2007 was
$2,984,000.  The tax benefits for compensation tax deductions in
excess of compensation expense totaled $144,000 and were credited to capital in
excess of par value and are classified as financing cash flows in accordance
with SFAS 123R.
 
 Other
Information
 
 As of
March 31, 2008, total unrecognized compensation cost related to non-vested
restricted shares was $19,808,000 which is expected to be recognized over a
weighted-average period of 4.0 years.  As of March 31, 2008, all of
the compensation cost related to stock options has been recognized.
  7.        BUSINESS
SEGMENT INFORMATION
  RPC’s
service lines have been aggregated into two reportable oil and gas services
segments, Technical Services and Support Services, because of the similarities
between the financial performance and approach to managing the service lines
within each of the segments, as well as the economic and business conditions
impacting their business activity levels.  Corporate includes selected
administrative costs incurred by the Company that are not allocated to business
units.  Gains or losses on disposition of assets are reviewed by the
Company’s chief decision maker on a consolidated basis, and accordingly the
Company does not report gains or losses at the segment level.
  10
  RPC,
INC. AND SUBSIDIARIES
  Technical
Services include RPC’s oil and gas service lines that utilize people and
equipment to perform value-added completion, production and maintenance services
directly to a customer’s well. These services include pressure pumping services,
snubbing, coiled tubing, nitrogen pumping, well control consulting and
firefighting, down-hole tools, wireline, and fluid pumping
services.  These Technical Services are primarily used in the
completion, production and maintenance of oil and gas wells. The principal
markets for this segment include the United States, including the Gulf of
Mexico, the mid-continent, southwest and Rocky Mountain regions, and
international locations including primarily Africa, Canada, China, Latin America
and the Middle East. Customers include major multi-national and independent oil
and gas producers, and selected nationally-owned oil companies.
  Support
Services include RPC’s oil and gas service lines that primarily provide
equipment for customer use or services to assist customer operations. The
equipment and services include drill pipe and related tools, pipe handling,
inspection and storage services and oilfield training services. The demand for
these services tends to be influenced primarily by customer drilling-related
activity levels. The principal markets for this segment include the United
States, including the Gulf of Mexico and the mid-continent regions, and
international locations, including primarily Canada, Latin America, and the
Middle East. Customers include domestic operations of major multi-national and
independent oil and gas producers, and selected nationally-owned oil
companies.
  Inter-segment
revenues are generally recorded in segment operating results at prices that
management believes approximate prices for arm’s length transactions and are not
material to operating results.
  Certain information with respect to
RPC’s business segments is set forth in the following
tables:
  11
  RPC,
INC. AND SUBSIDIARIES
 
  Three
      months ended March 31,2008
                
                
                2007(in
      thousands)Revenues:Technical
      Services
                
                
                $
                169,231
                
                
                $
                142,307Support
      Services
                
                
                
                27,996
                
                
                
                28,738Total
      revenues
                
                
                $
                197,227
                
                
                $
                171,045Operating
      proft (loss):Technical
      Services
                
                
                $
                20,687
                
                
                $
                35,286Support
      Services
                
                
                
                5,858
                
                
                
                9,541Corporate
                
                
                
                (2,631
                )
                
                
                (2,391
                )Gain
      on disposition of assets, net
                
                
                
                1,527
                
                
                
                1,549Total
      operating profit
                
                
                $
                25,441
                
                
                $
                43,985Interest
      expense
                
                
                
                (1,471
                )
                
                
                (754
                )Interest
      income
                
                
                
                22
                
                
                
                18Other
      (expense) income, net
                
                
                
                (7
                )
                
                
                897Income
      before income taxes
                
                
                $
                23,985
                
                
                $
                44,146
 
 Three
      months ended March 31, 2008
              
              Technical
                Services
              
              
              Support
                Services
              
              
              Corporate
              
              
              Total(in
      thousands)Indentifiable
      assets
              
              $
              520,134
              
              
              $
              167,798
              
              
              $
              49,427
              
              
              $
              737,359Capital
      expenditures
              
              
              30,181
              
              
              
              16,006
              
              
              
              148
              
              
              
              46,335Depreciation
      and amortization
              
              
              21,507
              
              
              
              5,590
              
              
              
              229
              
              
              
              27,326
 
 
 8.        INVENTORIES
  Inventories
of $34,418,000 at March 31, 2008 and $29,602,000 at December 31, 2007 consist of
raw materials, parts and supplies.
 
 9. EMPLOYEE
BENEFIT PLAN
 
 The
following represents the net periodic benefit cost and related components of the
Company’s multiple employer Retirement Income Plan:
  12
  RPC, INC. AND
SUBSIDIARIES
  Three
      months ended
                March
      31,(in
      thousands)
              
              2008
              
              
              2007Service
      cost
              
              $
              -
              
              
              $
              -Interest
      cost
              
              
              460
              
              
              
              430Expected
      return on plan assets
              
              
              (636
              )
              
              
              (508
              )Amortization
      of net losses
              
              
              71
              
              
              
              194Net
      periodic benefit cost
              
              $
              (105
              )
              
              $
              116
  
 The
Company has not made any contributions to the plan in the first quarter of 2008
and does not currently expect to make any additional contributions to this plan
during the remainder of 2008.
 
 10.       NOTES
PAYABLE TO BANKS
  The
Company currently has a revolving credit agreement (the "Revolving Credit
Agreement") with SunTrust Capital Markets, Inc, as Joint Lead Arranger and Sole
Book Manager, Banc of America Securities LLC as Joint Lead Arranger, and a
syndicate of other lenders.  The Revolving Credit Agreement includes a
full and unconditional guarantee by RPC's 100% owned domestic subsidiaries whose
assets equal substantially all of the consolidated assets of RPC and its
subsidiaries.  The subsidiaries of the Company that are not guarantors
are considered minor.
  The
Revolving Credit Agreement has a general term of five years and provides for an
unsecured line of credit of up to $250 million, which includes a $50 million
letter of credit subfacility, and a $20 million swingline subfacility. Under
certain circumstances, the line of credit may be increased by an additional
amount of up to $50 million. The maturity date of all revolving loans under the
Credit Agreement is September 8, 2011, although the Company may request a
one-year extension of the maturity date on the second anniversary of the closing
of the Revolving Credit Agreement.  The Company incurred loan
origination fees and other debt related costs associated with the line of credit
of approximately $469,000.  These costs are being amortized over the
five year term of the loan, and the net amount is classified as non-current
other assets on the consolidated balance sheets.
  Revolving
loans under the Revolving Credit Agreement bear interest at one of the following
two rates, at RPC's election:
  ●           the
Base Rate, which is the greater of SunTrust Bank's "prime rate" for the day of
the borrowing and a fluctuating rate per annum equal to the Federal Funds Rate
plus .50%; or
  ●           with
respect to any Eurodollar borrowings, Adjusted LIBOR (which equals LIBOR as
increased to account for the maximum reserve percentages established by the U.S.
Federal Reserve) plus a margin ranging from .40% to .80%, based upon RPC's
then-current consolidated debt-to-EBITDA ratio.  In addition, RPC will
pay an annual fee ranging from .10% to .20% of the total credit facility based
upon RPC's then-current consolidated debt-to-EBITDA ratio.
  13
  RPC, INC. AND
SUBSIDIARIES
  The
Revolving Credit Agreement contains customary terms and conditions, including
certain financial covenants including covenants restricting RPC's ability to
incur liens, merge or consolidate with another entity.  Further, the
Revolving Credit Agreement contains financial covenants restricting RPC's
ability to permit the ratio of RPC's consolidated debt to EBITDA to exceed 2.5
to 1, and to permit the ratio of RPC's consolidated EBIT to interest expense to
exceed 2 to 1.
  As of
March 31, 2008, RPC has outstanding borrowings of $169.1 million under the
Revolving Credit Agreement.Interest expense incurred on
the line of credit was $1,748,000 during the three months ended March 31, 2008
and $753,000 during the three months ended March 31, 2007. The weighted average
interest rate was 4.4% for the three months ended March 31, 2008 and 6.3% for
three months ended March 31, 2007.  For the three months ended March
31, 2008, the Company capitalized interest of $293,000 related to facilities and
equipment under construction.  Additionally there were letters of
credit relating to self-insurance programs and contract bids outstanding for
$18.0 million as of March 31, 2008.
 
 11.      INCOME
TAXES
 
 The
Company determines its periodic income tax expense based upon the current period
income and the annual estimated tax rate for the Company adjusted for any change
to prior period estimates. The estimated tax rate is revised, if necessary, as
of the end of each successive interim period during the fiscal year to the
Company's current annual estimated tax rate.
 
 As of
January 1, 2007, the Company adopted the provisions of FASB Interpretation No.
48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109” (“FIN 48”), which provides criteria for the
recognition, measurement, presentation and disclosure of uncertain tax
positions.  The Company is subject to the provisions of FIN 48 and has
analyzed filing positions in federal, state and foreign filing jurisdictions
where it is required to file income tax returns, as well as all open years in
those jurisdictions.  As a result of the implementation of FIN 48, the
Company recognized an immaterial adjustment in the liability for unrecognized
income tax benefits.  As of the adoption date, the Company had gross
tax affected unrecognized tax benefits of $922,000, of which $850,000, if
recognized, would affect the Company’s effective tax rate.  As of
December 31, 2007, the Company had gross tax affected unrecognized tax benefits
of $10,000, of which $10,000, if recognized would affect the Company’s effective
tax rate.  There have been no material changes to these amounts during
the three months ended March 31, 2008.
 
 The
Company and its subsidiaries are subject to U.S. Federal income tax as well as
income tax in multiple state and foreign jurisdictions.  In many cases
our uncertain tax positions are related to tax years that remain open and
subject to examination by the relevant taxing authorities.  For
Federal and state purposes, the Company’s 2004 through 2007 tax years remain
open to examination.
  14
  RPC, INC. AND
SUBSIDIARIES
 Baring an
unforeseen event, the Company does not anticipate a material change in the
unrecognized tax benefits in the next 12 months.
 
 The
Company’s policy is to record interest and penalties related to income tax
matters as income tax expense.   Accrued interest and penalties
were immaterial as of March 31, 2008.
 
 12.      SUPPLEMENTAL
CASH FLOWS INFORMATION
 
 The
Company had accounts payable for purchases of property, plant and equipment of
approximately $33,934,000 as of March 31, 2008 and $19,800,000 as of March 31,
2007.
 
 13.      FAIR
VALUE DISCLOSURES
 
 The
Company adopted SFAS 157, “Fair Value Measurements,” and FSP 157-2, “Effective
Date of FASB Statement No. 157,” in the first quarter of 2008.  SFAS
157 defines fair value, establishes a framework for measuring fair value and
expands disclosure requirements about items measured at fair
value.  SFAS 157 does not require any new fair value
measurements.  It applies to accounting pronouncements that already
require or permit fair value measures.  As a result, the Company will
not be required to recognize any new assets or liabilities at fair value. FSP
157-2 delays the effective date of SFAS 157 for nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis.
 
 SFAS 157
establishes a fair value hierarchy that distinguishes between assumptions based
on market data (observable inputs) and the Company’s assumptions (unobservable
inputs).  The hierarchy consists of three broad levels as
follows:
 1.
              Level
      1 – Quoted market prices in active markets for identical assets or
      liabilities.2.
              Level
      2 – Inputs other than level 1 that are either directly or indirectly
      observable.3.
              Level
      3 – Unobservable inputs developed using the Company’s estimates and
      assumptions, which reflect those that market participants would
      use.
 
 Securities:
 The
Company determines the fair value of the marketable securities that are trading
and available for sale through quoted market prices.  The adoption of
SFAS 157 had no effect on the Company’s valuation of marketable
securities.
 
 The
following table summarizes the valuation of financial instruments measured at
fair value on a recurring basis in the balance sheet as of March 31,
2008:
  15
  RPC, INC. AND
SUBSIDIARIES
 Fair
      value Measurements at March 31, 2008 with:(in
      thousands)
              
              Quoted
      prices in
                active
      markets for
                identical
      assets
              
              
              Significant
      other observable inputs
              
              
              Significant
                unobservable
                inputs(Level 1)
              
              
              (Level 2)
              
              
              (Level 3)Assets:Trading
      securities
              
              $
              4,780
              
              
              $
              -
              
              
              $
              -Available
      for sale securities
              
              
              1,461
              
              
              
              -
              
              
              
              -
 
 In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities — including an amendment of FASB
Statement No. 115.” This statement permits entities to choose to measure
many financial instruments and certain other items at fair value. This statement
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, including interim periods within that fiscal year. The
Company did not elect the fair value option for any of its existing financial
instruments as of March 31, 2008 and the Company has not determined whether
or not it will elect this option for financial instruments it may acquire in the
future.
 
 16
  RPC, INC. AND
SUBSIDIARIES
 ITEM
2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Overview
  The
following discussion should be read in conjunction with the Consolidated
Financial Statements included elsewhere in this document. See also
“Forward-Looking Statements” on page 25.
  RPC, Inc.
(“RPC”) provides a broad range of specialized oilfield services primarily to
independent and major oilfield companies engaged in exploration, production and
development of oil and gas properties throughout the United States, including
the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and
selected international locations.  The Company’s revenues and profits
are generated by providing equipment and services to customers who operate oil
and gas properties and invest capital to drill new wells and enhance production
or perform maintenance on existing wells.  We continuously monitor
factors that impact the level of current and expected customer activity levels,
such as the price of oil and natural gas, changes in pricing for our services
and equipment, and utilization of our equipment and personnel.  Our
financial results are affected by geopolitical factors such as political
instability in the petroleum-producing regions of the world, overall economic
conditions and weather in the United States, the prices of oil and natural gas,
and our customers’ drilling and production activities.
  The
discussion of our key business and financial strategies set forth under the
Overview section in the Company’s annual report on Form 10-K for the fiscal year
ended December 31, 2007 is incorporated herein by reference.  Since
year-end, the Company's operational strategies have not changed.
  During
the first quarter of 2008, revenues increased 15.3 percent to $197.2 million
compared to the same period in the prior year.  The growth in revenues
resulted from strong activity levels in our industry and capacity additions made
during 2007 partially offset by reduced pricing for many services resulting from
increased competition.  International revenues for the first quarter
of 2008 decreased due to declines in customer activity levels in Turkmenistan,
Hungary, Cameroon and Angola partially offset by increases in Kuwait, Egypt,
Canada and Gabon. We continue to focus on developing international growth
opportunities; however, it is difficult to predict when contracts and projects
will be initiated and their ultimate duration.
  Cost of
services rendered and goods sold as a percentage of revenues increased
approximately 8.5 percentage points in the first quarter of 2008 compared to the
same period of 2007.  This increase was due primarily to the effect on
revenues of lower pricing due to competition and increases in the cost of
sourcing certain critical materials and supplies, and higher fuel
costs.
  Selling,
general and administrative expenses as a percentage of revenues decreased by
approximately 0.7 percentage point in the first quarter of 2008 compared to the
same period prior year due to increased personnel costs consistent with higher
activity levels.  However, as a percentage of revenues, these costs
declined slightly.  Operating profit decreased in the current quarter
compared to same period in the prior year due to pricing declines as a result of
competition, higher costs for fuel and materials and supplies, and increased
depreciation.
  17
  RPC, INC. AND
SUBSIDIARIES
  Income
before income taxes was $24.0 million for the three months ended March 31, 2008
compared to $44.1 million in the prior year.  The effective tax rate
for the three months ended March 31, 2008 was 38.5 percent compared to 36.5
percent in the prior year.  Diluted earnings per share decreased to
$0.15 for the three months ended March 31, 2008 compared to $0.29 in the same
period prior year. Cash flows from operating activities were $46.7 million for
the three months ended March 31, 2008 compared to $24.3 million for the same
period in the prior year, and cash and cash equivalents were $11.5 million at
March 31, 2008, an increase of $5.2 million compared to December 31,
2007.  The notes payable to banks were $169.1 million as of March 31,
2008 and $79.5 million as of March 31, 2007.
  Consistent
with our strategy to grow our capacity and maintain our existing fleet of high
demand equipment, capital expenditures were $46.3 million during the first three
months of 2008. Although we currently expect capital expenditures to be
approximately $140 million during 2008, the total amount of expenditures for the
year will depend primarily on equipment maintenance requirements and the
ultimate delivery dates and timing of payments for equipment on
order.  We expect these expenditures to be primarily directed toward
our larger, core service lines including primarily pressure pumping, but also
hydraulic workover, coiled tubing, nitrogen, and rental tools.
  Outlook
 
 Drilling
activity in the U.S. domestic oilfields, as measured by the rotary drilling rig
count, has been stable or gradually increasing for several years, and the
overall domestic rig count during the three months ended March 31, 2008 was
approximately 2.1 percent higher than in the comparable period in 2007. The
average price of oil increased by approximately 67.3 percent and the average
price of natural gas increased by approximately 20.4 percent during the three
months ended March 31, 2008 compared to the prior year.  The Company
is monitoring recent volatility in oil and natural gas prices for any signs of
weakness in domestic customer activity levels.  Our response to the
industry's potential uncertainty is to maintain sufficient liquidity and a
conservative capital structure.  Although we increased our borrowings
under our bank credit facility in 2007, we will still maintain a conservative
financial structure.  We expect revenues will be higher in 2008 than
in 2007; however, we are experiencing pricing pressure for many of our services,
higher interest expense, higher depreciation expense resulting from increased
capital expenditures and increases in employment, materials and supplies, fuel
and other operating costs which reduces our operating profit, income before
income taxes, and net income.  We believe that all of these
performance measures will be lower in 2008 than in 2007.  In most of
the Company’s service lines and many of our geographic markets, we are
experiencing the negative impacts of increased competition.  One
negative impact is lower pricing for our services.  In addition,
increased competition increases the costs and reduces the availability of
qualified employees and critical materials and supplies used in our business,
and competitive pressures are preventing us from passing these increased costs
through to our customers.
  18
  RPC, INC. AND
SUBSIDIARIES
  The high
activity levels in the domestic oilfield have increased demand for equipment
from the manufacturers of equipment and components used in the Company's
business.  This increased demand has increased the lead times for
ordering and delivery of such equipment and components over the past several
years.  As of the end of the first quarter of 2008, however, we
believe that much of this demand has been met, and that delivery lead times for
many types of equipment have decreased.
  Further
discussion of the Company’s outlook is set forth under the Outlook section in
the Company’s annual report on Form 10-K for the fiscal year ended December 31,
2007 and is incorporated herein by reference.  There have been no
significant changes in the Company’s outlook since the filing of the 10-K for
2007 except as discussed above.
 
 RESULTS OF
OPERATIONS
 
 Three
      months ended
                March
      31,2008
              
              
              2007Consolidated
      revenues [in thousands]
              
              $
              197,227
              
              
              $
              171,045Revenues
      by business segment [in thousands]:Technical
              
              $
              169,231
              
              
              $
              142,307Support
              
              
              27,996
              
              
              
              28,738Consolidated
      operating profit [in thousands]
              
              $
              25,441
              
              
              $
              43,985Operating
      profit (loss) by business segment [in thousands]:Technical
              
              $
              20,687
              
              
              $
              35,286Support
              
              
              5,858
              
              
              
              9,541Corporate
              
              $
              (2,631
              )
              
              $
              (2,391
              )Gain
      on disposition of assets, net
              
              $
              1,527
              
              
              $
              1,549Percentage
      cost of services rendered  & goods sold to
      revenues
              
              
              60
              %
              
              
              51
              %Percentage
      selling, general & administrative expenses to revenues
              
              
              14
              %
              
              
              15
              %Percentage
      depreciation and amortization expense to revenues
              
              
              14
              %
              
              
              9
              %Average
      U.S. domestic rig count
              
              
              1,770
              
              
              
              1,734Average
      natural gas price (per thousand cubic feet (mcf))
              
              $
              8.63
              
              
              $
              7.17Average
      oil price (per barrel)
              
              $
              98.03
              
              
              $
              58.60
 
 THREE MONTHS ENDED MARCH 31,
2008 COMPARED TO THREE MONTHS ENDED MARCH 31, 2007
  Revenues.Revenues
for the three months ended March 31, 2008 increased 15.3 percent compared to the
three months ended March 31, 2007.  Domestic revenues increased 18
percent to $188.9 million during the first quarter of 2008 compared to the same
period in the prior year.  The increases in revenues are due primarily
to strong industry activity levels and increased capacity driven by equipment
purchased under our long-term growth plan partially offset by increased
competition which has adversely impacted pricing for services and to a lesser
extent utilization.  International revenues decreased from $10.6
million to $8.4 million compared to the prior year quarter.  Revenues
decreased due to declines in customer activity levels in Turkmenistan, Hungary,
Cameroon and Angola partially offset by increases in Kuwait, Egypt, Canada and
Gabon.  Our international revenues are impacted by the timing of
project initiation and their ultimate duration and can be volatile in
nature.
  19
  RPC, INC. AND
SUBSIDIARIES
  The
average price of natural gas increased approximately 20 percent and the average
price of oil increased 67 percent during the first quarter of 2008 as compared
to the prior year.  The average domestic rig count during the quarter
was approximately two percent higher than the same period in
2007.  This increase in drilling activity had a positive impact on our
financial results.  We believe that our activity levels are affected
more by the price of natural gas than by the price of oil, because the majority
of U.S. domestic drilling activity relates to natural gas, and many of our
services are more appropriate for gas wells than oil wells.
  The
Technical Services segment revenues for the quarter increased 18.9 percent
compared to the first quarter of last year.  Revenues in this segment
increased due primarily to strong industry activity and higher capacity through
increased capital expenditures partially offset by lower pricing for services.
The Support Services segment revenues for the quarter decreased 2.6 percent
compared to the first quarter of prior year.  This decline was due to
slightly lower pricing in the rental tool service line, the largest within this
segment.  Operating profit declined in both segments primarily due to
the negative margin impact from competitive pricing pressure, higher fuel and
transportation costs, higher costs for critical materials and supplies and
increased depreciation expense with the additional equipment added to our
fleet.
  Cost of services rendered and goods
sold. Cost of services rendered and goods sold increased 34.4 percent due
to the variable nature of many of these expenses, including increases in
materials and supplies, direct employment costs caused by competition for
qualified employees and fuel and transportation costs. Cost of services rendered
and goods sold, as a percent of revenues, increased in the first quarter of 2008
compared to the first quarter of 2007 due primarily to increases in cost of
certain critical materials and supplies to perform customer jobs, direct
employment costs and fuel costs, most of which could not be passed through to
the customer because of the competitive environment.
  Selling, general and administrative
expenses. Selling, general and administrative expenses for
the three months ended March 31, 2008 increased 9.6 percent to $28.3 million
compared to $25.8 million for the three months ended March 31, 2007. This
increase was primarily due to higher compensation costs and other operational
expenses consistent with higher activity levels.  However, these costs
as a percent of revenues decreased during the three months ended March 31, 2008
compared to the same period in the prior year due to the fixed nature of these
expenses and the positive cost leverage realized with increasing
revenues.
  20
  RPC, INC. AND
SUBSIDIARIES
  Depreciation and
amortization. Depreciation and amortization totaled $27.3
million for the three months ended March 31, 2008, a 79.0 percent increase,
compared to $15.3 million for the quarter ended March 31, 2007. This increase in
depreciation and amortization resulted from a higher level of capital
expenditures during recent quarters within both Technical Services and Support
Services to increase capacity, expand facilities and to maintain our existing
fleet of equipment.
  Gain on disposition of assets,
net.  Gain on disposition of assets, net was $1.5 million for
the three months ended March 31, 2008 and 2007.  The gain on
disposition of assets, net include gains or losses related to various property
and equipment dispositions or sales to customers of lost or damaged rental
equipment.
  Other (expense) income, net.Other expense, net was $7 thousand for the three months ended March 31,
2008 and other income, net was $897 thousand for the same period in the prior
year.  Other (expense) income, net primarily includes gains and losses
from investments in the non-qualified plan being marked to market, settlements
of various legal and insurance claims and royalty payments.
  Interest expense and interest
income.Interest expensewas $1.5 million for
the three months ended March 31, 2008 compared to $754 thousand for the quarter
ended March 31, 2007.  The increase in 2008 is due to a higher average
balance on our revolving line of credit, net of interest capitalized on
equipment and facilities under construction.  Interest income
increased to $22 thousand for the three months ended March 31, 2008 compared to
$18 thousand for the same period of the prior year.
  Income tax provision.Income
tax provision was $9.2 million during the three months ended March 31, 2008,
compared to $16.1 million in 2007.  This decrease was due to the
decrease in income before taxes partially offset by an increase in the effective
tax rate to 38.7 percent for the three months ended March 31, 2008 from 36.5
percent for the three months ended March 31, 2007.
  LIQUIDITY AND CAPITAL
RESOURCES
 
 Cash
Flows
  The
Company’s cash and cash equivalents at March 31, 2008 were $11.5
million.  The following table sets forth the historical cash flows for
the three months ended March 31, 2008 and 2007:
 
 Three
      months ended
                March
      31,(In
      thousands)
              
              2008
              
              
              2007Net
      cash provided by operating activities
              
              $
              46,727
              
              
              $
              24,285Net
      cash used for investing activities
              
              
              (43,869
              )
              
              
              (61,840
              )Net
      cash provided by financing activities
              
              
              2,294
              
              
              
              38,813
  21
  RPC, INC. AND
SUBSIDIARIES
  Cash
provided by operating activities for the three months ended March 31, 2008
increased by $22.4 million compared to the comparable period in the prior
year.  Although net income decreased $13.3 million for the three
months ended March 31, 2008 compared to the same period of 2007, cash provided
by operating activities increased due primarily to an increase in depreciation
due to higher capital expenditures over the year, lower contributions to the
pension plan and lower growth in working capital requirements. Lower growth in
accounts receivable was due to lower revenue growth and decreases in income
taxes receivable/ payable, net due to timing of payments partially offset by
increases in inventory, accounts payable and accrued payroll including bonuses
as a result of increased business activity levels.
  Cash used
for investing activities for the three months ended March 31, 2008 decreased by
$18.0 million, compared to the three months ended March 31, 2007, as a result of
lower capital expenditures in the first quarter of 2008 compared to the same
period in the prior year.
  Cash
provided by financing activities for the three months ended March 31, 2008
decreased by $36.5 million, compared to the three months ended March 31, 2007,
due to a decrease in net borrowings from notes payable to banks, the repurchases
of stock and an increase in dividends paid to common shareholders during the
first three months of 2008 compared to prior year.
  Financial
Condition and Liquidity
  The
Company’s financial condition as of March 31, 2008, remains
strong.  We believe the liquidity provided by our existing cash and
cash equivalents, our overall strong capitalization, cash expected to be
generated from operations and our credit facility will provide sufficient
capital to meet our requirements for at least the next twelve
months.  The Company currently has a $250 million revolving credit
facility (the "Revolving Credit Agreement") maturing in 2011.  The
Revolving Credit Agreement contains customary terms and conditions, including
certain financial covenants including covenants restricting RPC's ability to
incur liens or merge or consolidate with another entity.  Our
outstanding borrowings were $169.1 million at March 31, 2008 and approximately
$18.0 million of the credit facility supports outstanding letters of credit
relating to self-insurance programs or contract bids.  Therefore a
total of $63.0 million was available under our facility as of March 31,
2008.  Additional information regarding our Revolving Credit Agreement
is included in Note 10 to our Consolidated Financial Statements included in this
report.
  The
Company’s decisions about the amount of cash to be used for investing and
financing purposes are influenced by its capital position, including access to
borrowings under our credit facility, and the expected amount of cash to be
provided by operations.  We believe our liquidity will continue to
provide the opportunity to grow our asset base and revenues during periods with
positive business conditions and strong customer activity levels.  In
addition, the Company's decisions about the amount of cash to be used for
investing and financing activities may also be influenced by the financial
covenants in our credit facility.
  22
  RPC, INC. AND
SUBSIDIARIES
  Cash
Requirements
  The
Company currently expects that capital expenditures during 2008 will be
approximately $140 million, of which $46.3 million has been spent as of March
31, 2008.  We expect these expenditures to be primarily directed
towards revenue-producing equipment in our larger, core service lines including
pressure pumping, snubbing, nitrogen, and rental tools. The actual amount of
2008 expenditures will depend primarily on equipment maintenance requirements,
expansion opportunities, and equipment delivery schedules.
  The
Company’s Retirement Income Plan, a multiple employer trusteed defined benefit
pension plan, provides monthly benefits upon retirement at age 65 to eligible
employees.  The Company has not made any contributions to the pension
plan in the first quarter of 2008 and does not currently expect to make any
contributions to the pension plan for the remainder of 2008.
  The
Company’s Board of Directors announced a stock buyback program on March 9, 1998
authorizing the repurchase of 11,812,500 shares.  The Company
repurchased 335,600 shares of common stock under the program during the three
months ended March 31, 2008 and may repurchase outstanding common shares
periodically based on market conditions and our capital allocation strategies
and restrictions under our credit facility.  The stock buyback program
does not have a predetermined expiration date.
  On April
22, 2008, the Board of Directors approved a $0.06 per share cash dividend
payable June 10, 2008 to stockholders of record at the close of business May 8,
2008.  The Company expects to continue to pay cash dividends to common
stockholders, subject to the earnings and financial condition of the Company and
other relevant factors.
 
 INFLATION
  The
Company purchases its equipment and materials from suppliers who provide
competitive prices, and employs skilled workers from competitive labor
markets.  If inflation in the general economy increases, the Company’s
costs for equipment, materials and labor increase as well.  Due to the
increases in activity in the domestic oilfield over the past several years, as
well as a shortage of a skilled work force due to historically low activity in
the oilfield, the Company has experienced upward wage pressures in the labor
markets from which it hires employees.  More recently, the Company has
experienced shortages for critical materials used in some of its largest service
lines, and these shortages have caused price increases for these materials as
well as higher transportation costs, since some alternative suppliers are
located farther from the Company’s operational locations than the original
suppliers.  Also, high fuel prices have affected the Company’s costs
because fuel is used to transport the Company’s equipment as well as to provide
power at customer locations. Over the past several years, the price of steel,
for both the commodity and for products manufactured with steel, increased
dramatically.  Steel prices have moderated but remain high by
historical standards.  This factor has affected the Company's
operations by increasing the cost of the Company's new equipment, which has
resulted in higher capital expenditures and depreciation expense.  RPC
attempts to recover such increased costs, particularly personnel costs,
materials and fuel, through price increases to its customers.  Due to
increased competition during recent periods, however, the majority of these
attempts have not been successful, which has decreased the Company’s
profitability.  Such decreased profitability is likely to continue as
long as fuel prices remain high, costs for materials and labor in the domestic
oilfield remain high, and competition prevents the Company from recovering such
increased costs through increased costs to its customers.
  23
  RPC, INC. AND
SUBSIDIARIES
 OFF BALANCE SHEET
ARRANGEMENTS
 
 The
Company does not have any material off balance sheet arrangements.
 
 RELATED PARTY TRANSACTIONS
  Marine
Products Corporation
  Effective
February 28, 2001, the Company spun-off the business conducted through Chaparral
Boats, Inc, RPC’s former powerboat manufacturing segment.  In
conjunction with the spin-off, RPC and Marine Products entered into various
agreements that define the companies’ relationship.  A detailed
discussion of the various agreements in effect is contained in the Company’s
annual report on Form 10-K for the year ended December 31,
2007.  During the three months ended March 31, 2008, RPC charged
Marine Products for its allocable share of administrative costs incurred for
services rendered on behalf of Marine Products totaling $263,000 compared to
$251,000 for the comparable period in 2007.
  Other
  The
Company periodically purchases in the ordinary course of business products or
services from suppliers who are owned by officers or significant shareholders
of, or affiliated with the directors of RPC. The total amounts paid to these
affiliated parties were approximately $91,000 for the three months ended March
31, 2008 and $273,000 for the three months ended March 31, 2007.
  RPC
receives certain administrative services and rents office space from Rollins,
Inc. (a company of which Mr. R. Randall Rollins is also Chairman, and which is
controlled by Mr. Rollins and his affiliates).  The service agreements
between Rollins, Inc. and the Company provide for the provision of services on a
cost reimbursement basis and are terminable on six months notice.  The
services covered by these agreements include office space, selected
administration services for certain employee benefit programs, and other
administrative services. Charges to the Company (or to corporations which are
subsidiaries of the Company) for such services and rent aggregated approximately
$21,000 for the three months ended March 31, 2008 and $17,000 for the three
months ended March 31, 2007.
 
 CRITICAL ACCOUNTING
POLICIES
  The
discussion of Critical Accounting Policies is incorporated herein by reference
from the Company’s annual report on Form 10-K for the fiscal year ended December
31, 2007.  There have been no significant changes in the critical
accounting policies since year-end.
  24
  RPC, INC. AND
SUBSIDIARIES
 IMPACT OF RECENT ACCOUNTING
PRONOUNCEMENTS
  See
Notes 4 and 13 of the Notes to Consolidated Financial Statements for a
description of recent accounting pronouncements, including the expected dates of
adoption and estimated effects on results of operations and financial
condition.
  SEASONALITY
 
 Oil and natural gas prices affect
demand throughout the oil and natural gas industry, including the demand for the
Company’s products and services. The Company’s business depends in large part on
the conditions of the oil and gas industry, and specifically on the capital
expenditures of its customers related to the exploration and production of oil
and natural gas.  There is a positive correlation between these
expenditures and customers’ demand for the Company’s services.  As
such, when these expenditures fluctuate, customers’ demand for the Company’s
services fluctuates as well.  These fluctuations depend on the current
and projected prices of oil and natural gas and resulting drilling activity, and
are not seasonal to any material degree.
 
 FORWARD-LOOKING
STATEMENTS
 
 Certain statements made in this report
that are not historical facts are “forward-looking statements” under Section 21E
of the Securities Exchange Act of 1934 and the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements may include, without
limitation, statements regarding the effect of recent accounting pronouncements
on the Company’s consolidated financial statements, forecasted recognition of
tax benefits, forecasted revenues, forecasted lower performance measures in 2008
compared to 2007, our ability to acquire and delivery times for
revenue-producing equipment to support long-term growth, our business strategy,
plans and objectives, market risk exposure, adequacy of capital resources and
funds, opportunity for growth and expansion, anticipated pension funding
payments and capital expenditures, expectations as to future payment of
dividends, the impact of inflation on the Company’s financial position and
operating results, our beliefs and expectations regarding future demand for our
products and services, effect of litigation on our financial position and
results of operations, and other events and conditions that may influence the
oilfield services market and our performance in the future.  The
Company does not undertake to update its forward-looking
statements.
 
 The words “may,” “will,” “expect,”
“believe,” “anticipate,” “project,” “estimate,” “focus,” “plan,” and similar
expressions generally identify forward-looking statements. Such statements are
based on certain assumptions and analyses made by our management in light of its
experience and its perception of historical trends, current conditions, expected
future developments and other factors it believes to be
appropriate.  These statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of RPC to be materially different from any future results,
performance or achievements expressed or implied in such forward looking
statements.  Risk factors that could cause such future events not to
occur as expected include those described in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2007, its other SEC filings and the
following:  the possibility of declines in the price of oil and
natural gas, which tend to result in a decrease in drilling activity and
therefore a decline in the demand for our services, the actions of the OPEC
cartel, the ultimate impact of current and potential political unrest and armed
conflict in the oil producing regions of the world, which could impact drilling
activity, adverse weather conditions in oil or gas producing regions, including
the Gulf of Mexico, competition in the oil and gas industry, the Company’s
ability to implement price increases, and risks of international
operations.
  25
  RPC, INC. AND
SUBSIDIARIES
 ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
  The
Company is subject to interest rate risk exposure through borrowings on its $250
million credit facility.  As of March 31, 2008, there are outstanding
interest-bearing advances of $169.1 million on our credit facility which bear
interest at a floating rate.  A change in the interest rate of one
percent on the balance outstanding at March 31, 2008 would cause a change of
$1,691,000 in total annual interest costs.
  ITEM
4.  CONTROLS AND PROCEDURES
  Evaluation of disclosure controls
and procedures - The Company maintains disclosure controls and procedures
that are designed to ensure that information required to be disclosed in its
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Commission’s rules and forms, and that such
information is accumulated and communicated to its management, including the
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.
  As of the
end of the period covered by this report, March 31, 2008 (the “Evaluation
Date”), the Company carried out an evaluation, under the supervision and with
the participation of its management, including the Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of its
disclosure controls and procedures.  Based upon this evaluation, the
Chief Executive Officer and the Chief Financial Officer concluded that the
Company’s disclosure controls and procedures were effective at a reasonable
assurance level as of the Evaluation Date.
  Changes in internal control over
financial reporting – Management’s evaluation of changes in internal
control did not identify any changes in the Company’s internal control over
financial reporting that occurred during the Company’s most recent fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
  26
 
 RPC, INC. AND
SUBSIDIARIES
 
 PART
II.  OTHER INFORMATION
 
 ITEM
1.     LEGAL PROCEEDINGS
 
 RPC is
involved in litigation from time to time in the ordinary course of its
business.  RPC does not believe that the outcome of such litigation
will have a material adverse effect on the financial position or results of
operations of RPC.
 
 ITEM
1A.  RISK FACTORS
 
 See risk
factors described in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007.
 
 ITEM
2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
  Purchases
of Equity Securities by the Issuer and Affiliated Purchasers
  Shares
repurchased by the Company and affiliated purchases in the first quarter of 2008
are outlined below.
  
 Period
                
                
                Total
      Number of
                  Shares
      (or Units)
                  Purchased
                
                
                
                Average
      Price Paid
                  Per
      Share (or Unit)
                
                
                Total
      Number of
                  Shares
      (or Units) Purchased as Part of Publicly Announced Plans or
      Programs
                  (4)
                
                
                Maximum
      Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be
      Purchased Under the Plans or ProgramsMonth
      #1January
      1, 2008 to January 31, 2008
                
                
                357,444
                (1)
                
                $
                10.44
                
                
                145,000
                
                
                3,921,965Month
      #2February
      1, 2008 to February 29, 2008
                
                
                260,001
                (2)
                
                $
                10.68
                
                
                190,600
                
                
                3,731,365Month
      #3March
      1, 2008 to March 31, 2008
                
                
                28,651
                (3)
                
                $
                11.85
                
                
                —
                
                
                3,731,365Totals
                
                
                646,096
                
                
                $
                10.60
                
                
                335,600
                
                
                3,731,365
 (1)
                Consists
      of 212,444 shares repurchased by the Company in connection with option
      exercises and taxes related to restricted shares.(2)
                Consists
      of 69,401 shares repurchased by the Compnay in connection with option
      exercises and taxes related to restricted shares.(3)
                Consists
      of shares repurchased by the Company in connection with option exercises
      and taxes related to restricted shares.(4)
                The
      Company's Board of Directors announced a stock buyback program in March
      1998 authorizing the repurchase of 11,812,500 shares in the open market.
      Currently the program does not have a predetermined expiration
      date.
  27
  RPC, INC. AND
SUBSIDIARIES
 
 ITEM
3.     DEFAULTS UPON SENIOR SECURITIES
 
 None
 
 ITEM
4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 None
 
 ITEM
5.     OTHER INFORMATION
 
 None
  28
  RPC, INC. AND
SUBSIDIARIES
 
 ITEM
6.     Exhibits
 
 Exhibit
                Number
              Description3.1(a)
              Restated
      certificate of incorporation of RPC, Inc. (incorporated herein by
      reference to Exhibit 3.1 to the Annual Report on Form 10-K for the fiscal
      year ended December 31, 1999).3.1(b)
              Certificate
      of amendment of the certificate of incorporation of RPC, Inc.
      (incorporated by reference to Exhibit 3.1(b) to Registrant’s Quarterly
      Report on Form 10-Q filed on May 8, 2006).3.2
              Amended
      and Restated Bylaws of RPC, Inc. (incorporated herein by reference to
      Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on
      October 25, 2007).4
              Form
      of Stock Certificate (incorporated herein by reference to Exhibit 4 to the
      Registrant’s Annual Report on Form 10-K for the fiscal year ended December
      31, 1998).31.1
              Section
      302 certification for Chief Executive Officer.31.2
              Section
      302 certification for Chief Financial Officer.32.1
              Section
      906 certifications for Chief Executive Officer and Chief Financial
      Officer.
 
 29
  RPC, INC. AND
SUBSIDIARIES
  SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 RPC,
      INC./s/
      Richard A, HubbellDate:  May
      1, 2008
              Richard
      A. HubbellPresident
      and Chief Executive Officer(Principal
      Executive Officer)/s/
      Ben M. PalmerDate:  May
      1, 2008
              Ben
      M. PalmerVice
      President and Chief Financial Officer(Principal
      Financial and Accounting Officer)