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 June 30, 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 o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.      (Check one):
 
 Large
accelerated filer o    Accelerated
filer x    Non-accelerated
filer o    Smaller
reporting company o
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes o Nox
 
 As of
July 23, 2008, RPC, Inc. had 98,606,188 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 June 30, 2008 and December 31, 2007
              3Consolidated
      Statements of Operations –For
      the three and six months ended June 30, 2008 and 2007
              4Consolidated
      Statement of Stockholders’ Equity –For
      the six months ended June 30, 2008
              5Consolidated
      Statements of Cash Flows –For
      the six months ended June 30, 2008 and 2007
              6Notes
      to Consolidated Financial Statements
              7 –
      17Item
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              18
      – 28Item
      3.
              Quantitative
      and Qualitative Disclosures about Market Risk
              29Item
      4.
              Controls
      and Procedures
              29Part
      II.  Other InformationItem
      1.
              Legal
      Proceedings
              30Item
      1A.
              Risk
      Factors
              30Item
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              30Item
      3.
              Defaults
      upon Senior Securities
              31Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              31Item
      5.
              Other
      Information
              31Item
      6.
              Exhibits
              32Signatures
              33
  2
  RPC,
      INC. AND SUBSIDIARIESPART
      I.  FINANCIAL INFORMATIONITEM
      1. FINANCIAL STATEMENTSCONSOLIDATED
      BALANCE SHEETSAS
      OF JUNE 30, 2008 AND DECEMBER 31, 2007(In
      thousands)(Unaudited)June
      30,
                
                
                December
      31,2008
                
                
                2007ASSETS
                
                
                
                
                (Note
      1)Cash
      and cash equivalents
                
                $
                9,028
                
                
                $
                6,338Accounts
      receivable, net
                
                
                193,334
                
                
                
                176,154Inventories
                
                
                35,707
                
                
                
                29,602Deferred
      income taxes
                
                
                4,601
                
                
                
                3,974Income
      taxes receivable
                
                
                248
                
                
                
                12,296Prepaid
      expenses and other current assets
                
                
                5,273
                
                
                
                6,696Total
      current assets
                
                
                248,191
                
                
                
                235,060Property,
      plant and equipment, net
                
                
                471,168
                
                
                
                433,126Goodwill
                
                
                24,093
                
                
                
                24,093Other
      assets
                
                
                9,702
                
                
                
                8,736Total
      assets
                
                $
                753,154
                
                
                $
                701,015LIABILITIES
      AND STOCKHOLDERS' EQUITYAccounts
      payable
                
                $
                63,385
                
                
                $
                61,371Accrued
      payroll and related expenses
                
                
                16,154
                
                
                
                17,972Accrued
      insurance expenses
                
                
                5,161
                
                
                
                4,753Accrued
      state, local and other taxes
                
                
                3,014
                
                
                
                1,719Income
      taxes payable
                
                
                3,000
                
                
                
                4,340Other
      accrued expenses
                
                
                468
                
                
                
                567Total
      current liabilities
                
                
                91,182
                
                
                
                90,722Accrued
      insurance expenses
                
                
                8,696
                
                
                
                8,166Notes
      payable to banks
                
                
                182,550
                
                
                
                156,400Long-term
      pension liabilities
                
                
                5,326
                
                
                
                4,527Other
      long-term liabilities
                
                
                2,030
                
                
                
                2,692Deferred
      income taxes
                
                
                31,029
                
                
                
                29,236Total
      liabilities
                
                
                320,813
                
                
                
                291,743Common
      stock
                
                
                9,859
                
                
                
                9,804Capital
      in excess of par value
                
                
                13,612
                
                
                
                16,728Retained
      earnings
                
                
                410,854
                
                
                
                385,281Accumulated
      other comprehensive loss
                
                
                (1,984
                )
                
                
                (2,541
                )Total
      stockholders' equity
                
                
                432,341
                
                
                
                409,272Total
      liabilities and stockholders' equity
                
                $
                753,154
                
                
                $
                701,015The
      accompanying notes are an integral part of these consolidated financial
      statements.
 3
  RPC,
      INC. AND SUBSIDIARIESCONSOLIDATED  STATEMENTS  OF  OPERATIONSFOR
      THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007(In
      thousands except per share data)(Unaudited)
  Three
      months ended June 30,
                  
                  
                  Six
      months ended June 30,2008
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2007Revenues
                  
                  $
                  214,689
                  
                  
                  $
                  171,031
                  
                  
                  $
                  411,916
                  
                  
                  $
                  342,076Cost
      of services rendered and goods sold
                  
                  
                  120,175
                  
                  
                  
                  88,191
                  
                  
                  
                  237,845
                  
                  
                  
                  175,712Selling,
      general and administrative expenses
                  
                  
                  29,010
                  
                  
                  
                  27,077
                  
                  
                  
                  57,327
                  
                  
                  
                  52,902Depreciation
      and amortization
                  
                  
                  29,177
                  
                  
                  
                  18,695
                  
                  
                  
                  56,503
                  
                  
                  
                  33,958Gain
      on disposition of assets, net
                  
                  
                  (1,473
                  )
                  
                  
                  (1,637
                  )
                  
                  
                  (3,000
                  )
                  
                  
                  (3,186
                  )Operating
      profit
                  
                  
                  37,800
                  
                  
                  
                  38,705
                  
                  
                  
                  63,241
                  
                  
                  
                  82,690Interest
      expense
                  
                  
                  (1,250
                  )
                  
                  
                  (368
                  )
                  
                  
                  (2,721
                  )
                  
                  
                  (1,122
                  )Interest
      income
                  
                  
                  24
                  
                  
                  
                  14
                  
                  
                  
                  46
                  
                  
                  
                  32Other
      income, net
                  
                  
                  105
                  
                  
                  
                  527
                  
                  
                  
                  98
                  
                  
                  
                  1,424Income
      before income taxes
                  
                  
                  36,679
                  
                  
                  
                  38,878
                  
                  
                  
                  60,664
                  
                  
                  
                  83,024Income
      tax provision
                  
                  
                  14,221
                  
                  
                  
                  15,063
                  
                  
                  
                  23,449
                  
                  
                  
                  31,164Net
      income
                  
                  $
                  22,458
                  
                  
                  $
                  23,815
                  
                  
                  $
                  37,215
                  
                  
                  $
                  51,860Earnings
      per shareBasic
                  
                  $
                  0.23
                  
                  
                  $
                  0.25
                  
                  
                  $
                  0.39
                  
                  
                  $
                  0.54Diluted
                  
                  $
                  0.23
                  
                  
                  $
                  0.24
                  
                  
                  $
                  0.38
                  
                  
                  $
                  0.53Dividends
      per share
                  
                  $
                  0.06
                  
                  
                  $
                  0.05
                  
                  
                  $
                  0.12
                  
                  
                  $
                  0.10Average
      shares outstandingBasic
                  
                  
                  96,778
                  
                  
                  
                  96,350
                  
                  
                  
                  96,603
                  
                  
                  
                  96,037Diluted
                  
                  
                  98,120
                  
                  
                  
                  98,448
                  
                  
                  
                  98,124
                  
                  
                  
                  98,391The
      accompanying notes are an integral part of these consolidated financial
      statements.
  4
  RPC,
INC. AND SUBSIDIARIES
  CONSOLIDATED  STATEMENT
      OF STOCKHOLDERS' EQUITYFOR
      THE SIX MONTHS ENDED JUNE 30, 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 incentiveplans,
      net
                  
                  
                  
                  
                  
                  1,248
                  
                  
                  
                  125
                  
                  
                  
                  1,776
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,901Stock
      purchased and retired
                  
                  
                  
                  
                  
                  (694
                  )
                  
                  
                  (69
                  )
                  
                  
                  (7,468
                  )
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (7,537
                  )Net
      income
                  
                  $
                  37,215
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  37,215
                  
                  
                  
                  —
                  
                  
                  
                  37,215Pension
      adjustment, net of
      taxes
                  
                  
                  44
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  44
                  
                  
                  
                  44Foreign
      currency translation,of
      taxes
                  
                  
                  54
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  54
                  
                  
                  
                  54Unrealized
      gain on securities,of
      taxes
                  
                  
                  459
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  459
                  
                  
                  
                  459Comprehensive
      income
                  
                  $
                  37,772Dividends
      declared
                  
                  
                  
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (11,642
                  )
                  
                  
                  —
                  
                  
                  
                  (11,642
                  )Stock-based
      compensation
                  
                  
                  
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,809
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,809Excess
      tax benefits for share-based
      payments
                  
                  
                  
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  767
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  767Balance,
      June 30, 2008
                  
                  
                  
                  
                  
                  
                  98,594
                  
                  
                  $
                  9,859
                  
                  
                  $
                  13,612
                  
                  
                  $
                  410,854
                  
                  
                  $
                  (1,984
                  )
                  
                  $
                  432,341The
      accompanying note is an integral part of this consolidated financial
      statement.
  5
  RPC,
      INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE SIX MONTHS ENDED JUNE 30, 2008 and 2007(In
      thousands)(Unaudited)
  Six
      months ended June 30,2008
                  
                  
                  2007OPERATING
      ACTIVITIESNet
      income
                  
                  $
                  37,215
                  
                  
                  $
                  51,860Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation,
      amortization and other non-cash charges
                  
                  
                  56,515
                  
                  
                  
                  33,969Stock-based
      compensation expense
                  
                  
                  1,809
                  
                  
                  
                  1,572Gain
      on disposition of assets, net
                  
                  
                  (3,000
                  )
                  
                  
                  (3,186
                  )Deferred
      income tax provision (benefit)
                  
                  
                  793
                  
                  
                  
                  (516
                  )Excess
      tax benefits for share-based payments
                  
                  
                  (767
                  )
                  
                  
                  (1,121
                  )Changes
      in current assets and liabilities:Accounts
      receivable
                  
                  
                  (17,221
                  )
                  
                  
                  (16,535
                  )Income
      taxes receivable
                  
                  
                  12,815
                  
                  
                  
                  (7,009
                  )Inventories
                  
                  
                  (6,131
                  )
                  
                  
                  (3,793
                  )Prepaid
      expenses and other current assets
                  
                  
                  2,100
                  
                  
                  
                  2,065Accounts
      payable
                  
                  
                  6,702
                  
                  
                  
                  (2,399
                  )Income
      taxes payable
                  
                  
                  (1,340
                  )
                  
                  
                  2,043Accrued
      payroll and related expenses
                  
                  
                  (1,818
                  )
                  
                  
                  (142
                  )Accrued
      insurance expenses
                  
                  
                  408
                  
                  
                  
                  638Accrued
      state, local and other taxes
                  
                  
                  1,295
                  
                  
                  
                  1,211Other
      accrued expenses
                  
                  
                  (81
                  )
                  
                  
                  155Changes
      in working capital
                  
                  
                  (3,271
                  )
                  
                  
                  (23,766
                  )Changes
      in other assets and liabilities:Accrued
      pension
                  
                  
                  799
                  
                  
                  
                  (3,680
                  )Accrued
      insurance expenses
                  
                  
                  530
                  
                  
                  
                  353Other
      non-current assets
                  
                  
                  (798
                  )
                  
                  
                  (691
                  )Other
      non-current liabilities
                  
                  
                  (662
                  )
                  
                  
                  (2,411
                  )Net
      cash provided by operating activities
                  
                  
                  89,163
                  
                  
                  
                  52,383INVESTING
      ACTIVITIESCapital
      expenditures
                  
                  
                  (101,263
                  )
                  
                  
                  (134,047
                  )Proceeds
      from sale of assets
                  
                  
                  5,035
                  
                  
                  
                  3,962Net
      cash used for investing activities
                  
                  
                  (96,228
                  )
                  
                  
                  (130,085
                  )FINANCING
      ACTIVITIESPayment
      of dividends
                  
                  
                  (11,642
                  )
                  
                  
                  (9,745
                  )Borrowings
      from notes payable to banks
                  
                  
                  186,950
                  
                  
                  
                  291,750Repayments
      of notes payable to banks
                  
                  
                  (160,800
                  )
                  
                  
                  (202,200
                  )Debt
      issue costs for notes payable to banks
                  
                  
                  (94
                  )
                  
                  
                  -Excess
      tax benefits for share-based payments
                  
                  
                  767
                  
                  
                  
                  1,121Cash
      paid for common stock purchased and retired
                  
                  
                  (5,671
                  )
                  
                  
                  (1,730
                  )Proceeds
      received upon exercise of stock options
                  
                  
                  245
                  
                  
                  
                  500Net
      cash provided by financing activities
                  
                  
                  9,755
                  
                  
                  
                  79,696Net
      increase in cash and cash equivalents
                  
                  
                  2,690
                  
                  
                  
                  1,994Cash
      and cash equivalents at beginning of period
                  
                  
                  6,338
                  
                  
                  
                  2,729Cash
      and cash equivalents at end of period
                  
                  $
                  9,028
                  
                  
                  $
                  4,723The
      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 six
month period ended June 30, 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.
 
 A group
that includes the Company’s Chairman of the Board, R. Randall Rollins and his
brother Gary W. Rollins, who is also a director of the Company, and certain
companies under their control, controls an excess of fifty percent of the
Company’s voting power.
 
 2.
              REVENUE
  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
                June
      30,
              
              
              Six
      months ended
                June
      30,(In
      thousands except per share data )
              
              2008
              
              
              2007
              
              
              2008
              
              
              2007Net
      income available for stockholders (numerator for basic and
      diluted  earnings per share):
              
              $
              22,458
              
              
              $
              23,815
              
              
              $
              37,215
              
              
              $
              51,860Shares (denominator):Weighted
      average shares outstanding (denominator for basic earnings per
      share)
              
              
              96,778
              
              
              
              96,350
              
              
              
              96,603
              
              
              
              96,037Effect of dilutive securities:Employee
      stock options and restricted stock
              
              
              1,342
              
              
              
              2,098
              
              
              
              1,521
              
              
              
              2,354Adjusted weighted average shares (denominator for diluted earnings
      per share)
              
              
              98,120
              
              
              
              98,448
              
              
              
              98,124
              
              
              
              98,391Earnings per share:Basic
              
              $
              0.23
              
              
              $
              0.25
              
              
              $
              0.39
              
              
              $
              0.54Diluted
              
              $
              0.23
              
              
              $
              0.24
              
              
              $
              0.38
              
              
              $
              0.53
 
 
 4.
              RECENT
      ACCOUNTING PRONOUNCEMENTS
 
 In May
2008, the FASB issued SFAS 162, “The Hierarchy of Generally Accepted Accounting
Principles.”   SFAS 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in financial statements that are presented in
conformity with U.S. generally accepted accounting principles for
nongovernmental entities.  SFAS 162 is effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning ofPresent Fairly in Conformity With Generally Accepted Accounting
Principles.  The adoption of SFAS 162 is not expected to have a
significant impact on the Company’s consolidated financial
statements.
 
 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:
  8
  RPC,
INC. AND SUBSIDIARIES
  ●          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.
 ●          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 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.
 
 In June
2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted
in Share-Based Payment Transactions Are Participating Securities,” to clarify
that all outstanding unvested share-based payment awards that contain
nonforfeitable rights to dividends or dividend equivalents, whether paid or
unpaid, are participating securities. An entity must include participating
securities in its calculation of basic and diluted earnings per share (EPS)
pursuant to the two-class method, as described in FASB Statement 128, Earnings
per Share. FSP EITF 03-6-1 is effective for fiscal years beginning after
December 15, 2008 and interim periods within those fiscal years. The Company
intends to adopt FSP EITF 03-6-1 effective January 1, 2009 and apply its
provisions retrospectively to all prior-period EPS data presented in its
financial statements. The Company has periodically issued share-based payment
awards that contain nonforfeitable rights to dividends and is in the process of
evaluating the impact that the adoption of FSP EITF 03-6-1 will have on its
consolidated financial statements.
 
 In
April 2008, the FASB issued FSP FAS No. 142-3, which amends the
factors that must be considered in developing renewal or extension assumptions
used to determine the useful life over which to amortize the cost of a
recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible
Assets.” The FSP requires an entity that is estimating the useful
life of a recognized intangible asset to consider its historical experience in
renewing or extending similar arrangements or, in the absence of historical
experience, must consider assumptions that market participants would use about
renewal or extension that are both consistent with the asset’s highest and best
use and adjusted for entity-specific factors under SFAS
No. 142.  The FSP is effective for fiscal years beginning after
December 15, 2008, and the guidance for determining the useful life of a
recognized intangible asset must be applied prospectively to intangible assets
acquired after the effective date. The Company does not expect the adoption of
FSP FAS No. 142-3 to have a material effect on its consolidated financial
statements.
  9
  RPC,
INC. AND SUBSIDIARIES
  5.
              COMPREHENSIVE
      INCOME
 
 The components of comprehensive
income are as follows:
 Three
      months ended
                June
      30,
              
              
              Six
      months ended
                June
      30,(In
      thousands)
              
              2008
              
              
              2007
              
              
              2008
              
              
              2007Net
      income as reported
              
              $
              22,458
              
              
              $
              23,815
              
              
              $
              37,215
              
              
              $
              51,860Change
      in unrealized gain on securities,
                net
      of taxes
              
              
              440
              
              
              
              172
              
              
              
              459
              
              
              
              388Pension
      adjustment, net of taxes
              
              
              44
              
              
              
              -
              
              
              
              44
              
              
              
              -Change
      in foreign currency translation,
                net of taxes
              
              
              10
              
              
              
              21
              
              
              
              54
              
              
              
              28Comprehensive
      income
              
              $
              22,952
              
              
              $
              24,008
              
              
              $
              37,772
              
              
              $
              52,276
  
  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
June 30, 2008, there were approximately 2,882,000 shares available for
grants.
 
 Stock-based
employee compensation expense was as follows:
 
 Three
      months ended
                
                
                Six
      months endedJune
      30,
                
                
                June
      30,(in
      thousands)
                
                2008
                
                
                2007
                
                
                2008
                
                
                2007Pre-tax
      expense
                
                $
                920
                
                
                $
                837
                
                
                $
                1,809
                
                
                $
                1,572After
      tax expense
                
                
                584
                
                
                
                566
                
                
                
                1,160
                
                
                
                1,071
 10
  RPC,
INC. AND SUBSIDIARIES
 
 Stock
Options
 Transactions
involving RPC’s stock options for the six months ended June 30, 2008 were as
follows:
  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
              
              
              (692,035
              )
              
              
              3.05
              
              
              
              N/AForfeited
              
              
              (8,776
              )
              
              
              3.88
              
              
              
              N/AExpired
              
              
              -
              
              
              
              -
              
              
              
              N/AOutstanding
      and exercisable at June 30, 2008
              
              
              1,177,441
              
              
              $
              3.13
              
              
              3.54
      years
              
              
              $
              16,096,000
 
 The total
intrinsic value of stock options exercised was $5,596,000 during the six months
ended June 30, 2008 and $7,197,000 during the six months ended June 30,
2007.  The tax benefits related to options exercised totaled $277,000
during the six months ended June 30, 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 six months ended June 30, 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
six months ended June 30, 2008:
 
 Shares
              
              
              Weighted
      Average
                Grant-Date
      Fair
                ValueNon-vested
      shares at January 1, 2008
              
              
              1,570,232
              
              
              $
              11.01Granted
              
              
              608,500
              
              
              
              9.81Vested
              
              
              (345,756
              )
              
              
              8.86Forfeited
              
              
              (53,016
              )
              
              
              11.17Non-vested
      shares at June 30, 2008
              
              
              1,779,960
              
              
              $
              11.35
 
 The total
fair value of shares vested during the six months ended June 30, 2008 was
approximately $3,675,000 and during the six months ended June 30, 2007 was
approximately $4,902,000.  The tax benefits for compensation tax
deductions in excess of compensation expense totaled approximately $490,000 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
June 30, 2008, total unrecognized compensation cost related to non-vested
restricted shares was $18,889,000 which is expected to be recognized over a
weighted-average period of 3.8 years.  As of June 30, 2008, all of the
compensation cost related to stock options has been recognized.
  11
  RPC,
INC. AND SUBSIDIARIES
  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.
 
 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.
  12
  RPC,
INC. AND SUBSIDIARIES
  Certain information with respect to
RPC’s business segments is set forth in the following
tables:
  Three
      months ended June 30,
                  
                  
                  Six
      months ended June 30,2008
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2007(in
      thousands)Revenues:Technical
      Services
                  
                  $
                  185,284
                  
                  
                  $
                  140,199
                  
                  
                  $
                  354,515
                  
                  
                  $
                  282,505Support
      Services
                  
                  
                  29,405
                  
                  
                  
                  30,832
                  
                  
                  
                  57,401
                  
                  
                  
                  59,571Total
      revenues
                  
                  $
                  214,689
                  
                  
                  $
                  171,031
                  
                  
                  $
                  411,916
                  
                  
                  $
                  342,076Operating
      profit (loss):Technical
      Services
                  
                  $
                  31,958
                  
                  
                  $
                  31,426
                  
                  
                  $
                  52,644
                  
                  
                  $
                  66,713Support
      Services
                  
                  
                  6,764
                  
                  
                  
                  8,496
                  
                  
                  
                  12,622
                  
                  
                  
                  18,037Corporate
                  
                  
                  (2,395
                  )
                  
                  
                  (2,854
                  )
                  
                  
                  (5,025
                  )
                  
                  
                  (5,246
                  )Gain
      on disposition of assets, net
                  
                  
                  1,473
                  
                  
                  
                  1,637
                  
                  
                  
                  3,000
                  
                  
                  
                  3,186Total
      operating profit
                  
                  $
                  37,800
                  
                  
                  $
                  38,705
                  
                  
                  $
                  63,241
                  
                  
                  $
                  82,690Interest
      expense
                  
                  
                  (1,250
                  )
                  
                  
                  (368
                  )
                  
                  
                  (2,721
                  )
                  
                  
                  (1,122
                  )Interest
      income
                  
                  
                  24
                  
                  
                  
                  14
                  
                  
                  
                  46
                  
                  
                  
                  32Other
      income, net
                  
                  
                  105
                  
                  
                  
                  527
                  
                  
                  
                  98
                  
                  
                  
                  1,424Income
      before income taxes
                  
                  $
                  36,679
                  
                  
                  $
                  38,878
                  
                  
                  $
                  60,664
                  
                  
                  $
                  83,024
 
 Six
      months ended June 30, 2008
              
              Technical
      Services
              
              
              Support
                Services
              
              
              Corporate
              
              
              Total(in
      thousands)Identifiable
      assets at June 30, 2008
              
              $
              535,159
              
              
              $
              178,633
              
              
              $
              39,362
              
              
              $
              753,154Capital
      expenditures
              
              
              77,670
              
              
              
              23,291
              
              
              
              302
              
              
              
              101,263Depreciation
      and amortization
              
              
              44,444
              
              
              
              11,612
              
              
              
              447
              
              
              
              56,503
 
 
 8.  INVENTORIES
  Inventories
of $35,707,000 at June 30, 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 (credit) cost and related
components of the Company’s multiple employer Retirement Income
Plan:
  13
  RPC,
INC. AND SUBSIDIARIES
  Three
      months ended
                June
      30,
              
              
              Six
      months ended
                June
      30,(in
      thousands)
              
              2008
              
              
              2007
              
              
              2008
              
              
              2007Service
      cost
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Interest
      cost
              
              
              461
              
              
              
              449
              
              
              
              921
              
              
              
              879Expected
      return on plan assets
              
              
              (636
              )
              
              
              (652
              )
              
              
              (1,272
              )
              
              
              (1,160
              )Amortization
      of net losses
              
              
              71
              
              
              
              236
              
              
              
              142
              
              
              
              430Net
      periodic benefit credit
              
              $
              (104
              )
              
              $
              33
              
              
              $
              (209
              )
              
              $
              149
  The
Company has not made any contributions to the plan during the six months ended
June 30, 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 $296.5 million, which includes a $50 million
letter of credit subfacility, and a $20 million swingline subfacility. During
the second quarter of 2008, the Company entered into a certain Commitment
Increase Amendment to the Revolving Credit Agreement to increase the amount of
the credit facility by $46.5 million to its current amount of $296.5 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 has incurred loan origination fees and other
debt related costs associated with the line of credit and Commitment Increase
Amendment in the aggregate of approximately $514,000.  These costs are
being amortized over the remaining term of the five year 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
  14
  RPC,
INC. AND SUBSIDIARIES
  ●           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.
  The
Revolving Credit Agreement contains customary terms and conditions, including
certain financial covenants and restrictions on indebtedness, dividend payments,
business combinations and other related items.  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
June 30, 2008, RPC has outstanding borrowings of $182.6 million under the
Revolving Credit Agreement.Interest expense incurred on
the line of credit was $1,473,000 and $3,221,000 during the three and six months
ended June 30, 2008 and $1,532,000 and $2,286,000 during the three and six
months ended June 30, 2007. The weighted average interest rate was 3.4% and 3.9%
for the three and six months ended June 30, 2008 and 6.1% and 6.2% for the three
and six months ended June 30, 2007.  For the six months ended June 30,
2008, and June 30, 2007, the Company capitalized interest of approximately
$533,000 and $1,169,000 related to facilities and equipment under
construction.  Additionally there were letters of credit outstanding
relating to self-insurance programs and contract bids for $18 million as of June
30, 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 six months ended June 30, 2008.
  15
  RPC,
INC. AND SUBSIDIARIES
  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.
 
 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 June 30, 2008.
 
 12.  SUPPLEMENTAL
CASH FLOWS INFORMATION
 
 The
Company had accounts payable for purchases of property, plant and equipment of
approximately $14,482,000 as of June 30, 2008 and $25,098,000 as of June 30,
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 for financial
assets and liabilities.  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.
  16
  RPC,
INC. AND SUBSIDIARIES
 The
following table summarizes the valuation of financial instruments measured at
fair value on a recurring basis in the balance sheet as of June 30,
2008:
 
 Fair
      value Measurements at June 30, 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
              
              $
              4,871
              
              
              $
              -
              
              
              $
              -Available
      for sale securities
              
              
              2,155
              
              
              
              -
              
              
              
              -
 
 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 June 30, 2008 and the Company has not determined whether or
not it will elect this option for financial instruments it may acquire in the
future.
 
 17
  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 28.
  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 second quarter of 2008, revenues increased 25.5 percent to $214.7 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 and 2008 partially offset by reduced pricing for many services
resulting from increased competition.  International revenues for the
second quarter of 2008 decreased due to declines in customer activity levels in
Turkmenistan, Hungary, Gabon and Angola partially offset by increases in Oman,
Saudi Arabia, United Arab Emirates, Egypt and Canada. 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 4.4 percentage points in the second 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 2.3 percentage points in the second quarter of 2008 compared to
the same period in the prior year due to positive leverage of these costs
realized from higher revenues.  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.
  18
  RPC,
INC. AND SUBSIDIARIES
  Income
before income taxes was $36.7 million for the three months ended June 30, 2008
compared to $38.9 million in the prior year.  The effective tax rate
for the three months ended June 30, 2008 was 38.8 percent compared to 38.7
percent in the prior year.  Diluted earnings per share decreased to
$0.23 for the three months ended June 30, 2008 compared to $0.24 in the same
period prior year. Cash flows from operating activities were $89.1 million for
the six months ended June 30, 2008 compared to $52.4 million for the same period
in the prior year, and cash and cash equivalents were $9.0 million at June 30,
2008, an increase of $2.7 million compared to December 31, 2007.  The
notes payable to banks were $182.6 million as of June 30, 2008 and $125.2
million as of June 30, 2007.
  Consistent
with our strategy to grow our capacity and maintain our existing fleet of high
demand equipment, capital expenditures were $101.3 million during the first six
months of 2008. Although we currently expect capital expenditures to be
approximately $150 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
delivered.  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 oilfield, 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 six months ended June 30, 2008 was
approximately 4.1 percent higher than in the comparable period in 2007. The
average price of oil increased by approximately 80.2 percent and the average
price of natural gas increased by approximately 36.5 percent during the six
months ended June 30, 2008 compared to the prior year.  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 and during the first six
months of 2008, 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 coupled
with 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 our
operating profit, income before income taxes and net income 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 much of these increased costs through to our customers.
  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 second 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.
  19
  RPC,
INC. AND SUBSIDIARIES
  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
                June
      30,
              
              
              Six
      months ended
                June
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007Consolidated
      revenues [in thousands]
              
              $
              214,689
              
              
              $
              171,031
              
              
              $
              411,916
              
              
              $
              342,076Revenues
      by business segment [in thousands]:Technical
              
              $
              185,284
              
              
              $
              140,199
              
              
              $
              354,515
              
              
              $
              282,505Support
              
              
              29,405
              
              
              
              30,832
              
              
              
              57,401
              
              
              
              59,571Consolidated
      operating profit [in thousands]
              
              $
              37,800
              
              
              $
              38,705
              
              
              $
              63,241
              
              
              $
              82,690Operating
      profit (loss) by business segment [in thousands]:Technical
              
              $
              31,958
              
              
              $
              31,426
              
              
              $
              52,644
              
              
              $
              66,713Support
              
              
              6,764
              
              
              
              8,496
              
              
              
              12,622
              
              
              
              18,037Corporate
              
              $
              (2,395
              )
              
              $
              (2,854
              )
              
              $
              (5,025
              )
              
              $
              (5,246
              )Gain
      on disposition of assets, net
              
              $
              1,473
              
              
              $
              1,637
              
              
              $
              3,000
              
              
              $
              3,186Percentage
      cost of services rendered  & goods sold to
      revenues
              
              
              56.0
              %
              
              
              51.6
              %
              
              
              57.7
              %
              
              
              51.4
              %Percentage
      selling, general & administrative expenses to revenues
              
              
              13.5
              %
              
              
              15.8
              %
              
              
              13.9
              %
              
              
              15.5
              %Percentage
      depreciation and amortization expense to revenues
              
              
              13.6
              %
              
              
              10.9
              %
              
              
              13.7
              %
              
              
              9.9
              %Average
      U.S. domestic rig count
              
              
              1,864
              
              
              
              1,757
              
              
              
              1,817
              
              
              
              1,746Average
      natural gas price (per thousand cubic feet (mcf))
              
              $
              11.33
              
              
              $
              7.44
              
              
              $
              9.98
              
              
              $
              7.31Average
      oil price (per barrel)
              
              $
              125.24
              
              
              $
              65.33
              
              
              $
              111.64
              
              
              $
              61.96
 
 THREE MONTHS ENDED JUNE 30,
2008 COMPARED TO THREE MONTHS ENDED JUNE 30, 2007
  Revenues.Revenues
for the three months ended June 30, 2008 increased 25.5 percent compared to the
three months ended June 30, 2007.  Domestic revenues increased 29.1
percent to $206.0 million during the second 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 $11.4
million to $8.7 million compared to the prior year quarter.  Our
international revenues are impacted by the timing of project initiation and
their ultimate duration and can be volatile in nature.
  20
  RPC,
INC. AND SUBSIDIARIES
  The
average price of natural gas increased approximately 52.3 percent and the
average price of oil increased 91.7 percent during the second quarter of 2008 as
compared to the prior year.  The average domestic rig count during the
quarter was approximately 6.1 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 32.2 percent
compared to the second 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 4.6 percent
compared to the second  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 36.3 percent to
$120.2 million for the three months ended June 30, 2008 compared to $88.2
million for three months ended June 30, 2007.  This increase is
attributable 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
second quarter of 2008 compared to the second 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 June 30, 2008 increased 7.1 percent to $29.0 million
compared to $27.1 million for the three months ended June 30, 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 June 30, 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.
  Depreciation and
amortization. Depreciation and amortization totaled $29.2
million for the three months ended June 30, 2008, a 56.1 percent increase,
compared to $18.7 million for the quarter ended June 30, 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.
  21
  RPC,
INC. AND SUBSIDIARIES
  Gain on disposition of assets,
net.  Gain on disposition of assets, net was $1.5 million for
the three months ended June 30, 2008 compared to $1.6 million for the three
months ended June 30, 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 income, net was $105 thousand for the three months ended June 30,
2008 and $527 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 $1.3 million for
the three months ended June 30, 2008 compared to $368 thousand for the quarter
ended June 30, 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 was
$24 thousand for the three months ended June 30, 2008 compared to $14 thousand
for the same period of the prior year.
  Income tax provision.Income
tax provision was $14.2 million during the three months ended June 30, 2008,
compared to $15.1 million in 2007.  This decrease was due to the
decrease in income before taxes.  The effective tax rate was
essentially unchanged at 38.8 percent for the three months ended June 30, 2008
compared to 38.7 percent for the three months ended June 30, 2007.
 
 SIX MONTHS ENDED JUNE 30,
2008 COMPARED TO SIX MONTHS ENDED JUNE 30, 2007
  Revenues.Revenues
for the six months ended June 30, 2008 increased 20.4 percent compared to the
six months ended June 30, 2007.  Domestic revenues increased 23.4
percent to $394.8 million during the second 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 $22.1
million to $17.1 million compared to the prior period.  Revenues
decreased due to declines in customer activity levels in Turkmenistan, Hungary,
Cameroon and Angola partially offset by increases in Saudi Arabia, Oman, United
Arab Emirates, 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.
  The
average price of natural gas increased approximately 36.5 percent and the
average price of oil increased 80.2 percent during the six months ended June 30,
2008 as compared to the prior year.  The average domestic rig count
during the period was approximately 4.1 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 first six months of 2008 increased
25.5 percent compared to the same period 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 first six
months of 2008 decreased 3.6 percent compared to the same period 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.
  22
  RPC,
INC. AND SUBSIDIARIES
  Cost of services rendered and goods
sold. Cost of services rendered and goods sold increased 35.4 percent to
$237.8 million for the six months ended June 30, 2008 compared to $175.7 million
for the six months ended June 30, 2007.  The increase is attributable
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 first six months of 2008
compared to the same period 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 six months ended June 30, 2008 increased 8.4 percent to $57.3 million
compared to $52.9 million for the six months ended June 30, 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 six months ended June 30, 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.
  Depreciation and
amortization. Depreciation and amortization totaled $56.5
million for the six months ended June 30, 2008, a 66.4 percent increase,
compared to $34.0 million for the six months ended June 30, 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 $3.0 million for
the six months ended June 30, 2008 compared to $3.2 million for the six months
ended June 30, 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 income, net was $98 thousand for the six months ended June 30, 2008
and $1.4 million 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 $2.7 million for
the six months ended June 30, 2008 compared to $1.1 million for the six months
ended June 30, 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 was
$46 thousand for the six months ended June 30, 2008 compared to $32 thousand for
the same period of the prior year.
  23
  RPC,
INC. AND SUBSIDIARIES
  Income tax provision.Income
tax provision was $23.4 million during the six months ended June 30, 2008,
compared to $31.2 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 six months ended June 30, 2008 from 37.5
percent for the six months ended June 30, 2007.
  LIQUIDITY AND CAPITAL
RESOURCES
 
 Cash
Flows
  The
Company’s cash and cash equivalents at June 30, 2008 were $9.0
million.  The following table sets forth the historical cash flows for
the six months ended June 30, 2008 and 2007:
 
 Six
      months ended June 30,(In
      thousands)
              
              2008
              
              
              2007Net
      cash provided by operating activities
              
              $
              89,163
              
              
              $
              52,383Net
      cash used for investing activities
              
              
              (96,228
              )
              
              
              (130,085
              )Net
      cash provided by financing activities
              
              
              9,755
              
              
              
              79,696
  Cash
provided by operating activities for the six months ended June 30, 2008
increased by $36.7 million compared to the comparable period in the prior
year.  Although net income decreased $14.6 million for the six months
ended June 30, 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. Positive changes in
working capital requirements were due to decreases in income taxes
receivable/ payable, net due to timing of tax payments together
with  increases in accounts payable and accrued state, local and other
taxes. These positive changes were partially offset by increases in
inventory and accounts receivable resulting from increased business activity
levels and higher revenues.
  Cash used
for investing activities for the six months ended June 30, 2008 decreased by
$33.9 million, compared to the six months ended June 30, 2007, as a result of
lower capital expenditures.
  Cash
provided by financing activities for the six months ended June 30, 2008
decreased by $69.8 million, compared to the six months ended June 30, 2007, due
to a decrease in net borrowings from notes payable to banks, higher repurchases
of the Company's stock and an increase in dividends per share paid to common
shareholders.
  Financial
Condition and Liquidity
  The
Company’s financial condition as of June 30, 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 $296.5
million revolving credit facility (the “Revolving Credit Agreement”) and during
the second quarter of 2008, the Company entered into that certain Commitment
Increase Amendment to the Revolving Credit Agreement to increase the amount of
the credit facility by $46.5 million to it current amount of $296.5
million.  All of the facilities mature 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
$182.6 million at June 30, 2008 and approximately $18 million of the credit
facility supports outstanding letters of credit relating to self-insurance
programs or contract bids.  Therefore a total of $95.9 million was
available under our facility as of June 30, 2008.  Additional
information regarding our Revolving Credit Agreement is included in Note 10 to
our Consolidated Financial Statements included in this report.
  24
  RPC,
INC. AND SUBSIDIARIES
  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.
  25
  RPC,
INC. AND SUBSIDIARIES
  Cash
Requirements
  The
Company currently expects that capital expenditures during 2008 will be
approximately $150 million, of which $101.3 million has been spent as of June
30, 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 has ongoing sales and use tax audits in various jurisdictions and may be
subjected to varying interpretations of statute that could result in unfavorable
outcomes that cannot be currently estimated.
  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 did not make any contributions to the pension
plan in the second 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 six
months ended June 30, 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 July
22, 2008, the Board of Directors approved a $0.06 per share cash dividend
payable September 10, 2008 to stockholders of record at the close of business
August 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.
  26
 
  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 six months ended June 30, 2008, RPC charged Marine
Products for its allocable share of administrative costs incurred for services
rendered on behalf of Marine Products totaling $516,000 compared to $463,000 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 $152,000 for the six months ended June 30,
2008 and $589,000 for the six months ended June 30, 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
$48,000 for the six months ended June 30, 2008 and $35,000 for the six months
ended June 30, 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.
  27
  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.
  28
 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
$296.5 million credit facility.  As of June 30, 2008, there are
outstanding interest-bearing advances of $182.6 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 June 30, 2008 would cause a change
of $1,826,000 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, June 30, 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.
  29
 
 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 second quarter of
2008 are outlined below.
  Total
      Number of
                
                
                Maximum
      Number (orShares
      (or Units)
                
                
                Approximate
      Dollar Value) ofTotal
      Number of
                
                
                
                
                
                Purchased
      as Part of
                
                
                Shares
      (or Units) that May YetShares
      (or Units)
                
                Average
      Price Paid
                
                
                Publicly
      Announced
                
                
                Be
      Purchased Under the PlansPeriod
                
                Purchased
                
                Per
      Share (or Unit)
                
                
                Plans
      or Programs
                
                
                or
      Programs (2)Month
      #1April
      1, 2008 to April 30, 2008
                
                
                45,117
                (1)
                
                $
                14.38
                
                
                
                -
                
                
                
                3,731,365Month
      #2May
      1, 2008 to May 31, 2008
                
                
                1,972
                (1)
                
                $
                14.43
                
                
                
                -
                
                
                
                3,731,365Month
      #3June
      1, 2008 to June 30, 2008
                
                
                922
                (1)
                
                $
                15.42
                
                
                
                -
                
                
                
                3,731,365Totals
                
                
                48,011
                
                
                $
                14.40
                
                
                
                -
                
                
                
                3,731,365
 (1)
                Consists
      of shares repurchased by the Company in connection with option exercises
      and taxes related to vesting of restricted shares.(2)
                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.
  30
  RPC,
INC. AND SUBSIDIARIES
 
 ITEM
3.  DEFAULTS UPON SENIOR SECURITIES
 
 None
 
 ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 The
Company’s Annual Meeting of Stockholders was held on April 22,
2008.  At the meeting, the stockholders re-elected three Class I
directors to the Board of Directors for the terms expiring in 2011.
 
 The
following table sets forth the votes cast with respect to each of these
proposals:
 
 Proposal
              For
              WithheldRe-election
      of R. Randall Rollins
              91,500,058
              2,991,183Re-election
      of Henry B. Tippie
              94,123,910
              367,331Re-election
      of James B. Williams
              94,136,764
              354,477
 
 Messrs.
Richard A. Hubbell, Bill J. Dismuke, Wilton Looney, Gary W. Rollins and James A.
Lane, Jr. and Ms. Linda H. Graham, were not up for re-election and have
continued as directors.
 
 ITEM
5.  OTHER INFORMATION
 
 None
  31
  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).10.1
              
              Commitment
      Increase Amendment to Revolving Credit Agreement dated as of June 9, 2008,
      by and among the Company, the several banks and other financial
      institutions from time to time party thereto and SunTrust Bank, in its
      capacity as Administrative Agent (incorporated herein by reference to
      Exhibit 99.1 to the Company’s Current Report on Form 8-K dated June 9,
      2008).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.
 
 32
 
  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:  August
      4, 2008
              Richard
      A. HubbellPresident
      and Chief Executive Officer(Principal
      Executive Officer)
 
 
 /s/ Ben
      M. PalmerDate:  August
      4, 2008
              Ben
      M. PalmerVice
      President and Chief Financial Officer(Principal
      Financial and Accounting Officer)