UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

For the fiscal year ended December 31, 2001

Commission File No. 1-8726

RPC, INC.

2170 Piedmont Road, NE
Atlanta, Georgia 30324
(404) 321-2140

Securities registered pursuant to Section 12(b) of the Act:

        The aggregate market value of shares of common stock held by non-affiliates at February 26, 2002 was $160,732,188.

Securities registered pursuant to Section 12(g) of the Act:
None

        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. ý  Yes        o  No

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Documents Incorporated by Reference

        Portions of the Proxy Statement for the 2002 Annual Meeting of Stockholders of RPC, Inc. are incorporated by reference into Part III, Items 10 through 13 of this report.

PART I

        Throughout this report, we refer to RPC, Inc., together with its subsidiaries as "we," "us," or "the Company."

Forward-Looking Statements

        Certain statements made in this report that are not historical facts are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements that relate to our business strategy, plans and objectives, and our beliefs and expectations regarding future demand for our products and services and other events and conditions that may influence the oilfield services market and our performance in the future.

        The words "may," "will," "expect," "believe," "anticipate," "project," "estimate," 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. We caution you that such statements are only predictions and not guarantees of future performance and that actual results, developments and business decisions may differ from those envisioned by the forward-looking statements. See "Risk Factors" contained in Item 1.

ITEM 1. BUSINESS

        RPC, Inc. ("RPC") is a Delaware corporation originally organized in 1984 as part of a spin-off from Rollins, Inc. (NYSE:ROL). Two of RPC's businesses, Cudd Pressure Control ("Cudd") and Patterson Services ("Patterson"), have been in operation for more than 20 years. Effective February 28, 2001, RPC completed the spin-off of its powerboat manufacturing business through a distribution of shares of Marine Products Corporation ("Marine Products"). See "Discontinued Operation" for additional information.

        RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the 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 in selected international markets. The services and equipment provided include among other things, (1) snubbing services, (2) coiled tubing services, (3) pressure pumping services, (4) marine services, (5) firefighting and well control, and (6) the rental of drill pipe and other specialized oilfield equipment. RPC acts as a holding company for its operating subsidiaries, Cudd Pressure Control, Inc., Patterson Services, Inc. and Patterson Tubular Services, Inc. together with several smaller non-core businesses.

        RPC's service lines have been aggregated into two reportable oil and gas services business segments—Technical Services and Support Services—because of the similarities between the financial performance and approach to managing these service lines within each of the segments as well as the economic and business conditions impacting their business activity levels. The other business segment includes information concerning RPC's business units that do not qualify for separate segment reporting. These business units include an overhead crane fabricator, and other non-oilfield operations.

        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 are generally directed toward improving the flow of oil and natural gas from producing formations or to address well control issues. The Technical Services business segment consists primarily of snubbing, coiled tubing, pressure pumping, nitrogen, well control, down-hole tools, wire line, fluid pumping, hot-tapping, gate valve drilling and casing installation services. The principal markets for this

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business segment include the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and international locations including primarily Africa, Latin America and Canada. 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, work platform marine vessels, 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, Gulf of Mexico and mid-continent regions. Customers include domestic operations of major multi-national and independent oil and gas producers.

Technical Services

        The following is a description of the primary service lines conducted within the Technical Services business segment:

        Snubbing.    Snubbing involves using a high-pressure workover rig that permits an operator to repair damaged casing, production tubing and down-hole production equipment in a high-pressure environment. A snubbing unit makes it possible to remove and replace down-hole equipment in a pressurized environment. Customers benefit because these operations can be performed without removing the pressure from or "killing" the well. Since snubbing is a very hazardous process that entails high risk, the snubbing segment of the oil and gas services industry is limited to a few operators who have the experience and knowledge required to safely and efficiently perform such services.

        Coiled Tubing.    Coiled tubing services involve the injection of coiled tubing into wells to perform various applications and functions for use principally in well-servicing operations. Coiled tubing is a flexible steel pipe with a diameter of less than five inches manufactured in continuous lengths of thousands of feet and wound or coiled around a large reel. It can be inserted through existing production tubing and used to perform workovers without using a larger, more costly workover rig. Principal advantages of employing coiled tubing in a workover include: (i) not having to "shut-in" the well during such operations, (ii) the ability to reel continuous coiled tubing in and out of a well significantly faster than conventional pipe, (iii) the ability to direct fluids into a wellbore with more precision, and (iv) enhanced access to remote or offshore fields due to the smaller size and mobility of a coiled tubing unit.

        Pressure Pumping Services.    Cudd provides pumping services to customers throughout the Gulf Coast and mid-continent regions of the United States. Cudd utilizes complex, truck or skid-mounted equipment designed and constructed for each specific pumping service offered. The mobility of this equipment permits Cudd to provide pressure pumping services in varying geographic areas. Principal materials utilized in the pressure pumping business include fracturing proppants, acid and bulk chemical additives. Generally, these items are available from several suppliers, and Cudd utilizes more than one supplier for each item. Pressure Pumping Services offered include:

Fracturing—Fracturing services are performed to enhance the production of oil and natural gas from formations where the well's natural flow is restricted due to permeability issues. The fracturing process consists of pumping a fluid gel into a cased well at sufficient pressure to "fracture" the formation at desired depths. Sand, bauxite or synthetic proppant, which is suspended in the gel, is pumped into the fracture to prop it open. In some cases, fracturing is performed by an acid solution pumped under pressure without a proppant or with small amounts of proppant.

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Acidizing—Acidizing services are performed to enhance the flow rate of oil and natural gas from wells with reduced flow caused by formation damage due to drilling or completion fluids, or the buildup over time of various materials that block the formation. Acidizing entails pumping large volumes of specially formulated acids into reservoirs to dissolve barriers and enlarge crevices in the formation, thereby eliminating obstacles to the flow of oil and natural gas.

        Nitrogen.    There are a number of uses for nitrogen, an inert gas, in providing services to our oilfield customers. Used alone, it is effective in displacing fluids in various oilfield applications, including underbalanced drilling and pipeline purging.

        Well Control.    Cudd Pressure Control specializes in responding to and controlling oil and gas well emergencies, including blowouts and well fires domestically and internationally. In connection with these services, Cudd, along with Patterson Services, has the capacity to supply the equipment, expertise and personnel necessary to restore affected oil and gas wells to production. In the last five years, Cudd has responded to well control situations in several international locations including Argentina, Australia, Bolivia, Colombia, Egypt, India, Peru, Taiwan and Venezuela.

        Cudd Pressure Control's professional firefighting staff has more than 340 years of aggregate industry experience in responding to well fires and blowouts. This team of 17 experts responds to well control projects where hydrocarbons are escaping from a well bore, regardless of whether a fire has occurred. In the most critical situations, there are explosive fires, the destruction of drilling and production facilities, substantial environmental damage and the loss of hundreds of thousands of dollars per day in production revenue. Since these events ordinarily arise from equipment failures or human error, it is impossible to predict accurately the timing or scope of this work. Additionally, less critical events frequently occur in connection with the drilling of new wells into high-pressure reservoirs. In these situations, Cudd is called upon to supervise and assist in the well control effort so that drilling operations can resume as promptly as safety permits.

        Down-hole Tools.    Cudd Pressure Control's division, ThruTubing Solutions (TTS) provides proprietary down-hole motors and fishing tools to operators and service companies throughout the oil and gas industry. TTS' experience for reliable tool services allows it to work with virtually any coiled tubing unit or snubbing unit that is equipped for the task.

        Wireline Services.    Cudd provides mechanical wireline services. A wireline unit is a spooled wire that can be unwound and lowered into a well carrying various types of tools. Wireline services are used for a variety of purposes, such as: accessing a well to assist in data acquisition or logging activities, fishing tool operations to retrieve lost or broken equipment, pipe recovery, and remedial activities. In addition, wireline services are an integral part of plug and abandonment services.

        Special Services.    When a valve malfunctions, the only solution may be to drill out the gate or the plug. If pressure is trapped, hot-tapping, a technique of drilling into a medium that is under pressure, is one method of relieving that pressure. Cudd Pressure Control maintains hot-tapping and valve drilling equipment capable of drilling out valve seats in an environment with up to 15,000 psi working pressure and hydrogen sulfide. In order to isolate wellheads, valves and other circulating equipment from subsurface or upstream pressure, Cudd Pressure Control also performs freezing operations.

        Casing and Torque-Turn Services.    Casing and laydown principally consists of installing casing and production tubing into a wellbore. Casing is run to protect the structural integrity of the wellbore and to seal various production zones in the well. These services are normally provided during the drilling and completion phases of a well. Production tubing is run inside the casing. Oil and natural gas are produced through the tubing. These services are provided during the completion and workover phases.

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        Torque-Turn is used on tubulars in the deeper, higher pressure gas wells where connection integrity and leak resistance are most critical. By monitoring the makeup of connections with both torque and turns simultaneously, we are able to achieve the optimum bearing pressure between the connection. The level of bearing pressure directly affects the leak resistance of the connection. The use of the Torque-Turn system allows us to obtain the maximum bearing pressure without permanently deforming the material.

Support Services

        The following is a description of the primary service lines conducted within the Support Services business segment:

        Rental Tools.    RPC rents specialized equipment for use with onshore and offshore oil and gas well drilling, completion and workover activities. The drilling and operation of oil and gas wells generally require a variety of equipment. The equipment needed is in large part determined by the geological features of the well area and the size of the well itself. As a result, operators and drilling contractors often find it more economical to supplement their inventories with rental tools instead of maintaining a complete inventory of tools. RPC is strategically located to serve the major staging points for oil and gas activities in the Gulf of Mexico and mid-continent regions.

        RPC, through Patterson Rental Tools, offers a broad range of rental tools including:

        Marine Services.    A liftboat is a self-propelled, self-elevating work platform with legs, cranes and living accommodations. Our fleet consists of five liftboats, two of which have leg lengths of 200 feet or more. Upon arriving at a destination, a liftboat hydraulically lowers its legs until they are positioned on the ocean floor, and then jacks up until the work platform is sufficiently above the water level. Once positioned, the stability, open deck area, crane capacity, and relatively low cost of operation make liftboats ideal work platforms for a wide range of offshore activity from platform construction to plug and abandonment services. Our liftboats have either one or two cranes with lift capacities up to 75 tons. A liftboat's capability to reposition at a work site or to move to another location within a short time adds to its versatility. In addition, liftboat services are also highly complementary to RPC's service lines within the Technical Services business segment as it relates to providing services offshore.

        Pipe Inspection and Handling Services.    Pipe inspection services involve the inspection and testing of the integrity of pipe used in oil and gas wells. These services are provided primarily at RPC's inspection yards located on a water channel near Houston, Texas, and in Morgan City, Louisiana. Customers rely on tubular inspection services to avoid failure of in-service tubing, casing, flowlines, and drill pipe. Such tubular failures are expensive and in some cases catastrophic RPC's yard in Houston, Texas is equipped with bulkhead waterfronts, large capacity cranes, specially designed forklifts, and a computerized inventory system to serve a variety of other storage and handling issues.

        Well Control School.    Well Control School provides industry and government accredited training for the oil and gas industry. Well Control School provides this training in various formats including

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conventional classroom training, interactive computer training and mobile simulator training. Well Control School also develops customized training solutions for clients.

        Energy Personnel International.    Energy Personnel International provides consultants to the oil and gas industry to meet customers' needs for staff engineering and wellsite management.

Industry

        United States.    The United States represents the largest single oilfield services market in the world. RPC provides its services to its U.S. customers through a network of strategic locations including the Gulf of Mexico, the mid-continent, the southwest and the Rocky Mountains. Demand for RPC's services in the U.S. is driven by the current and projected prices of oil and natural gas and the resulting drilling and production activity levels. Our business tends to be extremely volatile and fluctuates with the price level of these commodities and customer production-enhancement activities.

        Due to aging oilfields and lower-cost sources of oil internationally, drilling activity in the U.S. has declined more than 75% from its peak in 1981. Record low drilling activity levels were experienced in 1986, 1992 and again in 1999, with April 1999 recording the lowest U.S. drilling rig count in recorded history.

        Currently, the industry is in the midst of a decrease in drilling activity in North America. At the end of 2001, there were 887 working drilling rigs domestically compared to 1,114 at the end of 2000, a one year decrease of approximately 20 percent. Since 1991, gas drilling rigs have typically represented just over 50 percent of the total drilling rig count. However, gas-directed drilling rigs have averaged approximately 80 percent of the total domestic drilling rig count since the record low seen in the second quarter of 1999. Demand for natural gas is continuing to rise, primarily as a result of increased emphasis on gas-fired power generation. Based on the current demand for natural gas as well as the high well depletion rates experienced over the past several years, it is anticipated that gas-directed drilling will represent at least 70 percent of the total drilling rig count in the foreseeable future.

        Thus, in North America the demand for our services and products associated with natural gas development is currently more robust than demand related to oil drilling. We expect that the tremendous downturn in domestic drilling activity that took place in the fourth quarter of 2001 will continue during the first part of 2002. Drilling activity, and demand for our services, will increase when the domestic economy recovers and current high storage levels of natural gas decrease.

        International.    RPC operates in several countries including the major international oil and natural gas producing areas of Algeria, Argentina, Bolivia, Canada, Cameroon, Colombia, Gabon, Indonesia, Mexico and Venezuela. RPC provides services to its international customers through wholly-owned foreign subsidiaries or branch locations. The international market is somewhat less volatile than the U.S. market although prone to risk of political uncertainties. Due to the significant investment requirement and complexity of international projects, drilling decisions relating to such projects tend to be evaluated and monitored with a longer-term perspective with regard to oil and natural gas pricing. Additionally, the international market is dominated by major oil companies and national oil companies which tend to have different objectives and more operating stability than the typical independent producer in the U.S. International activities have been increasingly important to RPC's results of operations since 1995, when RPC implemented a strategy to expand its international presence. Refer to Note 13 in the Notes to Consolidated Financial Statements for further details.

Growth Strategies

        RPC's primary objective is to provide stockholders with excellent long-term returns on their investment through income growth and asset appreciation. This objective will be pursued through strategic investments and opportunities designed to enhance the long-term value of RPC while

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improving market share, product offerings and the profitability of existing businesses. Growth strategies are focused on selected areas and markets in which there exist opportunities for higher market growth or penetration or enhanced returns through consolidations or through the provision of proprietary value-added products and services. RPC intends to focus on specific market segments in which it believes that it has a competitive advantage or there exists significant growth potential.

        RPC seeks to expand its service capabilities through a combination of internal growth, acquisitions, joint ventures and strategic alliances. Because of the fragmented nature of the oil and gas services industry, RPC believes a number of attractive acquisition opportunities exist. The oil and gas services business includes a small number of dominant global competitors and a significant number of locally oriented businesses, many of which tend to be viable acquisition targets.

Customers

        Demand for RPC's services and products depends primarily upon the number of oil and natural gas wells being drilled, the depth and drilling conditions of such wells, the number of well completions and the level of workover activity worldwide. RPC's principal customers consist of major and independent oil and natural gas producing companies. During 2001, RPC provided oilfield services to several hundred customers, none of which accounted for more than 10 percent of consolidated revenues. While the loss of certain of RPC's largest customers could have a material adverse effect on Company revenues and operating results in the near term, management believes RPC would be able to obtain other customers for its services in the event of a loss of any of its largest customers.

Competition

        RPC operates in highly competitive areas of the oilfield services industry. The products and services of each of RPC's principal industry segments are sold in highly competitive markets, and its revenues and earnings are affected by changes in prices for our services, fluctuations in the level of activity in major markets, general economic conditions and governmental regulation. RPC competes with the oil and gas industry's largest integrated oilfield services companies. RPC believes that the principal competitive factors in the market areas that it serves are product and service quality, availability, price and technical proficiency.

Facilities/Equipment

        RPC's equipment consists primarily of oil and gas services equipment used either in servicing customer wells or provided on a rental basis for customer use. Substantially all of this equipment is owned and unencumbered. RPC both owns and leases regional and district facilities from which its oilfield services are provided to land-based and offshore customers. RPC's principal executive offices in Atlanta, Georgia are leased. RPC believes that its facilities are adequate for its current operations. RPC owns and operates five offshore liftboats. For additional information with respect to RPC's lease commitments, see Note 10 of the Notes to Consolidated Financial Statements.

Governmental Regulation

        RPC's business is significantly affected by state and federal laws and other regulations relating to the oil and gas industry. RPC cannot predict the level of enforcement of existing laws and regulations or how such laws and regulations may be interpreted by enforcement agencies or court rulings, whether additional laws and regulations will be adopted, or the effect such changes may have on it, its businesses or financial condition.

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Intellectual Property

        RPC uses several patented items in its operations, which management believes are important but are not indispensable to RPC's operations. Although RPC anticipates seeking patent protection when possible, it relies to a greater extent on the technical expertise and know-how of its personnel to maintain its competitive position.

Employees

        As of December 31, 2001, RPC had approximately 1,500 employees. None of the employees is represented by a union or covered by a collective bargaining agreement. RPC believes that it has good relations with its employees.

Discontinued Operation

        In January 2000, RPC announced plans to spin-off Chaparral Boats, Inc. ("Chaparral"), the recreational powerboat manufacturing business of RPC, to RPC's stockholders. RPC accomplished the spin-off by contributing 100% of the issued and outstanding stock of Chaparral to Marine Products, a newly formed wholly-owned subsidiary of RPC, and then distributing the common stock of Marine Products to RPC stockholders effective February 28, 2001. As part of the transaction, RPC's stockholders received 0.6 shares of Marine Products common stock for every one share of RPC common stock owned as of February 16, 2001, the record date for the spin-off. Marine Products is listed on the American Stock Exchange and traded under the ticker symbol MPX.

        For the first two months of 2001 and for the twelve months of 2000 and 1999, RPC's powerboat manufacturing business segment has been classified for accounting purposes as a discontinued operation in light of the spin-off of that business to RPC stockholders.

Risk Factors

Demand for our products and services is affected by the volatility of oil prices.

        Oil prices affect demand throughout the oil and natural gas industry, including the demand for our products and services. Our business depends in large part on the conditions of the oil and gas industry, and specifically on the capital expenditures of our customers related to the exploration and production of oil and natural gas. When these expenditures decline, our customers' demand for our services declines.

        Although the production sector of the oil and gas industry is less immediately affected by changing prices, and, as a result, less volatile than the exploration sector, producers react to declining oil and gas prices by reducing expenditures. This would adversely affect our business. A prolonged low level of activity in the oil and gas industry will adversely affect the demand for our products and services and our financial condition and results of operations.

We may be unable to compete in the highly competitive oil and gas industry in the future.

        We operate in highly competitive areas of the oilfield services industry. The products and services of each of our principal industry segments are sold in highly competitive markets, and our revenues and earnings may be affected by the following factors: changes in competitive prices, fluctuations in the level of activity and major markets, general economic conditions, and governmental regulation. We compete with the oil and gas industry's largest integrated oilfield service providers. We believe that the principal competitive factors in the market areas that we serve are product and service quality and availability, reputation for safety, technical proficiency and price. Although we believe that our reputation for safety and quality service is good, we cannot assure you that we will be able to maintain our competitive position.

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We may be unable to identify or complete acquisitions.

        Acquisitions have been and will continue to be a key element of our business strategy. We cannot assure you that we will be able to identify and acquire acceptable acquisition candidates on terms favorable to us in the future. We may be required to incur substantial indebtedness to finance future acquisitions and also may issue equity securities in connection with such acquisitions. The issuance of additional equity securities could result in significant dilution to our stockholders. We cannot assure you that we will be able to consolidate successfully the operations and assets of any acquired business with our own business. Any inability on our part to consolidate and manage the growth from acquired businesses could have a material adverse effect on our results of operations and financial condition.

Our operations are affected by adverse weather conditions.

        Our operations are directly affected by the weather conditions in the Gulf of Mexico and Gulf Coast regions. Due to seasonal differences in weather patterns, our crews may operate more days in some periods than others. Rainy weather, hurricanes and other storms prevalent in the Gulf of Mexico and along the Gulf Coast throughout the year may also affect our operations. Accordingly, our operating results may vary from quarter to quarter, depending on factors outside of our control.

Our inability to attract and retain skilled workers may impair growth potential and profitability.

        Our ability to remain productive and profitable will depend substantially on our ability to attract and retain skilled workers. Our ability to expand our operations is in part impacted by our ability to increase our labor force. The demand for skilled oilfield employees is high and the supply is very limited. A significant increase in the wages paid by competing employers could result in a reduction in our skilled labor force, increases in the wage rates paid by us, or both. If either of these events occurred, our capacity and profitability could be diminished and our growth potential could be impaired.

Our inability to perform services for a number of our large existing customers could have a material adverse effect on our business and operations.

        Our inability to continue to perform services for a number of our large existing customers could have a material adverse effect on our business and operations. Substantially all of our customers are engaged in the energy industry. This concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. We perform ongoing credit evaluations of our customers and do not generally require collateral in support of our trade receivables. We maintain reserves for estimated credit losses.

Our business has potential liability for personal injury and property damage claims.

        Our operations involve the use of heavy equipment and exposure to inherent risks, including blowouts, explosions and fires. If any of these events were to occur, this could result in liability for personal injury and property damage, pollution or other environmental hazards or loss of production. Litigation may arise from a catastrophic occurrence at a location where our equipment and services are used. This could result in large claims for damages. The frequency and severity of such incidents will affect our operating costs, insurability and relationships with customers, employees and regulators. This could have a material adverse effect on us. We maintain what we believe is prudent insurance protection. We cannot assure you that we will be able to maintain adequate insurance in the future at rates we consider reasonable or that our insurance coverage will be adequate to cover future claims that may arise.

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Our operations may be affected if we are unable to comply with regulatory and environmental laws.

        Our business is significantly affected by environmental laws and other regulations relating to the oil and gas industry and by changes in such laws and the level of enforcement of such laws. We are unable to predict the level of enforcement of existing laws and regulations, how such laws and regulations may be interpreted by enforcement agencies or court rulings, or whether additional laws and regulations will be adopted. The adoption of laws and regulations curtailing exploration and development of oil and gas fields in our areas of operations for economic, environmental or other policy reasons would adversely affect our operations by limiting demand for our services. We also have potential environmental liabilities with respect to our offshore and onshore operations. We believe that our present operations substantially comply with applicable federal and state pollution control and environmental protection laws and regulations. We also believe that compliance with such laws has had no material adverse effect on our operations to date. However, such environmental laws are changed frequently. We are unable to predict whether environmental laws will in the future materially adversely affect our operations and financial condition.

Our international operations could have a material adverse effect on our business.

        Our operations in Africa, Canada and Latin America and other foreign countries, although presently limited, are subject to risks inherent in doing business in foreign countries. These risks include, but are not limited to, political changes, expropriation, currency restrictions and changes in currency exchange rates, taxes, and boycotts and other civil disturbances. Although it is impossible to predict the likelihood of such occurrences or their effect on our operations, our management believes that these risks are acceptable. However, the occurrence of any one of these events could have a material adverse effect on our operations.

Our common stock price may be adversely affected by changes in oil and gas prices and the supply and demand for oil and gas.

        Historically, and in recent months in particular, the market price of common stock of companies engaged in the oil and gas services industry has been highly volatile. Likewise, the market price of our common stock has varied significantly in the past. Changes in oil and natural gas prices, changes in the demand for oil and natural gas exploration, and changes in the supply and demand for oil and natural gas have all been factors affecting the price of our common stock.

ITEM 2. PROPERTIES

        RPC owns or leases 59 offices and operating facilities. RPC believes its current operating facilities are suitable and adequate to meet current and reasonably anticipated future needs. Descriptions of the major facilities of continuing operations are as follows:

Owned Locations

        Houston, Texas—Pipe storage terminal, inspection shed, and pipe coating facility

        Irving, Texas—Crane fabrication plant

        Houma, Louisiana—Oil and gas administrative office

        Morgan city, Louisiana—Pipe Cleaning Facility

ITEM 3. LEGAL PROCEEDINGS

        RPC is a party to various routine legal proceedings primarily involving commercial claims, workers' compensation claims and claims for personal injury. RPC insures against these risks to the extent

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deemed prudent by its management, but no assurance can be given that the nature and amount of such insurance will in every case fully indemnify RPC against liabilities arising out of pending and future legal proceedings related to its business activities. While the outcome of these lawsuits, legal proceedings and claims cannot be predicted with certainty, management believes that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on RPC's business or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        There were no matters submitted to a vote of security holders during the fourth quarter of 2001.

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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

        Each of the executive officers of RPC was elected by the Board of Directors to serve until the Board of Directors' meeting immediately following the next annual meeting of stockholders or until his or her earlier removal by the Board of Directors or his or her resignation. The following table lists the executive officers of RPC and their ages, offices, and terms of office with RPC.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

        RPC common stock is listed for trading on the New York Stock Exchange under the symbol RES. At the close of business on December 31, 2001, there were approximately 2,500 holders of record of common stock. The following table sets forth the high and low prices of RPC's common stock for each quarter in the years ended December 31, 2001 and 2000:

        The Company has paid cash dividends since the third quarter of 1997. The Company expects to continue to pay cash dividends, subject to the earnings and financial condition of the Company and other relevant factors. After taking into consideration the spin-off in February 2001, the Company reduced the cash dividend in the second quarter of 2001 to $0.025 per share from $0.035 per share.

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Item 6. Selected Financial Data

        The following summary financial data of RPC highlights selected historical financial data and should be read in conjunction with the consolidated financial statements included elsewhere in this document.

STATEMENT OF INCOME DATA:

(a)

EBITDA represents income (loss) from continuing operations before income taxes and interest income, plus depreciation and amortization. EBITDA is not presented as a substitute for income from operations, net income or net cash provided by operating activities. RPC has presented EBITDA data (which is not a measure of financial performance under accounting principles generally accepted in the United States) because such data is used by certain investors to analyze and compare companies on the basis of operating performance, leverage and liquidity, and to determine a company's ability to service debt.

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(b)

Depreciation and amortization was derived from the statement of cash flows. This amount differs from depreciation and amortization presented on the statement of income due to depreciation related to the manufacturing of goods which is included in cost of services rendered and goods sold.

(c)

Represents employees of continuing operations for all periods presented.

(d)

Includes assets and stockholders' equity associated with the discontinued operation prior to 2001.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with "Selected Financial Data," and the "Consolidated Financial Statements" included elsewhere in this document. See also "CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION" on page 2.

Overview

        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 markets.

Critical Accounting Policies

        The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. These judgments are based on our historical experience, terms of existing contracts, trends in the industry, and information available from other outside sources, as appropriate. The Company believes that of its significant accounting policies the following involve a higher degree of judgment and complexity:

        Allowance for Doubtful Accounts—Accounts receivable are reduced by an allowance for amounts that may not be collected in the future. Substantially all of the Company's receivables are due from oil and gas exploration and production companies in the United States, selected international locations, and foreign national owned oil companies. We have established credit evaluation procedures that seek to minimize the amount of business we conduct with higher risk customers. Our customers' ability to pay is directly related to their ability to generate cash flow on their projects and is significantly affected by the volatility in the price of oil and natural gas. The estimated allowance for doubtful accounts is based on management's evaluation of the overall trends in the oil and gas industry, financial condition of our customers, our historical collection experience, and in the case of oil companies owned by foreign governments, our observations about the economic and political environment of the related country and region. We have favorable collections experience with most of our customers except for certain companies owned by foreign governments that tend to extend their payments. If the contracts with these customers are not renewed, or if we elect to no longer perform work in that particular country, collection risk could increase.

        Income Taxes—The determination of our income tax provision is complex due to operations in several tax jurisdictions outside the United States which may be subject to certain risks which ordinarily would not be expected in the United States. Tax regimes in certain jurisdictions are subject to significant changes which may be applied on a retroactive basis. If this were to occur, our tax expense could be materially different than the amounts reported. Furthermore, in determining the valuation allowance related to deferred tax assets, we estimate taxable income into the future and determine the magnitude of deferred tax assets which are more likely than not to be realized. Future taxable income could be materially different than amounts estimated, in which case a valuation allowance would need to be created.

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        Accrued Insurance Expenses—The Company self insures, up to specified limits, certain risks related to general liability, workers' compensation, vehicle and equipment liability. The cost of claims under the self-insurance program is estimated and accrued as the claims are incurred although actual settlement of the claims may not be made until future periods. These claims are closely monitored and the cost estimates are revised as developments occur relating to such claims. To estimate the ultimate cost of the claims, the Company applies loss development factors to its outstanding claims based on our own historical experience and available industry statistical data. The noncurrent portion of these estimated outstanding claims is classified as long-term accrued insurance expenses. The ultimate cost of these claims depends upon many events beyond our control and could significantly vary from our current estimates.

Results of Operations

Year Ended December 31, 2001 Compared To Year Ended December 31, 2000

        Revenues.    RPC generated revenues of $264,942,000 in 2001 compared to $184,215,000 in 2000, an increase of $80,727,000 or 44 percent. Revenues increased as a result of improvements in overall customer activity levels domestically and internationally, as the average domestic rig count was 1,207 during the first three quarters of 2001 compared to 1,114 at the end of 2000. Also contributing to the strength of reported revenues was the addition of new equipment through asset purchases and acquisitions of businesses.

        Beginning in the fourth quarter of 2001, the domestic rig count experienced its second steepest quarterly decline since 1992. At the end of the fourth quarter of 2001, the number of active drilling rigs in the United States was approximately 31 percent lower than its July 2001 peak. Other factors that contributed to the decreased revenues in the fourth quarter of 2001 were the lower price for natural gas, terrorism and the war in Afghanistan, economic recession, and political instability in Venezuela. The demand for our services decreased in the fourth quarter of 2001 as many energy companies responded to the lower prices for oil and natural gas by curtailing their capital expenditures.

        Cost of Services Rendered and Goods Sold.    Cost of services rendered and goods sold were $148,573,000 in 2001 compared to $107,246,000 in 2000. Cost of services rendered and goods sold, as a percent of revenues, decreased from 58 percent in 2000 to 56 percent in 2001. This improvement resulted from an improved operating environment allowing for better utilization of our equipment and personnel and improved pricing.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses were $49,747,000 in 2001 compared to $34,630,000 in 2000. This increase of $15,117,000, or 44 percent, was due to additional overhead required to administer the significant growth in the Company's oil and gas service lines. Selling, general and administrative expenses as a percent of revenues held steady at 19 percent in 2001and 2000.

        Depreciation and Amortization.    Depreciation and amortization were $25,434,000 in 2001, an increase of $7,629,000 or 43 percent compared to $17,805,000 in 2000. This increase in depreciation and amortization results primarily from capital expenditures relating to the pressure pumping service line, and various maintenance and growth capital expenditures in other oil and gas service lines.

        Operating Profit (Loss).    Operating profit was $41,188,000 in 2001, an increase of $16,654,000, or 68 percent, compared to $24,534,000 in 2000. This significant improvement in operating profit resulted from improvements in industry conditions in the first three quarters of 2001, offset by the fourth quarter's sharp retraction and weakened industry conditions.

        Interest (Expense) Income.    Interest expense was $65,000 in 2001 compared to interest income of $1,443,000 in 2000. RPC generates interest income from investment of its available cash primarily in

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marketable securities. The decrease in interest income results primarily from a decrease in average investable cash balances. See "Liquidity and Capital Resources" for additional explanations.

        Income (Loss) from Continuing Operations (net of income taxes).    RPC's income from continuing operations was $25,496,000, an increase of $9,369,000 or 58 percent compared to $16,127,000 in 2000. This improvement is consistent with the increases in operating profit, as the income tax rate was the same in both periods.

        Income from Discontinued Operation (net of income taxes).    RPC's powerboat manufacturing segment, classified as a discontinued operation, earned $1,486,000 in 2001 compared to $13,961,000 in 2000. This decrease was due primarily to the fact that the discontinued operation was included in RPC's consolidated financial results for the first two months of 2001 prior to its spin-off, compared to being included for the full year of 2000.

Year Ended December 31, 2000 Compared To Year Ended December 31, 1999

        Revenues.    RPC generated revenues of $184,215,000 in 2000 compared to $107,585,000 in 1999, an increase of $76,630,000 or 71 percent. Revenues increased as a result of improvements in overall customer activity levels domestically and internationally, especially in Venezuela, the start-up of the pressure pumping service line, and several well control jobs in the United States and various international locations, including Egypt and Argentina.

        Beginning in the fourth quarter of 1999, revenues began to improve as customer spending increased in response to higher oil and natural gas prices. As of the end of 2000, the number of active drilling rigs in the United States was approximately 40 percent higher than at the end of 1999. Our services that increase production from existing wells have been increasingly in demand as production companies seek to take advantage of the higher prices for oil and natural gas; there was less customer emphasis on exploration activities until the last two quarters of 2000.

        Cost of Services Rendered and Goods Sold.    Cost of services rendered and goods sold were $107,246,000 in 2000 compared to $71,439,000 in 1999. Cost of services rendered and goods sold, as a percent of revenues, decreased from 66 percent in 1999 to 58 percent in 2000. This improvement resulted from an improved operating environment allowing for better utilization of our equipment and personnel. In addition, the increasing industry demand for oil and gas services allowed for slightly improved pricing.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses were $34,630,000 in 2000 compared to $23,364,000 in 1999. This increase of $11,266,000, or 48 percent, was due to additional overhead required to administer the significant growth in the Company's oil and gas services business lines. Selling, general and administrative expenses as a percent of revenues fell from 22 percent in 1999 to 19 percent in 2000.

        Depreciation and Amortization.    Depreciation and amortization were $17,805,000 in 2000, an increase of $1,968,000 or 12 percent compared to $15,837,000 in 1999. This increase in depreciation and amortization results primarily from capital expenditures relating to the new pressure pumping service line, and various maintenance and growth capital expenditures in other oil and gas service lines.

        Operating Profit (Loss).    Operating profit was $24,534,000 in 2000, an increase of $27,589,000 compared to an operating loss of $3,055,000 in 1999. This significant improvement in operating profit resulted from improvements in industry conditions in 2000 compared to 1999.

        Interest Income.    Interest income was $1,443,000 in 2000 compared to $1,485,000 in 1999. RPC generates interest income from investment of its available cash primarily in overnight securities and

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short-term marketable securities. The decrease in interest income results primarily from a decrease in average investable cash balances. See "Liquidity and Capital Resources" for additional explanations.

        Income (Loss) from Continuing Operations (net of income taxes).    RPC's results from continuing operations improved $17,094,000 from a loss of $967,000 in 1999 to an income of $16,127,000 in 2000. This improvement is consistent with the increases in operating profit, as the income tax rate was the same in both periods.

        Income from Discontinued Operation (net of income taxes).    RPC's powerboat manufacturing segment, classified as a discontinued operation, earned $13,961,000 in 2000 compared to $9,118,000 in 1999, an increase of $4,843,000 or 53 percent. This increase was primarily due to the after-tax gain of $4,227,000 from the settlement of a claim.

Liquidity and Capital Resources

        The Company's decisions about the amount of cash to be used for investing and financing purposes are influenced by our capital position and the amount of cash to be provided by operations. In February 2001, the Company spun-off its powerboat manufacturing segment in a tax-free spin-off. Historically, the powerboat manufacturing segment has generated more cash than it has needed. To fund its investing and financing requirements in prior years, the Company's oil and gas services businesses have used cash from operations (cash provided by continuing operations), and excess cash generated by the powerboat manufacturing segment. In connection with the spin-off, the Company transferred payments and cash and marketable securities to this discontinued operation totaling $14,447,000 in 2001. Subsequent to the spin-off, the cash generated by the spun-off segment is no longer available to the Company.

        During 2001, cash and cash equivalents, and marketable securities decreased $12,458,000 from December 31, 2000. Cash provided by continuing operations during 2001 was $55,938,000, an increase of $44,666,000 compared to 2000. Cash used for investing activities and financing activities, excluding payments made to Marine Products, increased $18,371,000 from $24,282,000 in 2000 to $42,653,000 in 2001. In summary, the cash flows provided by continuing operations were used in the following investing and financing activities: (1) capital expenditures for purchases of new equipment and maintenance of existing equipment, (2) funding of purchases of businesses, (3) payment of dividends to stockholders, and (4) repurchases of Company common stock.

        Cash provided by continuing operations was generated primarily from income from continuing operations (adjusted for depreciation and amortization) and lower working capital requirements at December 31, 2001. Accounts receivable decreased to $46,928,000 at December 31, 2001 compared to $55,485,000 at December 31, 2000. Federal income tax receivable increased $4,789,000 from an income tax payable at December 31, 2000. Accrued payroll and related expenses increased $4,061,000 due to higher management incentive bonuses. The decrease in accounts receivable and the increase in income tax receivable resulted from a significant decline in revenues and profit in the fourth quarter of 2001 caused by lower oil and gas customer activity levels. Customers were paying receivables faster than new receivables were being recorded, and the estimated federal income tax payment calculations during 2001 could not anticipate the sharp decline in income experienced in the fourth quarter of 2001. Higher management incentive bonuses resulted from the strong profitability for the full year of 2001.

        Net cash used for investing activities, excluding payments to Marine Products, increased to $38,984,000 in 2001 from $19,890,000 in 2000. The increase was due to an increase in capital expenditures related to the purchase of revenue producing equipment, primarily in the Technical Services business segment. Capital expenditures were also made in 2001 related to RPC's acquisition of Sooner Testing and Mathews Energy Services.

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        Net cash used for financing activities, excluding payments to Marine Products, decreased to $3,669,000 in 2001 from $4,392,000 in 2000. This decrease was due to lower dividend payments due to a change in RPC's dividend per share, following the spin-off of its powerboat manufacturing segment. The decrease was also caused by an increase in debt and increase in the proceeds from the exercise of stock options. It was also offset by the increase in cash used to purchase and retire the Company's common stock.

        Management has commenced preliminary discussions with a number of companies engaged in complementary businesses to explore the potential for mutually beneficial business arrangements. While none of these discussions has progressed to the point where RPC believes a particular transaction is probable, management believes that additional acquisitions, joint ventures and strategic alliances are likely. While RPC has historically completed acquisitions using a combination of cash and seller financing, RPC used its stock in the acquisition of Mathews Energy Services, and expects to use its stock as acquisition currency in future transactions.

        The Company's obligations and commitments that require future payments include notes payable in connection with acquisitions and a capital lease, a bank line of credit, and certain non-cancelable operating leases. As of December 31, 2001, these obligations and commitments totaled approximately $9.4 million and require payments in 2002 of $3.1 million, and substantially all the remainder of $6.3 million is due during the period 2003 to 2005.

        We believe the liquidity provided by our existing cash, cash equivalents and marketable securities, our overall strong capitalization, and cash expected to be generated from operations, will provide sufficient capital to meet our requirements for at least the next twelve months. We believe our liquidity will allow us to continue to grow and provide the opportunity to take advantage of business opportunities that may arise.

Related Party Transactions

        Effective with the spin-off, the Company established a cash balance at Marine Products of approximately $15 million by transferring a total of $13.8 million in cash and marketable securities. See Note 8 to the consolidated financial statements for further information. Effective February 28, 2001, the Company began providing certain administrative services to Marine Products. The service agreements are more fully described in Note 2 to the consolidated financial statements. Charges from the Company (or from corporations which are subsidiaries of the Company) for such services aggregated approximately $868,000 in 2001. The Company's directors are also directors of Marine Products and certain officers are employees of both the Company and Marine Products.

        Also, the Company periodically purchases in the ordinary course of business, products or services from vendors who are owned by significant officers or shareholders of RPC. During 2001, the total amounts paid to these affiliated parties totaled approximately $486,000.

New Accounting Standards

        Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," establishes accounting and reporting standards for derivative instruments including certain derivative instruments embedded in other contracts, and for hedging activities. It requires entities to recognize all instruments as either assets or liabilities in the balance sheet and measure those instruments at fair value. As amended, the adoption of SFAS No. 133, effective for the Company as of January 1, 2001, did not impact the results of operations or financial condition of the Company as the Company is not a party to any derivative transactions that fall under the provisions of this statement.

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        In June 2001, the Financial Accounting Standards Board (FASB) approved SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 prospectively prohibits the pooling of interests method of accounting for business combinations initiated after June 30, 2001. SFAS No. 142 requires companies to cease amortizing goodwill that existed on June 30, 2001 after December 31, 2001. Any goodwill resulting from acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142 also establishes a new method of testing goodwill for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. Beginning in the first quarter of 2002, if an impairment occurs, the adoption of SFAS No. 142 could have an adverse effect on the Company's future results of operations. No part of the Company's goodwill as of December 31, 2001 is considered impaired based on the provisions of SFAS No. 142. Adoption of SFAS No. 142 will increase the net income after taxes by approximately $245,000 in 2002 due to cessation of amortization of goodwill.

        In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses accounting and reporting for asset retirement costs of long lived assets resulting from legal obligations associated with acquisition, construction or development transactions. The Company plans to adopt SFAS No. 143 in January 2003. Management has determined the adoption of this statement will not have a material effect on the Company's future results of operations.

        In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets," which clarifies accounting and reporting for assets held for sale, scheduled for abandonment or other disposal, and recognition of impairment loss related to the carrying value of long-lived assets. The Company adopted SFAS No. 144 in January 2002. Management does not believe the adoption of this statement will have a material effect on the Company's future results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        RPC maintains an investment portfolio, comprised of U.S. Government, corporate and municipal debt securities, which is subject to interest rate risk exposure. Also, as of December 31, 2001, RPC had debt with variable interest rates which exposes RPC to certain market risks. RPC has performed an interest rate sensitivity analysis using a duration model over the near term of the securities and the term of the debt with a 10 percent change in interest rates. RPC is not subject to material interest rate risk exposure based on this analysis, and no material changes in market risk exposures or how those risks are managed is expected.

        As of December 31, 2001, RPC had accounts receivable of $47 million (net of an allowance for doubtful accounts of $4 million). RPC is subject to a concentration of credit risk because most of the accounts receivable are due from companies in the oil and gas industry.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEETS
RPC, Inc. and Subsidiaries
(in thousands except share information)

The accompanying notes are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF INCOME
RPC, Inc. and Subsidiaries
(in thousands except per share data)

The accompanying notes are an integral part of these statements.

21

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
RPC, Inc. and Subsidiaries
(in thousands)

The accompanying notes are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS
RPC, Inc. and Subsidiaries
(in thousands)

The accompanying notes are an integral part of these statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RPC, Inc. and Subsidiaries
Years ended December 31, 2001, 2000, and 1999

Note 1: Significant Accounting Policies

Principles of Consolidation

        The consolidated financial statements include the accounts of RPC, Inc. and its wholly-owned subsidiaries ("RPC"or the "Company"). All material intercompany accounts and transactions have been eliminated. On February 28, 2001, the Company distributed the Powerboat Manufacturing Segment of the Company to RPC stockholders through a tax-free spin-off transaction. Accordingly, as discussed in Note 2, this segment has been accounted for as a discontinued operation and the accompanying consolidated financial statements for all periods presented have been restated to report separately the net assets, cashflows and operating results of this discontinued operation.

Nature of Operations

        RPC provides a broad range of specialized oil and gas services and equipment primarily to independent and major oilfield companies engaged in the exploration, production and development of oil and gas properties in the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and in selected international markets. These services and equipment include among other things, (1) snubbing services, (2) coiled tubing services, (3) pressure pumping services, (4) firefighting and well control, and (5) the rental of drill pipe and other specialized oilfield equipment. RPC acts as a holding company for its operating subsidiaries, Cudd Pressure Control, Inc., Patterson Services, Inc. and Patterson Tubular Services, Inc. along with other smaller non-oilfield businesses.

Use of Estimates in the Preparation of Financial Statements

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

        Significant estimates are used in the determination of Allowance for Doubtful Accounts, Income Taxes and Accrued Insurance Expenses.

Revenues

        The Company's revenue recognition policy is in accordance with the Securities and Exchange Commission's Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" which clarifies the basic criteria for recognizing revenue. RPC recognizes revenue when an agreement exists, prices are determinable, services and products are delivered and collectibility is reasonably assured.

Concentration of Credit Risk

        Substantially all of our customers are engaged in the energy industry. This concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions.

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Cash Equivalents

        Highly liquid investments with original maturities of 3 months or less are considered to be cash equivalents.

Marketable Securities

        RPC maintains cash equivalents and investments in several large, well-capitalized financial institutions, and RPC's policy disallows investment in any securities rated less than "investment grade" by national rating services.

        Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designations as of each balance sheet date. Debt securities are classified as available-for-sale because the Company does not have the intent to hold the securities to maturity. Available-for-sale securities are stated at their fair values, with the unrealized gains and losses, net of tax, reported in a separate component of stockholders' equity. As of December 31, 2001 and 2000, cost approximated fair value. Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income.

        Investments with original maturities between 3 and 12 months are considered to be current marketable securities. Investments with original maturities greater than 12 months are considered to be noncurrent marketable securities.

Allowance for Doubtful Accounts

        Accounts receivable are reduced by an allowance for estimated amounts that may not be collectible in the future.

Inventories

        Inventories, which consist principally of (i) products which are consumed in RPC's services provided to customers, (ii) spare parts for equipment used in providing these services and (iii) manufactured components and attachments for equipment used in providing services, are recorded at the lower of cost (first-in, first-out basis) or market value.

Long-Lived Assets

        RPC records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. The Company periodically reviews the values assigned to long-lived assets, such as property, plant and equipment and other assets, to determine if any impairments are other than temporary. Management believes that the long-lived assets in the accompanying balance sheets are appropriately valued.

Property, Plant and Equipment

        Depreciation is provided principally on a straight-line basis over the estimated useful lives of assets. Annual provisions for depreciation are computed using the following useful lives: operating equipment, 3 to 10 years; buildings and leasehold improvements, 15 to 30 years; furniture and fixtures, 5 to 7 years; and vehicles, 3 to 5 years. The cost of assets retired or otherwise disposed of and the related accumulated depreciation are eliminated from the accounts in the year of disposal with the resulting gain or loss credited or charged to income. Expenditures for additions, major renewals, and betterments are capitalized. Expenditures for restoring an identifiable asset to working condition or for

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maintaining the asset in good working order constitute repairs and maintenance and are expensed as incurred.

Intangibles

        Intangibles represent the excess of the purchase price over the fair value of net assets of businesses acquired and noncompete agreements related to businesses acquired. Intangibles are presented net of accumulated amortization and are amortized using the straight-line method over a period not exceeding 20 years or the period of the noncompete agreement. Amortization of intangibles for the years ended December 31, 2001, 2000, and 1999 amounted to approximately $880,000, $717,000, and $594,000. For the year ended December 31, 2001, goodwill totaling $5.9 million was amortized and the remaining goodwill of $2.8 million relating to an acquisition completed in July 2001 was not amortized.

        See "New Accounting Standards" in this note for information regarding the effects of a new pronouncement on the Company's prospective accounting for goodwill and goodwill amortization.

Insurance Expenses

        RPC self insures, up to specified limits, certain risks related to general liability, product liability, workers' compensation, and vehicle liability. The estimated cost of claims under the self-insurance program is accrued as the claims are incurred (although actual settlement of the claims may not be made until future periods) and may subsequently be revised based on developments relating to such claims. The non-current portion of these estimated outstanding claims is classified as long-term accrued insurance expenses.

Income Taxes

        Deferred tax liabilities and assets are determined based on the difference between the financial and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Earnings per Share

        Statement of Financial Accounting Standards ("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 restricted shares included in diluted earnings per share, but excluded in basic earnings per share. A reconciliation of the weighted shares outstanding is as follows:

New Accounting Standards

        SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," establishes accounting and reporting standards for derivative instruments including certain derivative instruments embedded in other contracts, and for hedging activities. It requires entities to recognize all instruments as either assets or liabilities in the balance sheet and measure those instruments at fair value. As amended, the adoption of SFAS No. 133, effective for the Company as of January 1, 2001, did not impact the results of operations or financial condition of the Company as the Company is not a party to any derivative transactions that fall under the provisions of this statement.

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        In June 2001, the Financial Accounting Standards Board ("FASB") approved SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 prospectively prohibits the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS No. 142 requires companies to cease amortizing goodwill that existed on June 30, 2001 after December 31, 2001. Any goodwill resulting from acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142 also establishes a new method of testing goodwill for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. Beginning in the first quarter of 2002, if an impairment occurs, the adoption of SFAS No. 142 could have an adverse effect on the Company's future results of operations. No part of the Company's goodwill as of December 31, 2001 is considered impaired based on the provisions of SFAS No. 142. Adoption of SFAS No. 142 will increase net income after taxes by approximately $245,000 in 2002 due to cessation of amortization of goodwill.

        In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which addresses accounting and reporting for asset retirement costs of long-lived assets resulting from legal obligations associated with acquisition, construction or development transactions. The Company is required to adopt SFAS No. 143 in January 2003. Management has determined the adoption of this statement will not have a material effect on the Company's future results of operations.

        In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets," which clarifies accounting and reporting for assets held for sale, scheduled for abandonment or other disposal, and recognition of impairment loss related to the carrying value of long-lived assets. The Company adopted SFAS No. 144 in January 2002. Management does not believe the adoption of this statement will have a material effect on the Company's future results of operations.

Note 2: Discontinued Operation

        In January 2000, the Board of Directors of RPC announced that it planned to spin-off to stockholders the business conducted through Chaparral Boats, Inc. ("Chaparral"), RPC's Powerboat Manufacturing Segment (the "spin-off"). The spin-off transaction was approved by RPC's Board of Directors on February 12, 2001. RPC accomplished the spin-off by contributing 100 percent of the issued and outstanding stock of Chaparral to Marine Products Corporation (a Delaware corporation) ("Marine Products"), a newly formed wholly-owned subsidiary of RPC, and then distributing the common stock of Marine Products to RPC stockholders. RPC stockholders received 0.6 shares of Marine Products Common Stock for each share of RPC Common Stock owned as of the record date. Based on an Internal Revenue Service Private Letter ruling, the spin-off was tax-free to RPC and RPC stockholders, except for cash received for any fractional shares. The spin-off was consummated on February 28, 2001, with 17,012,277 shares of Marine Products Common Stock distributed to RPC stockholders.

        For the first two months of 2001 and for the twelve months of 2000 and 1999, the Powerboat Manufacturing Segment of RPC has been accounted for as a discontinued operation and, accordingly, the accompanying consolidated financial statements of RPC have been restated to report separately the

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operating results of this discontinued operation. For 2000, the net assets of the discontinued operation had been reported separately and can be summarized as follows:

        A summary of the operating results of RPC's Powerboat Manufacturing Segment for the two months in 2001, and for the twelve months in 2000 and 1999 is as follows:

        The Transition Support Services Agreement stipulates that RPC provide certain services, including financial reporting and income tax administration, acquisition assistance, etc. to Marine Products until the agreement is terminated by either party. During 2001, RPC charged $868,000 to Marine Products for these services. Certain costs allocated by RPC to Marine Products in the past are now incurred directly by Marine Products. During 2000 and 1999, RPC allocated expenses totaling $2,372,000, and $1,966,000, respectively, which was based on Marine Products' revenues as a percent of RPC's total revenues.

        In the first quarter of 2000, RPC recorded an after-tax gain of $4,227,000 in its powerboat manufacturing business segment. The gain is a result of Chaparral's receipt of its share of a non-refundable $35 million settlement payment made by Brunswick Corporation ("Brunswick"), a major engine supplier, to the members of the American Boatbuilders Association ("ABA"), a buying group which includes Chaparral. Under the terms of this agreement between the ABA and Brunswick, additional payments were to be made to the ABA depending on the final judgment or settlement of a lawsuit brought by Independent Boatbuilders Association ("IBBI"), another buying group supplied engines by Brunswick. In March 2000, the U.S. Court of Appeals for the Eighth Circuit ordered the trial court to enter a judgment for Brunswick, thereby reversing the initial decision in favor of IBBI. No additional payments will be received by Marine Products in connection with this settlement.

        Refer to Note 12 for details regarding certain officers being employees of both RPC and Marine Products.

Note 3: Acquisitions

        During the year ended December 31, 2001, the Company completed two acquisitions, which were accounted for under the purchase method of accounting. Proforma results of operations have not been presented for either of the acquisitions because the effects of these acquisitions were not material to

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the Company on either an individual or aggregate basis. The results of operations of each acquisition are included in the Company's consolidated statements of income from the respective dates of acquisition.

        A summary of the Company's purchase transactions for the year ended December 31, 2001 is included in the following table (in thousands, except share amounts):

        Potential earnouts may have to be paid in accordance with the respective agreements on an annual basis and will be recorded as goodwill when paid. The consolidated statements of cash flows for the year ended December 31, 2001 excludes the $3.25 million of promissory notes payable in connection with these acquisitions and the $4.0 million stock issuance.

        Payments totaling $286,000 were made in 2001 in connection with earnouts related to acquisitions prior to 2001. These amounts have been recorded as goodwill.

Note 4: Accounts Receivable

        Accounts receivable are stated net of allowances for doubtful accounts of $4,118,000 in 2001 and $4,994,000 in 2000.

Note 5: Inventories

        Inventories consist of the following:

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Note 6: Property, Plant and Equipment

        Property, plant and equipment are presented at cost net of accumulated depreciation and consist of the following:

        Depreciation expense amounted to $24,656,000, $17,278,000, and $15,368,000 for the years ended December 31, 2001, 2000, and 1999.

Note 7: Income Taxes

        The following table lists the components of the provision (benefit) for income taxes from continuing operations:

        A reconciliation between the federal statutory rate and RPC's effective tax rate is as follows:

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        Significant components of the Company's deferred tax assets and liabilities are as follows:

        Total income tax payments, net of refunds, were $15,615,000 in 2001, $13,825,000 in 2000, and $1,616,000 in 1999.

Note 8: Payable to Marine Products Corporation

        At December 31, 2000, the consolidated balance sheet reflects a Payable to Marine Products Corporation. This represents the amount of cash transferred from Marine Products to RPC since RPC's acquisition of Chaparral in 1986. In February 2001, effective with the spin-off, RPC established a cash balance at Marine Products of $15 million by contributing approximately $13.8 million. The remaining Payable to Marine Products totaling approximately $53.8 million was cancelled and RPC's retained earnings was increased by an equal amount.

Note 9: Long-Term Debt

        At December 31, 2001, future minimum payments on long-term debt and capitalized lease obligations were as follows:

        Cash interest paid was approximately $262,000 in 2001, $125,000 in 2000 and $50,000 in 1999.

        The Company has access to a $25 million credit facility with a financial institution encompassing letters of credit and advances. It is renewable annually with interest payable monthly at LIBOR plus 50 basis points. As of December 31, 2001, the balance on this facility was $160,000 and is reflected as part of short-term debt on the consolidated balance sheet. The Company is required to maintain various financial ratios and as of December 31, 2001, the Company is in compliance with all of the covenants.

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        The long-term debt of RPC as of December 31, 2001, and December 31, 2000, is summarized as follows:

        The net book value of equipment under capital lease was $658,000 at December 31, 2001.

Note 10: Commitments and Contingencies

        Minimum annual rentals, principally for noncancelable real estate leases with terms in excess of one year, in effect at December 31, 2001, are summarized in the following table:

        Total rental expense charged to operations was approximately $4,164,000 in 2001, $3,110,000 in 2000, and $2,014,000 in 1999.

        RPC is a defendant in a number of lawsuits which allege that plaintiffs have been damaged as a result of the rendering of services by RPC personnel and equipment. RPC is vigorously contesting these actions. Management is of the opinion that the outcome of these lawsuits will not have a material adverse effect on the financial position, results of operations or liquidity of RPC.

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Note 11: Employee Benefit Plans

Retirement Plan

        RPC has a tax-qualified defined benefit, noncontributory, trusteed retirement income plan that covers substantially all employees of RPC, and Marine Products prior to the spin-off, with atleast one year of service. Benefits are based on an employee's years of service and compensation near retirement. RPC has the right to terminate or modify the plan at any time.

        SFAS No. 132, "Employers' Disclosures About Pensions and Other Post Retirement Benefits," standardizes the disclosure requirements for pensions and other post retirement benefits to the extent possible.

        The following table sets forth the funded status of the retirement income plan and the amounts recognized in RPC's consolidated balance sheets: