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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 1-6747
 The Gorman-Rupp Company
 
 Ohio
    
    34-0253990(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)305 Bowman Street, Mansfield, Ohio
    
    44903(Address of principal executive offices)
    
    (Zip Code)
 (419) 755-1011
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The Gorman-Rupp Company and Subsidiaries
Three and Six Months Ended June 30, 2006 and 2005
 PART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Statements of Income-Three months ended June 30, 2006 and 2005-Six months ended June 30, 2006 and 2005Condensed Consolidated Balance Sheets-June 30, 2006 and December 31, 2005Condensed Consolidated Statements of Cash Flows-Six months ended June 30, 2006 and 2005Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures about Market RiskItem 4.
    
    Controls and ProceduresPART II. OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 1A.
    
    Risk FactorsItem 6.
    
    ExhibitsEX-3 Articles of Incorporation and By-lawsEX-4 Instruments defining the rights of security holders, including indenturesEX-10 Material ContractsEX-31.1 302 CEO CertificationEX-31.2 302 CFO CertificationEX-32 Section 1350 CEO and CFO Certifications
 2




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PART I. FINANCIAL INFORMATION
 ITEM 1FINANCIAL STATEMENTS (UNAUDITED)
 THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 (Thousands of dollars, except per share amounts)
    
    Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    67,905
    
    
    $
    56,109
    
    
    $
    134,992
    
    
    $
    108,146Cost of products sold
    
    
    52,318
    
    
    
    43,703
    
    
    
    104,455
    
    
    
    85,955Gross Profit
    
    
    15,587
    
    
    
    12,406
    
    
    
    30,537
    
    
    
    22,191Selling, general and
administrative expenses
    
    
    7,643
    
    
    
    7,274
    
    
    
    15,749
    
    
    
    14,705Operating Income
    
    
    7,944
    
    
    
    5,132
    
    
    
    14,788
    
    
    
    7,486Other income
    
    
    442
    
    
    
    173
    
    
    
    654
    
    
    
    490Other expense
    
    
    (3
    )
    
    
    (7
    )
    
    
    (11
    )
    
    
    (54
    )Income Before Income Taxes
    
    
    8,383
    
    
    
    5,298
    
    
    
    15,431
    
    
    
    7,922Income taxes
    
    
    2,884
    
    
    
    1,961
    
    
    
    5,394
    
    
    
    2,931Net Income
    
    $
    5,499
    
    
    $
    3,337
    
    
    $
    10,037
    
    
    $
    4,991Basic and Diluted
Earnings Per Share
    
    $
    0.52
    
    
    $
    0.32
    
    
    $
    0.94
    
    
    $
    0.47Dividends Paid Per Share
    
    $
    0.140
    
    
    $
    0.140
    
    
    $
    0.280
    
    
    $
    0.280Average number of shares outstanding
    
    
    10,685,697
    
    
    
    10,682,697
    
    
    
    10,685,697
    
    
    
    10,682,697
 See notes to condensed consolidated financial statements.
 3




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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 (Thousands of dollars)
    
    June 30,
    
    
    December 31,2006
    
    
    2005AssetsCurrent Assets:Cash and cash equivalents
    
    $
    7,785
    
    
    $
    6,755Short-term investments
    
    
    6,513
    
    
    
    4,785Accounts receivable  net
    
    
    47,199
    
    
    
    41,473Inventories  net
    
    
    54,167
    
    
    
    52,403Deferred income taxes and other current assets
    
    
    4,119
    
    
    
    5,085Total Current Assets
    
    
    119,783
    
    
    
    110,501Property, plant and equipment
    
    
    138,382
    
    
    
    136,629Less allowances for depreciation
    
    
    87,467
    
    
    
    85,124Property, Plant and Equipment  Net
    
    
    50,915
    
    
    
    51,505Other assets
    
    
    17,628
    
    
    
    17,535Total Assets
    
    $
    188,326
    
    
    $
    179,541Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable
    
    $
    9,913
    
    
    $
    9,835Payrolls and related liabilities
    
    
    3,886
    
    
    
    3,781Accrued expenses
    
    
    15,427
    
    
    
    13,782Income taxes
    
    
    15
    
    
    
    821Total Current Liabilities
    
    
    29,241
    
    
    
    28,219Postretirement Benefits
    
    
    23,870
    
    
    
    23,255Deferred Income Taxes
    
    
    1,014
    
    
    
    1,019Shareholders EquityCommon shares, without par value:Authorized  14,000,000 shares;Outstanding  10,685,697 shares in 2006 and
2005 (after deducting treasury
shares of 395,278 in 2006 and 2005)
at stated capital amount
    
    
    5,095
    
    
    
    5,095Retained earnings
    
    
    129,288
    
    
    
    122,243Accumulated other comprehensive loss
    
    
    (182
    )
    
    
    (290
    )Total Shareholders Equity
    
    
    134,201
    
    
    
    127,048Total Liabilities and Shareholders Equity
    
    $
    188,326
    
    
    $
    179,541
 See notes to condensed consolidated financial statements.
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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 (Thousands of dollars)
    
    Six Months EndedJune 30,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    10,037
    
    
    $
    4,991Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    3,311
    
    
    
    3,441Changes in operating assets and liabilities
    
    
    (5,232
    )
    
    
    (6,594
    )Net cash provided by operating activities
    
    
    8,116
    
    
    
    1,838Cash flows from investing activities:Capital additions, net
    
    
    (2,596
    )
    
    
    (726
    )Purchases of short-term investments
    
    
    (1,728
    )
    
    
    (351
    )Payment for acquisition
    
    
    
    
    
    
    (1,331
    )Net cash used for investing activities
    
    
    (4,324
    )
    
    
    (2,408
    )Cash flows from financing activities:Cash dividends
    
    
    (2,992
    )
    
    
    (2,991
    )Net cash used for financing activities
    
    
    (2,992
    )
    
    
    (2,991
    )Effect of exchange rate changes on cash
    
    
    230
    
    
    
    (99
    )Net increase (decrease) in cash
and cash equivalents
    
    
    1,030
    
    
    
    (3,660
    )Cash and cash equivalents:Beginning of year
    
    
    6,755
    
    
    
    16,202June 30,
    
    $
    7,785
    
    
    $
    12,542
 See notes to condensed consolidated financial statements.
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PART I  CONTINUED
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE A  BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
  NEW ACCOUNTING PRONOUNCEMENTS
   NOTE B  INVENTORIES
   (Thousands of dollars)
    
    June 30,
    
    December 31,2006
    
    2005Raw materials and in-process
    
    $
    28,088
    
    
    $
    29,187Finished parts
    
    
    22,850
    
    
    
    21,883Finished products
    
    
    3,229
    
    
    
    1,333Total inventories
    
    $
    54,167
    
    
    $
    52,403
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PART I  CONTINUED
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  CONTINUED
 NOTE C  PRODUCT WARRANTIES
  (Thousands of dollars)
    
    Six Months EndedJune 30,2006
    
    2005Balance at beginning of year
    
    $
    1,277
    
    
    $
    829Warranty costs
    
    
    1,005
    
    
    
    492Settlements
    
    
    (906
    )
    
    
    (541
    )Balance at end of quarter
    
    $
    1,376
    
    
    $
    780
 NOTE D  COMPREHENSIVE INCOME
  (Thousands of dollars)
    
    Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Net income
    
    $
    5,499
    
    
    $
    3,337
    
    
    $
    10,037
    
    
    $
    4,991Changes in cumulative
foreign currency
translation adjustment
    
    
    432
    
    
    
    (317
    )
    
    
    108
    
    
    
    (486
    )Comprehensive income
    
    $
    5,931
    
    
    $
    3,020
    
    
    $
    10,145
    
    
    $
    4,505
 NOTE E  PENSION AND OTHER POSTRETIREMENT BENEFITS
  7




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PART I  CONTINUED
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  CONTINUED
 NOTE E
 PENSION AND OTHER POSTRETIREMENT BENEFITS  CONTINUED
  Pension Benefits
    
    Postretirement Benefits(Thousands of dollars)
    
    Six Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Service cost
    
    $
    1,118
    
    
    $
    970
    
    
    $
    596
    
    
    $
    525Interest cost
    
    
    1,248
    
    
    
    1,109
    
    
    
    855
    
    
    
    888Expected return on plan assets
    
    
    (1,429
    )
    
    
    (1,219
    )
    
    
    
    
    
    
    Amortization of prior service cost
and unrecognized (gain)/loss
    
    
    512
    
    
    
    338
    
    
    
    
    
    
    
    Recognized net actuarial (gain)/loss
    
    
    
    
    
    
    
    
    
    
    131
    
    
    
    149Benefit cost
    
    $
    1,449
    
    
    $
    1,198
    
    
    $
    1,582
    
    
    $
    1,562
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
   Second Quarter 2006 Compared to Second Quarter 2005
 Net Sales
 (Thousands of Dollars)
    
    Three Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % ChangeNet Sales
    
    $
    67,905
    
    
    $
    56,109
    
    
    $
    11,796
    
    
    
    21.0
    %
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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
    Cost of Products Sold
 (Thousands of Dollars)
    
    Three Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % ChangeCost of Products Sold
    
    $
    52,318
    
    
    $
    43,703
    
    
    $
    8,615
    
    
    
    19.7
    %% Of sales
    
    
    77.0
    %
    
    
    77.9
    %
    
    
    
    
    
    
    (0.9
    )
  Selling, General, and Administrative Expenses (SG&A)
 (Thousands of Dollars)
    
    Three Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % ChangeSelling, General, and
Administrative Expenses
(SG&A)
    
    $
    7,643
    
    
    $
    7,274
    
    
    $
    369
    
    
    
    5.1
    %% Of sales
    
    
    11.3
    %
    
    
    13.0
    %
    
    
    
    
    
    
    (1.7
    )
  9




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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
 Net Income
 (Thousands of Dollars)
    
    Three Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    8,383
    
    
    $
    5,298
    
    
    $
    3,085
    
    
    
    58.2
    %% Of sales
    
    
    12.3
    %
    
    
    9.4
    %
    
    
    
    
    
    
    2.9Income taxes
    
    $
    2,884
    
    
    $
    1,961
    
    
    
    923
    
    
    
    47.1Effective tax rate
    
    
    34.4
    %
    
    
    37.0
    %
    
    
    
    
    
    
    (2.6
    )Net income
    
    $
    5,499
    
    
    $
    3,337
    
    
    
    2,162
    
    
    
    64.8% Of sales
    
    
    8.1
    %
    
    
    5.9
    %
    
    
    
    
    
    
    2.2Earnings per share
    
    $
    0.52
    
    
    $
    0.32
    
    
    $
    0.20
    
    
    
    62.5
   Six Months 2006 Compared to Six Months 2005
 Net Sales
 (Thousands of Dollars)
    
    Six Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % ChangeNet Sales
    
    $
    134,992
    
    
    $
    108,146
    
    
    $
    26,846
    
    
    
    24.8
    %
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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
 Cost of Products Sold
 (Thousands of Dollars)
    
    Six Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % ChangeCost of Products Sold
    
    $
    104,455
    
    
    $
    85,955
    
    
    $
    18,500
    
    
    
    21.5
    %% Of sales
    
    
    77.4
    %
    
    
    79.5
    %
    
    
    
    
    
    
    (2.1
    )
  Selling, General, and Administrative Expenses (SG&A)
 (Thousands of Dollars)
    
    Six Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % ChangeSelling, General, and
Administrative Expenses
(SG&A)
    
    $
    15,749
    
    
    $
    14,705
    
    
    $
    1,044
    
    
    
    7.1
    %% Of sales
    
    
    11.7
    %
    
    
    13.6
    %
    
    
    
    
    
    
    (1.9
    )
  11




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PART I  CONTINUED
 ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
 Net Income
 (Thousands of Dollars)
    
    Six Months EndedJune 30,2006
    
    2005
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    15,431
    
    
    $
    7,922
    
    
    $
    7,509
    
    
    
    94.8
    %% Of sales
    
    
    11.4
    %
    
    
    7.3
    %
    
    
    
    
    
    
    4.1Income taxes
    
    $
    5,394
    
    
    $
    2,931
    
    
    
    2,463
    
    
    
    84.0Effective tax rate
    
    
    35.0
    %
    
    
    37.0
    %
    
    
    
    
    
    
    (2.0
    )Net income
    
    $
    10,037
    
    
    $
    4,991
    
    
    
    5,046
    
    
    
    101.1% Of sales
    
    
    7.4
    %
    
    
    4.6
    %
    
    
    
    
    
    
    2.8Earnings per share
    
    $
    0.94
    
    
    $
    0.47
    
    
    $
    0.47
    
    
    
    100.0
   Liquidity and Sources of Capital
     12




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PART I  CONTINUED
 ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
   ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
  ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  hanges in Internal Control Over Financial Reporting
  PART II  OTHER INFORMATION
 ITEM 1. LEGAL PROCEEDINGS
  ITEM 1A. RISK FACTORS
  13




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ITEM 6. EXHIBITS
  Exhibits 3, 4 and 10
    
    (articles of incorporation and by-laws;
instruments defining the rights of security holders, including indentures;
and material contracts) are incorporated herein by
this reference from Exhibits (3), (4) and (10) of the
Companys Annual Report on Form 10-K for the year ended
December 31, 2005.Exhibit 31.1
    
    Certification of Jeffrey S. Gorman, Chief Executive
Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002Exhibit 31.2
    
    Certification of Robert E. Kirkendall, Chief Financial
Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002Exhibit 32
    
    Certification pursuant to 18 U.S.C Section
1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
 SIGNATURES
  The Gorman-Rupp Company
               (Registrant)Date: August 4, 2006By:
    /s/ Judith L. SovineJudith L. SovineCorporate TreasurerBy:
    /s/ Robert E. KirkendallRobert E. KirkendallSenior Vice President and
Chief Financial Officer 14