##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2010
 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.)600 South Airport Road, Mansfield, Ohio
    
    44903(Address of principal executive offices)
    
    (Zip Code)
 (419) 755-1011
 þ o
 Yes
o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
 16,685,535




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##### 



The Gorman-Rupp Company and Subsidiaries
Three and Six Months June 30, 2010 and 2009
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)
    
    
    3Condensed Consolidated Statements of Income
-Three months ended June 30, 2010 and 2009
-Six months ended June 30, 2010 and 2009
    
    
    3Condensed Consolidated Balance Sheets
-June 30, 2010 and December 31, 2009
    
    
    4Condensed Consolidated Statements of Cash Flows
-Six months ended June 30, 2010 and 2009
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    15PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    16Item 6. Exhibits
    
    
    17EX-31.1 302 Principal Executive Officer (PEO) CertificationEX-31.2 302 Principal Financial Officer (PFO) CertificationEX-32 Section 1350 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)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Thousands of dollars, except per share amounts)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    72,380
    
    
    $
    68,345
    
    
    $
    138,166
    
    
    $
    139,943Cost of products sold
    
    
    55,094
    
    
    
    52,555
    
    
    
    105,431
    
    
    
    108,808Gross profit
    
    
    17,286
    
    
    
    15,790
    
    
    
    32,735
    
    
    
    31,135Selling, general and
administrative expenses
    
    
    8,375
    
    
    
    8,790
    
    
    
    17,134
    
    
    
    17,778Operating income
    
    
    8,911
    
    
    
    7,000
    
    
    
    15,601
    
    
    
    13,357Other income
    
    
    12
    
    
    
    144
    
    
    
    137
    
    
    
    909Other expense
    
    
    (412
    )
    
    
    58
    
    
    
    (528
    )
    
    
    (196
    )Income before income taxes
    
    
    8,511
    
    
    
    7,202
    
    
    
    15,210
    
    
    
    14,070Income taxes
    
    
    2,855
    
    
    
    2,335
    
    
    
    5,057
    
    
    
    4,697Net income
    
    $
    5,656
    
    
    $
    4,867
    
    
    $
    10,153
    
    
    $
    9,373Earnings per share
    
    $
    0.34
    
    
    $
    0.29
    
    
    $
    0.61
    
    
    $
    0.56Cash dividends paid per share
    
    $
    0.105
    
    
    $
    0.100
    
    
    $
    0.210
    
    
    $
    0.200Weighted average shares outstanding
    
    
    16,710,260
    
    
    
    16,707,535
    
    
    
    16,710,397
    
    
    
    16,707,535
 See notes to condensed consolidated financial statements.
  3




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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 UnauditedJune 30,
    
    
    December 31,(Thousands of dollars)
    
    2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    37,216
    
    
    $
    44,403Short-term investments
    
    
    1,513
    
    
    
    1,505Accounts receivable  net
    
    
    49,315
    
    
    
    37,239Inventories  net
    
    
    37,711
    
    
    
    40,506Deferred income taxes and other current assets
    
    
    4,538
    
    
    
    7,747Total current assets
    
    
    130,293
    
    
    
    131,400Property, plant and equipment
    
    
    209,265
    
    
    
    208,571Less accumulated depreciation
    
    
    100,884
    
    
    
    100,048Property, plant and equipment  net
    
    
    108,381
    
    
    
    108,523Deferred income taxes and other assets
    
    
    9,816
    
    
    
    9,149Total assets
    
    $
    248,490
    
    
    $
    249,072Liabilities and shareholders equityCurrent liabilities:Accounts payable
    
    $
    13,669
    
    
    $
    8,972Short-term debt
    
    
    
    
    
    
    15,000Payroll and related liabilities
    
    
    7,806
    
    
    
    6,909Accrued expenses
    
    
    17,960
    
    
    
    12,294Total current liabilities
    
    
    39,435
    
    
    
    43,175Income taxes payable
    
    
    971
    
    
    
    971Retirement benefits
    
    
    2,768
    
    
    
    5,044Postretirement benefits
    
    
    22,752
    
    
    
    22,270Total liabilities
    
    
    65,926
    
    
    
    71,460The Gorman-Rupp Company shareholders equityCommon shares, without par value:Authorized - 35,000,000 sharesOutstanding - 16,685,535 shares in 2010
and 16,710,535 in 2009 (after deducting
treasury shares of 626,683 in 2010 and
601,683 in 2009) at stated capital amount
    
    
    5,092
    
    
    
    5,100Retained earnings
    
    
    188,879
    
    
    
    182,875Accumulated other comprehensive loss
    
    
    (12,064
    )
    
    
    (11,070
    )The Gorman-Rupp Company shareholders equity
    
    
    181,907
    
    
    
    176,905Noncontrolling interest
    
    
    657
    
    
    
    707Total shareholders equity
    
    
    182,564
    
    
    
    177,612Total liabilities and shareholders equity
    
    $
    248,490
    
    
    $
    249,072
 See notes to condensed consolidated financial statements.
  4




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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED)
 Six Months EndedJune 30,(Thousands of dollars)
    
    2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    10,153
    
    
    $
    9,373Adjustments to reconcile net income attributable to
net cash provided by operating activities:Depreciation and amortization
    
    
    5,205
    
    
    
    4,236Changes in operating assets and liabilities:Accounts receivable
    
    
    (12,075
    )
    
    
    7,102Inventories
    
    
    2,795
    
    
    
    8,986Accounts payable
    
    
    4,697
    
    
    
    (6,343
    )Accrued expenses and other
    
    
    5,736
    
    
    
    3,793Net cash provided by operating activities
    
    
    16,511
    
    
    
    27,147Cash flows from investing activities:Capital additions  net
    
    
    (3,966
    )
    
    
    (23,204
    )Proceeds from sale of product line
    
    
    
    
    
    
    1,210Change in short-term investments
    
    
    (8
    )
    
    
    Net cash used for investing activities
    
    
    (3,974
    )
    
    
    (21,994
    )Cash flows from financing activities:Cash dividends
    
    
    (3,509
    )
    
    
    (3,342
    )Proceeds from bank borrowings
    
    
    
    
    
    
    16,834Payments to bank for borrowings
    
    
    (15,000
    )
    
    
    Purchase of common shares for treasury
    
    
    (648
    )
    
    
    Net cash (used for) provided by financing activities
    
    
    (19,157
    )
    
    
    13,492Effect of exchange rate changes on cash
    
    
    (567
    )
    
    
    271Net (decrease) increase in cash
and cash equivalents
    
    
    (7,187
    )
    
    
    18,916Cash and cash equivalents:Beginning of year
    
    
    44,403
    
    
    
    23,793June 30,
    
    $
    37,216
    
    
    $
    42,709
 See notes to condensed consolidated financial statements.
  5




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PART I
 ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE A  BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
  NEW ACCOUNTING PRONOUNCEMENTS
  NOTE B  INVENTORIES
   June 30,
    
    
    December  31,(Thousands of dollars)
    
    2010
    
    
    2009Raw materials and in-process
    
    $
    19,744
    
    
    $
    22,087Finished parts
    
    
    15,237
    
    
    
    16,026Finished products
    
    
    2,730
    
    
    
    2,393Total inventories
    
    $
    37,711
    
    
    $
    40,506
  6




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PART I  CONTINUED
 ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  CONTINUED
 NOTE C  FINANCING ARRANGEMENTS
  NOTE D  PRODUCT WARRANTIES
  June 30,(Thousands of dollars)
    
    2010
    
    
    2009Balance at beginning of year
    
    $
    1,863
    
    
    $
    2,048Warranty costs accrued
    
    
    486
    
    
    
    1,323Expenses
    
    
    (944
    )
    
    
    (1,299
    )Balance at end of period
    
    $
    1,405
    
    
    $
    2,072
 NOTE E  COMPREHENSIVE INCOME
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    5,656
    
    
    $
    4,867
    
    
    $
    10,153
    
    
    $
    9,373Changes in cumulative
foreign currency
translation adjustments
    
    
    (1,401
    )
    
    
    1,179
    
    
    
    (1,509
    )
    
    
    498Pension and OPEB adjustments
    
    
    246
    
    
    
    470
    
    
    
    515
    
    
    
    941Total comprehensive income
attributable to The
Gorman-Rupp Company
    
    $
    4,501
    
    
    $
    6,516
    
    
    $
    9,159
    
    
    $
    10,812
 NOTE F  INCOME TAXES
   7




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PART I  CONTINUED
 ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  CONTINUED
 NOTE F  INCOME TAXES  CONTINUED
       NOTE G  PENSION AND OTHER POSTRETIREMENT BENEFITS
    8




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PART I  CONTINUED
 ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  CONTINUED
 NOTE G  PENSION AND OTHER POSTRETIREMENT BENEFITS  CONTINUED
  Pension Benefits
    
    
    Postretirement BenefitsSix Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    1,361
    
    
    $
    1,376
    
    
    $
    553
    
    
    $
    605Interest cost
    
    
    1,577
    
    
    
    1,702
    
    
    
    628
    
    
    
    787Expected return on plan assets
    
    
    (2,214
    )
    
    
    (1,768
    )
    
    
    
    
    
    
    Unrecognized actuarial (gain) loss
    
    
    788
    
    
    
    1,053
    
    
    
    (286
    )
    
    
    (113
    )Recognized actuarial (gain) loss
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    Benefit cost
    
    $
    1,512
    
    
    $
    2,363
    
    
    $
    894
    
    
    $
    1,279
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 Executive Overview
    9




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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS  CONTINUED
 Second Quarter 2010 Compared to Second Quarter 2009
 Net Sales
 Three Months EndedJune 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeNet sales
    
    $
    72,380
    
    
    $
    68,345
    
    
    $
    4,035
    
    
    
    5.9
    %
  Cost of Products Sold
 Three Months EndedJune 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeCost of products sold
    
    $
    55,094
    
    
    $
    52,555
    
    
    $
    2,539
    
    
    
    4.8
    %% of Net sales
    
    
    76.1
    %
    
    
    76.9
    %
  Selling, General and Administrative Expenses (SG&A)
 Three Months EndedJune 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeSelling, general and
administrative
expenses (SG&A)
    
    $
    8,375
    
    
    $
    8,790
    
    
    $
    (415
    )
    
    
    (4.7
    )%% of Net sales
    
    
    11.6
    %
    
    
    12.9
    %
   10




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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS  CONTINUED
 Other Expense
 Three Months EndedJune 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeOther expense
    
    $
    412
    
    
    $
    (58
    )
    
    $
    470
    
    
    
    810.3
    %% of Net sales
    
    
    0.6
    %
    
    
    0.1
    %
  Net Income
 Three Months EndedJune 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeIncome before income taxes
    
    $
    8,511
    
    
    $
    7,202
    
    
    $
    1,309
    
    
    
    18.2
    %% of Net sales
    
    
    11.8
    %
    
    
    10.5
    %Income taxes
    
    $
    2,855
    
    
    $
    2,335
    
    
    $
    520
    
    
    
    22.3
    %Effective tax rate
    
    
    33.5
    %
    
    
    32.4
    %Net income
    
    $
    5,656
    
    
    $
    4,867
    
    
    $
    789
    
    
    
    16.2
    %% of Net sales
    
    
    7.8
    %
    
    
    7.1
    %Earnings per share
    
    $
    0.34
    
    
    $
    0.29
    
    
    $
    0.05
    
    
    
    17.2
    %
  Six Months 2010 Compared to Six Months 2009
 Net Sales
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeNet sales
    
    $
    138,166
    
    
    $
    139,943
    
    
    $
    (1,777
    )
    
    
    (1.3
    )%
  11




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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
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeCost of products sold
    
    $
    105,431
    
    
    $
    108,808
    
    
    $
    (3,377
    )
    
    
    (3.1
    )%% of Net sales
    
    
    76.3
    %
    
    
    77.8
    %
  Selling, General, and Administrative Expenses (SG&A)
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeSelling, general, and
administrative expenses
(SG&A)
    
    $
    17,134
    
    
    $
    17,778
    
    
    $
    (644
    )
    
    
    (3.6
    )%% of Net sales
    
    
    12.4
    %
    
    
    12.7
    %
   12




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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS  CONTINUED
 Other Income
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeOther income
    
    $
    137
    
    
    $
    909
    
    
    $
    (772
    )
    
    
    (84.9
    )%% of Net sales
    
    
    0.1
    %
    
    
    0.7
    %
  Other Expense
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeOther expense
    
    $
    528
    
    
    $
    196
    
    
    $
    332
    
    
    
    169.4
    %% of Net sales
    
    
    0.4
    %
    
    
    0.1
    %
  Net Income
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeIncome before income taxes
    
    $
    15,210
    
    
    $
    14,070
    
    
    $
    1,140
    
    
    
    8.1
    %% of Net sales
    
    
    11.0
    %
    
    
    10.1
    %Income taxes
    
    $
    5,057
    
    
    $
    4,697
    
    
    $
    360
    
    
    
    7.7
    %Effective tax rate
    
    
    33.2
    %
    
    
    33.4
    %Net income
    
    $
    10,153
    
    
    $
    9,373
    
    
    $
    780
    
    
    
    8.3
    %% of Net sales
    
    
    7.3
    %
    
    
    6.7
    %Earnings per share
    
    $
    0.61
    
    
    $
    0.56
    
    
    $
    0.05
    
    
    
    8.9
    %
  13




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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS  CONTINUED
 Liquidity and Capital Resources
 Six Months EndedJune 30,(Thousands of dollars)
    
    2010
    
    
    2009Net cash provided by operating activities
    
    $
    16,511
    
    
    $
    27,147Net cash used for investing activities
    
    
    3,974
    
    
    
    21,994Net cash (used for) provided by financing activities
    
    
    (19,157
    )
    
    
    13,492
     Critical Accounting Policies
 Managements Discussion and Analysis of
Financial Condition and Results of Operations
  14




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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS  CONTINUED
 Safe Harbor Statement
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
    15




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PART I  CONTINUED
 ITEM 4. CONTROLS AND PROCEDURES  CONTINUED
 Changes in Internal Control Over Financial Reporting
  
 PART II OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
   16




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ITEM 6. EXHIBITS
  Exhibits 3 and 4
    
    (articles of incorporation) are incorporated
herein by this reference from Exhibits (3) and (4) of the
Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2007.Exhibits 3, 4 and 10
    
    (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 2002.Exhibit 31.2
    
    Certification of Wayne L. Knabel, Chief Financial Officer,
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.Exhibit 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:  July 29, 2010By:

/s/ Wayne L. KnabelWayne L. KnabelChief Financial Officer  17