##### 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 September 30, 2009
 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
 16,710,535




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##### 



The Gorman-Rupp Company and Subsidiaries
Three and Nine Months Ended September 30, 2009 and 2008
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Statements of Income
-Three months ended September 30, 2009 and 2008
-Nine months ended September 30, 2009 and 2008
    
    
    3Condensed Consolidated Balance Sheets
-September 30, 2009 and December 31, 2008
    
    
    4Condensed Consolidated Statements of Cash Flows
-Nine months ended September 30, 2009 and 2008
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    10Item 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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Thousands of dollars, except per share amounts)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    64,096
    
    
    $
    84,188
    
    
    $
    204,039
    
    
    $
    249,653Cost of products sold
    
    
    47,996
    
    
    
    64,016
    
    
    
    156,804
    
    
    
    189,231Gross profit
    
    
    16,100
    
    
    
    20,172
    
    
    
    47,235
    
    
    
    60,422Selling, general and
administrative expenses
    
    
    8,373
    
    
    
    9,140
    
    
    
    26,151
    
    
    
    27,995Operating income
    
    
    7,727
    
    
    
    11,032
    
    
    
    21,084
    
    
    
    32,427Other income
    
    
    142
    
    
    
    440
    
    
    
    1,051
    
    
    
    2,003Other expense
    
    
    (64
    )
    
    
    (63
    )
    
    
    (260
    )
    
    
    (200
    )Income before income taxes
    
    
    7,805
    
    
    
    11,409
    
    
    
    21,875
    
    
    
    34,230Income taxes
    
    
    2,628
    
    
    
    4,024
    
    
    
    7,325
    
    
    
    11,798Net income
    
    $
    5,177
    
    
    $
    7,385
    
    
    $
    14,550
    
    
    $
    22,432Basic and diluted
earnings per share
    
    $
    0.31
    
    
    $
    0.44
    
    
    $
    0.87
    
    
    $
    1.34Dividends paid per share
    
    $
    0.10
    
    
    $
    0.10
    
    
    $
    0.30
    
    
    $
    0.30Average shares outstanding
    
    
    16,710,535
    
    
    
    16,707,187
    
    
    
    16,708,546
    
    
    
    16,704,429
 See notes to condensed consolidated financial statements.
  3




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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 UnauditedSeptember 30,
    
    
    December 31,(Thousands of dollars)
    
    2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    54,236
    
    
    $
    23,793Short-term investments
    
    
    1,500
    
    
    
    Accounts receivable  net
    
    
    39,371
    
    
    
    48,200Inventories  net
    
    
    43,961
    
    
    
    56,881Deferred income taxes and other current assets
    
    
    4,423
    
    
    
    5,392Total current assets
    
    
    143,491
    
    
    
    134,266Property, plant and equipment
    
    
    211,970
    
    
    
    178,030Less allowances for depreciation
    
    
    103,482
    
    
    
    97,624Property, plant and equipment  net
    
    
    108,488
    
    
    
    80,406Deferred income taxes and other assets
    
    
    15,562
    
    
    
    16,866Total assets
    
    $
    267,541
    
    
    $
    231,538Liabilities and shareholders equityCurrent liabilities:Accounts payable
    
    $
    10,981
    
    
    $
    15,878Short-term debt
    
    
    24,806
    
    
    
    Payrolls and related liabilities
    
    
    9,265
    
    
    
    7,442Accrued expenses
    
    
    14,937
    
    
    
    12,249Total current liabilities
    
    
    59,989
    
    
    
    35,569Income taxes payable
    
    
    863
    
    
    
    863Retirement benefits
    
    
    9,186
    
    
    
    11,421Postretirement benefits
    
    
    24,994
    
    
    
    24,020Deferred income taxes
    
    
    466
    
    
    
    459Total liabilities
    
    
    95,498
    
    
    
    72,332The Gorman-Rupp Company shareholders equityCommon shares, without par value:Authorized  35,000,000 sharesOutstanding  16,710,535 shares in 2009 and
16,707,535 in 2008 (after deducting treasury
shares of 601,683 in 2009 and 604,683 in
2008)
at stated capital amount
    
    
    5,100
    
    
    
    5,099Retained earnings
    
    
    180,911
    
    
    
    171,312Accumulated other comprehensive loss
    
    
    (14,671
    )
    
    
    (17,823
    )The Gorman-Rupp Company shareholders equity
    
    
    171,340
    
    
    
    158,588Noncontrolling interest
    
    
    703
    
    
    
    618Total shareholders equity
    
    
    172,043
    
    
    
    159,206Total liabilities and shareholders equity
    
    $
    267,541
    
    
    $
    231,538
 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)
 Nine Months EndedSeptember 30,(Thousands of dollars)
    
    2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    14,550
    
    
    $
    22,432Adjustments to reconcile net income attributable to
net cash provided by operating activities:Depreciation and amortization
    
    
    6,288
    
    
    
    5,888Changes in operating assets and liabilities
    
    
    23,038
    
    
    
    (922
    )Net cash provided by operating activities
    
    
    43,876
    
    
    
    27,398Cash flows from investing activities:Capital additions, net
    
    
    (33,838
    )
    
    
    (11,890
    )Proceeds from sale of product line assets
    
    
    1,315
    
    
    
    Change in short-term investments
    
    
    (1,500
    )
    
    
    5,585Net cash used for investing activities
    
    
    (34,023
    )
    
    
    (6,305
    )Cash flows from financing activities:Cash dividends
    
    
    (5,011
    )
    
    
    (5,010
    )Proceeds from unsecured loan agreement
    
    
    24,806
    
    
    
    Net cash provided (used) for financing activities
    
    
    19,795
    
    
    
    (5,010
    )Effect of exchange rate changes on cash
    
    
    795
    
    
    
    (852
    )Net increase in cash
and cash equivalents
    
    
    30,443
    
    
    
    15,231Cash and cash equivalents:Beginning of year
    
    
    23,793
    
    
    
    24,604September 30,
    
    $
    54,236
    
    
    $
    39,835
 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
    The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 (FAS
168)
  6




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PART I
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  CONTINUED
 NOTE B  INVENTORIES
   September 30,
    
    
    December  31,(Thousands of dollars)
    
    2009
    
    
    2008Raw materials and in-process
    
    $
    23,645
    
    
    $
    32,996Finished parts
    
    
    17,936
    
    
    
    20,288Finished products
    
    
    2,380
    
    
    
    3,597Total inventories
    
    $
    43,961
    
    
    $
    56,881
 NOTE C  FINANCING ARRANGEMENTS
   7




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PART I  CONTINUED
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  CONTINUED
 NOTE D  PRODUCT WARRANTIES
  Nine Months EndedSeptember 30,(Thousands of dollars)
    
    2009
    
    
    2008Balance at beginning of year
    
    $
    2,048
    
    
    $
    1,682Warranty costs
    
    
    1,503
    
    
    
    2,357Settlements
    
    
    (1,643
    )
    
    
    (2,112
    )Balance at end of quarter
    
    $
    1,908
    
    
    $
    1,927
 NOTE E  COMPREHENSIVE INCOME
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Thousands of dollars)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    5,177
    
    
    $
    7,385
    
    
    $
    14,550
    
    
    $
    22,432Changes in cumulative
foreign currency
translation adjustments
    
    
    1,242
    
    
    
    (1,379
    )
    
    
    1,740
    
    
    
    (1,489
    )Pension and OPEB adjustments
    
    
    471
    
    
    
    169
    
    
    
    1,412
    
    
    
    145Total comprehensive income
    
    $
    6,890
    
    
    $
    6,175
    
    
    $
    17,702
    
    
    $
    21,088
 NOTE F  INCOME TAXES
      8




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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
    9




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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 BenefitsNine Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Thousands of dollars)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    2,064
    
    
    $
    1,975
    
    
    $
    907
    
    
    $
    894Interest cost
    
    
    2,553
    
    
    
    2,293
    
    
    
    1,181
    
    
    
    1,247Expected return on plan assets
    
    
    (2,652
    )
    
    
    (3,145
    )
    
    
    
    
    
    
    Amortization of loss
    
    
    1,580
    
    
    
    511
    
    
    
    (169
    )
    
    
    Benefit cost
    
    $
    3,545
    
    
    $
    1,634
    
    
    $
    1,919
    
    
    $
    2,141
 NOTE H  FLOOD INSURANCE RECOVERIES
  
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    10




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PART I  CONTINUED
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
 Third Quarter 2009 Compared to Third Quarter 2008
 Net Sales
 Three Months EndedSeptember 30,(Thousands of dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeNet sales
    
    $
    64,096
    
    
    $
    84,188
    
    
    $
    (20,092
    )
    
    
    (23.9
    )%
  Cost of Products Sold
 Three Months EndedSeptember 30,(Thousands of dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeCost of products sold
    
    $
    47,996
    
    
    $
    64,016
    
    
    $
    (16,020
    )
    
    
    (25.0
    )%% of Net sales
    
    
    74.9
    %
    
    
    76.0
    %
  Selling, General, and Administrative Expenses (SG&A)
 Three Months EndedSeptember 30,(Thousands of dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeSelling, general, and
administrative expenses
(SG&A)
    
    $
    8,373
    
    
    $
    9,140
    
    
    $
    (767
    )
    
    
    (8.4
    )%% of Net sales
    
    
    13.1
    %
    
    
    10.9
    %
  11




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PART I  CONTINUED
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
  Other Income
 Three Months EndedSeptember 30,(Thousands of dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeOther income
    
    $
    142
    
    
    $
    440
    
    
    $
    (298
    )
    
    
    (67.7
    )%% of Net sales
    
    
    .2
    %
    
    
    0.5
    %
  Net Income
 Three Months EndedSeptember 30,(Thousands of dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeIncome before income taxes
    
    $
    7,805
    
    
    $
    11,409
    
    
    $
    (3,604
    )
    
    
    (31.6
    )%% of Net sales
    
    
    12.2
    %
    
    
    13.6
    %Income taxes
    
    $
    2,628
    
    
    $
    4,024
    
    
    $
    (1,396
    )
    
    
    (34.7
    )%Effective tax rate
    
    
    33.7
    %
    
    
    35.3
    %Net income
    
    $
    5,177
    
    
    $
    7,385
    
    
    $
    (2,208
    )
    
    
    (29.9
    )%% of Net sales
    
    
    8.1
    %
    
    
    8.8
    %Earnings per share
    
    $
    0.31
    
    
    $
    0.44
    
    
    $
    (0.13
    )
    
    
    (29.5
    )%
 Nine Months 2009 Compared to Nine Months 2008
 Net Sales
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeNet sales
    
    $
    204,039
    
    
    $
    249,653
    
    
    $
    (45,614
    )
    
    
    (18.3
    )%
   12




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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
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeCost of products sold
    
    $
    156,804
    
    
    $
    189,231
    
    
    $
    (32,427
    )
    
    
    (17.1
    )%% of Net sales
    
    
    76.9
    %
    
    
    75.8
    %
  Selling, General, and Administrative Expenses (SG&A)
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeSelling, general, and
administrative expenses
(SG&A)
    
    $
    26,151
    
    
    $
    27,995
    
    
    $
    (1,844
    )
    
    
    (6.6
    )%% of Net sales
    
    
    12.8
    %
    
    
    11.2
    %
  13




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PART I  CONTINUED
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS  CONTINUED
  Other Income
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeOther income
    
    $
    1,051
    
    
    $
    2,003
    
    
    $
    (952
    )
    
    
    (47.5
    )%% of Net sales
    
    
    0.5
    %
    
    
    0.8
    %
  Net Income
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeIncome before income taxes
    
    $
    21,875
    
    
    $
    34,230
    
    
    $
    (12,355
    )
    
    
    (36.1
    )%% of Net sales
    
    
    10.7
    %
    
    
    13.7
    %Income taxes
    
    $
    7,325
    
    
    $
    11,798
    
    
    $
    (4,473
    )
    
    
    (37.9
    )%Effective tax rate
    
    
    33.5
    %
    
    
    34.5
    %Net income
    
    $
    14,550
    
    
    $
    22,432
    
    
    $
    (7,882
    )
    
    
    (35.1
    )%% of Net sales
    
    
    7.1
    %
    
    
    9.0
    %Earnings per share
    
    $
    0.87
    
    
    $
    1.34
    
    
    $
    (0.47
    )
    
    
    (35.1
    )%
 Liquidity and Sources of Capital
 Nine Months EndedSeptember 30,(Thousands of dollars)
    
    2009
    
    
    2008
    
    
    $ ChangeNet cash provided by operating activities
    
    $
    43,876
    
    
    $
    27,398
    
    
    $
    16,478Net cash used for investing activities
    
    
    34,023
    
    
    
    6,305
    
    
    
    27,718Net cash provided by (used for)
financing activities
    
    
    19,795
    
    
    
    (5,010
    )
    
    
    24,805
  14




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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
   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
 (a)
    
    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:  October 27, 2009
    By:
    /s/ Wayne L. KnabelWayne L. KnabelChief Financial Officer  17