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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, 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
 þ o
  o þ o
 o þ
 10,688,697




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##### Table of Contents



The Gorman-Rupp Company and Subsidiaries
Three and Nine Months Ended September 30, 2006 and 2005
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Statements of Income
-Three months ended September 30, 2006 and 2005
-Nine months ended September 30, 2006 and 2005Condensed Consolidated Balance Sheets
-September 30, 2006 and December 31, 2005Condensed Consolidated Statements of Cash Flows
-Nine months ended September 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 CertificationsEX-31.1EX-31.2EX-32
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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)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    70,833
    
    
    $
    58,980
    
    
    $
    205,825
    
    
    $
    167,126Cost of products sold
    
    
    54,243
    
    
    
    47,610
    
    
    
    158,698
    
    
    
    133,565Gross Profit
    
    
    16,590
    
    
    
    11,370
    
    
    
    47,127
    
    
    
    33,561Selling, general and
administrative expenses
    
    
    8,179
    
    
    
    7,127
    
    
    
    23,928
    
    
    
    21,832Operating Income
    
    
    8,411
    
    
    
    4,243
    
    
    
    23,199
    
    
    
    11,729Other income
    
    
    387
    
    
    
    192
    
    
    
    1,041
    
    
    
    682Other expense
    
    
    (26
    )
    
    
    (189
    )
    
    
    (37
    )
    
    
    (243
    )Income Before Income Taxes
    
    
    8,772
    
    
    
    4,246
    
    
    
    24,203
    
    
    
    12,168Income taxes
    
    
    2,160
    
    
    
    1,571
    
    
    
    7,554
    
    
    
    4,502Net Income
    
    $
    6,612
    
    
    $
    2,675
    
    
    $
    16,649
    
    
    $
    7,666Basic and Diluted
Earnings Per Share
    
    $
    0.62
    
    
    $
    0.25
    
    
    $
    1.56
    
    
    $
    0.72Dividends Paid Per Share
    
    $
    0.140
    
    
    $
    0.140
    
    
    $
    0.420
    
    
    $
    0.420Average number of shares outstanding
    
    
    10,688,697
    
    
    
    10,685,697
    
    
    
    10,686,708
    
    
    
    10,683,708
 See notes to condensed consolidated financial statements.
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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 September 30,
    
    
    December 31,(Thousands of dollars)
    
    2006
    
    
    2005AssetsCurrent Assets:Cash and cash equivalents
    
    $
    14,892
    
    
    $
    6,755Short-term investments
    
    
    7,339
    
    
    
    4,785Accounts receivable  net
    
    
    45,324
    
    
    
    41,473Inventories  net
    
    
    50,834
    
    
    
    52,403Income taxes
    
    
    1,683
    
    
    
    Deferred income taxes and other current assets
    
    
    5,500
    
    
    
    5,085Total Current Assets
    
    
    125,572
    
    
    
    110,501Property, plant and equipment
    
    
    139,401
    
    
    
    136,629Less allowances for depreciation
    
    
    88,219
    
    
    
    85,124Property, Plant and Equipment  Net
    
    
    51,182
    
    
    
    51,505Other assets
    
    
    17,474
    
    
    
    17,535Total Assets
    
    $
    194,228
    
    
    $
    179,541Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable
    
    $
    9,293
    
    
    $
    9,835Payrolls and related liabilities
    
    
    4,000
    
    
    
    3,781Accrued expenses
    
    
    16,449
    
    
    
    13,782Income taxes
    
    
    
    
    
    
    821Total Current Liabilities
    
    
    29,742
    
    
    
    28,219Postretirement Benefits
    
    
    24,164
    
    
    
    23,255Deferred Income Taxes
    
    
    1,014
    
    
    
    1,019Shareholders EquityCommon shares, without par value:Authorized - 14,000,000 shares;Outstanding - 10,688,697 shares in 2006 and
10,685,697 shares in 2005 (after deducting treasury
shares of 392,278 in 2006 and 395,278 in 2005)
at stated capital amount
    
    
    5,096
    
    
    
    5,095Retained earnings
    
    
    134,483
    
    
    
    122,243Accumulated other comprehensive loss
    
    
    (271
    )
    
    
    (290
    )Total Shareholders Equity
    
    
    139,308
    
    
    
    127,048Total Liabilities and Shareholders Equity
    
    $
    194,228
    
    
    $
    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)
 Nine Months EndedSeptember 30,(Thousands of dollars)
    
    2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    16,649
    
    
    $
    7,666Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    4,991
    
    
    
    5,105Changes in operating assets and liabilities
    
    
    (2,217
    )
    
    
    (7,633
    )Net cash provided by operating activities
    
    
    19,423
    
    
    
    5,138Cash flows from investing activities:Capital additions, net
    
    
    (4,485
    )
    
    
    (2,204
    )Purchases of short-term investments
    
    
    (2,553
    )
    
    
    (1,002
    )Payment for acquisition
    
    
    
    
    
    
    (1,331
    )Net cash used for investing activities
    
    
    (7,038
    )
    
    
    (4,537
    )Cash flows from financing activities:Cash dividends
    
    
    (4,488
    )
    
    
    (4,487
    )Net cash used for financing activities
    
    
    (4,488
    )
    
    
    (4,487
    )Effect of exchange rate changes on cash
    
    
    240
    
    
    
    134Net increase (decrease) in cash
and cash equivalents
    
    
    8,137
    
    
    
    (3,752
    )Cash and cash equivalents:Beginning of year
    
    
    6,755
    
    
    
    16,202September 30,
    
    $
    14,892
    
    
    $
    12,450
 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
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PART I  CONTINUED
 ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  CONTINUED
 NOTE B  INVENTORIES
   September 30,
    
    December 31,(Thousands of dollars)
    
    2006
    
    2005Raw materials and in-process
    
    $
    24,369
    
    
    $
    29,187Finished parts
    
    
    22,942
    
    
    
    21,883Finished products
    
    
    3,523
    
    
    
    1,333Total inventories
    
    $
    50,834
    
    
    $
    52,403
 NOTE C  PRODUCT WARRANTIES
  Nine Months EndedSeptember 30,(Thousands of dollars)
    
    2006
    
    2005Balance at beginning of year
    
    $
    1,277
    
    
    $
    829Warranty costs
    
    
    1,508
    
    
    
    987Settlements
    
    
    (1,456
    )
    
    
    (965
    )Balance at end of quarter
    
    $
    1,329
    
    
    $
    851
 NOTE D  INCOME TAXES
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PART I  CONTINUED
 ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  CONTINUED
 NOTE E  COMPREHENSIVE INCOME
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(Thousands of dollars)
    
    2006
    
    2005
    
    2006
    
    2005Net income
    
    $
    6,612
    
    
    $
    2,675
    
    
    $
    16,649
    
    
    $
    7,666Changes in cumulative
foreign currency
translation adjustment
    
    
    (89
    )
    
    
    772
    
    
    
    19
    
    
    
    286Comprehensive income
    
    $
    6,523
    
    
    $
    3,447
    
    
    $
    16,668
    
    
    $
    7,952
 NOTE F  PENSION AND OTHER POSTRETIREMENT BENEFITS
   Pension Benefits
    
    Postretirement BenefitsNine Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(Thousands of dollars)
    
    2006
    
    2005
    
    2006
    
    2005Service cost
    
    $
    1,677
    
    
    $
    1,455
    
    
    $
    894
    
    
    $
    788Interest cost
    
    
    1,872
    
    
    
    1,663
    
    
    
    1,282
    
    
    
    1,331Expected return on plan assets
    
    
    (2,143
    )
    
    
    (1,828
    )
    
    
    
    
    
    
    Amortization of prior service cost
and unrecognized (gain)/loss
    
    
    768
    
    
    
    507
    
    
    
    
    
    
    
    Recognized net actuarial (gain)/loss
    
    
    
    
    
    
    
    
    
    
    197
    
    
    
    223Benefit cost
    
    $
    2,174
    
    
    $
    1,797
    
    
    $
    2,373
    
    
    $
    2,342
 NOTE G
 SUBSEQUENT EVENT
  8




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PART I  CONTINUED
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
   Third Quarter 2006 Compared to Third Quarter 2005
 Net Sales
 Three Months EndedSeptember 30,(Thousands of Dollars)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeNet Sales
    
    $
    70,833
    
    
    $
    58,980
    
    
    $
    11,853
    
    
    
    20.1
    %
  Cost of Products Sold
 Three Months EndedSeptember 30,(Thousands of Dollars)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeCost of Products Sold
    
    $
    54,243
    
    
    $
    47,610
    
    
    $
    6,633
    
    
    
    13.9
    %% of Sales
    
    
    76.6
    %
    
    
    80.7
    %
    
    
    
    
    
    
    (4.1
    )
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PART I  CONTINUED
 ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
  Selling, General, and Administrative Expenses (SG&A)
 Three Months EndedSeptember 30,(Thousands of Dollars)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeSelling, General, and
Administrative Expenses (SG&A)
    
    $
    8,179
    
    
    $
    7,127
    
    
    $
    1,052
    
    
    
    14.8
    %% of Sales
    
    
    11.5
    %
    
    
    12.1
    %
    
    
    
    
    
    
    (0.6
    )
  Net Income
 Three Months EndedSeptember 30,(Thousands of Dollars)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    8,772
    
    
    $
    4,246
    
    
    $
    4,526
    
    
    
    106.6
    %% of Sales
    
    
    12.4
    %
    
    
    7.2
    %
    
    
    
    
    
    
    5.2Income taxes
    
    $
    2,160
    
    
    $
    1,571
    
    
    
    589
    
    
    
    37.5
    %Effective tax rate
    
    
    24.6
    %
    
    
    37.0
    %
    
    
    
    
    
    
    (12.4
    )Net income
    
    $
    6,612
    
    
    $
    2,675
    
    
    
    3,937
    
    
    
    147.2
    %% of Sales
    
    
    9.3
    %
    
    
    4.5
    %
    
    
    
    
    
    
    4.8Earnings per share
    
    $
    0.62
    
    
    $
    0.25
    
    
    $
    0.37
    
    
    
    148.0
    %
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PART I  CONTINUED
 ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
  Nine Months 2006 Compared to Nine Months 2005
 Net Sales
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeNet Sales
    
    $
    205,825
    
    
    $
    167,126
    
    
    $
    38,699
    
    
    
    23.2
    %
  Cost of Products Sold
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeCost of Products Sold
    
    $
    158,698
    
    
    $
    133,565
    
    
    $
    25,133
    
    
    
    18.8
    %% of Sales
    
    
    77.1
    %
    
    
    79.9
    %
    
    
    
    
    
    
    (2.8
    )
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PART I  CONTINUED
 ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
 Selling, General, and Administrative Expenses (SG&A)
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeSelling, General, and
Administrative Expenses (SG&A)
    
    $
    23,928
    
    
    $
    21,832
    
    
    $
    2,096
    
    
    
    9.6
    %% of Sales
    
    
    11.6
    %
    
    
    13.1
    %
    
    
    
    
    
    
    (1.5
    )
  Net Income
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    24,203
    
    
    $
    12,168
    
    
    $
    12,035
    
    
    
    98.9
    %% of Sales
    
    
    11.8
    %
    
    
    7.3
    %
    
    
    
    
    
    
    4.5Income taxes
    
    $
    7,554
    
    
    $
    4,502
    
    
    
    3,052
    
    
    
    67.8
    %Effective tax rate
    
    
    31.2
    %
    
    
    37.0
    %
    
    
    
    
    
    
    (5.8
    )Net income
    
    $
    16,649
    
    
    $
    7,666
    
    
    
    8.983
    
    
    
    117.2
    %% of Sales
    
    
    8.1
    %
    
    
    4.6
    %
    
    
    
    
    
    
    3.5Earnings per share
    
    $
    1.56
    
    
    $
    0.72
    
    
    $
    0.84
    
    
    
    116.7
    %
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PART I  CONTINUED
 ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
 Liquidity and Sources of Capital
       
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
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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
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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: November 3, 2006By:
    
    /s/Judith L. SovineJudith L. SovineCorporate TreasurerBy:
    
    /s/Robert E. KirkendallRobert E. KirkendallSenior Vice President andChief Financial Officer
 15