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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, 2007
 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)
  þ o
  o þ o
 o þ
     Page 1 of 21 pages




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The Gorman-Rupp Company and Subsidiaries
Three and Nine Months Ended September 30, 2007 and 2006
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Statements of Income-Three months ended September 30, 2007 and 2006-Nine months ended September 30, 2007 and 2006Condensed Consolidated Balance Sheets-September 30, 2007 and December 31, 2006Condensed Consolidated Statements of Cash Flows-Nine months ended September 30, 2007 and 2006Item 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)
 (Thousands of dollars, except per share amounts)
    
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    74,629
    
    
    $
    70,833
    
    
    $
    228,737
    
    
    $
    205,825Cost of products sold
    
    
    58,362
    
    
    
    54,243
    
    
    
    178,306
    
    
    
    158,698Gross Profit
    
    
    16,267
    
    
    
    16,590
    
    
    
    50,431
    
    
    
    47,127Selling, general and
administrative expenses
    
    
    8,342
    
    
    
    8,179
    
    
    
    25,068
    
    
    
    23,928Operating Income
    
    
    7,925
    
    
    
    8,411
    
    
    
    25,363
    
    
    
    23,199Other income
    
    
    575
    
    
    
    387
    
    
    
    1,643
    
    
    
    1,041Other expense
    
    
    (68
    )
    
    
    (26
    )
    
    
    (93
    )
    
    
    (37
    )Income Before Income Taxes
    
    
    8,432
    
    
    
    8,772
    
    
    
    26,913
    
    
    
    24,203Income taxes
    
    
    2,957
    
    
    
    2,160
    
    
    
    9,808
    
    
    
    7,554Net Income
    
    $
    5,475
    
    
    $
    6,612
    
    
    $
    17,105
    
    
    $
    16,649Basic and Diluted
Earnings Per Share
    
    $
    0.41
    
    
    $
    0.50
    
    
    $
    1.28
    
    
    $
    1.25Dividends Paid Per Share
    
    $
    0.120
    
    
    $
    0.112
    
    
    $
    0.360
    
    
    $
    0.336Average Shares Outstanding
    
    
    13,363,004
    
    
    
    13,360,004
    
    
    
    13,361,015
    
    
    
    13,357,518
 See notes to condensed consolidated financial statements.
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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 Unaudited(Thousands of dollars)
    
    September 30,
    
    
    December 31,2007
    
    
    2006AssetsCurrent Assets:Cash and cash equivalents
    
    $
    23,425
    
    
    $
    12,654Short-term investments
    
    
    5,581
    
    
    
    4,201Accounts receivable  net
    
    
    47,121
    
    
    
    45,135Inventories  net
    
    
    50,230
    
    
    
    50,299Deferred income taxes and other current assets
    
    
    8,116
    
    
    
    7,829Total Current Assets
    
    
    134,473
    
    
    
    120,118Property, plant and equipment
    
    
    151,730
    
    
    
    141,901Less allowances for depreciation
    
    
    95,440
    
    
    
    89,550Property, Plant and Equipment  Net
    
    
    56,290
    
    
    
    52,351Deferred income taxes and other assets
    
    
    18,035
    
    
    
    15,071Total Assets
    
    $
    208,798
    
    
    $
    187,540Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable
    
    $
    12,444
    
    
    $
    10,417Payrolls and related liabilities
    
    
    4,270
    
    
    
    3,557Accrued expenses
    
    
    18,025
    
    
    
    13,672Total Current Liabilities
    
    
    34,739
    
    
    
    27,646Income taxes payable
    
    
    1,569
    
    
    
    Retirement benefits
    
    
    668
    
    
    
    4,185Postretirement benefits
    
    
    28,547
    
    
    
    27,567Total Liabilities
    
    
    65,523
    
    
    
    59,398Minority Interest
    
    
    523
    
    
    
    Shareholders EquityCommon shares, without par value:Authorized - 35,000,000 shares in 2007
and 14,000,000 in 2006;Outstanding - 13,363,004 shares in 2007 and
13,360,004 in 2006 (after deducting treasury
shares of 487,347 in 2007 and 490,347
in 2006) at stated capital amount
    
    
 5,098
    
    
    
    5,097Retained earnings
    
    
    147,407
    
    
    
    135,268Accumulated other comprehensive loss
    
    
    (9,753
    )
    
    
    (12,223
    )Total Shareholders Equity
    
    
    142,752
    
    
    
    128,142Total Liabilities and Shareholders Equity
    
    $
    208,798
    
    
    $
    187,540
 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)
    
    Nine Months EndedSeptember 30,2007
    
    
    2006Cash Flows From Operating Activities:Net income
    
    $
    17,105
    
    
    $
    16,649Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    5,474
    
    
    
    4,991Changes in operating assets and liabilities
    
    
    5,119
    
    
    
    (2,217
    )Net Cash Provided by Operating Activities
    
    
    27,698
    
    
    
    19,423Cash Flows From Investing Activities:Capital additions, net
    
    
    (8,151
    )
    
    
    (4,485
    )Change in short-term investments
    
    
    (1,380
    )
    
    
    (2,553
    )Payment for acquisition, net of cash acquired
    
    
    (3,693
    )
    
    
    Net Cash Used for Investing Activities
    
    
    (13,224
    )
    
    
    (7,038
    )Cash Flows From Financing Activities:Net Cash Used for Financing Activities, cash dividends
    
    
    (4,810
    )
    
    
    (4,488
    )Effect of exchange rate changes on cash
    
    
    1,107
    
    
    
    240Net Increase in Cash
and Cash Equivalents
    
    
    10,771
    
    
    
    8,137Cash and Cash Equivalents:Beginning of year
    
    
    12,654
    
    
    
    6,755September 30,
    
    $
    23,425
    
    
    $
    14,892
 See notes to condensed consolidated financial statements.
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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
   (Thousands of dollars)
    
    September 30,
    
    
    December 31,2007
    
    
    2006Raw materials and in-process
    
    $
    26,157
    
    
    $
    22,423Finished parts
    
    
    21,145
    
    
    
    23,491Finished products
    
    
    2,928
    
    
    
    4,385Total inventories
    
    $
    50,230
    
    
    $
    50,299
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PART I  CONTINUED
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  CONTINUED
 NOTE C  PRODUCT WARRANTIES
  (Thousands of dollars)
    
    Nine Months EndedSeptember 30,2007
    
    
    2006Balance at beginning of year
    
    $
    1,216
    
    
    $
    1,277Warranty costs
    
    
    2,253
    
    
    
    1,508Settlements
    
    
    (1,910
    )
    
    
    (1,456
    )Balance at end of quarter
    
    $
    1,559
    
    
    $
    1,329
 NOTE D  COMPREHENSIVE INCOME
  (Thousands of dollars)
    
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    5,475
    
    
    $
    6,612
    
    
    $
    17,105
    
    
    $
    16,649Changes in cumulative
foreign currency
translation adjustment
    
    
    1,096
    
    
    
    (89
    )
    
    
    2,049
    
    
    
    19Pension benefit adjustments
    
    
    140
    
    
    
    
    
    
    
    421
    
    
    
    Total comprehensive income
    
    $
    6,711
    
    
    $
    6,523
    
    
    $
    19,575
    
    
    $
    16,668
 NOTE E  INCOME TAXES
 Accounting for Uncertainty in Income
Taxes Accounting for Contingencies Accounting for Income Taxes
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PART I  CONTINUED
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  CONTINUED
      NOTE F  PENSION AND OTHER POSTRETIREMENT BENEFITS
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PART I  CONTINUED
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  CONTINUED
  Pension Benefits
    
    
    Postretirement Benefits(Thousands of dollars)
    
    Nine Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Service cost
    
    $
    1,859
    
    
    $
    1,677
    
    
    $
    939
    
    
    $
    894Interest cost
    
    
    2,012
    
    
    
    1,872
    
    
    
    1,207
    
    
    
    1,282Expected return on plan assets
    
    
    (2,564
    )
    
    
    (2,143
    )
    
    
    
    
    
    
    Amortization of loss
    
    
    691
    
    
    
    768
    
    
    
    
    
    
    
    197Benefit cost
    
    $
    1,998
    
    
    $
    2,174
    
    
    $
    2,146
    
    
    $
    2,373
 NOTE G
 ACQUISITIONS
 
 NOTE H
 FLOOD INSURANCE RECOVERIES
 Accounting for Contingencies, Accounting for Involuntary Conversions of Nonmonetary Assets to Monetary Assets.
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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PART I
 CONTINUED
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS  CONTINUED
  Third Quarter 2007 Compared to Third Quarter 2006
 Net Sales
 (Thousands of Dollars)
    
    Three Months EndedSeptember 30,2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeNet sales
    
    $
    74,629
    
    
    $
    70,833
    
    
    $
    3,796
    
    
    
    5.4
    %
  Cost of Products Sold
 (Thousands of Dollars)
    
    Three Months EndedSeptember 30,2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeCost of products sold
    
    $
    58,362
    
    
    $
    54,243
    
    
    $
    4,119
    
    
    
    7.6
    %% of Net sales
    
    
    78.2
    %
    
    
    76.6
    %
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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)
 (Thousands of Dollars)
    
    Three Months EndedSeptember 30,2007
    
    2006
    
    $ Change
    
    % ChangeSelling, general, and
administrative expenses (SG&A)
      
    $
    8,342
    
    
    $
    8,179
    
    
    $
    163
    
    
    
    2.0
    %% of Net sales
    
    
    11.2
    %
    
    
    11.5
    %
  Other Income
 (Thousands of Dollars)
    
    Three Months EndedSeptember 30,2007
    
    2006
    
    $ Change
    
    % ChangeOther income
    
    $
    575
    
    
    $
    387
    
    
    $
    188
    
    
    
    48.6
    %% of Net sales
    
    
    0.8
    %
    
    
    0.5
    %
  Net Income
 (Thousands of Dollars)
    
    Three Months EndedSeptember 30,2007
    
    2006
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    8,432
    
    
    $
    8,772
    
    
    $
    (340
    )
    
    
    (3.9
    )%% of Net sales
    
    
    11.3
    %
    
    
    12.4
    %Income taxes
    
    $
    2,957
    
    
    $
    2,160
    
    
    $
    797
    
    
    
    36.9
    %Effective tax rate
    
    
    35.1
    %
    
    
    24.6
    %Net income
    
    $
    5,475
    
    
    $
    6,612
    
    
    $
    (1,137
    )
    
    
    (17.2
    )%% of Net sales
    
    
    7.3
    %
    
    
    9.3
    %Earnings per share
    
    $
    0.41
    
    
    $
    0.50
    
    
    $
    (0.09
    )
    
    
    (18.0
    )%
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PART I  CONTINUED
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
  Nine Months 2007 Compared to Nine Months 2006
 Net Sales
 (Thousands of Dollars)
    
    Nine Months EndedSeptember 30,2007
    
    2006
    
    $ Change
    
    % ChangeNet sales
    
    $
    228,737
    
    
    $
    205,825
    
    
    $
    22,912
    
    
    
    11.1
    %
   Cost of Products Sold
 (Thousands of Dollars)
    
    Nine Months EndedSeptember 30,2007
    
    2006
    
    $ Change
    
    % ChangeCost of products sold
    
    $
    178,306
    
    
    $
    158,698
    
    
    $
    19,608
    
    
    
    12.4
    %% of Net sales
    
    
    78.0
    %
    
    
    77.1
    %
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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)
 (Thousands of Dollars)
    
    Nine Months EndedSeptember 30,2007
    
    2006
    
    $ Change
    
    % ChangeSelling, general, and
administrative expenses (SG&A)
    
    $
    25,068
    
    
    $
    23,928
    
    
    $
    1,140
    
    
    
    4.8
    %% of Net sales
    
    
    11.0
    %
    
    
    11.6
    %
  Other Income
 (Thousands of Dollars)
    
    Nine Months EndedSeptember 30,2007
    
    2006
    
    $ Change
    
    % ChangeOther income
    
    $
    1,643
    
    
    $
    1,041
    
    
    $
    602
    
    
    
    57.8
    %% of Net sales
    
    
    0.7
    %
    
    
    0.5
    %
  Net Income
 (Thousands of Dollars)
    
    Nine Months EndedSeptember 30,2007
    
    2006
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    26,913
    
    
    $
    24,203
    
    
    $
    2,710
    
    
    
    11.2
    %% of Net sales
    
    
    11.8
    %
    
    
    11.8
    %Income taxes
    
    $
    9,808
    
    
    $
    7,554
    
    
    $
    2,254
    
    
    
    29.8
    %Effective tax rate
    
    
    36.4
    %
    
    
    31.2
    %Net income
    
    $
    17,105
    
    
    $
    16,649
    
    
    $
    456
    
    
    
    2.7
    %% of Net sales
    
    
    7.5
    %
    
    
    8.1
    %Earnings per share
    
    $
    1.28
    
    
    $
    1.25
    
    
    $
    0.03
    
    
    
    2.4
    %
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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
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PART I  CONTINUED
 
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  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
      
 SIGNATURES
  The Gorman-Rupp Company(Registrant)Date: November 2, 2007
 By:
    /s/Judith L. SovineJudith L. SovineCorporate Treasurer By:
    /s/Robert E. KirkendallRobert E. KirkendallSenior Vice President and
Chief Financial Officer 16