##### 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, 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.)305 Bowman Street, Mansfield, Ohio
    
    44903(Address of principal executive offices)
    
    (Zip Code)
 (419) 755-1011
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ
 16,707,535




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##### 



The Gorman-Rupp Company and Subsidiaries
Three and Six Months Ended June 30, 2009 and 2008
 PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements (Unaudited)
    
    
    3Condensed Consolidated Statements of Income
-Three months ended June 30, 2009 and 2008
-Six months ended June 30, 2009 and 2008
    
    
    3Condensed Consolidated Balance Sheets
-June 30, 2009 and December 31, 2008
    
    
    4Condensed Consolidated Statements of Cash Flows
-Six months ended June 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 INFORMATION
    
    
    16Item 1. Legal Proceedings
    
    
    16Item 1A. Risk Factors
    
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    
    16Item 6. Exhibits
    
    
    17EX-3 Articles of Incorporation and By-lawsEX-4 Instruments Defining the Rights of Security Holders, including IndenturesEX-10 Material ContractsEX-31.1 302 Principal Executive Officer (PEO) CertificationEX-31.2 302 Principal Financial Officer (PFO) CertificationEX-32 Section 1350 CertificationsEX-31.1EX-31.2EX-32
  2




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##### Table of Contents



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)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    68,345
    
    
    $
    84,031
    
    
    $
    139,943
    
    
    $
    165,465Cost of products sold
    
    
    52,555
    
    
    
    63,625
    
    
    
    108,808
    
    
    
    125,215Gross profit
    
    
    15,790
    
    
    
    20,406
    
    
    
    31,135
    
    
    
    40,250Selling, general and
administrative expenses
    
    
    8,790
    
    
    
    9,356
    
    
    
    17,778
    
    
    
    18,855Operating income
    
    
    7,000
    
    
    
    11,050
    
    
    
    13,357
    
    
    
    21,395Other income
    
    
    144
    
    
    
    947
    
    
    
    909
    
    
    
    1,563Other expense
    
    
    58
    
    
    
    (64
    )
    
    
    (196
    )
    
    
    (137
    )Income before income taxes
    
    
    7,202
    
    
    
    11,933
    
    
    
    14,070
    
    
    
    22,821Income taxes
    
    
    2,335
    
    
    
    4,038
    
    
    
    4,697
    
    
    
    7,774Net income
    
    $
    4,867
    
    
    $
    7,895
    
    
    $
    9,373
    
    
    $
    15,047Basic and diluted
earnings per share
    
    $
    0.29
    
    
    $
    0.47
    
    
    $
    0.56
    
    
    $
    0.90Dividends paid per share
    
    $
    0.10
    
    
    $
    0.10
    
    
    $
    0.20
    
    
    $
    0.20Average shares outstanding
    
    
    16,707,535
    
    
    
    16,703,035
    
    
    
    16,707,535
    
    
    
    16,703,035
 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)
    
    2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    42,709
    
    
    $
    23,793Accounts receivable  net
    
    
    41,307
    
    
    
    48,200Inventories  net
    
    
    46,499
    
    
    
    56,881Deferred income taxes and other current assets
    
    
    2,364
    
    
    
    5,392Total current assets
    
    
    132,879
    
    
    
    134,266Property, plant and equipment
    
    
    200,690
    
    
    
    178,030Less allowances for depreciation
    
    
    100,871
    
    
    
    97,624Property, plant and equipment  net
    
    
    99,819
    
    
    
    80,406Deferred income taxes and other assets
    
    
    16,802
    
    
    
    16,866Total assets
    
    $
    249,500
    
    
    $
    231,538Liabilities and shareholders equityCurrent liabilities:Accounts payable
    
    $
    9,534
    
    
    $
    15,878Short-term debt
    
    
    16,834
    
    
    
    Payrolls and related liabilities
    
    
    7,679
    
    
    
    7,442Accrued expenses
    
    
    13,032
    
    
    
    12,249Total current liabilities
    
    
    47,079
    
    
    
    35,569Income taxes payable
    
    
    863
    
    
    
    863Retirement benefits
    
    
    9,731
    
    
    
    11,421Postretirement benefits
    
    
    24,639
    
    
    
    24,020Deferred income taxes
    
    
    461
    
    
    
    459Total liabilities
    
    
    82,773
    
    
    
    72,332The Gorman-Rupp Company shareholders equity
Common shares, without par value:Authorized  35,000,000 sharesOutstanding  16,707,535 shares in 2009 and
2008 (after deducting treasury shares of
604,683 in 2009 and 2008) at
stated capital amount
    
    
    5,099
    
    
    
    5,099Retained earnings
    
    
    177,345
    
    
    
    171,312Accumulated other comprehensive loss
    
    
    (16,384
    )
    
    
    (17,823
    )The Gorman-Rupp Company shareholders equity
    
    
    166,060
    
    
    
    158,588Noncontrolling interest
    
    
    667
    
    
    
    618Total shareholders equity
    
    
    166,727
    
    
    
    159,206Total liabilities and shareholders equity
    
    $
    249,500
    
    
    $
    231,538
 See notes to condensed consolidated financial statements.
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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Six Months EndedJune 30,(Thousands of dollars)
    
    2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    9,373
    
    
    $
    15,047Adjustments to reconcile net income attributable to
net cash provided by operating activities:Depreciation and amortization
    
    
    4,236
    
    
    
    3,882Changes in operating assets and liabilities
    
    
    13,538
    
    
    
    (3,411
    )Net cash provided by operating activities
    
    
    27,147
    
    
    
    15,518Cash flows from investing activities:Capital additions, net
    
    
    (23,204
    )
    
    
    (5,232
    )Proceeds from sale of product line assets
    
    
    1,210
    
    
    
    Change in short-term investments
    
    
    
    
    
    
    (838
    )Net cash used for investing activities
    
    
    (21,994
    )
    
    
    (6,070
    )Cash flows from financing activities:Cash dividends
    
    
    (3,342
    )
    
    
    (3,341
    )Proceeds from unsecured loan agreement
    
    
    16,834
    
    
    
    Net cash provided (used) for financing activities
    
    
    13,492
    
    
    
    (3,341
    )Effect of exchange rate changes on cash
    
    
    271
    
    
    
    (51
    )Net increase in cash
and cash equivalents
    
    
    18,916
    
    
    
    6,056Cash and cash equivalents:Beginning of year
    
    
    23,793
    
    
    
    24,604June 30,
    
    $
    42,709
    
    
    $
    30,660
 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
 Business Combinations (FAS 141(R)).
 Interests in Consolidated Financial
Statements (FAS 160), an amendment of Accounting Research Bulletin No. 51, Consolidated Financial
Statements (ARB 51)
 Employers Disclosures about Postretirement Benefit
Plan Asset (FAS 132(R)-1). Fair Value Measurements
 6




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PART I  CONTINUED
 ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  CONTINUED
 NOTE A  BASIS OF PRESENTATION OF FINANCIAL STATEMENTS  CONTINUED
 Subsequent Events FAS 165
 The FASB Accounting Standards Codification TM and the
Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 (FAS
168)
 NOTE B  INVENTORIES
   June 30,
    
    December 31,(Thousands of dollars)
    
    2009
    
    2008Raw materials and in-process
    
    $
    26,392
    
    
    $
    32,996Finished parts
    
    
    17,686
    
    
    
    20,288Finished products
    
    
    2,421
    
    
    
    3,597Total inventories
    
    $
    46,499
    
    
    $
    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
  Six Months EndedJune 30,(Thousands of dollars)
    
    2009
    
    2008Balance at beginning of year
    
    $
    2,048
    
    
    $
    1,682Warranty costs
    
    
    1,323
    
    
    
    1,522Settlements
    
    
    (1,299
    )
    
    
    (1,374
    )Balance at end of quarter
    
    $
    2,072
    
    
    $
    1,830
 NOTE E  COMPREHENSIVE INCOME
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(Thousands of dollars)
    
    2009
    
    2008
    
    2009
    
    2008Net income
    
    $
    4,867
    
    
    $
    7,895
    
    
    $
    9,373
    
    
    $
    15,047Changes in cumulative
foreign currency
translation adjustments
    
    
    1,179
    
    
    
    38
    
    
    
    498
    
    
    
    (110
    )Pension and OPEB adjustments
    
    
    470
    
    
    
    170
    
    
    
    941
    
    
    
    (24
    )Total comprehensive income
    
    $
    6,516
    
    
    $
    8,103
    
    
    $
    10,812
    
    
    $
    14,913
 NOTE F  INCOME TAXES
 Accounting for Uncertainty in Income
Taxes, Accounting for 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 BenefitsSix Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(Thousands of dollars)
    
    2009
    
    2008
    
    2009
    
    2008Service cost
    
    $
    1,376
    
    
    $
    1,317
    
    
    $
    605
    
    
    $
    596Interest cost
    
    
    1,702
    
    
    
    1,529
    
    
    
    787
    
    
    
    831Expected return on plan assets
    
    
    (1,768
    )
    
    
    (2,097
    )
    
    
    
    
    
    
    Amortization of loss
    
    
    1,053
    
    
    
    340
    
    
    
    (113
    )
    
    
    Benefit cost
    
    $
    2,363
    
    
    $
    1,089
    
    
    $
    1,279
    
    
    $
    1,427
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Second Quarter 2009 Compared to Second Quarter 2008
 Net Sales
 Three Months EndedJune 30,(Thousands of dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeNet sales
    
    $
    68,345
    
    
    $
    84,031
    
    
    $
    (15,686
    )
    
    
    (18.7
    )%
  10




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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
 Three Months EndedJune 30,(Thousands of dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeCost of products sold
    
    $
    52,555
    
    
    $
    63,625
    
    
    $
    (11,070
    )
    
    
    (17.4
    )%% of Net sales
    
    
    76.9
    %
    
    
    75.7
    %
  Selling, General, and Administrative Expenses (SG&A)
 Three Months EndedJune 30,(Thousands of dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeSelling, general, and
administrative
expenses (SG&A)
    
    $
    8,790
    
    
    $
    9,356
    
    
    $
    (566
    )
    
    
    (6.1
    )%% of Net sales
    
    
    12.9
    %
    
    
    11.1
    %
  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 EndedJune 30,(Thousands of dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeOther income
    
    $
    144
    
    
    $
    947
    
    
    $
    (803
    )
    
    
    (84.8
    )%% of Net sales
    
    
    0.2
    %
    
    
    1.1
    %
  Net Income
 Three Months EndedJune 30,(Thousands of dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    7,202
    
    
    $
    11,933
    
    
    $
    (4,731
    )
    
    
    (39.7
    )%% of Net sales
    
    
    10.5
    %
    
    
    14.2
    %Income taxes
    
    $
    2,335
    
    
    $
    4,038
    
    
    $
    (1,703
    )
    
    
    (42.2
    )%Effective tax rate
    
    
    32.4
    %
    
    
    33.8
    %Net income
    
    $
    4,867
    
    
    $
    7,895
    
    
    $
    3,028
    
    
    
    (38.4
    )%% of Net sales
    
    
    7.1
    %
    
    
    9.4
    %Earnings per share
    
    $
    0.29
    
    
    $
    0.47
    
    
    $
    (0.18
    )
    
    
    (38.3
    )%
 Six Months 2009 Compared to Six Months 2008
 Net Sales
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeNet sales
    
    $
    139,943
    
    
    $
    165,465
    
    
    $
    (25,522
    )
    
    
    (15.4
    )%
   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
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeCost of products sold
    
    $
    108,808
    
    
    $
    125,215
    
    
    $
    (16,407
    )
    
    
    (13.1
    )%% of Net sales
    
    
    77.8
    %
    
    
    75.7
    %
  Selling, General, and Administrative Expenses (SG&A)
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeSelling, general, and
administrative expenses
(SG&A)
    
    $
    17,778
    
    
    $
    18,855
    
    
    $
    (1,077
    )
    
    
    (5.7
    )%% of Net sales
    
    
    12.7
    %
    
    
    11.4
    %
  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
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeOther income
    
    $
    909
    
    
    $
    1,563
    
    
    $
    (654
    )
    
    
    (41.8
    )%% of Net sales
    
    
    0.7
    %
    
    
    0.9
    %
  Net Income
 Six Months EndedJune 30,(Thousands of Dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    14,070
    
    
    $
    22,821
    
    
    $
    (8,751
    )
    
    
    (38.4
    )%% of Net sales
    
    
    10.1
    %
    
    
    13.8
    %Income taxes
    
    $
    4,697
    
    
    $
    7,774
    
    
    $
    (3,077
    )
    
    
    (39.6
    )%Effective tax rate
    
    
    33.4
    %
    
    
    34.1
    %Net income
    
    $
    9,373
    
    
    $
    15,047
    
    
    $
    (5,674
    )
    
    
    (37.7
    )%% of Net sales
    
    
    6.7
    %
    
    
    9.1
    %Earnings per share
    
    $
    0.56
    
    
    $
    0.90
    
    
    $
    (0.34
    )
    
    
    (37.8
    )%
 Liquidity and Sources of Capital
 Six Months EndedJune 30,(Thousands of dollars)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeNet cash provided by operating activities
    
    $
    27,147
    
    
    $
    15,518
    
    
    $
    11,629
    
    
    
    74.9
    %Net cash used for investing activities
    
    
    21,994
    
    
    
    6,070
    
    
    
    15,924
    
    
    
    262.3Net cash provided by (used for)
financing activities
    
    
    13,492
    
    
    
    (3,341
    )
    
    
    16,833
    
    
    
    503.8
  
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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
  Changes in Internal Control Over Financial Reporting
  15




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PART II OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    Fix the number of Directors of the Company at eight and elect eight Directors to hold office
until the next annual meeting of shareholders and until their successors are elected and
qualified.
 Number of votesFor
    
    Abstain/WithheldJames C. Gorman
    
    
    13,872,826
    
    
    
    96,647Jeffrey S. Gorman
    
    
    13,876,103
    
    
    
    93,370M. Ann Harlan
    
    
    13,876,543
    
    
    
    92,930Thomas E. Hoaglin
    
    
    13,770,291
    
    
    
    199,182Christopher H. Lake
    
    
    13,022,859
    
    
    
    946,614Dr. Peter B. Lake
    
    
    13,746,447
    
    
    
    223,026Rick R. Taylor
    
    
    13,885,065
    
    
    
    84,408W. Wayne Walston
    
    
    13,880,728
    
    
    
    88,745
 2.
    
    Ratify the appointment by the Audit Review Committee of the Board of Directors of Ernst &
Young LLP as independent public accountants for the Company during the year ending
December 31, 2009.
 Number of votesFor
    
    Against
    
    Abstain/Withheld13,861,202
    
    
    
    85,252
    
    
    
    23,019
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ITEM 6. EXHIBITS
 (a)
    
    Exhibits
      SIGNATURES
  The Gorman-Rupp Company
(Registrant)Date:  July 28, 2009
    By:
    /s/ Wayne L. KnabelWayne L. KnabelChief Financial Officer 17