##### 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, 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
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
 16,788,535




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##### 



The Gorman-Rupp Company and Subsidiaries
Three and Nine Months September 30, 2010 and 2009
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)
    
       
3Condensed Consolidated Statements of Income  -Three months ended September 30, 2010 and 2009  -Nine months ended September 30, 2010 and 2009
    

    
    3Condensed Consolidated Balance Sheets  -September 30, 2010 and December 31, 2009
    
       
4Condensed Consolidated Statements of Cash Flows  -Nine months ended September 30, 2010 and 2009
    
       
5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
       
13Item 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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##### 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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Thousands of dollars, except per share amounts)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    73,953
    
    
    $
    64,096
    
    
    $
    212,119
    
    
    $
    204,039Cost of products sold
    
    
    55,298
    
    
    
    47,996
    
    
    
    160,729
    
    
    
    156,804Gross profit
    
    
    18,655
    
    
    
    16,100
    
    
    
    51,390
    
    
    
    47,235Selling, general and
administrative expenses
    
    
    9,401
    
    
    
    8,373
    
    
    
    26,535
    
    
    
    26,151Operating income
    
    
    9,254
    
    
    
    7,727
    
    
    
    24,855
    
    
    
    21,084Other income
    
    
    115
    
    
    
    142
    
    
    
    252
    
    
    
    1,051Other expense
    
    
    (112
    )
    
    
    (64
    )
    
    
    (640
    )
    
    
    (260
    )Income before income taxes
    
    
    9,257
    
    
    
    7,805
    
    
    
    24,467
    
    
    
    21,875Income taxes
    
    
    3,102
    
    
    
    2,628
    
    
    
    8,159
    
    
    
    7,325Net income
    
    $
    6,155
    
    
    $
    5,177
    
    
    $
    16,308
    
    
    $
    14,550Earnings per share
    
    $
    0.37
    
    
    $
    0.31
    
    
    $
    0.98
    
    
    $
    0.87Cash dividends paid per share
    
    $
    0.105
    
    
    $
    0.100
    
    
    $
    0.315
    
    
    $
    0.300Weighted average shares outstanding
    
    
    16,688,535
    
    
    
    16,710,535
    
    
    
    16,703,030
    
    
    
    16,708,546
 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)
    
    2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    40,607
    
    
    $
    44,403Short-term investments
    
    
    1,513
    
    
    
    1,505Accounts receivable  net
    
    
    49,644
    
    
    
    37,239Inventories  net
    
    
    39,287
    
    
    
    40,506Deferred income taxes and other current assets
    
    
    5,517
    
    
    
    7,747Total current assets
    
    
    136,568
    
    
    
    131,400Property, plant and equipment
    
    
    210,001
    
    
    
    208,571Less accumulated depreciation
    
    
    102,466
    
    
    
    100,048Property, plant and equipment  net
    
    
    107,535
    
    
    
    108,523Deferred income taxes and other assets
    
    
    10,081
    
    
    
    9,149Total assets
    
    $
    254,184
    
    
    $
    249,072Liabilities and shareholders equityCurrent liabilities:Accounts payable
    
    $
    12,299
    
    
    $
    8,972Short-term debt
    
    
    
    
    
    
    15,000Payroll and related liabilities
    
    
    9,674
    
    
    
    6,909Commissions payable
    
    
    7,975
    
    
    
    4,348Accrued expenses
    
    
    9,615
    
    
    
    7,946Total current liabilities
    
    
    39,563
    
    
    
    43,175Income taxes payable
    
    
    971
    
    
    
    971Retirement benefits
    
    
    1,930
    
    
    
    5,044Postretirement benefits
    
    
    22,982
    
    
    
    22,270Total liabilities
    
    
    65,446
    
    
    
    71,460The Gorman-Rupp Company shareholders equityCommon shares, without par value:Authorized  35,000,000 sharesOutstanding  16,688,535 shares in 2010
and 16,710,535 in 2009 (after deducting
treasury shares of 623,683 in 2010 and
601,683 in 2009) at stated capital amount
    
    
    5,093
    
    
    
    5,100Retained earnings
    
    
    193,354
    
    
    
    182,875Accumulated other comprehensive loss
    
    
    (10,440
    )
    
    
    (11,070
    )The Gorman-Rupp Company shareholders equity
    
    
    188,007
    
    
    
    176,905Noncontrolling interest
    
    
    731
    
    
    
    707Total shareholders equity
    
    
    188,738
    
    
    
    177,612Total liabilities and shareholders equity
    
    $
    254,184
    
    
    $
    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)
 Nine Months EndedSeptember 30,(Thousands of dollars)
    
    2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    16,308
    
    
    $
    14,550Adjustments to reconcile net income attributable to
net cash provided by operating activities:Depreciation and amortization
    
    
    7,751
    
    
    
    6,288Changes in operating assets and liabilities:Accounts receivable
    
    
    (12,405
    )
    
    
    8,934Inventories
    
    
    1,219
    
    
    
    11,524Accounts payable
    
    
    3,328
    
    
    
    (4,897
    )Commissions payable
    
    
    3,628
    
    
    
    (100
    )Accrued expenses and other
    
    
    2,796
    
    
    
    7,577Net cash provided by operating activities
    
    
    22,625
    
    
    
    43,876Cash flows from investing activities:Capital additions  net
    
    
    (5,607
    )
    
    
    (33,838
    )Proceeds from sale of product line
    
    
    
    
    
    
    1,315Change in short-term investments
    
    
    (8
    )
    
    
    (1,500
    )Net cash used for investing activities
    
    
    (5,615
    )
    
    
    (34,023
    )Cash flows from financing activities:Cash dividends
    
    
    (5,261
    )
    
    
    (5,011
    )Proceeds from bank borrowings
    
    
    
    
    
    
    24,806Payments to bank for borrowings
    
    
    (15,000
    )
    
    
    Purchase of common shares for treasury  net
    
    
    (574
    )
    
    
    Net cash (used for) provided by financing activities
    
    
    (20,835
    )
    
    
    19,795Effect of exchange rate changes on cash
    
    
    29
    
    
    
    795Net (decrease) increase in cash
and cash equivalents
    
    
    (3,796
    )
    
    
    30,443Cash and cash equivalents:Beginning of year
    
    
    44,403
    
    
    
    23,793September 30,
    
    $
    40,607
    
    
    $
    54,236
 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
   September 30,
    
    
    December 31,(Thousands of dollars)
    
    2010
    
    
    2009Raw materials and in-process
    
    $
    20,314
    
    
    $
    22,087Finished parts
    
    
    16,334
    
    
    
    16,026Finished products
    
    
    2,639
    
    
    
    2,393Total inventories
    
    $
    39,287
    
    
    $
    40,506
  6




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PART I  CONTINUED
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  CONTINUED
 NOTE C  PRODUCT WARRANTIES
  September 30,(Thousands of dollars)
    
    2010
    
    
    2009Balance at beginning of year
    
    $
    1,863
    
    
    $
    2,048Warranty costs accrued
    
    
    754
    
    
    
    1,503Expenses
    
    
    (1,173
    )
    
    
    (1,643
    )Balance at end of period
    
    $
    1,444
    
    
    $
    1,908
 NOTE D  COMPREHENSIVE INCOME
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    6,155
    
    
    $
    5,177
    
    
    $
    16,308
    
    
    $
    14,550Changes in cumulative
foreign currency
translation adjustments
    
    
    1,370
    
    
    
    1,242
    
    
    
    (139
    )
    
    
    1,740Pension and OPEB adjustments
    
    
    254
    
    
    
    471
    
    
    
    769
    
    
    
    1,412Total comprehensive income
attributable to The
Gorman-Rupp Company
    
    $
    7,779
    
    
    $
    6,890
    
    
    $
    16,938
    
    
    $
    17,702
 NOTE E  INCOME TAXES
      7




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




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PART I
 CONTINUED
 ITEM 1.
    
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)  CONTINUED
 NOTE F  PENSION AND OTHER POSTRETIREMENT BENEFITS  CONTINUED
  Pension Benefits
    
    
    Postretirement BenefitsNine Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    2,041
    
    
    $
    2,064
    
    
    $
    829
    
    
    $
    907Interest cost
    
    
    2,366
    
    
    
    2,553
    
    
    
    943
    
    
    
    1,181Expected return on plan assets
    
    
    (3,321
    )
    
    
    (2,652
    )
    
    
    
    
    
    
    Unrecognized actuarial (gain) loss
    
    
    1,182
    
    
    
    1,580
    
    
    
    (428
    )
    
    
    (169
    )Recognized actuarial (gain) loss
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    Benefit cost
    
    $
    2,268
    
    
    $
    3,545
    
    
    $
    1,342
    
    
    $
    1,919
 NOTE G
 SUBSEQUENT EVENT
   
 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
  Third Quarter 2010 Compared to Third Quarter 2009
 Net Sales
 Three Months EndedSeptember 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeNet sales
    
    $
    73,953
    
    
    $
    64,096
    
    
    $
    9,857
    
    
    
    15.4
    %
  Cost of Products Sold
 Three Months EndedSeptember 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeCost of products sold
    
    $
    55,298
    
    
    $
    47,996
    
    
    $
    7,302
    
    
    
    15.2
    %% of Net sales
    
    
    74.8
    %
    
    
    74.9
    %
   10




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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)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeSelling, general and
administrative
expenses (SG&A)
    
    $
    9,401
    
    
    $
    8,373
    
    
    $
    1,028
    
    
    
    12.3
    %% of Net sales
    
    
    12.7
    %
    
    
    13.1
    %
  Net Income
 Three Months EndedSeptember 30,(Thousands of dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeIncome before income taxes
    
    $
    9,257
    
    
    $
    7,805
    
    
    $
    1,452
    
    
    
    18.6
    %% of Net sales
    
    
    12.5
    %
    
    
    12.2
    %Income taxes
    
    $
    3,102
    
    
    $
    2,628
    
    
    $
    474
    
    
    
    18.0
    %Effective tax rate
    
    
    33.5
    %
    
    
    33.7
    %Net income
    
    $
    6,155
    
    
    $
    5,177
    
    
    $
    978
    
    
    
    18.9
    %% of Net sales
    
    
    8.3
    %
    
    
    8.1
    %Earnings per share
    
    $
    0.37
    
    
    $
    0.31
    
    
    $
    0.06
    
    
    
    19.4
    %
 Nine Months 2010 Compared to Nine Months 2009
 Net Sales
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeNet sales
    
    $
    212,119
    
    
    $
    204,039
    
    
    $
    8,080
    
    
    
    4.0
    %
 
  11




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##### Table of Contents



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)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeCost of products sold
    
    $
    160,729
    
    
    $
    156,804
    
    
    $
    3,925
    
    
    
    2.5
    %% of Net sales
    
    
    75.8
    %
    
    
    76.9
    %
  Selling, General, and Administrative Expenses (SG&A)
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeSelling, general, and
administrative
expenses (SG&A)
    
    $
    26,535
    
    
    $
    26,151
    
    
    $
    384
    
    
    
    1.5
    %% of Net sales
    
    
    12.5
    %
    
    
    12.8
    %
   12




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##### Table of Contents



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)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeOther income
    
    $
    252
    
    
    $
    1,051
    
    
    $
    (799
    )
    
    
    (76.0
    )%% of Net sales
    
    
    0.1
    %
    
    
    0.5
    %
  Other Expense
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeOther expense
    
    $
    640
    
    
    $
    260
    
    
    $
    380
    
    
    
    146.2
    %% of Net sales
    
    
    0.3
    %
    
    
    0.1
    %
  Net Income
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeIncome before income taxes
    
    $
    24,467
    
    
    $
    21,875
    
    
    $
    2,592
    
    
    
    11.8
    %% of Net sales
    
    
    11.5
    %
    
    
    10.7
    %Income taxes
    
    $
    8,159
    
    
    $
    7,325
    
    
    $
    834
    
    
    
    11.4
    %Effective tax rate
    
    
    33.3
    %
    
    
    33.5
    %Net income
    
    $
    16,308
    
    
    $
    14,550
    
    
    $
    1,758
    
    
    
    12.1
    %% of Net sales
    
    
    7.7
    %
    
    
    7.1
    %Earnings per share
    
    $
    0.98
    
    
    $
    0.87
    
    
    $
    0.11
    
    
    
    12.6
    %
  13




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##### Table of Contents



PART I  CONTINUED
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS  CONTINUED
 Liquidity and Capital Resources
 Nine Months EndedSeptember 30,(Thousands of dollars)
    
    2010
    
    
    2009Net cash provided by operating activities
    
    $
    22,625
    
    
    $
    43,876Net cash used for investing activities
    
    
    (5,615
    )
    
    
    (34,023
    )Net cash (used for) provided by financing activities
    
    
    (20,835
    )
    
    
    19,795
     Critical Accounting Policies
 Managements Discussion and Analysis of
Financial Condition and Results of Operations
  14




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##### Table of Contents



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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##### Table of Contents



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: November 3, 2010By:
    
    /s/ Wayne L. KnabelWayne L. KnabelChief Financial Officer
  17