##### 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, 2008
 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
  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 Nine Months Ended September 30, 2008 and 2007
  
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Statements of Income-Three months ended September 30, 2008 and 2007-Nine months ended September 30, 2008 and 2007Condensed Consolidated Balance Sheets-September 30, 2008 and December 31, 2007Condensed Consolidated Statements of Cash Flows-Nine months ended September 30, 2008 and 2007Item 2. Managements Discussion and Analysis of Financial Condition andResults of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPART II. OTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 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-99
Additional ExhibitsEX-31.1EX-31.2EX-32EX-99
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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)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    84,188
    
    
    $
    74,629
    
    
    $
    249,653
    
    
    $
    228,737Cost of products sold
    
    
    64,016
    
    
    
    58,362
    
    
    
    189,231
    
    
    
    178,306Gross profit
    
    
    20,172
    
    
    
    16,267
    
    
    
    60,422
    
    
    
    50,431Selling, general and
administrative expenses
    
    
    9,140
    
    
    
    8,342
    
    
    
    27,995
    
    
    
    25,068Operating income
    
    
    11,032
    
    
    
    7,925
    
    
    
    32,427
    
    
    
    25,363Other income
    
    
    440
    
    
    
    575
    
    
    
    2,003
    
    
    
    1,643Other expense
    
    
    (63
    )
    
    
    (68
    )
    
    
    (200
    )
    
    
    (93
    )Income before income taxes
    
    
    11,409
    
    
    
    8,432
    
    
    
    34,230
    
    
    
    26,913Income taxes
    
    
    4,024
    
    
    
    2,957
    
    
    
    11,798
    
    
    
    9,808Net income
    
    $
    7,385
    
    
    $
    5,475
    
    
    $
    22,432
    
    
    $
    17,105Basic and diluted
earnings per share
    
    $
    0.44
    
    
    $
    0.33
    
    
    $
    1.34
    
    
    $
    1.02Dividends paid per share
    
    $
    0.100
    
    
    $
    0.096
    
    
    $
    0.300
    
    
    $
    0.288Average shares outstanding
    
    
    16,707,187
    
    
    
    16,703,035
    
    
    
    16,704,429
    
    
    
    16,700,549
 Shares outstanding and per share data reflect the 5 for 4 stock split effective December 10, 2007.
See notes to condensed consolidated financial statements.
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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 UnauditedSeptember 30,
    
    
    December 31,(Thousands of dollars)
    
    2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    39,835
    
    
    $
    24,604Short-term investments
    
    
    
    
    
    
    5,586Accounts receivable  net
    
    
    46,652
    
    
    
    47,256Inventories  net
    
    
    56,060
    
    
    
    53,223Deferred income taxes and other current assets
    
    
    3,501
    
    
    
    4,619Total current assets
    
    
    146,048
    
    
    
    135,288Property, plant and equipment
    
    
    164,223
    
    
    
    155,379Less allowances for depreciation
    
    
    97,625
    
    
    
    95,409Property, plant and equipment  net
    
    
    66,598
    
    
    
    59,970Deferred income taxes and other assets
    
    
    19,612
    
    
    
    16,276Total assets
    
    $
    232,258
    
    
    $
    211,534Liabilities and shareholders equityCurrent liabilities:Accounts payable
    
    $
    11,623
    
    
    $
    14,162Payrolls and related liabilities
    
    
    10,862
    
    
    
    7,122Accrued expenses
    
    
    14,462
    
    
    
    12,197Total current liabilities
    
    
    36,947
    
    
    
    33,481Income taxes payable
    
    
    823
    
    
    
    823Postretirement benefits
    
    
    27,748
    
    
    
    26,661Deferred income taxes
    
    
    435
    
    
    
    609Total liabilities
    
    
    65,953
    
    
    
    61,574Minority interest
    
    
    621
    
    
    
    520Shareholders equityCommon shares, without par value:Authorized - 35,000,000 sharesOutstanding - 16,707,535 shares in 2008 and
16,703,035 in 2007 (after deducting treasury
shares of 604,683 in 2008 and 609,183
in 2007) at stated capital amount
    
    
    5,099
    
    
    
    5,098Retained earnings
    
    
    169,054
    
    
    
    151,467Accumulated other comprehensive loss
    
    
    (8,469
    )
    
    
    (7,125
    )Total shareholders equity
    
    
    165,684
    
    
    
    149,440Total liabilities and shareholders equity
    
    $
    232,258
    
    
    $
    211,534
 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)
    
    2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    22,432
    
    
    $
    17,105Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation and amortization
    
    
    5,888
    
    
    
    5,474Changes in operating assets and liabilities
    
    
    (922
    )
    
    
    5,119Net cash provided by operating activities
    
    
    27,398
    
    
    
    27,698Cash flows from investing activities:Capital additions, net
    
    
    (11,890
    )
    
    
    (8,151
    )Change in short-term investments
    
    
    5,585
    
    
    
    (1,380
    )Payments for acquisition, net of cash acquired
    
    
    
    
    
    
    (3,693
    )Net cash used for investing activities
    
    
    (6,305
    )
    
    
    (13,224
    )Cash flows from financing activities:Net cash used for financing activities, cash dividends
    
    
    (5,010
    )
    
    
    (4,810
    )Effect of exchange rate changes on cash
    
    
    (852
    )
    
    
    1,107Net increase in cash
and cash equivalents
    
    
    15,231
    
    
    
    10,771Cash and cash equivalents:Beginning of year
    
    
    24,604
    
    
    
    12,654September 30,
    
    $
    39,835
    
    
    $
    23,425
 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
 Fair Value Measurements (FAS 157)
 The Fair Value Option for Financial Assets and
Financial Liabilities-Including an Amendment of SFAS 115
 Business Combinations (FAS 141(R)).
  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
  NOTE B  INVENTORIES
   September 30,
    
    December 31,(Thousands of dollars)
    
    2008
    
    2007Raw materials and in-process
    
    $
    31,428
    
    
    $
    27,917Finished parts
    
    
    21,104
    
    
    
    21,348Finished products
    
    
    3,528
    
    
    
    3,958Total inventories
    
    $
    56,060
    
    
    $
    53,223
 NOTE C  PRODUCT WARRANTIES
  Nine Months EndedSeptember 30,(Thousands of dollars)
    
    2008
    
    2007Balance at beginning of year
    
    $
    1,682
    
    
    $
    1,216Warranty costs
    
    
    2,357
    
    
    
    2,253Settlements
    
    
    (2,112
    )
    
    
    (1,910
    )Balance at end of quarter
    
    $
    1,927
    
    
    $
    1,559
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PART I  CONTINUED
 ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  CONTINUED
 NOTE D  COMPREHENSIVE INCOME
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(Thousands of dollars)
    
    2008
    
    2007
    
    2008
    
    2007Net income
    
    $
    7,385
    
    
    $
    5,475
    
    
    $
    22,432
    
    
    $
    17,105Changes in cumulative
foreign currency
translation adjustments
    
    
    (1,379
    )
    
    
    1,096
    
    
    
    (1,489
    )
    
    
    2,049Pension benefit adjustments
    
    
    169
    
    
    
    140
    
    
    
    145
    
    
    
    421Total comprehensive income
    
    $
    6,175
    
    
    $
    6,711
    
    
    $
    21,088
    
    
    $
    19,575
 NOTE E  INCOME TAXES
 Accounting for Uncertainty in Income
Taxes Accounting for Contingencies Accounting for Income Taxes
    8




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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
   Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans (FAS 158),
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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)
    
    2008
    
    2007
    
    2008
    
    2007Service cost
    
    $
    1,975
    
    
    $
    1,859
    
    
    $
    894
    
    
    $
    939Interest cost
    
    
    2,293
    
    
    
    2,012
    
    
    
    1,247
    
    
    
    1,207Expected return on plan assets
    
    
    (3,145
    )
    
    
    (2,564
    )
    
    
    
    
    
    
    Amortization of loss
    
    
    511
    
    
    
    691
    
    
    
    
    
    
    
    Benefit cost
    
    $
    1,634
    
    
    $
    1,998
    
    
    $
    2,141
    
    
    $
    2,146
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Third Quarter 2008 Compared to Third Quarter 2007
 Net Sales
 Three Months EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeNet sales
    
    $
    84,188
    
    
    $
    74,629
    
    
    $
    9,559
    
    
    
    12.8
    %
  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 EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeCost of products sold
    
    $
    64,016
    
    
    $
    58,362
    
    
    $
    5,654
    
    
    
    9.7
    %% of Net sales
    
    
    76.0
    %
    
    
    78.2
    %
  Selling, General, and Administrative Expenses (SG&A)
 Three Months EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeSelling, general, and
administrative
expenses (SG&A)
    
    $
    9,140
    
    
    $
    8,342
    
    
    $
    798
    
    
    
    9.6
    %% of Net sales
    
    
    10.9
    %
    
    
    11.2
    %
  Other Income
 Three Months EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeOther income
    
    $
    440
    
    
    $
    575
    
    
    $
    (135
    )
    
    
    (23.5
    )%% of Net sales
    
    
    0.5
    %
    
    
    0.8
    %
  11




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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
 Net Income
 Three Months EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    11,409
    
    
    $
    8,432
    
    
    $
    2,977
    
    
    
    35.3
    %% of Net sales
    
    
    13.6
    %
    
    
    11.3
    %Income taxes
    
    $
    4,024
    
    
    $
    2,957
    
    
    $
    1,067
    
    
    
    36.1
    %Effective tax rate
    
    
    35.3
    %
    
    
    35.1
    %Net income
    
    $
    7,385
    
    
    $
    5,475
    
    
    $
    1,910
    
    
    
    34.9
    %% of Net sales
    
    
    8.8
    %
    
    
    7.3
    %Earnings per share
    
    $
    0.44
    
    
    $
    0.33
    
    
    $
    0.11
    
    
    
    33.3
    %
  Nine Months 2008 Compared to Nine Months 2007
 Net Sales
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeNet sales
    
    $
    249,653
    
    
    $
    228,737
    
    
    $
    20,916
    
    
    
    9.1
    %
   Cost of Products Sold
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeCost of products sold
    
    $
    189,231
    
    
    $
    178,306
    
    
    $
    10,925
    
    
    
    6.1
    %% of Net sales
    
    
    75.8
    %
    
    
    78.0
    %
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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)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeSelling, general, and
administrative
expenses (SG&A)
    
    $
    27,995
    
    
    $
    25,068
    
    
    $
    2,927
    
    
    
    11.7
    %% of Net sales
    
    
    11.2
    %
    
    
    11.0
    %
  Other Income
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeOther income
    
    $
    2,003
    
    
    $
    1,643
    
    
    $
    360
    
    
    
    21.9
    %% of Net sales
    
    
    0.8
    %
    
    
    0.7
    %
  13




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PART I  CONTINUED
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  CONTINUED
 Net Income
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeIncome before income taxes
    
    $
    34,230
    
    
    $
    26,913
    
    
    $
    7,317
    
    
    
    27.2
    %% of Net sales
    
    
    13.7
    %
    
    
    11.8
    %Income taxes
    
    $
    11,798
    
    
    $
    9,808
    
    
    $
    1,990
    
    
    
    20.3
    %Effective tax rate
    
    
    34.5
    %
    
    
    36.4
    %Net income
    
    $
    22,432
    
    
    $
    17,105
    
    
    $
    5,327
    
    
    
    31.1
    %% of Net sales
    
    
    9.0
    %
    
    
    7.5
    %Earnings per share
    
    $
    1.34
    
    
    $
    1.02
    
    
    $
    0.32
    
    
    
    31.4
    %
   Liquidity and Sources of Capital
 Nine Months EndedSeptember 30,(Thousands of Dollars)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeNet cash provided by operating activities
    
    $
    27,398
    
    
    $
    27,698
    
    
    $
    (300
    )
    
    
    (1.1
    )%Net cash used for investing activities
    
    
    6,305
    
    
    
    13,224
    
    
    
    (6,919
    )
    
    
    (52.3
    )Net cash used for financing activities
    
    
    5,010
    
    
    
    4,810
    
    
    
    200
    
    
    
    4.2
    14




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PART I  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
  
 PART II OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  15




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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 Robert E.
Kirkendall, 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.Exhibit 99
    
    Form 4 - Statement of Changes in Beneficial Ownership of Securities filed with the Securities and Exchange Commission on July 17, 2008.
 
 SIGNATURES
  The Gorman-Rupp
Company(Registrant)Date: October 27, 2008By:
    
    /s/Judith L. SovineJudith L. Sovine
Corporate TreasurerBy:
    
    /s/Robert E. KirkendallRobert E. Kirkendall

Senior Vice President and 
Chief Financial Officer
 16