The Gorman-Rupp Company (GRC) 10-Q 2000 Q1 Quarterly report

TABLE OF CONTENTS

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2000                                                                    Commission File Number 1-6747

The Gorman-Rupp Company

(Exact name of registrant as specified in its charter)

Ohio	34-0253990
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
305 Bowman Street, P. O. Box 1217, Mansfield, Ohio	44901
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code       (419) 755-1011

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

      Yes [X] No [  ]

Shares outstanding at March 31, 2000 —
common, without par value, 8,592,049

Page 1 of 6 pages

1

PART I — FINANCIAL INFORMATION

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands of dollars, except per share data)

			Three Months Ended
			March 31
			2000		1999
INCOME
	Net sales		$	48,289	$	43,184
	Other income			170		202
		TOTAL INCOME		48,459		43,386
DEDUCTIONS FROM INCOME
	Cost of products sold			35,606		31,890
	Selling, general and administrative expenses			6,149		6,818
		TOTAL DEDUCTIONS		41,755		38,708
INCOME BEFORE INCOME TAXES				6,704		4,678
	Income taxes			2,604		1,817
		NET INCOME	$	4,100	$	2,861
	Basic And Diluted Earnings Per Share		$	0.48	$	0.33
	Dividends Paid Per Share		$	0.15	$	0.15
	Average Shares Outstanding			8,592,049		8,579,830

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)

				Three Months Ended
				March 31
				2000			1999
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income			$	4,100		$	2,861
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization		1,592			1,494
			Changes in operating assets and liabilities		3,822			(582	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital additions, net				(4,565	)		(1,306	)
	Change in short-term investments				(3,177	)		(441	)
	Other				38			(177	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Cash dividends				(1,289	)		(1,288	)
	Change in treasury shares				0			(148	)
	(Repayments to) Borrowings from bank				(1,499	)		1,237
		NET (DECREASE) INCREASE IN CASH			—			—
			AND CASH EQUIVALENTS		(978	)		1,650
	CASH AND CASH EQUIVALENTS:
		Beginning of year			4,114			2,359
		March 31		$	3,136		$	4,009

2

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands of dollars)

					March 31			December 31
					2000			1999
ASSETS
CURRENT ASSETS
	Cash and cash equivalents				$	3,136		$	4,114
	Short-term investments					6,403			3,225
	Accounts receivable					31,713			27,898
	Inventories					35,039			36,189
	Other current assets and deferred income taxes					6,040			6,759
			TOTAL CURRENT ASSETS			82,331			78,185
OTHER ASSETS						675			715
DEFERRED INCOME TAXES						4,367			4,366
PROPERTY, PLANT AND EQUIPMENT						112,352			107,962
	Less allowances for depreciation					55,770			54,353
		PROPERTY, PLANT AND EQUIPMENT — NET				56,582			53,609
			TOTAL ASSETS		$	143,955		$	136,875
				LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
	Accounts payable				$	7,728		$	5,805
	Payrolls and related liabilities					3,103			2,943
	Accrued expenses					8,781			6,969
	Income taxes					2,875			693
		TOTAL CURRENT LIABILITIES				22,487			16,410
LONG TERM DEBT						1,607			3,107
POSTRETIREMENT BENEFITS						24,768			25,063
SHAREHOLDERS’ EQUITY
	Common shares, without par value at stated capital amount					5,123			5,123
	Retained earnings					91,220			88,409
	Accumulated other comprehensive income					(1,250	)		(1,237	)
		TOTAL SHAREHOLDERS’ EQUITY				95,093			92,295
			TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	143,955		$	136,875
	Common shares — authorized					14,000,000			14,000,000
*	Common shares — outstanding					8,592,049			8,592,049
	Common shares — treasury					273,127			273,127
*	After deducting treasury shares

3

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 2000

NOTE A — BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2000 are not necessarily indicative of results that may be expected for the year ending December 31, 2000. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 1999.

NOTE B — INVENTORIES

The major components of inventories are as follows:

	March 31		December 31
(Thousands of dollars)	2000		1999
Raw materials and in-process	$	23,276	$	24,040
Finished parts		8,972		9,266
Finished products		2,791		2,883
	$	35,039	$	36,189

NOTE C — COMPREHENSIVE INCOME

During the first quarter of 2000 and 1999, total comprehensive income amounted to $4,087,000 and $2,992,000.

4

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

First Quarter 2000 vs First Quarter 1999
Net sales were $48,289,000 in 2000, an increase of $5,105,000 or 11.8% from the $43,184,000 in 1999. Most of the increase was due to increased sales of pumps and fabricated turbine diffusers.

Other income was $170,000 in 2000 compared to $202,000 in 1999. Most of this decrease was a result of decreased interest income.

Cost of products sold in 2000 was $35,606,000 compared to $31,890,000 in 1999. The increase was primarily due to the use of materials to support the increased sales. As a percentage of net sales, cost of products sold in 2000 was 73.7% compared to 73.8% in 1999.

Selling, general and administrative expenses decreased to $6,149,000 in 2000 from $6,818,000 in 1999 principally due to a decrease in advertising expenses associated with trade shows. More shows, including ConExpo, were held in 1999 than 2000. ConExpo is the largest trade show related to the construction industry in the U.S. and is held every three years. Lower expenses for supplies and travel contributed to the decrease.

Income before income taxes was $6,704,000 in 2000 compared to $4,678,000 in 1999, an increase of $2,026,000. Income tax expense increased from $1,817,000 in 1999 to $2,604,000 in 2000, primarily as a result of the increase in profit. The effective income tax rate was 38.8% in 2000 and 1999.

Net income in 2000 of $4,100,000 increased $1,239,000 from $2,861,000 in 1999. As a percent of net sales, net income was 8.5% in 2000 and 6.6% in 1999. Net income per share was $.48 in 2000, an increase of $.15 from $.33 in 1999.

FINANCIAL CONDITION
The Company continues to finance most of its capital expenditures and working capital requirements through internally generated funds and bank financing. The ratio of current assets to current liabilities was 3.7 to 1 at March 31, 2000 and 4.8 to 1 at December 31, 1999.

The Company presently has adequate working capital, adequate borrowing capacity and a healthy liquidity position.

5

PART II — OTHER INFORMATION

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES

Item 6.	EXHIBITS AND REPORTS ON FORM 8-K
	(a) Exhibits — 27 Financial Data Schedule
	(b) Reports filed on Form 8-K during the Quarter Ended March 31, 2000 — None

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		The Gorman-Rupp Company
		(Registrant)
Date	April 20, 2000
		By:/S/Kenneth E. Dudley
		Kenneth E. Dudley Treasurer & Principal Financial Officer

6