The Gorman-Rupp Company (GRC) 10-Q 2001 Q2 Quarterly report

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
PART II — OTHER INFORMATION
	Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarter endedJune 30, 2001 Commission File Number1-6747

The Gorman-Rupp Company(Exact name of registrant as specified in its charter)

Ohio	34-0253990
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	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 June 30, 2001 —
common, without par value, 8,565,553

Page 1 of 8 pages

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				Six Months Ended
			June 30				June 30
			2001		2000		2001		2000
INCOME
	Net sales		$	54,838	$	48,008	$	104,509	$	97,032
	Other income			114		229		376		399
		TOTAL INCOME		54,952		48,237		104,885		97,431
DEDUCTIONS FROM INCOME
	Cost of products sold			41,413		35,770		78,738		72,111
	Selling, general and administrative expenses			6,951		6,427		13,695		12,576
		TOTAL DEDUCTIONS		48,364		42,197		92,433		84,687
INCOME BEFORE INCOME TAXES				6,588		6,040		12,452		12,744
	Income taxes			2,590		2,379		4,850		4,983
		NET INCOME	$	3,998	$	3,661	$	7,602	$	7,761
	Basic And Diluted Earnings Per Share		$	0.47	$	0.42	$	0.89	$	0.90
	Dividends Paid Per Share		$	0.16	$	0.15	$	0.32	$	0.30
	Avg. Shares Outstanding			8,565,553		8,591,402		8,565,553		8,591,725

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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)

				Six Months Ended
				June 30
				2001			2000
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income			$	7,602		$	7,761
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization		3,585			3,210
			Changes in operating assets and liabilities		(1,851	)		380
			NET CASH PROVIDED BY OPERATING ACTIVITIES		9,336			11,351
CASH FLOWS FROM INVESTING ACTIVITIES:
	Capital additions, net				(1,766	)		(7,662	)
	Change in short-term investments				(2,000	)		(2,587	)
	Other				0			46
			NET CASH USED FOR INVESTING ACTIVITIES		(3,766	)		(10,203	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Cash dividends				(2,741	)		(2,578	)
	Change in treasury shares				0			(348	)
	Repayments to bank				(3,413	)		(232	)
			NET CASH USED FOR FINANCING ACTIVITIES		(6,154	)		(3,158	)
		NET (DECREASE) INCREASE IN CASH
			AND CASH EQUIVALENTS		(584	)		(2,010	)
	CASH AND CASH EQUIVALENTS:
		Beginning of year			7,630			4,114
		June 30		$	7,046		$	2,104

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

					June 30			December 31
					2001			2000
ASSETS
CURRENT ASSETS
		Cash and cash equivalents			$	7,046		$	7,630
		Short-term investments				2,000			0
		Accounts receivable				36,717			28,851
		Inventories				36,999			39,760
		Other current assets and deferred income taxes				5,118			6,048
				TOTAL CURRENT ASSETS		87,880			82,289
OTHER ASSETS						2,816			1,593
DEFERRED INCOME TAXES						4,115			4,114
PROPERTY, PLANT AND EQUIPMENT						117,418			117,322
		Less allowances for depreciation				61,352			59,437
			PROPERTY, PLANT AND EQUIPMENT — NET			56,066			57,885
				TOTAL ASSETS	$	150,877		$	145,881
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
		Accounts payable			$	5,466		$	7,391
		Payrolls and related liabilities				3,624			3,331
		Accrued expenses				11,887			8,357
		Income taxes				1,778			0
			TOTAL CURRENT LIABILITIES			22,755			19,079
LONG TERM DEBT						0			3,413
POSTRETIREMENT BENEFITS						23,270			23,390
SHAREHOLDERS’ EQUITY
		Common shares, without par value at stated capital amount				5,106			5,106
		Retained earnings				101,278			96,417
		Accumulated other comprehensive income				(1,532	)		(1,524	)
			TOTAL SHAREHOLDERS’ EQUITY			104,852			99,999
				TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	150,877		$	145,881
	Common shares — authorized					14,000,000			14,000,000
* Common shares — outstanding						8,565,553			8,565,553
	Common shares — treasury					299,623			299,623
* After deducting treasury shares

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

JUNE 30, 2001

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 and six month periods ended June 30, 2001 are not necessarily indicative of results that may be expected for the year ending December 31, 2001. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10K for the year ended December 31, 2000.

NOTE B — INVENTORIES

The major components of inventories are as follows:

	June 30		December 31
(Thousands of dollars)	2001		2000
Raw materials and in-process	$	24,100	$	25,898
Finished parts		10,374		11,148
Finished products		2,525		2,714
	$	36,999	$	39,760

NOTE C — COMPREHENSIVE INCOME

During the three month periods ended June 30, 2001 and 2000, total comprehensive income was $4,337,000 and $3,720,000, respectively During the six month periods ended June 30, 2001 and 2000, total comprehensive income was $7,594,000 and $7,807,000, respectively Comprehensive income consists of foreign currency translation adjustments.

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

Second Quarter 2001 vs Second Quarter 2000

Net sales were $54,838,000 in 2001 compared to $48,008,000 in 2000, an increase of 14.2% A majority of the increase was due to increased sales of fabricated turbine diffusers.

Other income was $114,000 in 2001 compared to $229,000 in 2000. The decrease was due primarily to decreased currency exchange gains.

Cost of products sold in 2001 was $41,413,000 compared to $35,770,000 in 2000. The largest factors in the increase were material needed to support the increased sales and increased payroll related expenses. As a percentage of net sales, cost of products sold was 75.5% in 2000 compared to 74.5% in 2000. A change in product mix increased the percentage in 2001.

Selling, general and administrative expenses increased from $6,427,000 in 2000 to $6,951,000 in 2001 primarily as a result of an increase in professional services.

Income before income taxes was $6,588,000 in 2001 compared to $6,040,000 in 2000, an increase of $548,000. Income tax expense increased from $2,379,000 in 2000 to $2,590,000 in 2001, primarily as a result of the increase in profit. The effective tax rate was 39.3% in 2001 compared to 39.4% in 2000.

Net income in 2001 was $3,998,000 which resulted in an increase of $337,000 from $3,661,000 in 2000, an increase of 9.2%. As a percent of net sales, net income was 7.3% in 2001 and 7.7% in 2000. Net income per share was $.47 in 2001, an increase of $.05 from the $.42 in 2000.

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

Six Months 2001 vs Six Months 2000

Net sales were $104,509,000 in 2001, an increase of $7,477,000 or 7.7% over the $97,032,000 in 2000. A majority of the increase is related to increased sales of fabricated turbine diffusers.

Other income was $376,000 in 2000 compared to $399,000 in 1999. The decrease was primarily due to a decrease in interest income.

Cost of products sold in 2001 was $78,738,000 compared to $72,111,000 in 2000. The largest factor in the increase was material needed to support the increased sales. An increase in payroll related expenses, medical expenses and depreciation also contributed to the increase. As a percentage of net sales, cost of products sold was 75.3% in 2001 compared to 74.3% in 2000. Changes in product mix are responsible for the higher percentage in 2001.

Selling, general and administrative expenses increased from $12,576,000 in 2000 to $13,695,000 in 2001 with an increase in professional services being the largest single item with health care costs also contributing to the increase.

Income before income taxes was $12,452,000 in 2001 compared to $12,744,000 in 2000, a decrease of $292,000. Income tax expense decreased from $4,983,000 in 2000 to $4,850,000 in 2001. The effective income tax rate was 38.9% in 2001 compared to 39.1% in 2000.

Net income of $7,602,000 in 2001 decreased $159,000 from $7,761,000 in 2000, a decrease of 2.0%. As a percent of net sales, net income was 7.3% in 2001 and 8.0% in 2000. Net income per share was $.89 in 2001, a decrease from the $.90 in 2000.

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 3.9 to 1 at June 30, 2001 and 4.3 to 1 at December 31, 2000.

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

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PART II — OTHER INFORMATION
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Reports filed on Form 8-K during the Quarter Ended June 30, 2001 — 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	August 3, 2001
		By:	/s/Kenneth E. Dudley
			Kenneth E. Dudley
			Principal Financial Officer

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