The Gorman-Rupp Company (GRC) 10-Q 29 Jul 15 2015 Q2 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 24, 2015
Entity Registrant Name	GORMAN RUPP CO
Entity Central Index Key	42,682
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		26,260,043
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net sales	$ 103,892	$ 109,728	$ 203,125	$ 219,792
Cost of products sold	79,751	82,824	155,069	165,334
Gross profit	24,141	26,904	48,056	54,458
Selling, general and administrative expenses	14,258	13,483	27,570	26,344
Operating income	9,883	13,421	20,486	28,114
Other income	122	184	453	357
Other expense	(140)	(377)	(161)	(411)
Income before income taxes	9,865	13,228	20,778	28,060
Income taxes	3,236	4,368	6,874	9,246
Net income	$ 6,629	$ 8,860	$ 13,904	$ 18,814
Earnings per share (in dollars per share)	$ 0.25	$ 0.34	$ 0.53	$ 0.72
Cash dividends per share (in dollars per share)	$ 0.10	$ 0.09	$ 0.20	$ 0.18
Average number of shares outstanding (in shares)	26,260,543	26,253,043	26,260,543	26,253,043

Condensed Consolidated Stateme3

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net income	$ 6,629	$ 8,860	$ 13,904	$ 18,814
Cumulative translation adjustments	621	207	(2,215)	(149)
Pension and postretirement medical liability adjustments, net of tax	1,162	37	1,388	211
Other comprehensive income (loss)	1,783	244	(827)	62
Comprehensive income	$ 8,412	$ 9,104	$ 13,077	$ 18,876

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents	$ 25,989	$ 24,491
Accounts receivable – net	76,785	70,734
Inventories	93,224	94,760
Deferred income taxes and other current assets	9,576	10,724
Total current assets	205,574	200,709
Property, plant and equipment	269,983	266,660
Less accumulated depreciation	138,567	132,696
Property, plant and equipment – net	131,416	133,964
Deferred income taxes and other	6,034	6,313
Goodwill and other intangible assets – net	39,053	39,918
Total assets	382,077	380,904
Current liabilities
Accounts payable	17,897	17,908
Short-term debt	6,000	12,000
Payroll and related liabilities	11,178	11,355
Commissions payable	9,408	9,448
Deferred revenue	2,167	4,166
Accrued expenses	10,019	9,469
Total current liabilities	56,669	64,346
Pension benefits	5,247	4,496
Postretirement benefits	21,589	21,297
Deferred and other income taxes	8,780	8,798
Total liabilities	92,285	98,937
Shareholders' equity
Outstanding common shares: 26,260,543 at June 30, 2015 and December 31, 2014 (net of 788,253 treasury shares, respectively), at stated capital amounts	5,133	5,133
Additional paid-in capital	3,059	3,059
Retained earnings	299,753	291,101
Accumulated other comprehensive loss	(18,153)	(17,326)
Total shareholders' equity	289,792	281,967
Total liabilities and shareholders' equity	$ 382,077	$ 380,904

Condensed Consolidated Balance5

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Common Stock Par Value (in dollars per share)	$ 0	$ 0
Common Stock Outstanding (in shares)	26,260,543	26,260,543
Treasury Shares (in shares)	788,253	788,253

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net income	$ 13,904	$ 18,814
Adjustments to reconcile net income attributable to net cash provided by operating activities:
Depreciation and amortization	7,532	7,048
Pension expense	$ 3,277	1,437
Contributions to pension plan		(1,200)
Capital additions - net	$ (4,104)	(5,586)
Acquisition, net of cash acquired	34	(16,280)
Net cash used in investing activities	(4,070)	(21,866)
Changes in operating assets and liabilities:
Accounts receivable - net	(6,060)	(13,660)
Inventories - net	1,510	3,396
Accounts payable	(11)	1,650
Commissions payable	(40)	628
Deferred revenue	(1,999)	(1,736)
Accrued expenses	355	(49)
Benefit obligations and other	(954)	(4,345)
Net cash provided by operating activities	17,514	11,983
Cash flows from financing activities:
Cash dividends	$ (5,252)	(4,726)
Proceeds from bank borrowings		18,000
Payments to bank for borrowings	$ (6,000)	(4,333)
Net cash (used in) provided by financing activities	(11,252)	8,941
Effect of exchange rate changes on cash	(694)	(735)
Net increase (decrease) in cash and cash equivalents	1,498	(1,677)
Cash and cash equivalents:
Beginning of period	24,491	31,123
End of period	$ 25,989	$ 29,446

Note A - Basis of Presentation

Note A - Basis of Presentation of Financial Statements	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Basis of Accounting [Text Block]	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 (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements include the accounts of The Gorman-Rupp Company (the “Company” or “Gorman-Rupp”) and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management of the Company, 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, 2015 are not necessarily indicative of results that may be expected for the year ending December 31, 2015. 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, 2014, from which related information herein has been derived.

Note B - Recently Issued Accoun

Note B - Recently Issued Accounting Standards	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
New Accounting Pronouncements and Changes in Accounting Principles [Text Block]	NOTE B - RECENTLY ISSUED ACCOUNTING STANDARDS In May 2014, the Financial Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers,” which supersedes most current revenue recognition guidance, including industry-specific guidance, and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied retrospectively, with early application not permitted. The Company currently does not expect the adoption of ASU 2014-09 to have a material impact on its consolidated financial statements.

Note C - Inventories

Note C - Inventories	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Inventory Disclosure [Text Block]	NOTE C - INVENTORIES Inventories are stated at the lower of cost or market. The costs for approximately 73% of inventories at June 30, 2015 and 75% of inventories at December 31, 2014 are determined using the last-in, first-out (LIFO) method, with the remainder determined using the first-in, first-out (FIFO) method applied on a consistent basis. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels and costs at that time. Interim LIFO calculations are based on management’s estimate of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation. The major components of inventories are as follows (net of LIFO reserves of $59.4 million and $57.9 million at June 30, 2015 and December 31, 2014, respectively): June 30, December 31, (Dollars in thousands) 2015 2014 Raw materials and in-process $ 30,062 $ 16,217 Finished parts 49,684 42,414 Finished products 13,478 36,129 Total inventories $ 93,224 $ 94,760

Note D - Product Warranties

Note D - Product Warranties	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Product Warranty Disclosure [Text Block]	NOTE D - PRODUCT WARRANTIES A liability is established for estimated future warranty and service claims based on historical claims experience and specific product failures. The Company expenses warranty costs directly to cost of products sold. Changes in the Company’s product warranty liability are: June 30, (Dollars in thousands) 2015 2014 Balance at beginning of year $ 1,189 $ 1,170 Provision 734 811 Claims (727 ) (862 ) Balance at end of period $ 1,196 $ 1,119

Note E - Pension and Other Post

Note E - Pension and Other Postretirement Benefits	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Pension and Other Postretirement Benefits Disclosure [Text Block]	NOTE E - PENSION AND OTHER POSTRETIREMENT BENEFITS The Company sponsors a defined benefit pension plan (“Plan”) covering certain domestic employees. Benefits are based on each covered employee’s years of service and compensation. The Plan is funded in conformity with the funding requirements of applicable U.S. regulations. The Plan was closed to new participants effective January 1, 2008. Employees hired after this date, in eligible locations, participate in an enhanced 401(k) plan instead of the defined benefit pension plan. Employees hired prior to this date continue to accrue benefits. Additionally, the Company sponsors defined contribution pension plans made available to all domestic and Canadian employees. The Company also sponsors a non-contributory defined benefit health care plan that provides health benefits to certain domestic and Canadian retirees and their spouses. The Company funds the cost of these benefits as incurred. During the second quarter of 2015 the Company recorded a non-cash settlement loss relating to retirees that received lump-sum distributions from the Company’s defined benefit pension plan totaling $1.5 million. This charge was the result of lump-sum payments to retirees which exceeded the plan’s actuarial service and interest cost threshold for 2015. The following tables present the components of net periodic benefit cost: Pension Benefits Postretirement Benefits Three Months Ended June 30, Three Months Ended June 30, (Dollars in thousands) 2015 2014 2015 2014 Service cost $ 783 $ 726 $ 299 $ 226 Interest cost 659 728 199 212 Expected return on plan assets (1,067 ) (1,170 ) - - Recognized actuarial loss (gain) 537 457 (164 ) (380 ) Settlement loss 1,452 - - - Net periodic benefit cost $ 2,364 $ 741 $ 334 $ 58 Pension Benefits Postretirement Benefits Six Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2015 2014 2015 2014 Service cost $ 1,567 $ 1,452 $ 598 $ 453 Interest cost 1,318 1,448 397 424 Expected return on plan assets (2,134 ) (2,378 ) - - Recognized actuarial loss (gain) 1,074 915 (327 ) (577 ) Settlement loss 1,452 - - - Net periodic benefit cost $ 3,277 $ 1,437 $ 668 $ 300

Note F - Accumulated Other Comp

Note F - Accumulated Other Comprehensive Income (Loss)	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Accumulated Other Comprehensive Loss [Text Block]	NOTE F – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The reclassifications out of accumulated other comprehensive loss as reported in the Consolidated Statements of Income are: Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2015 2014 2015 2014 Pension and other postretirement benefits: Recognized actuarial loss (a) $ 384 $ 77 $ 739 $ 338 Settlement loss (b) 959 - 959 - Settlement loss (c) 493 - 493 - Total before income tax $ 1,836 77 2,191 338 Income tax (674 ) (40 ) (803 ) (127 ) Net of income tax $ 1,162 $ 37 1,388 $ 211 (a) The recognized actuarial loss is included in the computation of net periodic benefit cost. See Note E for additional details. (b) This portion of the settlement loss is included in Cost of products sold on the Statements of Income. (c) This portion of the settlement loss in included in Selling, general & administrative expenses on the Statements of Income. The components of accumulated other comprehensive loss as reported in the Consolidated Balance Sheets are: (Dollars in thousands) Currency Translation Adjustments Pension and Other Postretirement Benefits Accumulated Other Comprehensive Income (loss) Balance at January 1, 2015 $ (4,338 ) $ (12,988 ) $ (17,326 ) Reclassification adjustments - 2,191 2,191 Current period credit (charge) (2,215 ) - (2,215 ) Income tax expense - (803 ) (803 ) Balance at June 30, 2015 $ (6,553 ) $ (11,600 ) $ (18,153 ) P ART I – CONTINUED ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – CONTINUED (Dollars in thousands) Currency Translation Adjustments Pension and Other Postretirement Benefits Accumulated Other Comprehensive Income (loss) Balance at January 1, 2014 $ (1,062 ) $ (7,399 ) $ (8,461 ) Reclassification adjustments - - - Current period credit (charge) (149 ) 338 187 Income tax expense - (127 ) (127 ) Balance at June 30, 2014 $ (1,211 ) $ (7,188 ) $ (8,399 )

Note C - Inventories (Tables)

Note C - Inventories (Tables)	6 Months Ended
	Jun. 30, 2015
Notes Tables
Schedule of Inventory, Current [Table Text Block]	June 30, December 31, (Dollars in thousands) 2015 2014 Raw materials and in-process $ 30,062 $ 16,217 Finished parts 49,684 42,414 Finished products 13,478 36,129 Total inventories $ 93,224 $ 94,760

Note D - Product Warranties (Ta

Note D - Product Warranties (Tables)	6 Months Ended
	Jun. 30, 2015
Notes Tables
Schedule of Product Warranty Liability [Table Text Block]	June 30, (Dollars in thousands) 2015 2014 Balance at beginning of year $ 1,189 $ 1,170 Provision 734 811 Claims (727 ) (862 ) Balance at end of period $ 1,196 $ 1,119

Note E - Pension and Other Po15

Note E - Pension and Other Postretirement Benefits (Tables)	6 Months Ended
	Jun. 30, 2015
Notes Tables
Schedule of Costs of Retirement Plans [Table Text Block]	Pension Benefits Postretirement Benefits Three Months Ended June 30, Three Months Ended June 30, (Dollars in thousands) 2015 2014 2015 2014 Service cost $ 783 $ 726 $ 299 $ 226 Interest cost 659 728 199 212 Expected return on plan assets (1,067 ) (1,170 ) - - Recognized actuarial loss (gain) 537 457 (164 ) (380 ) Settlement loss 1,452 - - - Net periodic benefit cost $ 2,364 $ 741 $ 334 $ 58 Pension Benefits Postretirement Benefits Six Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2015 2014 2015 2014 Service cost $ 1,567 $ 1,452 $ 598 $ 453 Interest cost 1,318 1,448 397 424 Expected return on plan assets (2,134 ) (2,378 ) - - Recognized actuarial loss (gain) 1,074 915 (327 ) (577 ) Settlement loss 1,452 - - - Net periodic benefit cost $ 3,277 $ 1,437 $ 668 $ 300

Note F - Accumulated Other Co16

Note F - Accumulated Other Comprehensive Income (Loss) (Tables)	6 Months Ended
	Jun. 30, 2015
Notes Tables
Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]	Three Months Ended June 30, Six Months Ended June 30, (Dollars in thousands) 2015 2014 2015 2014 Pension and other postretirement benefits: Recognized actuarial loss (a) $ 384 $ 77 $ 739 $ 338 Settlement loss (b) 959 - 959 - Settlement loss (c) 493 - 493 - Total before income tax $ 1,836 77 2,191 338 Income tax (674 ) (40 ) (803 ) (127 ) Net of income tax $ 1,162 $ 37 1,388 $ 211
Comprehensive Income (Loss) [Table Text Block]	(Dollars in thousands) Currency Translation Adjustments Pension and Other Postretirement Benefits Accumulated Other Comprehensive Income (loss) Balance at January 1, 2015 $ (4,338 ) $ (12,988 ) $ (17,326 ) Reclassification adjustments - 2,191 2,191 Current period credit (charge) (2,215 ) - (2,215 ) Income tax expense - (803 ) (803 ) Balance at June 30, 2015 $ (6,553 ) $ (11,600 ) $ (18,153 ) (Dollars in thousands) Currency Translation Adjustments Pension and Other Postretirement Benefits Accumulated Other Comprehensive Income (loss) Balance at January 1, 2014 $ (1,062 ) $ (7,399 ) $ (8,461 ) Reclassification adjustments - - - Current period credit (charge) (149 ) 338 187 Income tax expense - (127 ) (127 ) Balance at June 30, 2014 $ (1,211 ) $ (7,188 ) $ (8,399 )

Note C - Inventories (Details T

Note C - Inventories (Details Textual) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Percentage of LIFO Inventory	73.00%	75.00%
Inventory, LIFO Reserve	$ 59.4	$ 57.9

Note C - Inventories (Details)

Note C - Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Raw materials and in-process	$ 30,062	$ 16,217
Finished parts	49,684	42,414
Finished products	13,478	36,129
Total inventories	$ 93,224	$ 94,760

Note D - Summary of Product War

Note D - Summary of Product Warranties (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Balance at beginning of year	$ 1,189	$ 1,170
Provision	734	811
Claims	(727)	(862)
Balance at end of period	$ 1,196	$ 1,119

Note E - Pension and Other Po20

Note E - Pension and Other Postretirement Benefits (Details Textual) $ in Millions	3 Months Ended
	Jun. 30, 2015USD ($)
Defined Benefit Plan, Settlements, Benefit Obligation	$ 1.5

Note E - Summary of Components

Note E - Summary of Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Pension Plan [Member]
Service cost	$ 783	$ 726	$ 1,567	$ 1,452
Interest cost	659	728	1,318	1,448
Expected return on plan assets	(1,067)	(1,170)	(2,134)	(2,378)
Recognized actuarial loss (gain)	537	$ 457	1,074	$ 915
Settlement loss	1,452		1,452
Net periodic benefit cost	2,364	$ 741	3,277	$ 1,437
Postretirement Benefits [Member]
Service cost	299	226	598	453
Interest cost	$ 199	$ 212	$ 397	$ 424
Expected return on plan assets
Recognized actuarial loss (gain)	$ (164)	$ (380)	$ (327)	$ (577)
Settlement loss
Net periodic benefit cost	$ 334	$ 58	$ 668	$ 300
Settlement loss	$ 1,500

Note F - Reclassification out o

Note F - Reclassification out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | Cost of Sales [Member]
Defined Benefit Plan, Settlements, Benefit Obligation	[1]	$ 959		$ 959
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | Selling, General and Administrative Expenses [Member]
Defined Benefit Plan, Settlements, Benefit Obligation	[2]	493		493
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Recognized actuarial loss (a)	[3]	384	$ 77	739	$ 338
Total before income tax		1,836	77	2,191	338
Income tax		(674)	(40)	(803)	(127)
Net of income tax		1,162	37	1,388	211
Defined Benefit Plan, Settlements, Benefit Obligation		1,500
Total before income tax		(9,865)	(13,228)	(20,778)	(28,060)
Income tax		$ 3,236	$ 4,368	$ 6,874	$ 9,246
[1]	This portion of the settlement loss is included in Cost of products sold on the Statements of Income.
[2]	This portion of the settlement loss in included in Selling, general & administrative expenses on the Statements of Income.
[3]	The recognized actuarial loss is included in the computation of net periodic benefit cost. See Note E for additional details.

Note F - Components of Accumula

Note F - Components of Accumulated Other Comprehensive Income (Loss) as Reported in the Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Currency Translation Adjustments [Member]
Balance	$ (4,338)	$ (1,062)
Reclassification adjustments
Current period credit (charge)	$ (2,215)	$ (149)
Income tax expense
Balance	$ (6,553)	$ (1,211)
Pension And O P E B Adjustments [Member]
Balance	(12,988)	$ (7,399)
Reclassification adjustments	$ 2,191
Current period credit (charge)		$ 338
Income tax expense	$ (803)	(127)
Balance	(11,600)	(7,188)
Accumulated Other Comprehensive Income Loss [Member]
Balance	(17,326)	$ (8,461)
Reclassification adjustments	2,191
Current period credit (charge)	(2,835)	$ 187
Income tax expense	(803)	(127)
Balance	(18,153)	$ (8,399)
Balance	(17,326)
Balance	$ (18,153)