1 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 September 30, 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 (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 September 30, 2000 ----- common, without par value, 8,565,553 Page 1 of 7 pages 2 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 Nine Months Ended September 30 September 30 2000 1999 2000 1999 INCOME ---------- ---------- ---------- ---------- Net sales $ 46,904 $ 46,898 $ 142,481 $ 135,200 Other income 207 168 606 626 ---------- ---------- ---------- ---------- TOTAL INCOME 47,111 47,066 143,087 135,826 DEDUCTIONS FROM INCOME Cost of products sold 34,460 33,829 105,116 99,334 Selling, general and administrative expenses 6,485 6,647 19,061 19,747 Non-recurring expense/ plant relocation 1,051 0 1,051 0 ---------- ---------- ---------- ---------- TOTAL DEDUCTIONS 41,996 40,476 125,228 119,081 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 5,115 6,590 17,859 16,745 Income taxes 1,987 2,687 6,970 6,600 ---------- ---------- ---------- ---------- NET INCOME $ 3,128 $ 3,903 $ 10,889 $ 10,145 ========== ========== ========== ========== Basic And Diluted Earnings Per Share $ 0.37 $ 0.45 $ 1.27 $ 1.18 Dividends Paid Per Share $ 0.16 $ 0.15 $ 0.46 $ 0.45 Avg. Shares Outstanding 8,583,914 8,591,790 8,589,103 8,583,797 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands of dollars) Nine Months Ended September 30 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: ---------- ---------- Net income $ 10,889 $ 10,145 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,985 5,086 Changes in operating assets and liabilities 511 (1,638) CASH FLOWS FROM INVESTING ACTIVITIES: Capital additions, net (9,472) (9,172) Change in short-term investments (571) (845) Other (5) (173) CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends (3,952) (3,864) Change in treasury shares (723) 124 (Repayments to) Borrowings from bank 496 1,197 -------- -------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 2,158 860 CASH AND CASH EQUIVALENTS: Beginning of year 4,114 2,359 -------- -------- September 30 $ 6,272 $ 3,219 ======== ======== 2 3 THE GORMAN-RUPP COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands of dollars) Sept 30 Dec 31 2000 1999 ASSETS ------------ ------------ CURRENT ASSETS Cash and cash equivalents $ 6,272 $ 4,114 Short-term investments 3,797 3,225 Accounts receivable 31,027 27,898 Inventories 37,288 36,189 Other current assets and deferred income taxes 6,395 6,759 ------------ ------------ TOTAL CURRENT ASSETS 84,779 78,185 OTHER ASSETS 719 715 DEFERRED INCOME TAXES 4,376 4,366 PROPERTY, PLANT AND EQUIPMENT 116,407 107,962 Less allowances for depreciation 58,311 54,353 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT - NET 58,096 53,609 ------------ ------------ TOTAL ASSETS $ 147,970 $ 136,875 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 7,099 $ 5,805 Payrolls and related liabilities 3,409 2,943 Accrued expenses 10,289 6,969 Income taxes 1,125 693 ------------ ------------ TOTAL CURRENT LIABILITIES 21,922 16,410 LONG TERM DEBT 3,603 3,107 POSTRETIREMENT BENEFITS 23,970 25,063 SHAREHOLDERS' EQUITY Common shares, without par value at stated capital amount 5,106 5,123 Retained earnings 94,640 88,409 Accumulated other comprehensive income (1,271) (1,237) ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 98,475 92,295 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 147,970 $ 136,875 ============ ============ Common shares - authorized 14,000,000 14,000,000 * Common shares - outstanding 8,565,553 8,592,049 Common shares - treasury 299,623 273,127 * After deducting treasury shares 3 4 THE GORMAN-RUPP COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 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 and nine month periods ended September 30, 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 10K for the year ended December 31, 1999. NOTE B - INVENTORIES The major components of inventories are as follows: Sept 30 Dec 31 (Thousands of dollars) 2000 1999 ------- ------- Raw materials and in-process $24,770 $24,040 Finished parts 9,547 9,266 Finished products 2,971 2,883 ------- ------- $37,288 $36,189 ======= ======= NOTE C - COMPREHENSIVE INCOME During the three month periods ended September 30, 2000 and 1999, total comprehensive income was $3,048,000 and $3,923,000, respectively. During the nine month periods ended September 30, 2000 and 1999, total comprehensive income was $10,855,000 and $10,479,000, respectively. 4 5 THE GORMAN-RUPP COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Third Quarter 2000 vs Third Quarter 1999 - ------------------------------------------ Net sales were $46,904,000 in 2000 compared to $46,898,000 in 1999, an increase of $6,000, and is virtually the same for both years. Other income was $207,000 in 2000 compared to $168,000 in 1999. The increase was due primarily to increased interest expense. Cost of products sold in 2000 was $34,460,000 compared to $33,829,000 in 1999. The largest factors contributing to the increase were depreciation and professional expenses. As a percentage of net sales, cost of products sold was 73.5% in 2000 compared to 72.1% in 1999. A change in product mix increased the percentage in 2000. Selling, general and administrative expenses decreased from $6,647,000 in 1999 to $6,485,000 in 2000 primarily as a result of decreases in bad debts and depreciation. A non-recurring expense of $1,051,000 was recorded at the Mansfield Division and was associated with the moving of machines and materials into the newly completed manufacturing facility. Income before income taxes was $5,115,000 in 2000 compared to $6,590,000 in 1999, a decrease of $1,475,000. Income tax expense decreased from $2,687,000 in 1999 to $1,987,000 in 2000, primarily as a result of the decrease in profit. The effective tax rate was 38.8% in 2000 compared to 40.8% in 1999. Net income in 2000 was $3,128,000 which resulted in a decrease of $775,000 from $3,903,000 in 1999, a decrease of 19.9%. As a percent of net sales, net income was 6.7% in 2000 and 8.3% in 1999. Net income per share was $.37 in 2000, a decrease of $.08 from the $.45 in 1999. 5 6 THE GORMAN-RUPP COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nine Months 2000 vs Nine Months 1999 - ------------------------------------------ Net sales were $142,481,000 in 2000, an increase of $7,281,000 or 5.4% over the $135,200,000 in 1999. A majority of the increase is related to increased sales of fabricated turbine diffusers. Other income was $606,000 in 2000 compared to $626,000 in 1999. The decrease was primarily due to a decrease in gains on disposals of property, plant and equipment in 1999 that were not repeated in 2000. Cost of products sold in 2000 was $105,116,000 compared to $99,334,000 in 1999. The largest factor in the increase was material needed to support the increased sales. An increase in payroll related expenses also contributed to the increase. As a percentage of net sales, cost of products sold was 73.8% in 2000 compared to 73.5% in 1999. Changes in product mix are responsible for the higher percentage in 2000. Selling, general and administrative expenses decreased from $19,747,000 in 1999 to $19,061,000 in 2000 primarily as a result in decreases in retirement, advertising, personal property taxes and depreciation expenses. A non-recurring expense of $1,051,000 was recorded at the Mansfield Division and was associated with the moving of machines and materials into the newly completed manufacturing facility. Income before income taxes was $17,859,000 in 2000, compared to $16,745,000 in 1999, an increase of $1,114,000. Income tax expense increase from $6,600,000 in 1999 to $6,970,000 in 2000. The effective income tax rate was 39.0% in 2000 compared to 39.4% in 1999. Net income of $10,889,000 in 2000 increased $744,000 from $10,145,000 in 1999, an increase of 7.3%. As a percent of net sales, net income was 7.6% in 2000 and 7.5% in 1999. Net income per share was $1.27 in 2000, an increase from the $1.18 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 3.9 to 1 at September 30, 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. 6 7 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 September 30, 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 November 2, 2000 ---------------------- By:/S/Kenneth E. Dudley ------------------------------ Kenneth E. Dudley Treasurer & Principal Financial Officer 7