<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996 Commission file number: 1-6747
----------------- ------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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 Identification No.)
incorporation or organization)
305 Bowman St., Mansfield, Ohio 44903
------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (419) 755-1011
---------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange
on which registered
Common Shares, without par value American Stock Exchange
-------------------------------- -----------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
----------------------------------------------------------
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, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
X
- -----
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant. The aggregate market value is computed by reference to the price
at which the stock was sold as of March 18, 1997. $71,871,300
-----------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of March 18, 1997.
Common Shares, without par value--8,618,383
-------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1996 Annual Report to Shareholders incorporated by reference
into Part II (Items 5-8).
Portions of Notice of 1997 Annual Meeting of Shareholders and related Proxy
Statement incorporated by reference into Part III (Items 10-13).
**************
The Exhibit Index is located at Page 13
<PAGE> 2
PART I
ITEM 1. BUSINESS
Registrant ("Gorman-Rupp" or the "Company") designs, manufactures and sells
pumps and related equipment (pump and motor controls) for use in construction,
industrial, petroleum, agricultural, water and wastewater, original equipment,
fire, military and other liquid-handling applications.
PRODUCTS
The principal products of the Company are pumps and fluid control products. (The
Company operates principally in one business segment, the manufacture and sale
of pumps and other fluid control equipment.) The following table sets forth, for
the years 1994 through 1996, the total net sales, income before income taxes and
identifiable assets ($000 omitted) of the Company.
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net Sales $155,187 $149,489 $137,508
Income Before Income Taxes 15,663 15,051 14,952
Identifiable Assets 117,650 119,816 107,100
</TABLE>
The Company's product line is composed of pump models from the smallest, 1/2" to
the largest 84", ranging in rated capacity from less than one gallon per minute
up to 500,000 gallons per minute. The types of pumps which the Company produces
include self priming centrifugal, standard centrifugal, magnetic drive
centrifugal, axial and mixed flow, rotary gear, diaphragm, bellows and
oscillating.
The pumps have drives that range from 1/35 horsepower electric motors up to much
larger electric motors or internal combustion engines. Many of the larger units
comprise encased, fully integrated sewage pumping stations. In certain cases,
units are designed for the inclusion of customer-supplied drives.
The Company's larger pumps are sold principally for use in the construction,
industrial, sewage and waste handling fields; for pumping refined petroleum
products, including the ground refueling of aircraft; for agricultural
applications; and for fire fighting.
Many of the Company's smallest pumps are sold to customers for incorporation
into such products as X-ray processing equipment; gas air conditioning
equipment; office copy machines; chemical feeding, instrumentation and ice cube
making machinery; photographic processing and soft drink dispensing equipment;
laser cooling applications; graphic arts equipment; and floor cleaning
equipment.
2
<PAGE> 3
PART I--CONTINUED
ITEM 1. BUSINESS--CONTINUED
In 1996 the Company expanded its pump line with the introduction of the
Prime-Aire(TM) trash pump, equipped with a unique auxiliary priming system. This
priming system virtually eliminates any spewing of liquids from the priming air
exhaust line and thereby reduces operational concerns, especially for
applications containing environmentally hazardous liquids.
During 1996 vertical turbine pumps were also designed to better serve the water,
waste water and fire pump markets, extending the capacity range of the product
line.
Although no other new significant products have been introduced since 1992, the
Company has continued to emphasize product development. Several of the Company's
existing products, which were designed with added features, have also been
expanded to various new applications.
MARKETING
Except for government and export sales, the Company's pumps are marketed in the
United States and Canada through a network of about 1,000 distributors, through
manufacturers' representatives (for sales to many original equipment
manufacturers) and by direct sales. Government sales are handled directly by the
Company; and export sales are made through the Company's wholly owned
subsidiary, The Gorman-Rupp International Company, as well as through foreign
distributors and representatives. During 1996, there were no shipments to any
single customer greater than 10% of total net sales.
Gorman-Rupp is actively pursuing international business opportunities and
established offices in Thailand and Greece in 1996 to improve access to Asian
Pacific, Mid-East and the European markets. The Company continues to penetrate
international markets principally by its aggressive response to worldwide pump
needs. Approximately 12% of all 1996 sales were made to customers outside North
America (as compared to 11% in 1995 and 13% in 1994).
COMPETITION
The pump business is highly competitive. Gorman-Rupp estimates that 80 other
companies sell pumps and pump units which compete in one or more of the
industries and applications in which comparable products of the Company are
utilized. Many pumps are specifically designed and engineered for a particular
customer's application. The Company believes that proper application, product
performance and service are the principal methods of competition, and attributes
its success to its emphasis in these areas.
PURCHASING AND PRODUCTION
Virtually all materials, supplies, components and accessories used by the
Company in the fabrication of its products, including all castings (for which
the patterns are made and owned by the Company),
3
<PAGE> 4
PART I--CONTINUED
ITEM 1. BUSINESS--CONTINUED
PURCHASING AND PRODUCTION--CONTINUED
structural steel, bar stock, motors, solenoids, engines, seals, and phenolic,
polyethylene and rubber components, are purchased by the Company from other
suppliers and manufacturers. No purchases are made under long-term contracts and
the Company is not dependent upon a single source for any materials, supplies,
components or accessories which are of material importance to its business.
The Company purchases motors for its polypropylene bellows pumps and its
magnetic drive pumps from several alternate vendors and motor components for its
large submersible pumps from a limited number of suppliers. Small motor
requirements are also currently sourced from alternate suppliers.
The other production operations of the Company consist of the machining of
castings, the cutting and shaping of bar stock and structural members, the
manufacture of a few minor components, and the assembling, painting and testing
of its products. Virtually all of the Company's products are tested prior to
shipment.
OTHER ASPECTS
As of December 31, 1996, the Company employed approximately 994 persons, of whom
approximately 597 were hourly employees. The Company has no collective
bargaining agreements, has never experienced a strike and considers its labor
relations to be satisfactory.
Although the Company owns a number of patents, and several of them are important
to its business, Gorman-Rupp believes that the business of the Company is not
materially dependent upon any one or more patents.
As of December 31, 1996, the value of the Company's backlog of unfilled orders
was approximately $48,348,000, of which $30,235,000 was for the unfilled orders
of Patterson Pump Company. Approximately $47,821,000 is scheduled to be shipped
during 1997, with the balance ($527,000) to be shipped in 1998. At December 31,
1995, the value of the backlog of unfilled orders was approximately
$46,311,000.
ITEM 2. PROPERTIES
All of the production operations of the Company are conducted at its plants
located in Mansfield and Bellville, Ohio; St. Thomas, Ontario; Sand Springs,
Oklahoma; and Toccoa, Georgia. All of the Company's properties are owned in fee
without any material encumbrance. (In December 1995, the Company sold facilities
and 19 contiguous undeveloped acres, utilized by its former Durham Products
Division, located in Durham, North Carolina.) The Company also owns in fee an
approximately 26,000 square foot facility in Sparks, Nevada which comprises a
training center and warehouse space.
4
<PAGE> 5
PART I--CONTINUED
ITEM 2. PROPERTIES--CONTINUED
The Company's Ohio operations are principally located in facilities in
Mansfield. These facilities consist of five buildings containing approximately
682,200 square feet of floor space for production, office and warehousing
functions. The original portion of the largest production plant, consisting of
approximately 238,000 square feet located on a 26 acre site, was built in 1917
and has been expanded on several occasions, the latest in 1973. Another
production plant, also situated on the 26 acre site, was built in 1968 and has
been frequently expanded, most recently in 1994. The 1994 expansion added
approximately 37,600 square feet, including a modern testing facility. This
plant currently comprises approximately 134,200 square feet of floor space. A
third plant, containing approximately 215,000 square feet of floor space,
located on a 5-1/2 acre site, was purchased in 1975 and is used for most
machining operations and storage of raw materials. Its latest addition,
consisting of 30,000 square feet of floor space, was made in 1978. A small
office building of approximately 11,500 square feet was purchased in 1979 and
houses a training facility and the Company's personnel and advertising
departments. In late 1982, the Company purchased a building built in 1920 and
located on 3.4 acres adjacent to the Company's 26 acre site. This acquisition,
which was renovated in 1983, contains 83,500 square feet and is being used for
additional warehouse space.
The remainder of the Company's Ohio operations are conducted at two plants in
Bellville, which comprise approximately 107,500 square feet of floor space
situated on an 8.5 acre site. The initial portion of the larger plant,
containing approximately 93,200 square feet of floor space, was built in 1953
and has been expanded on several occasions, most recently in 1973-74. The
smaller facility, which contains approximately 14,300 square feet of floor
space, was acquired in 1984.
The plant in St. Thomas, Ontario has undergone five major expansions since it
was established in 1960. In 1986, a minor expansion of approximately 600 square
feet was added as a receiving and shipping area to improve materials handling.
This facility contains about 52,600 square feet of floor space and is situated
on an 11 acre site.
The Oklahoma facility, located on 4.5 acres of land, was purchased in 1977.
Manufacturing and warehousing facilities are located in a 26,700 square foot
building, originally built in 1973 and expanded in 1978, 1981, 1982 and 1991. A
detached 2,200 square foot building is used for offices. In 1980, a contiguous
parcel of two acres of undeveloped land was purchased for future needs.
Patterson Pump Company, in Toccoa, Georgia, includes a 31 acre site with
buildings totaling approximately 165,900 square feet, with about 28,000 square
feet of office space and 137,900 square feet of manufacturing space. In 1989,
Patterson Pump Company completed an addition of 38,500 square feet to the
building for manufacturing purposes and razed an approximately 12,700 square
foot portion of the manufacturing facility. In 1992, the Company completed a
64,000 square foot addition to the manufacturing plant, including a modern
400,000 gallon testing facility. A 28,000 square foot office addition was
completed in 1993. Upon occupancy of the new building in 1993, the pre-existing
office space of 15,200 square feet was razed for additional parking space.
5
<PAGE> 6
PART I--CONTINUED
ITEM 2. PROPERTIES--CONTINUED
The Company considers its plants, machinery and equipment to be well maintained,
in good operating condition and adequate for the present uses and business
requirements of the Company.
ITEM 3. LEGAL PROCEEDINGS
Gorman-Rupp is not currently engaged in any litigation which in the opinion of
the Company is material to its operations or assets.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this Form 10-K, no
matter was submitted to a vote of the Company's shareholders, through the
solicitation of proxies or otherwise.
********************
6
<PAGE> 7
PART I --CONTINUED
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3), the information regarding executive
officers called for by Item 401 of Regulation S-K and by Item 10 of this Form
10-K is set forth below.
<TABLE>
<CAPTION>
Date
Elected to
Name Age Office Position
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
James C. Gorman 72 Chairman 1989
John A. Walter 63 President and Chief Executive Officer 1989
Jeffrey S. Gorman 44 Senior Vice President; General Manager,
Mansfield Division 1989
Kenneth E. Dudley 59 Treasurer 1982
Robert E. Kirkendall 54 Corporate Secretary/Assistant Treasurer 1982
William D. Danuloff 49 Vice President Information Services 1991
</TABLE>
Except as noted, each of the above-named officers has held his executive
position with the Company for the past five years. Mr. J. C. Gorman served as
the Company's President from 1964 until 1989, and as Chief Executive Officer
from 1964 until 1996. Mr. Walter was elected to the additional position of Chief
Executive Officer in 1996; he had served as Chief Operating Officer since 1993
and as Vice President and General Manager of the Industries Division from 1978
until 1990. Mr. J. S. Gorman was elected Senior Vice President in 1996 and as
Vice President and General Manager of the Mansfield Division in 1989, after
serving as Assistant General Manager from 1986 to 1988; he held the office of
Corporate Secretary from 1982 to 1990. Mr. Kirkendall was elected as Assistant
Treasurer in 1982; he assumed the additional office of Corporate Secretary in
1990. Mr. Danuloff was elected Vice President Information Services in 1991,
after serving as Director of Information Services from 1981 to 1991. Mr. K. Jack
Bargahiser, Vice President Communications since 1975 retired from the Company in
November 1996.
Mr. J. S. Gorman is the son of Mr. J. C. Gorman. Otherwise, there is no family
relationship among any of the Executive Officers and Directors of the Company.
7
<PAGE> 8
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Attention is directed to the section "Ranges of Stock Prices" and the data
immediately below pertaining to the shareholder information reported by the
Transfer Agent and Registrar on page 16 in the Company's 1996 Annual Report to
Shareholders, which are incorporated herein by this reference.
ITEM 6. SELECTED FINANCIAL DATA
Attention is directed to the section "Ten Year Summary of Selected Financial
Data" on pages 16 and 17 in the Company's 1996 Annual Report to Shareholders,
which is incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Attention is directed to the section "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on page 15 in the Company's 1996
Annual Report to Shareholders, which is incorporated herein by this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Attention is directed to the Company's consolidated financial statements, the
notes thereto and the report of independent auditors thereon on pages 10-14, and
17, and to the section "Summary of Quarterly Results of Operations" on page 16,
in the Company's 1996 Annual Report to Shareholders, which are incorporated
herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has not changed its independent public accountants and there have
been no reportable disagreements with such accountants regarding accounting
principles or practices or financial disclosure matters.
8
<PAGE> 9
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
With respect to Directors, attention is directed to the section "Election of
Directors" in the Company's definitive Notice of 1997 Annual Meeting of
Shareholders and related Proxy Statement (filed pursuant to Regulation 14A not
later than 120 days after the end of the fiscal year covered by this Form 10-K),
which is incorporated herein by this reference.
With respect to executive officers, attention is directed to Part I of this Form
10-K.
ITEM 11. EXECUTIVE COMPENSATION
Attention is directed to the sections "Board of Directors and Directors'
Committees", "Executive Compensation", "Pension and Retirement Benefits",
"Salary Committee Report on Executive Compensation" and "Shareholder Return
Performance Presentation" in the Company's definitive Notice of 1997 Annual
Meeting of Shareholders and related Proxy Statement (filed pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year covered
by this Form 10-K), which are incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Attention is directed to the sections "Principal Shareholders", "Election of
Directors" and "Shareholdings by Executive Officers" in the Company's
definitive Notice of 1997 Annual Meeting of Shareholders and related Proxy
Statement (filed pursuant to Regulation 14A not later than 120 days after the
end of the fiscal year covered by this Form 10-K), which are incorporated herein
by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has no relationships or transactions required to be reported by Item
404 of Regulation S-K.
9
<PAGE> 10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
--------------------
With respect to the consolidated financial statements of the Registrant
and its subsidiaries, the following documents have been incorporated
by reference into this report:
(i) Consolidated balance sheets--December 31, 1996 and 1995
(ii) Consolidated statements of income--Years ended
December 31, 1996, 1995 and 1994
(iii) Consolidated statements of shareholders' equity--Years ended
December 31, 1996, 1995 and 1994
(iv) Consolidated statements of cash flows--Years ended
December 31, 1996, 1995 and 1994
(v) Notes to consolidated financial statements
(vi) Report of independent auditors
2. Financial Statement Schedules
-----------------------------
All financial statement schedules for which provision is made in the
applicable accounting regulation of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
3. Exhibits
--------
The exhibits listed below are submitted in a separate section of this
report immediately following the Exhibit Index.
(3) (i) Articles of incorporation and (ii) By-laws
(4) Instruments defining the rights of security holders, including
indentures
(10) Material contracts
(13) Annual report to security holders
(21) Subsidiaries of the registrant
(23) Consents of experts and counsel
(24) Powers of attorney
(27) Financial data schedule
(b) No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
10
<PAGE> 11
PART IV--CONTINUED
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
*By: ROBERT E. KIRKENDALL
--------------------------
Robert E. Kirkendall
Attorney-In-Fact
Date: March 24, 1997
11
<PAGE> 12
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
* JOHN A. WALTER President, Principal Executive
------------------------- Officer and Director
John A. Walter
* KENNETH E. DUDLEY Treasurer and Principal Financial
- -------------------------- and Accounting Officer
Kenneth E. Dudley
* JAMES C. GORMAN Director
- --------------------------
James C. Gorman
* WILLIAM A. CALHOUN Director
- --------------------------
William A. Calhoun
* JEFFREY S. GORMAN Director
- --------------------------
Jeffrey S. Gorman
* THOMAS E. HOAGLIN Director
- --------------------------
Thomas E. Hoaglin
* PETER B. LAKE Director
- --------------------------
Peter B. Lake
* JAMES R. WATSON Director
- --------------------------
James R. Watson
*The undersigned, by signing his name hereto, does sign and execute this Annual
Report on Form 10-K on behalf of The Gorman-Rupp Company and on behalf of each
of the above-named Officers and Directors of The Gorman-Rupp Company pursuant to
Powers of Attorney executed by The Gorman-Rupp Company and by each such Officer
and Director and filed with the Securities and Exchange Commission.
March 24, 1997
By: /s/ ROBERT E. KIRKENDALL
--------------------------
Robert E. Kirkendall
Attorney-In-Fact
12
<PAGE> 13
ANNUAL REPORT ON FORM 10-K
THE GORMAN-RUPP COMPANY
For the Year Ended December 31, 1996
EXHIBIT INDEX
EXHIBIT
(3)(4) Amended Articles of Incorporation, as amended *
(3)(4) Regulations *
(10) Form of Indemnification Agreement between the
Company and its Directors and Officers **
(13) Incorporated Portions of 1996 Annual Report
to Shareholders 14
(21) Subsidiaries of the Company 26
(23) Consent of Independent Auditors 27
(24) Powers of Attorney 28
(27) Financial Data Schedule 31
- -------------
* Incorporated herein by this reference from Exhibits (3) (4) of the
Company's Annual Report on Form 10-K for the year ended December 31,
1994.
** Incorporated herein by this reference from Exhibit (10) of the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
13
<PAGE> 1
Exhibit 13
The Gorman-Rupp Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Thousands of dollars, except per share amounts) YEAR ENDED DECEMBER 31,
INCOME 1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net sales............................. $155,187 $149,489 $137,508
Other income.......................... 491 1,304 511
-------- -------- --------
Total Income..................... 155,678 150,793 138,019
Deductions from income:
Cost of products sold............ 116,060 112,973 101,745
Selling, general and
administrative expenses....... 23,955 22,769 21,322
-------- -------- --------
140,015 135,742 123,067
-------- -------- --------
INCOME BEFORE
INCOME TAXES.................. 15,663 15,051 14,952
Income taxes.......................... 5,735 5,590 5,625
-------- -------- --------
NET INCOME .................. $9,928 $9,461 $9,327
======== ======== ========
NET INCOME PER SHARE.......... $1.15 $1.10 $1.09
======== ======== ========
Average number of shares outstanding.. 8,617,168 8,587,466 8,579,633
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
CUMULATIVE
COMMON RETAINED TRANSLATION
SHARES EARNINGS ADJUSTMENTS TOTAL
------ -------- ----------- -----
<S> <C> <C> <C> <C>
BALANCES
DECEMBER 31, 1993................... $5,115 $52,448 ($652) $56,911
Net income.......................... 9,327 9,327
Cash dividends - $.49 a share....... (4,209) (4,209)
Translation adjustment.............. (421) (421)
------ ------- ----- -------
BALANCES
DECEMBER 31, 1994................... 5,115 57,566 (1,073) 61,608
Net income.......................... 9,461 9,461
Cash dividends - $.52 a share....... (4,466) (4,466)
Sale of 49,289 common shares
from treasury..................... 32 727 759
Purchase of 21,250 common shares
for treasury...................... (14) (304) (318)
Translation adjustment.............. 196 196
------ ------- ----- -------
BALANCES
DECEMBER 31, 1995................... 5,133 62,984 (877) 67,240
Net income.......................... 9,928 9,928
Cash dividends - $.53 a share....... (4,567) (4,567)
Sale of 10,711 common shares .......
from treasury..................... 8 157 165
Translation adjustment.............. (29) (29)
------ ------- ----- -------
BALANCES
DECEMBER 31, 1996................... $5,141 $68,502 ($906) $72,737
====== ======= ===== =======
</TABLE>
See notes to consolidated financial statements.
<PAGE> 2
The Gorman-Rupp Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Thousands of dollars) DECEMBER 31,
ASSETS 1996 1995
CURRENT ASSETS -------- -------
<S> <C> <C>
Cash and cash equivalents.......................... $ 4,284 $ 3,250
Accounts receivable................................ 29,894 31,952
Inventories........................................ 33,621 32,833
Deferred income taxes.............................. 3,086 2,557
Other current assets............................... 1,041 809
-------- --------
Total Current Assets........................ 71,926 71,401
OTHER ASSETS.......................................... 786 543
DEFERRED INCOME TAXES................................. 4,389 5,709
PROPERTY, PLANT AND EQUIPMENT
Land............................................ 898 898
Buildings....................................... 25,542 25,304
Machinery and equipment......................... 58,227 55,587
-------- --------
84,667 81,789
Less allowances for depreciation................ 44,118 39,626
-------- --------
PROPERTY, PLANT AND EQUIPMENT - NET ........ 40,549 42,163
-------- --------
$117,650 $119,816
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.................................. $ 6,659 $ 7,508
Payrolls and related liabilities.................. 2,535 2,156
Commissions payable............................... 2,002 2,027
Accrued expenses ................................. 2,902 2,326
Income taxes...................................... 1,101 710
Notes payable to banks ........................... - 5,000
-------- --------
TOTAL CURRENT LIABILITIES.................. 15,199 19,727
LONG-TERM DEBT....................................... 3,796 7,188
PENSION LIABILITY.................................... 1,921 2,219
POSTRETIREMENT HEALTH BENEFITS OBLIGATION............ 23,997 23,442
SHAREHOLDERS' EQUITY
Common Shares, without par value:
Authorized - 14,000,000 shares;
Outstanding- 8,618,383 shares in 1996 and
8,607,672 shares in 1995 (after deducting
treasury shares of 246,793 in 1996 and
257,504 in 1995) at stated capital amount.. 5,141 5,133
Retained earnings................................. 68,502 62,984
Cumulative translation adjustments................ (906) (877)
-------- --------
TOTAL SHAREHOLDERS' EQUITY................. 72,737 67,240
-------- --------
$117,650 $119,816
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 3
The Gorman-Rupp Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
(Thousands of dollars) 1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................ $ 9,928 $ 9,461 $ 9,327
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .............. 5,675 5,173 4,534
Gain on disposal of assets ................. - (681) -
Deferred income taxes ...................... 791 (122) 22
Pension liability .......................... (298) 707 448
Changes in operating assets and liabilities:
Accounts receivable ...................... 2,058 (9,180) 1,114
Inventories .............................. (788) (2,019) (5,200)
Accounts payable ......................... (849) 1,727 (1,063)
Postretirement health benefits obligation 555 568 799
Other .................................... 792 357 (880)
-------- ------- -------
Net cash provided by operating activities 17,864 5,991 9,101
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions, net ............................ (4,036) (8,229) (8,553)
Proceeds from sale of assets ...................... - 2,478 -
-------- ------- -------
NET CASH USED FOR INVESTING ACTIVITIES ... (4,036) (5,751) (8,553)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends .................................... (4,567) (4,466) (4,209)
Net (payments to) borrowings from banks ........... (8,392) 3,973 3,941
Sale of common shares from treasury ............... 165 759 -
Purchase of common shares for treasury ............ - (318) -
-------- ------- -------
NET CASH USED FOR FINANCING ACTIVITIES ... (12,794) (52) (268)
-------- ------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,034 188 280
CASH AND CASH EQUIVALENTS:
Beginning of year ................................. 3,250 3,062 2,782
-------- ------- -------
End of year ....................................... $ 4,284 $ 3,250 $ 3,062
======== ======= =======
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
The Gorman-Rupp Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF MAJOR ACCOUNTING POLICIES
Consolidation: The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are
stated on the basis of cost. Depreciation is computed principally by
the straight-line method over the estimated useful lives of the assets. The
estimated useful life is primarily 30 years for buildings and ranges from 5 to
12 years for machinery and equipment.
STATEMENT OF CASH FLOWS: The Company considers highly liquid, short-term
investments to be cash equivalents.
INVENTORIES: Inventories are stated at the lower of cost or market. The cost for
approximately 65% and 70% of inventories at December 31, 1996 and 1995,
respectively, is determined using the last-in, first-out (LIFO) method, with the
remainder determined using the first-in, first-out method.
BUSINESS SEGMENT INFORMATION: The Company operates principally in one business
segment, the manufacture and sale of pumps and other fluid control equipment.
Export sales comprised approximately 12%, 11% and 13% of net sales in 1996, 1995
and 1994, respectively.
CONCENTRATION OF CREDIT RISK: In 1996 and 1995, there were no sales to any one
customer greater than 10% of total net sales. In 1994 sales to two customers
were approximately 15% of total net sales. The Company generally does not
require collateral from its customers. The Company has generally had a good
collection history.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
NOTE B - INVENTORIES: The major components of inventories are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials and in-process........ $16,793 $15,728
Finished parts...................... 13,352 12,859
Finished products................... 3,476 4,246
------- -------
$33,621 $32,833
======= =======
- --------------------------------------------------------------------------------
</TABLE>
The excess of replacement cost over LIFO cost is approximately $20,287,000 and
$19,743,000 at December 31, 1996 and 1995, respectively.
NOTE C - FINANCING ARRANGEMENTS: Under unsecured demand lines of credit with
banks, the Company may borrow up to $7.0 million with interest at the LIBOR plus
.75% or at alternative rates as selected by the Company. At December 31, 1996,
$7.0 million was available for borrowing. At December 31, 1995, outstanding
borrowings of $5.0 million had an average interest rate of 6.7%.
The Company also has an $8.0 million unsecured revolving loan agreement which
matures in May, 1999. At December 31, 1996, $3.4 million was available for
borrowing after deducting $3.8 million of outstanding borrowings and $.8 million
of outstanding letters of credit. Interest is payable quarterly at the LIBOR
plus .75% or at alternative rates as selected by the Company (weighted average
interest rate 5.8% and 6.7% at December 31, 1996 and 1995, respectively). The
agreement contains restrictive covenants including limits on additional
borrowings and maintenance of certain operating and financial ratios. Interest
expense was $330,000, $602,000 and $195,000 in 1996, 1995 and 1994,
respectively.
NOTE D - INCOME TAXES: The components of income before income taxes are as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States.............. $14,902 $14,258 $14,724
Canada..................... 761 793 228
------- ------- -------
$15,663 $15,051 $14,952
======= ======= =======
- --------------------------------------------------------------------------------
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal.................. $4,124 $4,669 $4,888
Canadian................. 313 393 115
State and local.......... 507 650 600
------ ------ ------
4,944 5,712 5,603
Deferred................... 791 (122) 22
------ ------ ------
$5,735 $5,590 $5,625
====== ====== ======
- --------------------------------------------------------------------------------
</TABLE>
The reconciliation between income tax expense and the amount computed by
applying the statutory federal income tax rate of 35% to income before income
taxes is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes at
statutory rate........ $5,482 $5,268 $5,233
State and local income
taxes, net of federal
tax benefit........... 330 423 390
Other...................... (77) (101) 2
------ ------ ------
$5,735 $5,590 $5,625
====== ====== ======
- --------------------------------------------------------------------------------
</TABLE>
Deferred tax assets (liabilities) consist of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Inventories.............. $1,333 $1,226 $1,292
Accrued liabilities...... 1,753 1,331 1,352
------ ------ ------
3,086 2,557 2,644
Non-current:
Depreciation............. (5,033) (3,883) (3,010)
Postretirement health
benefits obligation... 9,551 9,002 8,692
Other.................... (129) 590 (182)
------ ------ ------
4,389 5,709 5,500
------ ------ ------
$7,475 $8,266 $8,144
====== ====== ======
- --------------------------------------------------------------------------------
</TABLE>
The Company made income tax payments of $4,600,000, $5,600,000 and $6,018,000 in
1996, 1995 and 1994, respectively.
<PAGE> 5
The Gorman-Rupp Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE E - PENSIONS: The Company has a defined benefit pension plan covering
substantially all employees. The Company's policy is to fund the maximum tax
deductible contribution. The plan provides benefits based upon years of service
and compensation.
The components of pension expense are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned $ 1,172 $ 851 $ 1,128
Interest cost................ 1,624 1,376 1,467
Return on plan assets........ (2,220) (2,443) 1,069
Net amortization and deferral 657 1,038 (3,215)
------- ----- -------
$ 1,233 $ 822 $ 449
======= ===== =======
- --------------------------------------------------------------------------------
</TABLE>
The funded status of the Plan at November 1, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
accumulated benefit obligation:
Vested...................... $15,936 $15,191
Non-vested.................. 1,170 157
------- -------
$17,106 $15,348
======= =======
Plan assets at fair value .......... $21,714 $18,630
Actuarial present value of projected
benefit obligation ............ (24,150) (22,027)
------- -------
Plan assets less than projected
benefit obligation ............ (2,436) (3,397)
Unrecognized net loss .............. 1,433 2,235
Unrecognized transition asset....... (1,043) (1,217)
Unrecognized prior service cost..... 125 160
------- -------
Net pension (liability) at December 31 $(1,921) $(2,219)
======= =======
- --------------------------------------------------------------------------------
</TABLE>
The projected benefit obligation was determined using an assumed discount rate
of 7.25% in 1996 and 1995. Annual salary increases are assumed to be 4.5% in
1996 and 1995. The long-term rate of return on plan assets was assumed to be
8.0% in each year. Plan assets are invested principally in guaranteed investment
contracts and equity and fixed income funds.
NOTE F - POSTRETIREMENT HEALTH BENEFITS: The Company sponsors a non-contributory
defined benefit health care plan that provides health benefits to retirees and
their spouses. The Company's policy is to fund the cost of these benefits as
incurred.
The following table presents the plan's funded status reconciled with amounts
recognized in the Company's balance sheets.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement
health benefits obligation:
Retirees...................... $ 5,901 $ 7,395
Fully eligible active
plan participants...... 5,333 5,694
Other active plan participants 4,268 3,209
------- -------
Accumulated benefits obligation....... 15,502 16,298
Unrecognized assets:
Net gain......................... 3,913 2,038
Prior service cost............... 4,582 5,106
------- -------
Accrued postretirement health
benefits obligation.............. $23,997 $23,442
======= =======
- --------------------------------------------------------------------------------
</TABLE>
Postretirement health benefits expense includes the following components:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost.............. $ 675 $ 661 $ 785
Interest cost 1,138 1,336 1,144
Net amortization of
unrecognized assets. (655) (556) (525)
------ ------ ------
$1,158 $1,441 $1,404
====== ====== ======
- --------------------------------------------------------------------------------
</TABLE>
The weighted-average discount rate used in determining the accumulated
postretirement health benefits obligation was 7.25% in 1996 and 1995. The
weighted-average annual assumed rate of increase in the per capita cost of
covered benefits (i.e., health care cost trend rate) for 1996 is 8.5-10.0%,
(9.0-10.5% in 1995) depending on the age of the retiree, and is assumed to
decrease gradually to 5.0% by 2006 and remain at that level thereafter.
Increasing the assumed health care cost trend rates by one percentage point in
each year would increase the accumulated postretirement health benefits
obligation as of December 31, 1996 by $2,138,000 and postretirement health
benefits expense for the year ended December 31, 1996 by $190,000.
<PAGE> 6
The Gorman-Rupp Company and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
1996 COMPARED TO 1995
1996 was the tenth consecutive year the Company achieved record sales and
income. Sales amounted to $155.2 million in 1996, compared to $149.5 million in
1995, an increase of 3.8%. The increase was principally the result of overall
increases in the prices of products sold and product mix. In mid-year, the
Mansfield Division completed a government contract which began in 1995 and the
reduction in sales was more than offset in the second half of 1996 by commercial
business. Also, Patterson Pump Company began shipping product the second half of
1996 under a restructured agreement with General Electric which schedules
shipments annually through 1999. Other income in 1996 was $491,000 compared to
$1,304,000 in 1995. In 1996 other income is principally the result of interest
earned on short-term investments compared to 1995 which also included income
from leased facilities and gains on the sale of assets.
Cost of products sold as a percentage of net sales was 74.8% in 1996, compared
to 75.6% in 1995. The reduction in cost of products sold was principally the
result of changes in product mix, efficiencies in manufacturing realized from
investment in state-of-the-art technology and machinery and equipment, and
increases in the utilization of manufacturing facilities. These manufacturing
efficiencies continue to help offset increases in manufacturing cost.
Selling, general and administrative expense was 15.4% of net sales in 1996,
compared to 15.2% in 1995. The increase of $1,186,000 in 1996 was principally
the result of increases in employee related expenses and benefits and
advertising expenses related to a construction exposition held every three years
and, to a lesser extent, implementation expenses through mid-year associated
with the upgraded information management system implemented in May of 1996.
The effective income tax rate was 36.6% in 1996, compared to 37.1% in 1995. (See
Note D to the financial statements.)
Record net income in 1996 was $9,928,000, compared to $9,461,000 in 1995, an
increase of $467,000 or 4.9%. Net income as a percent of net sales in 1996 was
6.4%, compared to 6.3% in 1995. Record earnings per share of $1.15 in 1996 was
an increase of $.05 from earnings per share of $1.10 in 1995.
1995 COMPARED TO 1994
Sales of $149.5 million were recorded in 1995, compared to $137.5 million in
1994, an increase of $12.0 million or 8.7%. The increase in net sales was
principally the result of increased business at the Company's Mansfield
Division, shipments relating to a government contract and to a lesser degree,
overall price increases on products and the general economic improvement in
Canada. Other income in 1995 was $1,304,000 compared to $511,000 in 1994. Other
income includes interest earned on short-term investments, income from leased
facilities and gains on sale of assets. The increase in 1995 resulted
principally from the sale of the Company's former Durham Products Division
facilities.
Cost of products sold as a percentage of net sales was 75.6% in 1995, compared
to 74.0% in 1994. The increase in cost of products sold was principally due to
product mix, including the production of products which have higher material
content and increases in spending for employee medical and health care expenses.
Continued efforts to improve manufacturing efficiencies and cost containment
procedures coupled with increased utilization of the manufacturing facilities at
the Company's largest Division continue to help offset the increase in
manufacturing cost.
Selling, general and administrative expense was 15.2% of net sales in 1995,
compared to 15.5% in 1994. However, there was an increase of $1,447,000 in 1995
which was principally the result of increased employee related expenses and
benefits, interest expense, continued expenses associated with the design and
implementation of upgraded information management systems and professional fees.
The effective income tax rate was 37.1% in 1995, compared to 37.6% in 1994. (See
Note D to the financial statements.)
Record net income in 1995 was $9,461,000, compared to net income of $9,327,000
in 1994, an increase of 1.4%. Net income as a percent of net sales in 1995 was
6.3%, as compared to 6.8% in 1994. Net income per share in 1995 was a record
$1.10, an increase of $.01 from net income per share of $1.09 in 1994.
LIQUIDITY AND SOURCES OF CAPITAL
Cash and cash equivalents were $4.3 million as of December 31, 1996. The Company
has $7.0 million in bank short-term lines of credit available for borrowing at
December 31, 1996.
The Company also maintains an unsecured revolving credit facility which provides
for maximum borrowings of $8.0 million, $3.4 million of which is available. As
of December 31, 1996, $3.8 million had been borrowed and $.8 million covered
outstanding letters of credit.
During 1996, the Company financed its capital improvements and working capital
requirements through internally generated funds and line of credit arrangements
with banks. Capital expenditures for 1997 are expected to be financed through
internally generated funds and existing credit arrangements.
The ratio of current assets to current liabilities was 4.7 to 1 at December 31,
1996, compared to 3.6 to 1 at December 31, 1995. Management believes that it has
adequate working capital and a healthy liquidity position.
IMPACT OF INFLATION
The Company continues to implement programs that improve productivity and
efficiency in a stable economy.
<PAGE> 7
The Gorman-Rupp Company and Subsidiaries
TEN YEAR SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(Thousands of dollars, except per share amounts)
1996 1995 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING RESULTS:
Net sales $155,187 $149,489 $137,508 $131,535
Gross profit 39,127 36,516 35,763 32,699
Income taxes 5,735 5,590 5,625 5,063
Income (1) 9,928 9,461 9,327 8,795
Return on net sales (%) 6.4 6.3 6.8 6.7
Sales dollars per employee 159.3 153.8 138.5 133.9
FINANCIAL POSITION:
Current assets $ 71,926 $ 71,401 $ 60,070 $ 55,746
Current liabilities 15,199 19,727 16,391 14,382
Working capital 56,727 51,674 43,679 41,364
Current ratio 4.7 3.6 3.7 3.9
Property, plant and
equipment - net 40,549 42,163 40,879 36,835
Capital additions 4,036 8,229 8,553 10,277
Total assets 117,650 119,816 107,100 98,706
Shareholders' equity 72,737 67,240 61,608 56,911
Dividends paid 4,567 4,466 4,209 4,122
Average number of employees 974 972 993 982
SHAREHOLDER INFORMATION:
Income per share (1) $1.15 $1.10 $1.09 $1.02
Cash dividends per share .53 .52 .49 .48
Shareholders' equity per share at December 31, 8.44 7.81 7.18 6.63
Average number of shares outstanding 8,617,168 8,587,466 8,579,633 8,588,493
<FN>
(1) Income in 1992 is before the cumulative effect of a change in accounting
principle which reduced income by $11,886,000 or $1.38 per share.
*Includes the acquisition of Patterson Pump Company in November 1988.
</TABLE>
- --------------------------------------------------------------------------------
RANGES OF STOCK PRICES
The high and low sales price and dividends per share for Common Shares traded on
the American Stock Exchange were:
<TABLE>
<CAPTION>
Sales Price of Common Shares Dividends Per Share
1996 1995 1996 1995
-------------------- ------------------- ---- ----
Quarter High Low High Low
<S> <C> <C> <C> <C> <C> <C>
First............................ $16.375 $14.125 $18.250 $15.000 $.13 $.13
Second........................... 15.375 12.000 16.000 14.000 .13 .13
Third............................ 14.250 12.250 17.625 13.000 .13 .13
Fourth........................... 14.875 12.875 16.625 14.125 .14 .13
</TABLE>
- --------------------------------------------------------------------------------
Shareholder information reported by Transfer Agent and Registrar, National City
Bank, February 14, 1997.
<TABLE>
<CAPTION>
Holders Shares
------- ---------
<S> <C> <C>
Individuals............................................. 1,260 2,574,555
Nominees, Brokers and Other ............................ 34 6,043,828
----- ---------
TOTAL 1,294 8,618,383
===== =========
</TABLE>
An additional 246,793 Common Shares are held in Treasury.
- --------------------------------------------------------------------------------
Summary of Quarterly Results of Operations
The following is a summary of unaudited quarterly results of operations for the
years ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
(Thousands of dollars, except per share amounts)
QUARTER ENDED 1996 MAR. 31 JUNE 30 SEPT. 30 DEC. 31
------- ------- -------- -------
<S> <C> <C> <C> <C>
Net sales............ $38,006 $36,251 $39,625 $41,305
Gross profit......... 8,897 8,918 10,136 11,176
Net income........... 1,974 1,821 2,911 3,222
Net income per share. .23 .21 .34 .37
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended 1995 Mar. 31 June 30 Sept. 30 Dec. 31
------- ------- -------- -------
<S> <C> <C> <C> <C>
Net sales............ $36,224 $37,845 $38,231 $37,189
Gross profit......... 9,300 9,270 9,210 8,736
Net income........... 2,508 2,154 2,518 2,281
Net income per share. .29 .25 .30 .26
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988* 1987
---- ---- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C>
$126,019 $123,442 $119,715 $114,253 $ 82,750 $ 74,435
30,975 29,872 28,602 27,663 22,308 20,460
4,693 4,664 4,888 4,638 4,221 4,851
7,966 7,689 7,342 6,771 6,618 5,919
6.3 6.2 6.1 5.9 8.0 8.0
125.6 120.0 120.7 118.6 106.9 99.2
$ 50,152 $ 53,642 $ 50,531 $ 48,793 $ 44,118 $ 39,663
12,380 14,471 14,805 15,871 14,789 6,402
37,772 39,171 35,726 32,922 29,329 33,261
4.1 3.7 3.4 3.1 3.0 6.2
30,807 30,838 26,134 24,479 22,795 16,890
4,496 8,224 4,962 4,844 2,873 2,100
86,434 85,131 77,643 74,560 68,695 57,119
52,759 61,256 57,310 53,711 50,476 48,248
3,923 3,820 3,743 3,667 3,399 3,258
1,003 1,029 992 963 774 750
$ .92 $ .89 $ .85 $ .79 $ .76 $ .68
.46 .45 .44 .43 .39 .38
6.14 7.13 6.67 6.25 5.83 5.56
8,594,255 8,594,255 8,594,255 8,594,255 8,655,119 8,682,711
</TABLE>
- --------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
Board of Directors and Shareholders
The Gorman-Rupp Company
We have audited the accompanying consolidated balance sheets of
The Gorman-Rupp Company and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of income, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1996,
appearing on pages 10 through 14. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the consolidated financial
position of The Gorman-Rupp Company and subsidiaries at December 31, 1996 and
1995, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
January 31, 1997
<PAGE> 1
Exhibit (21)
SUBSIDIARIES OF THE COMPANY
---------------------------
The Company has three wholly owned subsidiaries: (i) Gorman-Rupp of Canada
Limited, organized under the laws of the Province of Ontario; (ii) The
Gorman-Rupp International Company, organized under the laws of the State of
Ohio; and (iii) Patterson Pump Company, organized under the laws of the State of
Ohio. The consolidated financial statements of the Company, filed as a part of
this Form 10-K, include the account of each such subsidiary.
26
<PAGE> 1
Exhibit (23)
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of The Gorman-Rupp Company of our report dated January 31, 1997, included in the
1996 Annual Report to Shareholders of The Gorman-Rupp Company.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-47712) pertaining to the Employee Stock Purchase Plan of The
Gorman-Rupp Company and in the related Prospectus, and in the Registration
Statement (Form S-8 No. 333-03395) pertaining to the Individual Profit Sharing
Retirement Plan of The Gorman-Rupp Company and in the related Prospectus of our
report dated January 31, 1997, with respect to the consolidated financial
statements of The Gorman-Rupp Company incorporated by reference in this Annual
Report (Form 10-K) for the year ended December 31, 1996.
/s/ Ernst & Young LLP
Cleveland, Ohio
March 24, 1997
27
<PAGE> 1
Exhibit (24)
THE GORMAN-RUPP COMPANY
CERTIFICATE OF THE SECRETARY
The undersigned hereby certifies that he is the duly elected, qualified and
acting Corporate Secretary of The Gorman-Rupp Company, an Ohio corporation (the
"Company"), and that the following resolutions were duly adopted by the
Company's Board of Directors at a duly noticed and called meeting held on
January 23, 1997 at which a quorum was present and acting throughout, which
resolutions have not been amended, rescinded or modified and are in full force
and effect on the date hereof.
RESOLVED, that the officers of the Company, and each of them, hereby are
authorized, for and on behalf of the Company, to prepare, sign and file, or
cause to be prepared, signed and filed, with the Securities and Exchange
Commission, under the Securities Exchange Act of 1934, the Company's 1996 Annual
Report on Form 10-K, and any and all amendments thereto, and to do or cause to
be done all things necessary or advisable in connection therewith.
FURTHER RESOLVED, that John A. Walter, Jeffrey S. Gorman, Robert E.
Kirkendall and Anthony R. Moore, and each of them, hereby are appointed
attorneys for the Company, with full power of substitution, for and in the name,
place and stead of the Company, to sign and file the Company's 1996 Annual
Report on Form 10-K and any and all amendments thereto, and any and all other
documents in connection therewith, with full power and authority to do and
perform any and all acts necessary or advisable.
FURTHER RESOLVED, that the officers of the Company and each of them, hereby
are authorized, for and on behalf of the Company, to execute a power of attorney
evidencing the foregoing appointments.
IN WITNESS WHEREOF, I have hereunto signed this Certificate as of the 24th
day of March, 1997.
/s/ ROBERT E. KIRKENDALL
---------------------------
Robert E. Kirkendall
Corporate Secretary
28
<PAGE> 2
Exhibit (24)
POWER OF ATTORNEY
The undersigned, The Gorman-Rupp Company (the "Company"), by the
undersigned officer of the Company hereunto duly authorized, hereby appoints
John A. Walter, Jeffrey S. Gorman, Robert E. Kirkendall and Anthony R. Moore,
and each of them, as attorneys for the Company with full power of substitution,
for and in its name, place and stead, to sign and file with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, the
Company's 1996 Annual Report on Form 10-K and any and all amendments thereto,
and any and all other documents to be filed with the Securities and Exchange
Commission or otherwise in connection therewith, with full power and authority
to do and perform any and all acts whatsoever necessary or advisable.
Executed this 24th day of March 1997.
THE GORMAN-RUPP COMPANY
BY: /s/ ROBERT E. KIRKENDALL
---------------------------
Robert E. Kirkendall
Corporate Secretary
29
<PAGE> 3
Exhibit (24)
POWER OF ATTORNEY
The undersigned Officers and Directors of The Gorman-Rupp Company (the
"Company") hereby appoint John A. Walter, Jeffrey S. Gorman, Robert E.
Kirkendall, and Anthony R. Moore, and each of them, as attorneys for each of the
undersigned, with full power of substitution, for and in the name, place and
stead of each of the undersigned, to sign and file with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, the
Company's 1996 Annual Report on Form 10-K and any and all amendments thereto,
and any and all other documents to be filed with the Securities and Exchange
Commission or otherwise in connection therewith, with full power and authority
to do and perform any and all acts whatsoever necessary or advisable.
Executed this 23rd day of January 1997.
/s/ JOHN A. WALTER President, Principal Executive Officer
- -------------------------- and Director
John A. Walter
/s/ KENNETH E. DUDLEY Treasurer and Principal Financial
- -------------------------- and Accounting Officer
Kenneth E. Dudley
/s/ JAMES C. GORMAN Director
- --------------------------
James C. Gorman
/s/ WILLIAM A. CALHOUN Director
- --------------------------
William A. Calhoun
/s/ JEFFREY S. GORMAN Director
- --------------------------
Jeffrey S. Gorman
/s/ THOMAS E. HOAGLIN Director
- --------------------------
Thomas E. Hoaglin
/s/ PETER B. LAKE Director
- --------------------------
Peter B. Lake
/s/ JAMES R. WATSON Director
- --------------------------
James R. Watson
30
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ART. 5
FDS FOR 1996 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,284
<SECURITIES> 0
<RECEIVABLES> 29,894
<ALLOWANCES> 0
<INVENTORY> 33,621
<CURRENT-ASSETS> 71,926
<PP&E> 84,667
<DEPRECIATION> 44,118
<TOTAL-ASSETS> 117,650
<CURRENT-LIABILITIES> 15,199
<BONDS> 0
<COMMON> 5,141
0
0
<OTHER-SE> 67,596
<TOTAL-LIABILITY-AND-EQUITY> 117,650
<SALES> 155,187
<TOTAL-REVENUES> 155,678
<CGS> 116,060
<TOTAL-COSTS> 140,015
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,663
<INCOME-TAX> 5,735
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,928
<EPS-PRIMARY> 1.15
<EPS-DILUTED> 1.15
</TABLE>
