<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For nine months ended September 30, 1997 Commission File Number 1-6747
------------------ ------
The Gorman-Rupp Company
- ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0253990
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
305 Bowman Street, P. O. Box 1217, Mansfield, Ohio 44901
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(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 by 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, 1997 -----
common, without par value, 8,599,600
Page 1 of 7 pages
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PART I - FINANCIAL INFORMATION
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCOME
Net sales $ 42,278 $ 39,625 $ 122,971 $ 113,882
Other income 134 131 423 372
---------- ---------- ---------- ----------
TOTAL INCOME 42,412 39,756 123,394 114,254
DEDUCTIONS FROM INCOME
Cost of products sold 31,503 29,489 91,717 85,931
Selling, general and
administrative expenses 6,133 5,661 18,033 17,483
---------- ---------- ---------- ----------
TOTAL DEDUCTIONS 37,636 35,150 109,750 103,414
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 4,776 4,606 13,644 10,840
Income taxes 1,768 1,695 5,088 4,134
---------- ---------- ---------- ----------
NET INCOME $ 3,008 $ 2,911 $ 8,556 $ 6,706
========== ========== ========== ==========
Net Income Per Share $ 0.35 $ 0.34 $ 0.99 $ 0.78
Dividends Paid Per Share $ 0.14 $ 0.13 $ 0.42 $ 0.39
Average Shares Outstanding 8,603,013 8,618,383 8,611,680 8,616,760
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1997 1996
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,556 $ 6,706
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,414 4,121
Changes in operating assets and liabilities (165) 5,203
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions, net (5,124) (2,926)
Other (43) (167)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (3,616) (3,361)
Change in treasury shares (338) 165
Repayments to bank (278) (7,852)
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NET INCREASE IN CASH
AND CASH EQUIVALENTS 3,406 1,889
CASH AND CASH EQUIVALENTS:
Beginning of year 4,284 3,250
-------- --------
September 30 $ 7,690 $ 5,139
======== ========
</TABLE>
2
<PAGE> 3
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands of dollars)
<TABLE>
<CAPTION>
September 30 December 31
1997 1996
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,690 $ 4,284
Accounts receivable 30,521 29,894
Inventories 37,626 33,621
Other current assets and deferred income taxes 4,317 4,127
------------ ------------
TOTAL CURRENT ASSETS 80,154 71,926
OTHER ASSETS 876 786
DEFERRED INCOME TAXES 4,391 4,389
PROPERTY, PLANT AND EQUIPMENT 85,984 84,667
Less allowances for depreciation 44,830 44,118
------------ ------------
PROPERTY, PLANT AND EQUIPMENT - NET 41,154 40,549
------------ ------------
TOTAL ASSETS $ 126,575 $ 117,650
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 6,756 $ 6,659
Payrolls and related liabilities,
accrued expenses 10,716 7,439
Income taxes 2,688 1,101
------------ ------------
TOTAL CURRENT LIABILITIES 20,160 15,199
LONG TERM DEBT 3,518 3,796
PENSION LIABILITY 1,124 1,921
POSTRETIREMENT HEALTH BENEFITS OBLIGATION 24,493 23,997
SHAREHOLDERS' EQUITY
Common shares, without par value
at stated capital amount 5,162 5,141
Retained earnings 73,082 68,502
Translation adjustments (964) (906)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 77,280 72,737
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 126,575 $ 117,650
============ ============
Common shares - authorized 14,000,000 14,000,000
* Common shares - outstanding 8,599,600 8,618,383
Common shares - treasury 265,576 246,793
* After deducting treasury shares
</TABLE>
3
<PAGE> 4
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
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 the management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
month period and nine month period ended September 30, 1997 are not necessarily
indicative of results that may be expected for the year ending December 31,
1997. 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, 1996.
NOTE B - INVENTORIES
The major components of inventories are as follows:
<TABLE>
<CAPTION>
September 30 December 31
(Thousands of dollars) 1997 1996
------------ -----------
<S> <C> <C>
Raw materials and in-process $18,793 $16,793
Finished parts 14,943 13,352
Finished products 3,890 3,476
--------- --------
Inventories $37,626 $33,621
========= ========
</TABLE>
4
<PAGE> 5
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Third Quarter 1997 vs Third Quarter 1996
- ------------------------------------------
Net sales were $42,278,000 in 1997 compared to $39,625,000 in 1996, an increase
of 6.7%. Most of the increase was due to increased sales at the Patterson Pump
Company.
Other income was $134,000 in 1997 compared to $131,000 in 1996.
Cost of products sold in 1997 was $31,503,000 compared to $29,489,000 in 1996.
The largest factors in the increase were higher material and labor costs
incurred to support increased sales. As a percentage of net sales, cost of
products sold was 74.5% in 1997 compared to 74.4% in 1996. Some change in
product mix resulted in the higher gross margin percentage in 1997.
Selling, general and administrative expenses increased from $5,661,000 in 1996
to $6,133,000 in 1997 with increases in advertising and travel being the largest
reasons for the increase.
Income before income taxes was $4,776,000 in 1997 compared to $4,606,000 in
1996, an increase of $170,000. Income tax expense increased from $1,695,000 in
1996 to $1,768,000 in 1997, primarily as a result of the increase in profit. The
effective tax rate was 37.0% in 1997 compared to 36.8% in 1996.
Net income in 1997 of $3,008,000 increased $97,000 from $2,911,000 in 1996. As a
percent of net sales, net income was 7.1% in 1997 and 7.3% in 1996. Net income
per share was $.35 in 1997, an increase of $.01 from the $.34 in 1996.
5
<PAGE> 6
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
Nine Months 1997 vs Nine Months 1996
- ------------------------------------------
Net sales were $122,971,000 in 1997, an increase of $9,089,000 or 8.0% over the
$113,882,000 in 1996. Most of the increase was due to increased sales at the
Patterson Pump Company.
Other income was $423,000 in 1997 compared to $372,000 in 1996. This increase
was primarily due to higher interest income.
Cost of products sold in 1997 was $91,717,000 compared to $85,931,000 in 1996.
The largest factors in the increase were higher material and labor costs
incurred to support increased sales. As a percentage of net sales, cost of
products sold was 74.6% in 1997 compared to 75.5% in 1996. Some change in
product mix resulted in the lower gross margin percentage in 1997.
Selling, general and administrative expenses increased from $17,483,000 in 1996
to $18,033,000 in 1997 with increases in payroll and travel expenses being the
largest reasons for the increase.
Income before income taxes was $13,644,000 in 1997 compared to $10,840,000 in
1996, an increase of $2,804,000. Income tax expense increased from $4,134,000 in
1996 to $5,088,000 in 1997, primarily as a result of the increase in profit. The
effective income tax rate was 37.3% in 1997 compared to 38.1% in 1996.
Net income of $8,556,000 in 1997 increased to $1,850,000 from $6,706,000 in
1996. As a percent of net sales, net income was 7.0% in 1997 and 5.9% in 1996.
Net income per share was $.99 in 1997, an increase of .21 from $.78 in 1996.
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 4.0 to 1 at September 30,
1997 and 4.7 to 1 at December 31, 1996.
The Company presently has adequate working capital, adequate borrowing capacity
and a healthy liquidity position.
6
<PAGE> 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,
1997 - 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 October 27, 1997 Kenneth E. Dudley
----------------------
/S/ Kenneth E. Dudley
------------------------------
(Signature)
Treasurer & Principal
Financial Officer
7
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000042682
<NAME> THE GORMAN-RUPP COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,690
<SECURITIES> 0
<RECEIVABLES> 31,202
<ALLOWANCES> 681
<INVENTORY> 37,626
<CURRENT-ASSETS> 80,154
<PP&E> 85,984
<DEPRECIATION> 44,830
<TOTAL-ASSETS> 126,575
<CURRENT-LIABILITIES> 20,160
<BONDS> 0
0
0
<COMMON> 5,162
<OTHER-SE> 72,118
<TOTAL-LIABILITY-AND-EQUITY> 126,575
<SALES> 122,971
<TOTAL-REVENUES> 123,394
<CGS> 91,717
<TOTAL-COSTS> 109,750
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 355
<INTEREST-EXPENSE> 166
<INCOME-PRETAX> 13,644
<INCOME-TAX> 5,088
<INCOME-CONTINUING> 8,556
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,556
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
</TABLE>
