<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 six months ended June 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 June 30, 1997 -----
common, without par value, 8,610,683
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 Six Months Ended
June 30 June 30
1997 1996 1997 1996
INCOME --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $40,163 $36,251 $80,693 $74,257
Other income 150 125 289 241
---------- ---------- ---------- ----------
TOTAL INCOME 40,313 36,376 80,982 74,498
DEDUCTIONS FROM INCOME
Cost of products sold 29,591 27,333 60,214 56,442
Selling, general and
administrative expenses 6,233 6,013 11,900 11,822
---------- ---------- ---------- ----------
TOTAL DEDUCTIONS 35,824 33,346 72,114 68,264
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 4,489 3,030 8,868 6,234
Income taxes 1,677 1,209 3,320 2,439
---------- ---------- ---------- ----------
NET INCOME $2,812 $1,821 $5,548 $3,795
========== ========== ========== ==========
Net Income Per Share $0.32 $0.21 $0.64 $0.44
Dividends Paid Per Share $0.14 $0.13 $0.28 $0.26
Average Shares Outstanding 8,613,814 8,618,383 8,616,086 8,615,939
</TABLE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)
Six Months Ended
June 30
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES: --------- ---------
<S> <C> <C>
Net income $5,548 $3,795
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,912 2,749
Changes in operating assets and liabilities (485) (2,620)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions, net (4,346) (1,645)
Other (214) (58)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (2,412) (2,240)
Change in treasury shares (130) 165
Repayments to bank (1,430) (1,672)
------- -------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (557) (1,526)
CASH AND CASH EQUIVALENTS:
Beginning of year 4,284 3,250
------- -------
June 30 $3,727 $1,724
======= =======
</TABLE>
2
<PAGE> 3
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands of dollars)
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
ASSETS --------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $3,727 $4,284
Accounts receivable 29,854 29,894
Inventories 35,241 33,621
Other current assets and deferred income taxes 4,442 4,127
------------ ------------
TOTAL CURRENT ASSETS 73,264 71,926
OTHER ASSETS 969 786
DEFERRED INCOME TAXES 4,392 4,389
PROPERTY, PLANT AND EQUIPMENT 88,797 84,667
Less allowances for depreciation 46,860 44,118
------------ ------------
PROPERTY, PLANT AND EQUIPMENT - NET 41,937 40,549
------------ ------------
TOTAL ASSETS $120,562 $117,650
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $6,134 $6,659
Payrolls and related liabilities,
accrued expenses 9,324 7,439
Income taxes 1,421 1,101
------------ ------------
TOTAL CURRENT LIABILITIES 16,879 15,199
LONG TERM DEBT 2,366 3,796
PENSION LIABILITY 1,324 1,921
POSTRETIREMENT HEALTH BENEFITS OBLIGATION 24,328 23,997
SHAREHOLDERS' EQUITY
Common shares, without par value
at stated capital amount 5,135 5,141
Retained earnings 71,513 68,502
Translation adjustments (983) (906)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 75,665 72,737
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $120,562 $117,650
============ ============
Common shares - authorized 14,000,000 14,000,000
* Common shares - outstanding 8,610,683 8,618,383
Common shares - treasury 254,493 246,793
* After deducting treasury shares
</TABLE>
3
<PAGE> 4
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 six month period ended June 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>
June 30 December 31
(Thousands of dollars) 1997 1996
--------- ---------
<S> <C> <C>
Raw materials and in-process $17,602 $16,793
Finished parts 13,995 13,352
Finished products 3,644 3,476
------- -------
Inventories $35,241 $33,621
======= =======
</TABLE>
4
<PAGE> 5
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Second Quarter 1997 vs Second Quarter 1996
- ------------------------------------------
Net sales were $40,163,000 in 1997 compared to $36,251,000 in 1996, an increase
of 10.8%. Approximately 85% of the increase was due to increased sales volume at
the Mansfield Division and Patterson Pump Company.
Other income was $150,000 in 1997 compared to $125,000 in 1996. This increase
was due primarily to an increase in interest income.
Cost of products sold in 1997 was $29,591,000 compared to $27,333,000 in 1996.
The largest factor in the increase was material needed to support the increased
sales. An increase in payroll related expenses was the next largest single item.
As a percentage of net sales, cost of products sold was 73.7% in 1997 compared
to 75.4% in 1996. Some change in product mix resulted in the lower percentage in
1997.
Selling, general and administrative expenses increased from $6,013,000 in 1996
to $6,233,000 in 1997 with increases in bad debt expense, medical insurance and
payroll related expenses being the largest reasons for the increase.
Income before income taxes was $4,489,000 in 1997 compared to $3,030,000 in
1996, an increase of $1,459,000. Income tax expense increased from $1,209,000 in
1996 to $1,677,000 in 1997, primarily as a result of the increase in profit. The
effective tax rate was 37.4% in 1997 compared to 39.9% in 1996.
Net income in 1997 of $2,812,000 increased $991,000 from $1,821,000 in 1996, an
increase of 54.4%. As a percent of net sales, net income was 7.0 % in 1997 and
5.0% in 1996. Net income per share was $.32 in 1997, an increase of $.11 from
the $.21 in 1996.
5
<PAGE> 6
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
Six Months 1997 vs Six Months 1996
- ----------------------------------
Net sales were $80,693,000 in 1997, an increase of $6,436,000 or 8.7% over the
$74,257,000 in 1996. Approximately 75% of the increase was due to increased
sales volume at Patterson Pump Company.
Other income was $289,000 in 1997 compared to $241,000 in 1996. This increase
was due primarily to an increase in interest income.
Cost of products sold in 1997 was $60,214,000 compared to $56,442,000 in 1996.
The largest factor in the increase was material needed to support the increased
sales. An increase in payroll related expenses was the next largest single item.
As a percentage of net sales, cost of products sold was 74.6% in 1997 compared
to 76.0% in 1996. Some change in product mix resulted in the lower percentage in
1997.
Selling, general and administrative expenses increased from $11,822,000 in 1996
to $11,900,000 in 1997 with increases in payroll related expenses, bad debt
expense and medical insurance being the largest reasons for the increase.
Income before income taxes was $8,868,000 in 1997 compared to $6,234,000 in
1996, an increase of $2,634,000. Income tax expense increased from $2,439,000 in
1996 to $3,320,000 in 1997, primarily as a result of the increase in profit. The
effective income tax rate was 37.4% in 1997 compared to 39.1% in 1996.
Net income of $5,548,000 in 1997 was up $1,753,000 from $3,795,000 in 1996, an
increase of 46.2%. As a percent of net sales, net income was 6.9 % in 1997 and
5.1% in 1996. Net income per share was $.64 in 1997, an increase of $.20 from
the $.44 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 4.3 to 1 at June 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
June 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 July 24, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,727
<SECURITIES> 0
<RECEIVABLES> 30,492
<ALLOWANCES> 638
<INVENTORY> 35,241
<CURRENT-ASSETS> 73,264
<PP&E> 88,797
<DEPRECIATION> 46,860
<TOTAL-ASSETS> 120,562
<CURRENT-LIABILITIES> 16,879
<BONDS> 0
<COMMON> 5,135
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 120,562
<SALES> 80,693
<TOTAL-REVENUES> 80,982
<CGS> 60,214
<TOTAL-COSTS> 72,114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 277
<INTEREST-EXPENSE> 113
<INCOME-PRETAX> 8,868
<INCOME-TAX> 3,320
<INCOME-CONTINUING> 5,548
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,548
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
</TABLE>
