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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 three months ended March 31, 1998 Commission File Number 1-6747
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The Gorman-Rupp Company
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(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
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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
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Shares outstanding at March 31, 1998 -----
common, without par value, 8,622,001
Page 1 of 6 pages
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<TABLE>
<CAPTION>
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
March 31
1998 1997
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<S> <C> <C>
INCOME
Net sales $ 43,703 $ 40,530
Other income 223 139
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TOTAL INCOME 43,926 40,669
DEDUCTIONS FROM INCOME
Cost of products sold 32,596 30,623
Selling, general and
administrative expenses 6,054 5,667
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TOTAL DEDUCTIONS 38,650 36,290
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INCOME BEFORE INCOME TAXES 5,276 4,379
Income taxes 2,025 1,643
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NET INCOME $ 3,251 $ 2,736
========== ==========
Basic And Diluted
Earnings Per Share $ 0.38 $ 0.32
Dividends Paid Per Share $ 0.14 $ 0.14
Average Shares Outstanding 8,615,292 8,618,383
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,251 $ 2,736
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,538 1,395
Changes in operating assets and liabilities 6,705 (471)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions, net (2,990) (1,713)
Change in short-term investments (2,880) (1,996)
Other (2) (360)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (1,206) (1,207)
Change in treasury shares 248 0
(Repayments to) Borrowings from bank (4,457) 1,083
NET (DECREASE) INCREASE IN CASH ------- -------
AND CASH EQUIVALENTS 207 (533)
CASH AND CASH EQUIVALENTS:
Beginning of year 836 830
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March 31 $ 1,043 $ 297
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</TABLE>
2
<PAGE> 3
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands of dollars)
<TABLE>
<CAPTION>
March 31 December 31
1998 1997
ASSETS --------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,043 $ 836
Short-term investments 9,781 6,901
Accounts receivable 29,339 31,263
Inventories 37,331 39,761
Other current assets and deferred income taxes 2,550 2,934
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TOTAL CURRENT ASSETS 80,044 81,695
OTHER ASSETS 860 816
DEFERRED INCOME TAXES 4,433 4,435
PROPERTY, PLANT AND EQUIPMENT 88,427 86,997
Less allowances for depreciation 46,044 46,078
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PROPERTY, PLANT AND EQUIPMENT - NET 42,383 40,919
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TOTAL ASSETS $ 127,720 $ 127,865
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,528 $ 7,669
Payrolls and related liabilities,
accrued expenses 9,456 7,908
Income taxes 1,951 1,459
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TOTAL CURRENT LIABILITIES 18,935 17,036
LONG TERM DEBT 2,232 6,689
PENSION LIABILITY 1,258 1,418
POSTRETIREMENT HEALTH BENEFITS OBLIGATION 24,887 24,662
SHAREHOLDERS' EQUITY
Common shares, without par value
at stated capital amount 5,143 5,135
Retained earnings 76,428 74,143
Accumulated other comprehensive income (1,163) (1,218)
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TOTAL SHAREHOLDERS' EQUITY 80,408 78,060
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 127,720 $ 127,865
============ ============
14,000,000 14,000,000
Common shares - authorized
* Common shares - outstanding 8,622,001 8,609,368
Common shares - treasury 243,175 255,808
* After deducting treasury shares
</TABLE>
3
<PAGE> 4
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1998
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 month
period ended March 31, 1998 are not necessarily indicative of results that may
be expected for the year ending December 31, 1998. 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, 1997.
NOTE B - INVENTORIES
The major components of inventories are as follows:
(Thousands of dollars) March 31 December 31
1998 1997
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Raw materials and in-process $22,298 $23,749
Finished parts 11,709 12,471
Finished products 3,324 3,541
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$37,331 $39,761
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NOTE C - COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this Statement had no impact on the Company's net income or shareholders'
equity. Statement 130 requires foreign currency translation adjustments, which
prior to adoption were reported separately in shareholders' equity to be
included in other comprehensive income. Prior year financial statements have
been reclassified to conform to the requirements of Statement 130.
During the first quarter of 1998 and 1997, total comprehensive income amounted
to $3,306,000 and $2,658,000.
4
<PAGE> 5
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
First Quarter 1998 vs First Quarter 1997
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Net sales were $43,703,000 in 1998, an increase of $3,173,000 or 7.8% from the
$40,530,000 in 1997. Most of the increase was due to increased sales at the
Patterson subsidiary.
Other income was $223,000 in 1998 compared to $139,000 in 1997. Most of this
increase was a result of higher interest income.
Cost of products sold in 1998 was $32,596,000 compared to $30,623,000 in 1997.
The increase was primarily due to the use of materials to build additional
product. As a percentage of net sales, cost of products sold in 1998 was 74.6%
compared to 75.6% in 1997. The reduction is principally the result of changes in
product mix and manufacturing efficiencies.
Selling, general and administrative expenses increased to $6,054,000 in 1998
from $5,667,000 in 1997 with an increase in payroll related expenses being the
largest factor.
Income before income taxes was $5,276,000 in 1998 compared to $4,379,000 in
1997, an increase of $897,000. Income tax expense increased from $1,643,000 in
1997 to $2,025,000 in 1998, primarily as a result of an increase in profit. The
effective income tax rate was 38.4% in 1998 compared to 37.5% in 1997.
Net income in 1998 of $3,251,000 increased $515,000 from $2,736,000 in 1997. As
a percent of net sales, net income was 7.4% in 1998 and 6.8% in 1997. Net income
per share was $.38 in 1998, an increase of $.06 from $.32 in 1997.
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 4.2 to 1 at March 31, 1998
and 4.8 to 1 at December 31, 1997.
The Company presently has adequate working capital, adequate borrowing capacity
and a healthy liquidity position.
5
<PAGE> 6
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 March 31, 1998
- 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
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(Registrant)
Date April 28, 1998 Kenneth E. Dudley
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/S/ Kenneth E. Dudley
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(Signature)
Treasurer & Principal
Financial Officer
6
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<NAME> THE GORMAN-RUPP COMPANY
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
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