<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1999 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 be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Shares outstanding at March 31, 1999 -----
common, without par value, 8,572,016
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
March 31
1999 1998
INCOME --------- ---------
<S> <C> <C>
Net sales $43,184 $43,703
Other income 202 223
--------- ---------
TOTAL INCOME 43,386 43,926
DEDUCTIONS FROM INCOME
Cost of products sold 31,890 32,596
Selling, general and
administrative expenses 6,818 6,054
--------- ---------
TOTAL DEDUCTIONS 38,708 38,650
--------- ---------
INCOME BEFORE INCOME TAXES 4,678 5,276
Income taxes 1,817 2,025
--------- ---------
NET INCOME $2,861 $3,251
========= =========
Basic And Diluted
Earnings Per Share $0.33 $0.38
Dividends Paid Per Share $0.15 $0.14
Average Shares Outstanding 8,579,830 8,615,292
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands of dollars)
Three Months Ended
March 31
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES: --------- ---------
Net income $2,861 $3,251
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,494 1,538
Changes in operating assets and liabilities (582) 6,705
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions, net (1,306) (2,990)
Change in short-term investments (441) (2,880)
Other (177) (2)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (1,288) (1,206)
Change in treasury shares (148) 248
(Repayments to) Borrowings from bank 1,237 (4,457)
NET (DECREASE) INCREASE IN CASH --------- ---------
AND CASH EQUIVALENTS 1,650 207
CASH AND CASH EQUIVALENTS:
Beginning of year 2,359 836
--------- ---------
March 31 $4,009 $1,043
========= =========
</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
1999 1998
ASSETS --------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $4,009 $2,359
Short-term investments 6,747 6,306
Accounts receivable 30,187 26,282
Inventories 38,215 38,323
Other current assets and deferred income taxes 5,460 5,286
--------- ---------
TOTAL CURRENT ASSETS 84,618 78,556
OTHER ASSETS 807 632
DEFERRED INCOME TAXES 4,369 4,373
PROPERTY, PLANT AND EQUIPMENT 94,536 93,363
Less allowances for depreciation 50,807 49,447
--------- ---------
PROPERTY, PLANT AND EQUIPMENT - NET 43,729 43,916
--------- ---------
TOTAL ASSETS $133,523 $127,477
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $9,194 $8,666
Payrolls and related liabilities,
accrued expenses 9,811 8,222
Income taxes 1,939 543
--------- ---------
TOTAL CURRENT LIABILITIES 20,944 17,431
LONG TERM DEBT 2,020 783
POSTRETIREMENT BENEFITS 25,385 25,557
SHAREHOLDERS' EQUITY
Common shares, without par value
at stated capital amount 5,110 5,116
Retained earnings 81,657 80,314
Accumulated other comprehensive income (1,593) (1,724)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 85,174 83,706
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $133,523 $127,477
========= =========
Common shares - authorized 14,000,000 14,000,000
* Common shares - outstanding 8,572,016 8,581,236
Common shares - treasury 293,160 283,940
* After deducting treasury shares
</TABLE>
3
<PAGE> 4
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1999
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, 1999 are not necessarily indicative of results that may
be expected for the year ending December 31, 1999. 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, 1998.
NOTE B - INVENTORIES
The major components of inventories are as follows:
March 31 December 31
(Thousands of dollars) 1999 1998
--------- ---------
Raw materials and in-process $21,275 $21,335
Finished parts 13,579 13,617
Finished products 3,361 3,371
--------- ---------
$38,215 $38,323
========= =========
NOTE C - COMPREHENSIVE INCOME
During the first quarter of 1999 and 1998, total comprehensive income amounted
to $2,992,000 and $3,306,000.
4
<PAGE> 5
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
First Quarter 1999 vs First Quarter 1998
- ------------------------------------------
Net sales were $43,184,000 in 1999, a decrease of $519,000 or 1.2% from the
$43,703,000 in 1998. Most of the decrease was due to decreased sales of the
fabricated turbine diffusers.
Other income was $202,000 in 1999 compared to $223,000 in 1998. Most of this
decrease was a result of decreased interest income.
Cost of products sold in 1999 was $31,890,000 compared to $32,596,000 in 1998.
The decrease was primarily due to the use of materials to support the reduced
sales. As a percentage of net sales, cost of products sold in 1999 was 73.8%
compared to 74.6% in 1998. The reduction is principally the result of changes in
product mix and manufacturing efficiencies.
Selling, general and administrative expenses increased to $6,818,000 in 1999
from $6,054,000 in 1998 principally due to an increase in advertising expenses
associated with trade shows. More shows, including ConExpo, were held in 1999
than 1998. ConExpo is the largest trade show related to the construction
industry in the U.S. and is held every three years.
Income before income taxes was $4,678,000 in 1999 compared to $5,276,000 in
1998, a decrease of $598,000. Income tax expense decreased from $2,025,000 in
1998 to $1,817,000 in 1999, primarily as a result of the decrease in profit. The
effective income tax rate was 38.8% in 1999 compared to 38.4% in 1998.
Net income in 1999 of $2,861,000 decreased $390,000 from $3,251,000 in 1998. As
a percent of net sales, net income was 6.6% in 1999 and 7.4% in 1998. Net income
per share was $.33 in 1999, a decrease of $.05 from $.38 in 1998.
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 March 31, 1999
and 4.5 to 1 at December 31, 1998.
The Company presently has adequate working capital, adequate borrowing capacity
and a healthy liquidity position.
5
<PAGE> 6
PART I - FINANCIAL INFORMATION
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Impact of Year 2000
- -------------------
The Year 2000 issue, as widely reported, could cause malfunctions in certain
computer-related applications with respect to dates on or after January 1, 2000.
The Company's Year 2000 program provides for assessments of its computer
technology, operating equipment, facilities and suppliers. Assessments,
initiated in 1998, continue to be conducted primarily through internal testing
procedures and inquiry of critical suppliers. Further, individual assessments
regarding significant suppliers of services, product materials and components
continue to be conducted at the Company's various facilities in accordance with
the Company's Year 2000 program.
Management believes the completion in 1998 of additional hardware and software
upgrades to the Company's new management information systems originally
installed in 1996 have enabled manufacturing, financial and distribution systems
to become Year 2000 compliant. Ancillary computer systems are being evaluated in
accordance with the Company's Year 2000 program to assure their compliance.
Costs of the new systems were capitalized in 1996; certain implementation costs
were expensed and related software upgrades were substantially provided through
existing acquisition and maintenance agreements. Any other Year 2000 costs have
not been and are not expected to be material.
Management continues to assess the extent of necessary modifications to its
operating activities and supplier and customer readiness. To date, no
significant issues have been identified and the Company is not aware of any
unresolved Year 2000 issue which would materially impact the Company's
operations and financial 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 March 31, 1999
- 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 April 27, 1999
----------------------
By:/S/Kenneth E. Dudley
------------------------------
Kenneth E. Dudley
Treasurer & Principal
Financial Officer
7
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<CIK> 0000042682
<NAME> N/A
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 4,009
<SECURITIES> 6,747
<RECEIVABLES> 31,026
<ALLOWANCES> 839
<INVENTORY> 38,215
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<PP&E> 94,536
<DEPRECIATION> 50,807
<TOTAL-ASSETS> 133,523
<CURRENT-LIABILITIES> 20,944
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0
0
<COMMON> 5,110
<OTHER-SE> 80,064
<TOTAL-LIABILITY-AND-EQUITY> 133,523
<SALES> 43,184
<TOTAL-REVENUES> 43,386
<CGS> 31,890
<TOTAL-COSTS> 38,708
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<LOSS-PROVISION> 85
<INTEREST-EXPENSE> 51
<INCOME-PRETAX> 4,678
<INCOME-TAX> 1,817
<INCOME-CONTINUING> 2,861
<DISCONTINUED> 0
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<NET-INCOME> 2,861
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
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