<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
For the fiscal year ended December 31, 1998 Commission file number 1-6747
----------------- ------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
THE GORMAN-RUPP COMPANY
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio 34-0253990
- --------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of 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
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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, 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 19, 1999. $66,401,024
---------------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock as of March 19, 1999.
Common Shares, without par value--8,572,016
-------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1998 Annual Report to Shareholders incorporated by reference
into Part II (Items 5-8).
Portions of Notice of 1999 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
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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 water,
wastewater, construction, industrial, petroleum, original equipment,
agricultural, 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 1996 through 1998, the total net sales, income before income taxes and
identifiable assets ($000 omitted) of the Company.
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net Sales $171,245 $164,862 $155,187
Income Before Income Taxes 19,152 16,952 15,663
Identifiable Assets 127,477 127,865 117,650
</TABLE>
The Company's product line is composed of pump models ranging in size from 1/2"
to 84" and 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.
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PART I--CONTINUED
ITEM 1. BUSINESS--CONTINUED
In 1998 the Company launched a line of new pump stations, known as Booster
Pumps. These packaged systems consist of pressure booster stations which are
designed for water tower applications and for boosting low residential water
pressure in the municipal and commercial fresh water markets. The manufacture of
Booster Pumps are a result of the combined effort of the Company's Mansfield
Division, historically a leader in the packaged sewage pump market, and
Patterson Pump Company (the Company's wholly owned subsidiary), a current
leading producer of fire pumps for building and industry.
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,
wastewater and fire pump markets, extending the capacity range of the product
line.
The Company continues 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 1998 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 European markets. In 1998 Patterson Pump Company's
majority-owned subsidiary, Patterson Pump Ireland Limited, started assembly of
pumps in Ireland to further serve the European market. The Company continues to
penetrate international markets principally by its aggressive response to
worldwide pump needs. In 1998 the Company also organized a Foreign Sales
Corporation to further enhance its exporting activities. Approximately 16% of
all 1998 sales were made to customers outside the United States (as compared to
15% in 1997 and 12% in 1996).
3
<PAGE> 4
PART I--CONTINUED
ITEM 1. BUSINESS--CONTINUED
COMPETITION
Consolidations of pump companies have occurred within the highly competitive
pump business. Two large independent pump manufacturing companies combined with
other companies in 1997. 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), structural steel, bar stock,
motors, solenoids, engines, seals, and plastic and elastomeric 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, 1998, the Company employed approximately 1,015 persons, of
whom approximately 608 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, 1998, the value of the Company's backlog of unfilled orders
was approximately $48,228,000, of which $28,506,000 was for the unfilled orders
of Patterson Pump Company. All of the backlog at December 31, 1998 is scheduled
to be shipped during 1999. At December 31, 1997, the value of the backlog of
unfilled orders was approximately $47,869,000.
4
<PAGE> 5
PART I--CONTINUED
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; Toccoa, Georgia; and County Westmeath, Ireland. All of the Company's
properties, except the leased facility in Ireland, are owned in fee without any
material encumbrance. The Company also owns in fee an approximately 26,000
square foot facility in Sparks, Nevada which comprises a training center and
warehouse space.
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.
In 1997 the Company purchased 90 acres of undeveloped land near the Mansfield
Lahm Airport for future expansion and consolidation of facilities for the
Mansfield Division and the Corporate Office. In 1998 design work and site
preparation began on the new consolidated facilities project. A plan has been
approved to begin construction in 1999 on the first phase consisting of a
360,000 square foot manufacturing and warehousing plant. Completion of phase one
is projected to take twelve months. No plans or schedule have been determined
for the completion of the multi-phased, approximately one million square foot
consolidated facilities project.
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. In 1998, a 3,000 square foot expansion of the office and
training facilities was completed.
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PART I--CONTINUED
ITEM 2. PROPERTIES--CONTINUED
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 Patterson 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.
The manufacturing facilities occupied by Patterson Pump Ireland Limited in
County Westmeath, Ireland consist of 4,500 square feet of leased manufacturing
space. Office space is shared with another occupant in the building.
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
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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 74 Chairman 1989
John A. Walter 65 Formerly President and
Chief Executive Officer 1989
Jeffrey S. Gorman 46 President and Chief Executive Officer;
General Manager, Mansfield Division 1998/1989
Kenneth E. Dudley 61 Treasurer 1982
Robert E. Kirkendall 56 Corporate Secretary/Assistant Treasurer 1982
William D. Danuloff 51 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 retired from the Company on May 1, 1998.
Previously Mr. Walter was elected to the additional position of Chief Executive
Officer in 1996; he had served as Chief Operating Officer beginning in 1993; he
had also served as Vice President and General Manager of the Industries Division
from 1978 until 1990. Mr. J. S. Gorman was elected President and Chief Executive
Officer effective May 1, 1998, after having served as Senior Vice President
since 1996. Mr. J. S. Gorman has held the position of General Manager of the
Mansfield Division since 1989. He served as Assistant General Manager from 1986
to 1988; and 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 having served as Director of Information
Services from 1981 to 1991.
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 22 in the Company's 1998 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 18 and 19 in the Company's 1998 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 pages 16 and 17, and to page
23, in the Company's 1998 Annual Report to Shareholders, which are incorporated
herein by this reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Attention is directed to the section "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 16 and 17, and to page
23, in the Company's 1998 Annual Report to Shareholders, which are incorporated
herein by this reference. The Company has no material market risk exposures
required to be reported by Item 305 of Regulation S-K.
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 10-15, and
19, and to the section "Summary of Quarterly Results of Operations" on page 18,
in the Company's 1998 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
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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 1999 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 1999 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 1999 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
Except as disclosed in the footnote in the section "Shareholdings By Executive
Officers" and in footnote 2 in the section "Principal Shareholders" in the
Company's definitive Notice of 1999 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, the Company has no relationships or transactions
required to be reported by Item 404 of Regulation S-K.
9
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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, 1998 and 1997
(ii) Consolidated statements of income--Years ended
December 31, 1998, 1997 and 1996
(iii) Consolidated statements of shareholders' equity--Years
ended December 31, 1998, 1997 and 1996
(iv) Consolidated statements of cash flows--Years ended
December 31, 1998, 1997 and 1996
(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) Consent of independent auditors
(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
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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 29, 1999
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.
*JEFFREY S. GORMAN President, Principal Executive
----------------- Officer and Director
Jeffrey S. Gorman
*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
*THOMAS E. HOAGLIN Director
-----------------
Thomas E. Hoaglin
*PETER B. LAKE Director
-------------
Peter B. Lake
*JOHN A. WALTER Director
--------------
John A. Walter
*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 29, 1999
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, 1998
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
<S> <C> <C>
(3) (4) Amended Articles of Incorporation, as amended 14
(3) (4) Regulations 16
(10) Form of Indemnification Agreement between the
Company and its Directors and Officers 23
(13) Incorporated Portions of 1998 Annual Report
to Shareholders 31
(21) Subsidiaries of the Company 43
(23) Consent of Independent Auditors 44
(24) Powers of Attorney 45
(27) Financial Data Schedule 48
</TABLE>
13
<PAGE> 1
Exhibit (3) (4)
Effective May 4, 1993
AMENDED ARTICLES OF INCORPORATION
OF
THE GORMAN-RUPP COMPANY
(AS AMENDED)
---------------------------------
ARTICLE I: The name of the Company shall be The Gorman-Rupp
Company.
ARTICLE II: The place in the State of Ohio where the principal
office of the Company is to be located is the City of Mansfield, Richland
County.
ARTICLE III: The purposes for which, and for any of which, the
Company is formed is to buy, sell and generally deal in, in every manner, and to
develop, manufacture, repair, treat and finish in every manner, materials,
articles or products of every kind and description, to provide services of all
kinds, and to do all things necessary or incidental to any of the foregoing,
including owning, holding and dealing, in every manner, in all real and personal
property necessary or incidental to the foregoing purposes.
The Company reserves the right at any time and from time to
time to substantially change its purposes in any manner now or hereafter
permitted by statute. Any change of the purposes of the Company authorized or
approved by the holders of shares entitled to exercise the proportion of the
voting power of the Company now or hereafter required by statute for such
authorization or approval shall be binding and conclusive upon every shareholder
of the Company as fully as if such shareholder had voted therefor; and no
shareholder, notwithstanding that he may have voted against such change of
purposes or may have objected in writing thereto, shall be entitled to payment
of the fair cash value of his shares.
ARTICLE IV: The number of shares which the Company is
authorized to have outstanding is 14,000,000 Common Shares, without par value.
Each Common Share shall be equal to every other Common Share.
The holders of Common Shares shall be entitled to one vote for each share upon
all matters presented to the shareholders.
ARTICLE V: No holders of any class of shares of the Company
shall have any pre-emptive right to purchase or have offered to them for
purchase any shares or other securities of the Company.
ARTICLE VI: The Company may from time to time, pursuant to
authorization by its Directors and without action by the shareholders, purchase
or otherwise acquire shares of the Company of any class or series upon such
terms and in such amounts as the Directors shall determine, to the extent
permitted by law; subject, however, to such limitation or restriction, if
<PAGE> 2
2
any, as may be imposed by the terms of any class or series of shares or other
securities of the Company outstanding at the time of the purchase or acquisition
in question.
ARTICLE VII: Any and every statute of the State of Ohio
hereafter enacted whereby the rights, powers and privileges of corporations or
of the shareholders of corporations organized under the laws of the State of
Ohio are increased or diminished or in any way affected, or whereby effect is
given to the action taken by any number, less than all, of the shareholders of
any such corporation, shall apply to the Company and shall be binding not only
upon the Company but upon every shareholder of the Company to the same extent as
if such statute had been in force on the date of filing these Amended Articles
of Incorporation of the Company in the office of the Secretary of State of Ohio.
ARTICLE VIII: These Amended Articles of Incorporation
supersede and take the place of the heretofore existing Articles of
Incorporation of the Company and all amendments thereto.
<PAGE> 3
Exhibit (3) (4)
Effective April 16, 1998
REGULATIONS
OF
THE GORMAN-RUPP COMPANY
ARTICLE I
SHAREHOLDERS' MEETINGS
SECTION 1. ANNUAL MEETINGS.
The annual meeting of the Company shall be held at such time
as is set forth in the notice of the meeting, on the fourth Thursday in April of
each year, if not a legal holiday, and if a legal holiday, then on the next day
not a legal holiday, for the election of Directors and the consideration of
reports to be laid before such meeting. Upon due notice, there may also be
considered and acted upon at an annual meeting any matter which could properly
be considered and acted upon at a special meeting, in which case and for which
purpose the annual meeting shall also be considered as, and shall be, a special
meeting. When the annual meeting is not held or Directors are not elected
thereat, they may be elected at a special meeting called for that purpose.
SECTION 2. SPECIAL MEETINGS.
Special meetings of shareholders may be called by the Chairman
of the Board or the President or a Vice President, or by the Directors by action
at a meeting or by a majority of the Directors acting without a meeting, or by
the person or persons who hold of record not less than twenty-five percent of
all shares outstanding and entitled to be voted on any proposal to be submitted
at such meeting.
Upon request in writing delivered either in person or by
registered mail to the President or Secretary by any person or persons entitled
to call a meeting of shareholders, such officer shall forthwith cause to be
given, to the shareholders entitled thereto, notice of a meeting to be held not
less than seven nor more than sixty days after the receipt of such request, as
such officer shall fix. If such notice shall not be given within twenty days
after the delivery or mailing of such request, the person or persons calling the
meeting may fix the time of the meeting and give, or cause to be given, notice
in the manner hereinafter provided.
<PAGE> 4
2
SECTION 3. PLACE OF MEETINGS.
Any meeting of shareholders may be held either at the
principal office of the Company or at such other place within or without the
State of Ohio as may be designated in the notice of said meeting.
SECTION 4. NOTICE OF MEETINGS.
Not more than sixty days nor less than ten days before the
date fixed for a meeting of shareholders, whether annual or special, written
notice of the time, place and purposes of such meeting shall be given by or at
the direction of the President, a Vice President, the Secretary or an Assistant
Secretary. Such notice shall be given either by personal delivery or by mail to
each shareholder of record entitled to notice of such meeting. If such notice is
mailed, it shall be addressed to the shareholders at their respective addresses
as they appear upon the records of the Company, and notice shall be deemed to
have been given on the day so mailed. Notice of adjournment of a meeting need
not be given if the time and place to which it is adjourned are fixed and
announced at such meeting.
SECTION 5. SHAREHOLDERS ENTITLED TO NOTICE AND TO VOTE.
If a record date shall not be fixed and the books of the
Company shall not be closed against transfers of shares pursuant to statutory
authority, the record date for the determination of shareholders who are
entitled to notice of, or who are entitled to vote at, a meeting of
shareholders, shall be the date next preceding the day on which notice is given,
or the date next preceding the day on which the meeting is held, as the case may
be.
SECTION 6. INSPECTORS OF ELECTION - LIST OF SHAREHOLDERS.
Inspectors of Election may be appointed to act at any meeting
of shareholders in accordance with statute.
At any meeting of shareholders, a list of shareholders,
alphabetically arranged, showing their respective addresses and the number and
classes of shares held by each on the record date applicable to such meeting
shall be produced on the request of any shareholder.
SECTION 7. QUORUM.
Subject to the provisions of the Amended Articles of
Incorporation, to constitute a quorum at any meeting of shareholders, there
shall be present in person or by proxy shareholders of record entitled to
exercise not less than fifty percent of the voting power of the Company in
respect of any one of the purposes for which the meeting is called.
The shareholders present in person or by proxy, whether or not
a quorum be present, may adjourn the meeting from time to time.
<PAGE> 5
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SECTION 8. VOTING.
In all cases, except where otherwise by statute or the
Articles or the Regulations provided, a majority of the votes cast shall
control.
Cumulative voting in the election of Directors shall be
permitted as provided by statute.
SECTION 9. REPORTS TO SHAREHOLDERS.
At the annual meeting, or the meeting to be held in lieu
thereof, the officers of the Company shall lay before the shareholders a
financial statement as required by statute.
SECTION 10. ACTION WITHOUT A MEETING.
Any action which may be authorized or taken at a meeting of
the shareholders may be authorized or taken without a meeting with the
affirmative vote or approval of, and in a writing or writings signed by, all of
the shareholders who would be entitled to notice of a meeting for such purpose,
which writing or writings shall be filed with or entered upon the records of the
Company.
ARTICLE II
DIRECTORS
SECTION 1. ELECTION, NUMBER AND TERM OF OFFICE.
The Directors shall be elected at the annual meeting of
shareholders, or if not so elected, at a special meeting of shareholders called
for that purpose, and each Director shall hold office until the date fixed by
these Regulations for the next succeeding annual meeting of shareholders and
until his successor is elected, or until his earlier resignation, removal from
office, or death. At any meeting of shareholders at which Directors are to be
elected, only persons nominated as candidates shall be eligible for election.
The number of Directors, which shall not be less than three,
may be fixed or changed at a meeting called for the purpose of electing
Directors at which a quorum is present, by the affirmative vote of the holders
of a majority of the shares represented at the meeting and entitled to vote on
such proposal. In case the shareholders at any meeting for the election of
Directors shall fail to fix the number of Directors to be elected, the number
elected shall be deemed to be the number of Directors so fixed.
<PAGE> 6
4
SECTION 2. MEETINGS.
Regular meetings of the Directors shall be held immediately
after the annual meeting of shareholders and at such other times and places as
may be fixed by the Directors, and such meetings may be held without further
notice.
Special meetings of the Directors may be called by the
Chairman of the Board or by the President or by a Vice President or by the
Secretary of the Company, or by not less than one-third of the Directors. Notice
of the time and place of a special meeting shall be served upon or telephoned to
each Director at least twenty-four hours, or mailed, telegraphed or cabled to
each Director at least forty-eight hours, prior to the time of the meeting.
SECTION 3. QUORUM.
A majority of the number of Directors then in office shall be
necessary to constitute a quorum for the transaction of business, but if at any
meeting of the Directors there shall be less than a quorum present, a majority
of those present may adjourn the meeting from time to time without notice other
than announcement at the meeting until a quorum shall attend.
SECTION 4. ACTION WITHOUT A MEETING.
Any action which may be authorized or taken at a meeting of
the Directors may be authorized or taken without a meeting with the affirmative
vote or approval of, and in a writing or writings signed by, all of the
Directors, which writing or writings shall be filed with or entered upon the
records of the Company.
SECTION 5. COMMITTEES.
The Directors my from time to time create a committee or
committees of Directors to act in the intervals between meetings of the
Directors and may delegate to such committee or committees any of the authority
of the Directors other than that of filling vacancies among the Directors or in
any committee of the Directors. No committee shall consist of less than three
Directors. The Directors may appoint one or more Directors as alternate members
of any such committee, who may take the place of any absent member or members at
any meeting of such committee.
In particular, the Directors may create and define the powers
and duties of an Executive Committee. Except as above provided and except to the
extent that its powers are limited by the Directors, the Executive Committee
during the intervals between meetings of the Directors shall possess and may
exercise, subject to the control and direction of the Directors, all of the
powers of the Directors in the management and control of the business of the
Company, regardless of whether such powers are specifically conferred by these
Regulations. All action taken by the Executive Committee shall be reported to
the Directors at their first meeting thereafter.
<PAGE> 7
5
Unless otherwise ordered by the Directors, a majority of the
members of any committee appointed by the Directors pursuant to this section
shall constitute a quorum at any meeting thereof, and the act of a majority of
the members present at a meeting at which a quorum is present shall be the act
of such committee. Action may be taken by any such committee without a meeting
by a writing or writings signed by all of its members. Any such committee shall
prescribe its own rules for calling and holding meetings and its method of
procedure, subject to any rules prescribed by the Directors, and shall keep a
written record of all action taken by it.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS.
The Company may have a Chairman of the Board and shall have a
President (both of whom shall be Directors), a Secretary and a Treasurer. The
Company may also have one or more Vice Presidents and such other officers and
assistant officers as the Directors may deem necessary. All of the officers and
assistant officers shall be elected by the Directors.
SECTION 2. AUTHORITY AND DUTIES OF OFFICERS.
The officers of the Company shall have such authority and
shall perform such duties as are customarily incident to their respective
offices, or as may be specified from time to time by the Directors regardless of
whether such authority and duties are customarily incident to such office.
SECTION 3. COMPENSATION.
The Directors shall fix the compensation of the Chairman of
the Board and of the President and shall fix or authorize one or more officers
or Directors to fix the compensation of any or all other officers. The Directors
may authorize compensation to any Director and to any member of any committee
for attendance at meetings and for any special services.
ARTICLE IV
INDEMNIFICATION AND INSURANCE
SECTION 1. INDEMNIFICATION.
(a) The Company shall indemnify any person who was or is a
party or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a Director, officer,
employee or agent of the Company, or is or was serving at the request of the
<PAGE> 8
6
Company as a director, trustee, officer, employee or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust or other enterprise, to the full extent permitted from time to
time under the laws of the State of Ohio; provided, however, that the Company
shall indemnify any such agent (as opposed to any Director, officer or employee)
of the Company to an extent greater than that required by law only if and to the
extent that the Directors may, in their discretion, so determine.
(b) The indemnification authorized by this Article shall not
be exclusive of, and shall be in addition to, any other rights granted to those
seeking indemnification hereunder or under the Articles or any agreement, vote
of shareholders or disinterested Directors, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
trustee, officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(c) No amendment, termination or repeal of this Article IV
shall affect or impair in any way the rights of any Director or officer of the
Company to indemnification under the provisions hereof with respect to any
action, suit or proceeding arising out of, or relating to, any actions,
transactions or facts occurring prior to the final adoption of such amendment,
termination or repeal.
SECTION 2. LIABILITY INSURANCE.
The Company may purchase and maintain insurance or furnish
similar protection, including but not limited to trust funds, letters of credit
or self-insurance, on behalf of or for any person who is or was a Director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, trustee, officer, employee or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
regardless of whether the Company would have the power to indemnify him against
such liability under this Article. Insurance may be purchased from or maintained
with a person in which the Company has a financial interest.
ARTICLE V
MISCELLANEOUS
SECTION 1. TRANSFER AND REGISTRATION OF CERTIFICATES.
The Directors shall have authority to make such rules and
regulations as they deem expedient concerning the issuance, transfer and
registration of certificates for shares and the shares represented thereby and
may appoint transfer agents and registrars thereof.
<PAGE> 9
7
SECTION 2. SUBSTITUTED CERTIFICATES.
Any person claiming a certificate for shares to have been
lost, stolen or destroyed shall make an affidavit or affirmation of that fact,
shall give the Company and its registrar or registrars and its transfer agent or
agents a bond of indemnity satisfactory to the Directors or to the Executive
Committee or to the President or a Vice President and the Secretary or the
Treasurer, and, if required by the Directors or the Executive Committee or such
officers, shall advertise the same in such manner as may be required, whereupon
a new certificate may be executed and delivered of the same tenor and for the
same number of shares as the one alleged to have been lost, stolen or destroyed.
SECTION 3. VOTING UPON SHARES HELD BY THE COMPANY.
Unless otherwise ordered by the Directors, the President, in
person or by proxy or proxies appointed by him, shall have full power and
authority on behalf of the Company to vote, act and consent with respect to any
shares issued by other corporations which the Company may own.
SECTION 4. CORPORATE SEAL.
The seal of the Company shall be circular in form with the
name of the Company stamped around the margin and the words "Corporate Seal"
stamped across the center.
SECTION 5. ARTICLES TO GOVERN.
In case any provision of these Regulations shall be
inconsistent with the Articles, the Articles shall govern.
SECTION 6. AMENDMENTS.
These Regulations may be amended by the affirmative vote or
the written consent of the shareholders of record entitled to exercise a
majority of the voting power on such proposal, provided, however, that if an
amendment is adopted by written consent without a meeting of the shareholders,
the Secretary shall mail a copy of such amendment to each shareholder of record
who would have been entitled to vote thereon and did not participate in the
adoption thereof.
<PAGE> 1
Exhibit (10)
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the
_________ day of __________, __________, by and between The Gorman-Rupp Company,
an Ohio corporation (the "Company"), and (the "Indemnitee"), a Director and an
officer of the Company.
RECITALS
A. The Indemnitee is presently serving as a Director and an
officer of the Company and the Company desires the Indemnitee to continue in
those capacities. The Indemnitee is willing, subject to certain conditions,
including, without limitation, the execution and performance of this Agreement
by the Company, to continue in those capacities.
B. In addition to the indemnification to which the Indemnitee
is entitled under the Regulations of the Company, as amended (the
"Regulations"), the Company has obtained, at its sole expense, insurance
protecting the Company and its officers and Directors, including the Indemnitee,
against certain losses arising out of actual or threatened actions, suits or
proceedings to which such persons may be made or threatened to be made parties.
However, as a result of circumstances having no relation to, and beyond the
control of, the Company and the Indemnitee, the scope of that insurance has been
reduced, and there can be no assurance of the continuation or renewal of that
insurance.
Accordingly, and in order to induce the Indemnitee to continue
to serve in his present capacities, the Company and the Indemnitee agree as
follows:
1. CONTINUED SERVICE. The Indemnitee shall continue to serve
at the will of the Company as a Director and an officer of the Company so long
as he is duly elected and qualified in accordance with the Regulations or until
he resigns in writing in accordance with applicable law.
2. INITIAL INDEMNITY. (a) The Company shall indemnify the
Indemnitee if or when he is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company), by reason of the fact that he is or was a Director or
officer of the Company or is or was serving at the request of the Company as a
director, trustee, officer, employee or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
any such capacity, against any and all costs, charges, expenses (including,
without limitation, fees and expenses of attorneys and/or others; all such
costs, charges and expenses being herein jointly referred to as "Expenses"),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by the Indemnitee in connection therewith including any appeal of or
from any judgment or decision, unless it is proved by clear and convincing
evidence in a court of competent jurisdiction that the Indemnitee's action or
failure to act involved an act or omission undertaken with deliberate intent to
cause injury to the
<PAGE> 2
2
Company or undertaken with reckless disregard for the best interests of the
Company. In addition, with respect to any criminal action or proceeding,
indemnification hereunder shall be made only if the Indemnitee had no reasonable
cause to believe his conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement or conviction, or upon a plea of
"nolo contendere" or its equivalent, shall not, of itself, create a presumption
that the Indemnitee did not satisfy the foregoing standard of conduct to the
extent applicable thereto.
(b) The Company shall indemnify the Indemnitee if or when he
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Company to
procure a judgment in its favor, by reason of the fact that the Indemnitee is or
was a Director or an officer of the Company or is or was serving at the request
of the Company as a director, trustee, officer, employee or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust or other enterprise, against any and all Expenses actually and
reasonably incurred by the Indemnitee in connection with the defense or
settlement thereof or any appeal of or from any judgment or decision, unless it
is proved by clear and convincing evidence in a court of competent jurisdiction
that the Indemnitee's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company, except that no
indemnification shall be made in respect of any action or suit in which the only
liability asserted against the Indemnitee is pursuant to Section 1701.95 of the
Ohio Revised Code (the "ORC").
(c) Any indemnification under Section 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 2(a) or 2(b). Such authorization shall be made (i)
by the Directors of the Company (the "Board") by a majority vote of a quorum
consisting of Directors who were not and are not parties to or threatened with
such action, suit or proceeding, or (ii) if such a quorum of disinterested
Directors is not available or if a majority of such quorum so directs, in a
written opinion by independent legal counsel (designated for such purpose by the
Board) which shall not be an attorney, or a firm having associated with it an
attorney, who has been retained by or who has performed services for the
Company, or any person to be indemnified, within the five years preceding such
determination, or (iii) by the shareholders of the Company (the "Shareholders"),
or (iv) by the court in which such action, suit or proceeding was brought.
(d) To the extent that the Indemnitee has been successful on
the merits or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit or proceeding referred
to in Section 2(a) or 2(b), or in defense of any claim, issue or matter therein,
he shall be indemnified against Expenses actually and reasonably incurred by him
in connection therewith. Expenses actually and reasonably incurred by the
Indemnitee in defending any such action, suit or proceeding shall be paid by the
Company as they are incurred in advance of the final disposition of such action,
suit or proceeding under the procedure set forth in Section 4(b) hereof.
<PAGE> 3
3
(e) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to any employee
benefit plan; references to "serving at the request of the Company" shall
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involve services by, the Indemnitee with respect to
an employee benefit plan, its participants or beneficiaries; references to the
masculine shall include the feminine; and references to the singular shall
include the plural and VICE VERSA.
3. ADDITIONAL INDEMNIFICATION. Pursuant to Section
1701.13(E)(6) of the ORC, without limiting any right which the Indemnitee may
have pursuant to Section 2 hereof or any other provision of this Agreement or
the Articles of Incorporation, as amended, of the Company (the "Articles"), the
Regulations, the ORC, any policy of insurance, or otherwise, but subject to any
limitation on the maximum permissible indemnity which may exist under applicable
law at the time of any request for indemnity hereunder and subject to the
following provisions of this Section 3, the Company shall indemnify the
Indemnitee against any amount which he is or becomes obligated to pay relating
to or arising out of any claim made against him because of any act, failure to
act or neglect or breach of duty, including any actual or alleged error,
misstatement or misleading statement, which he commits, suffers, permits or
acquiesces in while acting in his capacity as a Director or an officer of the
Company. The payments which the Company is obligated to make pursuant to this
Section 3 shall include, without limitation, judgments, fines and amounts paid
in settlement and any and all Expenses actually and reasonably incurred by the
Indemnitee in connection therewith including any appeal of or from any judgment
or decision; PROVIDED, HOWEVER, that the Company shall not be obligated under
this Section 3 to make any payment in connection with any claim against the
Indemnitee:
(a) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from
paying which results from a final, nonappealable order; or
(b) to the extent based upon or attributable to the Indemnitee
having actually realized a personal gain or profit to which he was not
legally entitled, including, without limitation, profit from the
purchase and sale by the Indemnitee of equity securities of the Company
which are recoverable by the Company pursuant to Section 16(b) of the
Securities Exchange Act of 1934, or profit arising from transactions in
publicly traded securities of the Company which were effected by the
Indemnitee in violation of Section 10(b) of the Securities Exchange Act
of 1934, or Rule 10b-5 promulgated thereunder.
A determination as to whether the Indemnitee shall be entitled to
indemnification under this Section 3 shall be made in accordance with Section
4(a) hereof. Expenses incurred by the Indemnitee in defending any claim to which
this Section 3 applies shall be paid by the Company as they are actually and
reasonably incurred in advance of the final disposition of such claim under the
procedure set forth in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION. (a) For
purposes of pursuing his rights to indemnification under Section 3 hereof, the
Indemnitee shall (i) submit to the Board a sworn statement of request for
indemnification substantially in the
<PAGE> 4
4
form of Exhibit 1 attached hereto and made a part hereof (the "Indemnification
Statement") averring that he is entitled to indemnification hereunder; and (ii)
present to the Company reasonable evidence of all amounts for which
indemnification is requested. Submission of an Indemnification Statement to the
Board shall create a presumption that the Indemnitee is entitled to
indemnification hereunder, and the Company shall, within sixty (60) calendar
days after submission of the Indemnification Statement, make the payments
requested in the Indemnification Statement to or for the benefit of the
Indemnitee, unless (i) within such 60-calendar-day period the Board shall
resolve by vote of a majority of the Directors at a meeting at which a quorum is
present that the Indemnitee is not entitled to indemnification under Section 3
hereof, (ii) such vote shall be based upon clear and convincing evidence
(sufficient to rebut the foregoing presumption) and (iii) the Indemnitee shall
have received within such period notice in writing of such vote, which notice
shall disclose with particularity the evidence upon which the vote is based. The
foregoing notice shall be sworn to by all persons who participated in the vote
and voted to deny indemnification. The provisions of this Section 4(a) are
intended to be procedural only and shall not affect the right of the Indemnitee
to indemnification under Section 3 of this Agreement so long as the Indemnitee
follows the prescribed procedure, and any determination by the Board that the
Indemnitee is not entitled to indemnification and any failure to make the
payments requested in the Indemnification Statement shall be subject to judicial
review by any court of competent jurisdiction.
(b) For purposes of obtaining payments of Expenses in advance
of final disposition pursuant to the second sentence of Section 2(d) or the last
sentence of Section 3 hereof, the Indemnitee shall submit to the Company a sworn
request for advancement of Expenses substantially in the form of Exhibit 2
attached hereto and made a part hereof (the "Undertaking"), averring that he has
reasonably incurred actual Expenses in defending an action, suit or proceeding
referred to in Section 2(a) or 2(b) or any claim referred to in Section 3, or
pursuant to Section 7 hereof. Unless at the time of the Indemnitee's act or
omission at issue, the Articles or Regulations of the Company prohibit such
advances by specific reference to ORC Section 1701.13(E)(5)(a) and unless the
only liability asserted against the Indemnitee in the subject action, suit or
proceeding is pursuant to ORC Section 1701.95, the Indemnitee shall be eligible
to execute Part A of the Undertaking by which he undertakes to (a) repay such
amount if it is proved by clear and convincing evidence in a court of competent
jurisdiction that the Indemnitee's action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the Company or
undertaken with reckless disregard for the best interests of the Company and (b)
reasonably cooperate with the Company concerning the action, suit, proceeding or
claim. In all cases, the Indemnitee shall be eligible to execute Part B of the
Undertaking by which he undertakes to repay such amount if it ultimately is
determined that he is not entitled to be indemnified by the Company under this
Agreement or otherwise. In the event that the Indemnitee is eligible to and does
execute both Part A and Part B of the Undertaking, the Expenses which are paid
by the Company pursuant thereto shall be required to be repaid by the Indemnitee
only if he is required to do so under the terms of both Part A and Part B of the
Undertaking. Upon receipt of the Undertaking, the Company shall thereafter
promptly pay such Expenses of the Indemnitee as are noticed to the Company in
writing and in reasonable detail arising out of the matter described in the
Undertaking. No security shall be required in connection with any Undertaking.
<PAGE> 5
5
5. LIMITATION ON INDEMNITY. Notwithstanding anything contained
herein to the contrary, the Company shall not be required hereby to indemnify
the Indemnitee with respect to any action, suit or proceeding that was initiated
by the Indemnitee unless (i) such action, suit or proceeding was initiated by
the Indemnitee to enforce any rights to indemnification arising hereunder and
such person shall have been formally adjudged to be entitled to indemnity by
reason hereof, (ii) authorized by another agreement to which the Company is a
party whether heretofore or hereafter entered or (iii) otherwise ordered by the
court in which the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS. (a) In the event of
payment under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of the Indemnitee, who shall
execute all papers required and shall do everything that may be necessary to
secure such rights, including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against the Indemnitee to the
extent the Indemnitee has actually received payment (under any insurance policy,
the Company's Regulations or otherwise) of the amounts otherwise payable
hereunder.
7. FEES AND EXPENSES OF ENFORCEMENT. It is the intent of the
Company that the Indemnitee not be required to incur the expenses associated
with the enforcement of his rights under this Agreement by litigation or other
legal action because the cost and expense thereof would substantially detract
from the benefits intended to be extended to the Indemnitee hereunder.
Accordingly, if it should appear to the Indemnitee that the Company has failed
to comply with any of its obligations under this Agreement or in the event that
the Company or any other person takes any action to declare this Agreement void
or unenforceable, or institutes any action, suit or proceeding to deny, or to
recover from, the Indemnitee the benefits intended to be provided to the
Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee from
time to time to retain counsel of his choice, at the expense of the Company as
hereafter provided, to represent the Indemnitee in connection with the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, shareholder or other person
affiliated with the Company, in any jurisdiction. Regardless of the outcome
thereof, the Company shall pay and be solely responsible for any and all costs,
charges and expenses, including, without limitation, fees and expenses of
attorneys and others, reasonably incurred by the Indemnitee pursuant to this
Section 7.
8. MERGER OR CONSOLIDATION. In the event that the Company
shall be a constituent corporation in a consolidation, merger or other
reorganization, the Company, if it shall not be the surviving, resulting or
acquiring corporation therein, shall require as a condition thereto that the
surviving, resulting or acquiring corporation agree to assume all of the
obligations of the Company hereunder and to indemnify the Indemnitee to the full
extent provided herein. Regardless of whether the Company is the resulting,
surviving or acquiring corporation in any such transaction, the Indemnitee shall
also stand in the same position under this Agreement with respect to the
resulting, surviving or acquiring corporation as he would have with respect to
the Company if its separate existence had continued.
<PAGE> 6
6
9. NONEXCLUSIVITY AND SEVERABILITY. (a) The rights to
indemnification provided by this Agreement shall not be exclusive of any other
rights of indemnification to which the Indemnitee may be entitled under the
Articles, the Regulations, the ORC or any other statute, any insurance policy,
agreement or vote of shareholders or directors or otherwise, as to any actions
or failures to act by the Indemnitee, and shall continue after he has ceased to
be a Director, officer, employee or agent of the Company or other entity for
which his service gives rise to a right hereunder, and shall inure to the
benefit of his heirs, executors and administrators.
(b) If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflict of laws thereof.
11. MODIFICATION. This Agreement and rights and duties of the
Indemnitee and the Company hereunder may be modified only by an instrument in
writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereunto have duly executed
this Agreement as of the date first above written.
THE GORMAN-RUPP COMPANY
By______________________________
________________________________
("Indemnitee")
<PAGE> 7
Exhibit 1
INDEMNIFICATION STATEMENT
STATE OF ___________________)
) SS:
COUNTY OF __________________)
I, __________________________________, being first duly sworn,
do depose and say as follows:
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated ______________, ____, between The Gorman-Rupp
Company, an Ohio corporation (the "Company"), and the undersigned.
2. I am requesting indemnification against costs, charges,
expenses (which may include fees and expenses of attorneys and/or others),
judgments, fines and amounts paid in settlement (collectively, "Liabilities"),
which have been actually and reasonably incurred by me in connection with a
claim referred to in Section 3 of the aforesaid Indemnification Agreement.
3. With respect to all matters related to any such claim, I am
entitled to be indemnified as herein contemplated pursuant to the aforesaid
Indemnification Agreement.
4. Without limiting any other rights which I have or may have,
I am requesting indemnification against liabilities which have or may arise out
of _____________________________________________________________________________
____________________________.
__________________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for
said County and State, this ____ day of _________, ____.
__________________________________
[Seal]
My commission expires the ____ day of _________, ____.
<PAGE> 8
Exhibit 2
UNDERTAKING
STATE OF ___________________)
) SS:
COUNTY OF __________________)
I, __________________________________, being first duly sworn,
do depose and say as follows:
1. This Undertaking is submitted pursuant to the
Indemnification Agreement, dated ________, ___________, between The Gorman-Rupp
Company, an Ohio corporation (the "Company"), and the undersigned.
2. I am requesting payment of costs, charges and expenses
which I have reasonably incurred or will reasonably incur in defending an
action, suit or proceeding, referred to in Section 2(a) or 2(b) or any claim
referred to in Section 3, or pursuant to Section 7, of the aforesaid
Indemnification Agreement.
3. The costs, charges and expenses for which payment is
requested are, in general, all expenses related to _____________________________
_______________________________________________________________________________.
4. Part A
I hereby undertake to (a) repay all amounts paid pursuant
hereto if it is proved by clear and convincing evidence in a court of competent
jurisdiction that my action or failure to act which is the subject of the matter
described herein involved an act or omission undertaken with deliberate intent
to cause injury to the Company or undertaken with reckless disregard for the
best interests of the Company and (b) reasonably cooperate with the Company
concerning the action, suit, proceeding or claim.
__________________________________
(Signature of Indemnitee)
4. Part B
I hereby undertake to repay all amounts paid pursuant hereto
if it ultimately is determined that I am not entitled to be indemnified by the
Company under the aforesaid Indemnification Agreement or otherwise.
__________________________________
(Signature of Indemnitee)
Subscribed and sworn to before me, a Notary Public in and for
said County and State, this ____ day of _________, ____.
__________________________________
[Seal]
My commission expires the ____ day of _________, ____.
<PAGE> 1
Exhibit 13
Consolidated Statements of
Income And Shareholders' Equity
<TABLE>
<CAPTION>
(Thousands of dollars, except per share amounts)
YEAR ENDED DECEMBER 31,
INCOME 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net sales .................................... $171,245 $164,862 $155,187
Other income ................................. 1,001 706 491
------- ------- -------
TOTAL INCOME ............................ 172,246 165,568 155,678
Deductions from income:
Cost of products sold ...................... 127,532 123,898 116,060
Selling, general and administrative expenses 25,562 24,718 23,955
------- ------- -------
153,094 148,616 140,015
------- ------- -------
INCOME BEFORE INCOME TAXES .............. 19,152 16,952 15,663
Income taxes ................................. 7,400 6,340 5,735
------- ------- -------
NET INCOME .............................. $11,752 $10,612 $9,928
======= ======= =======
BASIC AND DILUTED EARNINGS PER SHARE .... $1.37 $1.23 $1.15
===== ===== =====
Average number of shares outstanding ......... 8,599,713 8,609,479 8,617,168
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY ACCUMULATED
OTHER
COMMON RETAINED COMPREHENSIVE
SHARES EARNINGS INCOME (LOSS) TOTAL
------ -------- ------------- -----
<S> <C> <C> <C> <C>
BALANCES DECEMBER 31, 1995 ....................... $5,133 $62,984 $ (877) $67,240
Comprehensive income:
Net income ....................................... 9,928 9,928
Foreign currency translation adjustments ......... (29) (29)
------
Total comprehensive income ....................... 9,899
Sale of 10,711 common shares from treasury ....... 8 157 165
Cash dividends - $.53 a share .................... (4,567) (4,567)
------ ------ ------ ------
BALANCES DECEMBER 31, 1996 ....................... 5,141 68,502 (906) 72,737
Comprehensive income:
Net income ....................................... 10,612 10,612
Foreign currency translation adjustments ......... (312) (312)
-----
Total comprehensive income ....................... 10,300
Sale of 11,768 common shares from treasury ....... 8 211 219
Purchase of 20,783 common shares for treasury .... (14) (361) (375)
Cash dividends - $.56 a share .................... (4,821) (4,821)
------ ------ ------ ------
BALANCES DECEMBER 31, 1997 ....................... 5,135 74,143 (1,218) 78,060
Comprehensive income:
Net income ....................................... 11,752 11,752
Foreign currency translation adjustments ......... (506) (506)
------
Total comprehensive income ....................... 11,246
Sale of 59,848 common shares from treasury ....... 39 1,027 1,066
Purchase of 87,980 common shares for treasury .... (58) (1,625) (1,683)
Cash dividends - $.58 a share .................... (4,983) (4,983)
------ ------ ------ ------
BALANCES DECEMBER 31, 1998 ....................... $5,116 $80,314 $(1,724) $83,706
====== ====== ====== ======
</TABLE>
10
See notes to consolidated financial statements
<PAGE> 2
Consolidated
Balance Sheets
<TABLE>
<CAPTION>
(Thousands of dollars) DECEMBER 31,
ASSETS 1998 1997
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ........................................................ $ 2,359 $ 836
Short-term investments ........................................................... 6,306 6,901
Accounts receivable .............................................................. 26,282 31,263
Inventories ...................................................................... 38,323 39,761
Deferred income taxes ............................................................ 4,214 2,068
Other current assets ............................................................. 1,072 866
------- -------
TOTAL CURRENT ASSETS ....................................................... 78,556 81,695
OTHER ASSETS ........................................................................ 632 816
DEFERRED INCOME TAXES ............................................................... 4,373 4,435
PROPERTY, PLANT AND EQUIPMENT
Land ........................................................................... 1,611 1,611
Buildings ...................................................................... 28,093 25,875
Machinery and equipment ........................................................ 63,659 59,511
------- -------
93,363 86,997
Less allowances for depreciation ............................................... 49,447 46,078
------- -------
PROPERTY, PLANT AND EQUIPMENT - NET ........................................ 43,916 40,919
------- -------
$127,477 $127,865
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.................................................................. $ 8,666 $ 7,669
Payrolls and related liabilities ................................................. 2,925 2,607
Commissions payable .............................................................. 2,055 2,160
Accrued expenses ................................................................. 2,203 2,155
Income taxes ..................................................................... 543 1,459
Accrued medical benefits ......................................................... 1,039 986
------- -------
TOTAL CURRENT LIABILITIES .................................................. 17,431 17,036
LONG-TERM DEBT ...................................................................... 783 6,689
POSTRETIREMENT BENEFITS ............................................................. 25,557 26,080
SHAREHOLDERS' EQUITY
Common Shares, without par value: Authorized - 14,000,000 shares;
Outstanding-8,581,236 shares in 1998 and 8,609,368 shares in 1997
(after deducting treasury shares of 283,940 in 1998 and 255,808 in 1997)
at stated capital amount ................................................... 5,116 5,135
Retained earnings ................................................................ 80,314 74,143
Accumulated other comprehensive income (translation adjustments) ................. (1,724) (1,218)
------- -------
TOTAL SHAREHOLDERS' EQUITY ................................................. 83,706 78,060
------- -------
$127,477 $127,865
======= =======
</TABLE>
11
See notes to consolidated financial statements
<PAGE> 3
Consolidated Statements
Of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996
(Thousands of dollars) ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income ............................................ $ 11,752 $ 10,612 $ 9,928
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ..................... 6,330 5,959 5,675
Deferred income taxes ............................. (2,084) 972 791
Changes in operating assets and liabilities:
Accounts receivable .............................. 4,981 (1,369) 2,058
Inventories ...................................... 1,438 (6,140) (788)
Accounts payable ................................. 997 1,010 (849)
Postretirement benefits .......................... (523) 162 257
Other ............................................ (989) 660 792
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........ 21,902 11,866 17,864
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions, net .............................. (9,327) (6,329) (4,036)
Purchases of short-term investments ................. (18,193) (25,689) --
Proceeds from short-term investments ................ 18,788 18,788 --
Other ............................................... (141) -- --
-------- -------- --------
NET CASH USED FOR INVESTING ACTIVITIES ........... (8,873) (13,230) (4,036)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends ...................................... (4,983) (4,821) (4,567)
Net borrowings from (payments to) banks ............. (5,906) 2,893 (8,392)
Sale of common shares from treasury ................. 1,066 219 165
Purchase of common shares for treasury .............. (1,683) (375) --
-------- -------- --------
NET CASH USED FOR FINANCING ACTIVITIES ........... (11,506) (2,084) (12,794)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ........................... 1,523 (3,448) 1,034
CASH AND CASH EQUIVALENTS:
Beginning of year ................................... 836 4,284 3,250
-------- -------- --------
END OF YEAR ......................................... $ 2,359 $ 836 $ 4,284
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
12
<PAGE> 4
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.
CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS: The Company considers highly
liquid, short-term investments to be cash equivalents. Short-term investments
consist of certificates of deposit having maturities of less than one year.
Because of their short maturity, the carrying amounts of the investments are
valued at cost which approximates market value.
INVENTORIES: Inventories are stated at the lower of cost or market. The cost for
approximately 97% and 96% of inventories at December 31, 1998 and 1997,
respectively, is determined using the last-in, first-out (LIFO) method, with the
remainder determined using the first-in, first-out method. At December 31, 1997,
retroactive to January 1, 1997, the Company extended the use of the LIFO method
to the remaining United States inventories to better match the cost of products
sold with related revenues. This change decreased 1997 net income by $246,000
(equal to $.03 per share).
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. Long-lived assets are reviewed for impairment losses whenever events
or changes in circumstances indicate the carrying amount may not be recovered
through future net cash flows generated by the assets.
CONCENTRATION OF CREDIT RISK: The Company does not require collateral from its
customers and has generally had a good collection history.
REVENUE RECOGNITION: The Company recognizes revenues at the point of passage of
title, which is generally at the time of shipment to the customer.
ADVERTISING: The Company expenses all advertising costs as incurred which, for
the years ended December 31, 1998, 1997 and 1996, totaled $2,861,000, $2,295,000
and $2,598,000, respectively.
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) 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials and in-process ............... $21,335 $23,749
Finished parts ............................. 13,617 12,471
Finished products .......................... 3,371 3,541
------- -------
$38,323 $39,761
======= =======
- --------------------------------------------------------------------------------
</TABLE>
The excess of replacement cost over LIFO cost is approximately $22,369,000 and
$21,500,000 at December 31, 1998 and 1997, respectively.
NOTE C - FINANCING ARRANGEMENTS: Under unsecured demand lines of credit with
banks, the Company may borrow up to $10.3 million with interest at LIBOR plus
.75% or at alternative rates as selected by the Company. At December 31, 1998,
$10.3 million is available for borrowing.
The Company also has an $8.0 million unsecured revolving loan agreement which
matures in May 2001. At December 31, 1998, $6.3 million is available for
borrowing after deducting $783,000 of outstanding borrowings due in 2001 and
$900,000 of outstanding letters of credit. Interest is payable quarterly at
LIBOR plus .55% or at alternative rates as selected by the Company
(weighted-average interest rate 6.1% and 6.2% at December 31, 1998 and 1997,
respectively). Although the agreement contains restrictive covenants including
limits on additional borrowings and maintenance of certain operating and
financial ratios, the Company significantly exceeds the requirements.
Interest expense was $188,000, $238,000 and $330,000 in 1998, 1997 and 1996,
respectively.
13
<PAGE> 5
Notes to Consolidated
Financial Statements
NOTE D - INCOME TAXES: The components of income before income taxes are:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States ............ $18,315 $16,021 $14,902
Foreign .................. 837 931 761
------- ------- -------
$19,152 $16,952 $15,663
======= ======= =======
- --------------------------------------------------------------------------------
</TABLE>
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal ................ $8,386 $4,301 $4,124
Canadian ............... 409 454 313
State and local ........ 689 613 507
------- ------- -------
9,484 5,368 4,944
Deferred ................. (2,084) 972 791
------- ------- -------
$7,400 $6,340 $5,735
======= ======= =======
- --------------------------------------------------------------------------------
</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) 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes at
statutory rate .............. $6,703 $5,933 $5,482
State and local income
taxes, net of federal
tax benefit ................. 448 399 330
Other ............................ 249 8 (77)
------- ------- -------
$7,400 $6,340 $5,735
======= ======= =======
- --------------------------------------------------------------------------------
</TABLE>
Deferred tax assets (liabilities) consist of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(Thousands of dollars) 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Inventories ............... $ 1,957 $ 64 $ 1,333
Accrued liabilities ....... 2,257 2,004 1,753
------- ------- -------
4,214 2,068 3,086
Non-current:
Depreciation .............. (5,399) (5,217) (5,033)
Postretirement health
benefits obligation ..... 9,820 9,815 9,551
Other ..................... (48) (163) (129)
------- ------- -------
4,373 4,435 4,389
------- ------- -------
$ 8,587 $ 6,503 $ 7,475
======= ======= =======
- --------------------------------------------------------------------------------
</TABLE>
The Company made income tax payments of $10,400,000, $5,000,000 and $4,600,000
in 1998, 1997 and 1996, respectively.
NOTE E - PENSIONS AND OTHER POSTRETIREMENT
BENEFITS: The Company sponsors a defined benefit pension plan covering
substantially all employees. The Company's policy is to fund the maximum tax
deductible contribution. The Company also 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 plans' funded status reconciled with amounts
recognized in the Company's balance sheets.
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
- --------------------------------------------------------------------------------
(Thousands of dollars) 1998 1997 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at
beginning of year ............. $25,867 $24,150 $17,815 $15,502
Service cost ....................... 1,377 1,312 642 974
Interest cost ...................... 1,784 1,678 1,113 1,099
Amendments ......................... - - (2,093) -
Actuarial losses (gains) ........... 1,124 1,039 (48) 883
Benefits paid ...................... (2,448) (2,312) (754) (643)
------ ------ ------ ------
Benefit obligation at end of year .. 27,704 25,867 16,675 17,815
CHANGE IN PLAN ASSETS
Fair value of plan assets
at beginning of year .......... 24,300 21,714 - -
Actual return on plan assets ....... 2,621 3,201 - -
Company contributions .............. 1,710 1,697 754 643
Benefits paid ...................... (2,448) (2,312) (754) (643)
------ ------ ------ ------
Fair value of plan assets
at end of year ..................... 26,183 24,300 - -
------ ------ ------ ------
Funded status of the plan
(underfunded) ................. (1,521) (1,567) (16,675) (17,815)
Unrecognized net actuarial loss .... 1,274 927 (3,477) (2,789)
Unrecognized net transition asset .. (695) (869) - -
Unrecognized prior service cost .... 56 91 (4,519) (4,058)
------ ------ ------ ------
ACCRUED BENEFIT COST ............... $ (886) $(1,418) $(24,671) $(24,662)
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Weighted-average assumptions PENSION BENEFITS OTHER BENEFITS
- --------------------------------------------------------------------------------
(as of December 31,) 1998 1997 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rate ............................. 7.00% 7.25% 7.00% 7.25%
Expected rate of return on plan assets .... 8.00% 8.00 - -
Rate of compensation increase ............. 4.00% 4.50% - -
- --------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 6
Notes to Consolidated
Financial Statements
For measurement purposes, a 7.0 - 7.5 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1999. The rate was
assumed to decrease gradually to 4.5 percent by 2005 and remain at that level
thereafter.
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
- ----------------------------------------------------------------------------------------------
(Thousands of dollars) 1998 1997 1996 1998 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost ..................... $ 1,377 $ 1,312 $ 1,172 $ 642 $ 974 $ 675
Interest cost .................... 1,784 1,678 1,624 1,113 1,099 1,138
Expected return on plan assets ... (1,844) (1,657) (1,426) - - -
Amortization of prior service cost 35 34 34 (756) (524) (524)
Recognized net actuarial loss .... (174) (173) (171) (208) (241) (131)
------- ------- ------- ------- ------- -------
BENEFIT COST ..................... $ 1,178 $ 1,194 $ 1,233 $ 791 $ 1,308 $ 1,158
======= ======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------
</TABLE>
The assumed health care trend rate has a significant effect on the amounts
reported for other postretirement benefits. A one-percentage point change in the
assumed health care cost trend rate would have the following effects:
<TABLE>
<CAPTION>
ONE-PERCENTAGE POINT
- --------------------------------------------------------------------------------------------------------
(Thousands of dollars) Increase Decrease
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Effect on total of service and interest cost components in 1998 ................... $169 $(152)
Effect on accumulated postretirement benefit obligation as of December 31, 1998 ... $1,499 $(1,328)
- --------------------------------------------------------------------------------------------------------
</TABLE>
NOTE F - BUSINESS SEGMENT INFORMATION: Effective January 1, 1998, the Company
adopted the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information". The Company operates principally in one business segment,
the manufacture and sale of pumps and related fluid control equipment for
water, wastewater, construction, industrial, petroleum, original equipment,
agricultural, fire and military applications. 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. Export sales are
principally made through foreign distributors and manufacturers'
representatives. The Company exports to more than 75 countries located around
the world. The components of customer sales, determined based on the location of
customers, are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
(Thousands of dollars) 1998 % 1997 % 1996 %
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States .............. $144,261 84 $140,040 85 $136,121 88
Exports to foreign countries 26,984 16 24,822 15 19,066 12
-------- --- -------- --- -------- ---
$171,245 100 $164,862 100 $155,187 100
======== === ======== === ======== ===
- -----------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 7
Management's Discussion And Analysis Of
Financial Condition And Results Of Operations
1998 COMPARED TO 1997
1998 marked the 12th consecutive year the Company achieved record net sales and
net income. Net sales amounted to $171.2 million in 1998 compared to $164.9
million in 1997, an increase of 3.9%. This growth was largely the result of
shipments in the wastewater, construction and fire markets approximating
increases of $6.7 million or 11.0%. Export shipments also increased $2.2 million
or 8.7% and represented approximately 16% of total sales in 1998 compared to 15%
in 1997. These results were, however, somewhat offset by an estimated $6 million
decline in business directly associated with the deteriorated economy in Asia.
Other income amounted to $1.0 million in 1998 compared to $706,000 in 1997 and
results principally from interest income earned on the investment of funds.
Cost of products sold for 1998 was $127.5 million compared to $123.9 million in
1997, an increase of $3.6 million or 2.9%. This increase was reflective of
increased sales. As a percent of net sales, cost of products sold was 74.5% and
75.2% in 1998 and 1997, respectively. Gross profit margins of 25.5% in 1998 and
24.8% in 1997 have improved and are principally the result of product mix,
utilization of capacity, cost control and manufacturing efficiencies resulting
from continued investment in manufacturing technology and machinery.
Selling, general and administrative (SG&A) expenses for 1998 were $25.6 million
compared to $24.7 million for 1997. As a percent of net sales, SG&A expenses
were 14.9% in 1998 and 15.0% in 1997. The reduction in 1998 SG&A expenses as a
percent of net sales principally resulted from increased sales volume and
continued efficiencies associated with the design and implementation of upgraded
information management systems during the mid-1990s. Interest expense was
$188,000 in 1998 compared to $238,000 in 1997, principally the reflection of
lower average borrowings.
The effective income tax rate was 38.6% in 1998, compared to 37.4% in 1997. (See
Note D to the financial statements.)
Net income increased 10.7% to a record $11.8 million in 1998 compared to $10.6
million in 1997. Net income as a percent of net sales was 6.9% and 6.4% in 1998
and 1997, respectively. Earnings per share increased 14 cents to $1.37 compared
to $1.23 in 1997.
The 1998 annual dividend of 58 cents per share represented the 26th consecutive
year of increased cash dividends. The quarterly dividend increase to 15 cents
per share approved by the Board of Directors in July 1998 represented an
increase of 7.1%. The yield at December 31, 1998 was 3.6%.
1997 COMPARED TO 1996
The Company achieved record net sales and net income in 1997, marking the 11th
consecutive year for those accomplishments. Net sales increased 6.2% in 1997 to
$164.9 million compared to $155.2 million in 1996. Real growth accounted for
increases of 3 to 4 percent while the remainder of the growth was the result of
increases in the prices of products sold coupled with product mix. Generally,
business at the Mansfield Division remained flat in 1997; increased commercial
business nearly offset the reduction in government sales due to the completion
of a large government contract in mid-year 1996. Patterson Pump Company sales
increased $8.5 million in 1997 resulting from an increase in pump sales and a
full year of shipments against a long-term agreement with a major customer for
fabricated products.
Other income amounted to $706,000 in 1997 compared to $491,000 in 1996 and
resulted principally from interest income earned on the investment of funds. The
increase in 1997 was the result of increased investments in short-term
securities.
Cost of products sold in 1997, as a percentage of net sales, was 75.2%, compared
74.8% in 1996. The increase in 1997 cost of products sold as a percentage of
net sales was principally the result of product mix and the increased material
and labor intensive production of product at Patterson Pump Company.
Selling, general and administrative (SG&A) expenses were 15.0% of net sales in
1997, compared to 15.4%
16
<PAGE> 8
in 1996. The reduction in 1997 SG&A expenses as a percent of net sales
principally resulted from increased sales volume and the reduction in expenses
incurred in 1996 and 1995 associated with the design and implementation of
upgraded information management systems.
The effective income tax rate was 37.4% in 1997, compared to 36.6% in 1996. (See
Note D to the financial statements.)
Net income in 1997 increased 6.9% to a record $10.6 million from $9.9 million in
1996. Net income as a percent of net sales was 6.4% in 1997 and 1996. Earnings
per share increased 8 cents to a record $1.23 compared to $1.15 in 1996.
LIQUIDITY AND SOURCES OF CAPITAL
Cash and cash equivalents and short-term investments totalled $8.7 million as of
December 31, 1998. In addition, the Company has $10.3 million in bank short-term
lines of credit, all of which are unused.
The Company also maintains an unsecured revolving credit facility, expiring in
2001, which provides for maximum borrowings of $8.0 million, $6.3 million of
which is available. As of December, 31, 1998, $783,000 had been borrowed and
$900,000 covered outstanding letters of credit. Although the facility contains
restrictive covenants which limit additional borrowings and require maintenance
of certain operating and financial ratios, the Company significantly exceeds
the requirements.
During 1998, the Company financed its capital improvements and working capital
requirements through internally generated funds and line of credit arrangements
with banks. Capital expenditures for 1999, estimated to be $24.0 to $25.0
million, are expected to be financed through internally generated funds,
existing credit arrangements and a long-term loan with an existing bank. The
Company plans to begin construction of the first phase of a new facility that
will eventually house the manufacturing, warehousing and office facilities of
the Mansfield Division and IPT Pumps Division. $17 million of the $30 million
phase one building project is projected to be incurred in 1999 and the remainder
is scheduled in 2000.
The ratio of current assets to current liabilities was 4.5 to 1 at December 31,
1998, compared to 4.8 to 1 at December 31, 1997. Management believes that it has
adequate working capital and a healthy liquidity position.
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.
17
<PAGE> 9
Ten Year Summary Of
Selected Financial Data
<TABLE>
<CAPTION>
(Thousands of dollars, except per share amounts)
1998 1997 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING RESULTS:
Net sales $171,245 $164,862 $155,187 $149,489
Gross profit 43,713 40,964 39,127 36,516
Income taxes 7,400 6,340 5,735 5,590
Income (1) 11,752 10,612 9,928 9,461
Return on net sales (%) 6.9 6.4 6.4 6.3
Sales dollars per employee 167.6 161.0 159.3 153.8
FINANCIAL POSITION:
Current assets $78,556 $81,695 $71,926 $71,401
Current liabilities 17,431 17,036 15,199 19,727
Working capital 61,125 64,659 56,727 51,674
Current ratio 4.5 4.8 4.7 3.6
Property, plant and
equipment - net 43,916 40,919 40,549 42,163
Capital additions 9,327 6,329 4,036 8,229
Total assets 127,477 127,865 117,650 119,816
Shareholders' equity 83,706 78,060 72,737 67,240
Dividends paid 4,983 4,821 4,567 4,466
Average number of employees 1,022 1,024 974 972
SHAREHOLDER INFORMATION:
Basic and diluted earnings per share (1) $1.37 $1.23 $1.15 $1.10
Cash dividends per share .58 .56 .53 .52
Shareholders' equity per share at December 31, 9.75 9.07 8.44 7.81
Average number of shares outstanding 8,599,713 8,609,479 8,617,168 8,587,466
</TABLE>
(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.
- --------------------------------------------------------------------------------
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS
The following is a summary of unaudited quarterly results of operations for the
years ended December 31, 1998 and 1997.
(Thousands of dollars, except per share amounts)
<TABLE>
QUARTER ENDED 1998 MAR. 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL
------- ------- -------- ------- -----
<S> <C> <C> <C> <C> <C>
Net sales $43,703 $42,535 $44,535 $40,472 $171,245
Gross profit 11,107 11,063 12,040 9,503 43,713
Net income 3,251 3,027 3,384 2,090 11,752
Basic and diluted earnings per share .38 .35 .39 .25 1.37
<CAPTION>
QUARTER ENDED 1997 MAR. 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL
------- ------- -------- ------- -----
<S> <C> <C> <C> <C> <C>
Net sales $40,530 $40,163 $42,278 $41,891 $164,862
Gross profit 9,907 10,572 10,775 9,710 40,964
Net income 2,736 2,812 3,008 2,056 10,612
Basic and diluted earnings per share .32 .32 .35 .24 1.23
</TABLE>
18
<PAGE> 10
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$137,508 $131,535 $126,019 $123,442 $119,715 $114,253
35,763 32,699 30,975 29,872 28,602 27,663
5,625 5,063 4,693 4,664 4,888 4,638
9,327 8,795 7,966 7,689 7,342 6,771
6.8 6.7 6.3 6.2 6.1 5.9
138.5 133.9 125.6 120.0 120.7 118.6
$60,070 $55,746 $50,152 $53,642 $50,531 $48,793
16,391 14,382 12,380 14,471 14,805 15,871
43,679 41,364 37,772 39,171 35,726 32,922
3.7 3.9 4.1 3.7 3.4 3.1
40,879 36,835 30,807 30,838 26,134 24,479
8,553 10,277 4,496 8,224 4,962 4,844
107,100 98,706 86,434 85,131 77,643 74,560
61,608 56,911 52,759 61,256 57,310 53,711
4,209 4,122 3,923 3,820 3,743 3,667
993 982 1,003 1,029 992 963
$1.09 $1.02 $.92 $.89 $.85 $.79
.49 .48 .46 .45 .44 .43
7.18 6.63 6.14 7.13 6.67 6.25
8,579,633 8,588,493 8,594,255 8,594,255 8,594,255 8,594,255
</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, 1998 and 1997, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31,1998, appearing on pages 10
through 15. 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, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
January 29, 1999
19
<PAGE> 11
Shareholder Information
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
1998 1997 1998 1997
------------------------ ---------------------- ---- ----
Quarter High Low High Low
<S> <C> <C> <C> <C> <C> <C>
First................. $21.3750 $19.5000 $16.6250 $13.3750 $.14 $.14
Second................ 21.5000 17.5000 18.8750 14.8750 .14 .14
Third................. 19.2500 15.7500 19.8750 17.3750 .15 .14
Fourth ............... 17.5000 13.2500 22.2500 17.8125 .15 .14
</TABLE>
- --------------------------------------------------------------------------------
Shareholder information reported by Transfer Agent and Registrar, National City
Bank, February 16, 1999.
<TABLE>
<CAPTION>
Holders Shares
------- ------
<S> <C> <C>
Individuals...................................... 1,329 2,452,882
Nominees, Brokers and Others .................... 32 6,135,467
----- ---------
TOTAL 1,361 8,588,349
===== =========
</TABLE>
An additional 276,827 Common Shares are held in Treasury.
- --------------------------------------------------------------------------------
22
<PAGE> 12
SAFE HARBOR STATEMENT
Safe Harbor Statement
This Annual Report contains various forward-looking statements and includes
assumptions concerning The Gorman-Rupp Company's operations, future results and
prospects. These forward-looking statements are based on current expectations
and are subject to risk and uncertainties. In connection with the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, The
Gorman-Rupp Company provides the following cautionary statement identifying
important economic, political and technological factors, among others, the
absence of which could cause the actual results or events to differ materially
from those set forth in or implied by the forward-looking statements and related
assumptions.
Such factors include the following: (1) continuation of the current and
projected future business environment, including interest rates and capital and
consumer spending; (2) competitive factors and competitor responses to
Gorman-Rupp initiatives; (3) successful development and market introductions of
anticipated new products; (4) stability of government laws and regulations,
including taxes; (5) stable governments and business conditions in emerging
economies; (6) successful penetration of emerging economies; (7) continuation of
the favorable environment to make acquisitions, domestic and foreign, including
regulatory requirements and market values of candidates; (8) successful
identification and conversion of computer systems to address the Year 2000 issue
by the Company, suppliers and vendors.
23
<PAGE> 1
EXHIBIT (21)
SUBSIDIARIES OF THE COMPANY
---------------------------
The Company has four 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; (iii) Patterson Pump Company, organized under the laws of the State of
Ohio; and; (iv) Gorman-Rupp Foreign Sales Corporation, organized under the laws
of Barbados. The Company has one indirect, majority-owned subsidiary: Patterson
Pump Ireland Limited, a majority-owned subsidiary of Patterson Pump Company,
organized under the laws of the Republic of Ireland. The consolidated financial
statements of the Company, filed as a part of this Form 10-K, include the
account of each such subsidiary.
43
<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 29, 1999, included in
the 1998 Annual Report to Shareholders of The Gorman-Rupp Company.
We also consent to the incorporation by reference in the Registration Statement
and in the related Prospectus (Form S-8 No. 333-32973) pertaining to the
Employee Stock Purchase Plan of The Gorman-Rupp Company, in the Registration
Statement and in the related Prospectus (Form S-8 No. 333-03395) pertaining to
the Individual Profit Sharing Retirement Plan of The Gorman-Rupp Company, in the
Registration Statement and in the related Prospectus (Form S-8 No. 333-30159)
pertaining to the Non-Employee Directors Compensation Plan of The Gorman-Rupp
Company, in the Registration Statement and in the related Prospectus (Form S-3
No. 333-37503) pertaining to Treasury shares, and in the Registration Statement
and in the related Prospectus (Form S-3 No. 333-45671) pertaining to the J.C.
Gorman Trust shares of our report dated January 29, 1999, 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,
1998.
/s/ ERNST & YOUNG LLP
---------------------
Ernst & Young LLP
Cleveland, Ohio
March 29, 1999
44
<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
February 25, 1999 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 1998 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 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 1998 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 29th
day of March, 1999.
/s/ ROBERT E. KIRKENDALL
------------------------
Robert E. Kirkendall
Corporate Secretary
45
<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
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
1998 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 29th day of March 1999.
THE GORMAN-RUPP COMPANY
BY: /s/ ROBERT E. KIRKENDALL
------------------------
Robert E. Kirkendall
Corporate Secretary
46
<PAGE> 3
EXHIBIT (24)
POWER OF ATTORNEY
-----------------
The undersigned Officers and Directors of The Gorman-Rupp Company (the
"Company") hereby appoint 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 1998 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 25th day of February 1999.
/s/ JEFFREY S. GORMAN President, Principal Executive Officer
- --------------------- and Director
Jeffrey S. Gorman
/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/ THOMAS E. HOAGLIN Director
- ---------------------
Thomas E. Hoaglin
/s/ PETER B. LAKE Director
- -----------------
Peter B. Lake
/s/ JOHN A. WALTER Director
- ------------------
John A. Walter
/s/ JAMES R. WATSON Director
- -------------------
James R. Watson
47
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ART. 5
FDS FOR 1998 FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
</LEGEND>
<CIK> 0000042682
<NAME> THE GORMAN-RUPP COMPANY
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 8,665
<SECURITIES> 0
<RECEIVABLES> 26,282
<ALLOWANCES> 0
<INVENTORY> 38,323
<CURRENT-ASSETS> 78,556
<PP&E> 93,363
<DEPRECIATION> 49,447
<TOTAL-ASSETS> 127,477
<CURRENT-LIABILITIES> 17,431
<BONDS> 0
0
0
<COMMON> 5,116
<OTHER-SE> 78,590
<TOTAL-LIABILITY-AND-EQUITY> 127,477
<SALES> 171,245
<TOTAL-REVENUES> 172,246
<CGS> 127,532
<TOTAL-COSTS> 153,094
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 19,152
<INCOME-TAX> 7,400
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,752
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
</TABLE>
