GORMAN RUPP CO — Interim / Quarterly Report 2001

Aug 3, 2001

10-Q 1 l89576ae10-q.htm THE GORMAN-RUPP COMPANY The Gorman-Rupp Company-Form 10-Q PAGEBREAK TOC

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES
PART II — OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES

/TOC

Table of Contents

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended June 30, 2001 Commission File Number 1-6747

The Gorman-Rupp Company (Exact name of registrant as specified in its charter)

Ohio	34-0253990
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

305 Bowman Street, P. O. Box 1217, Mansfield, Ohio	44901
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (419) 755-1011

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Shares outstanding at June 30, 2001 — common, without par value, 8,565,553

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link1 "PART I — FINANCIAL INFORMATION"

PART I — FINANCIAL INFORMATION THE GORMAN-RUPP COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands of dollars, except per share data)

	Three Months Ended — June 30		Six Months Ended — June 30
	2001	2000	2001	2000
INCOME
Net sales	$ 54,838	$ 48,008	$ 104,509	$ 97,032
Other income	114	229	376	399
TOTAL INCOME	54,952	48,237	104,885	97,431
DEDUCTIONS FROM INCOME
Cost of products sold	41,413	35,770	78,738	72,111
Selling, general and
administrative expenses	6,951	6,427	13,695	12,576
TOTAL DEDUCTIONS	48,364	42,197	92,433	84,687
INCOME BEFORE INCOME TAXES	6,588	6,040	12,452	12,744
Income taxes	2,590	2,379	4,850	4,983
NET INCOME	$ 3,998	$ 3,661	$ 7,602	$ 7,761
Basic And Diluted
Earnings Per Share	$ 0.47	$ 0.42	$ 0.89	$ 0.90
Dividends Paid Per Share	$ 0.16	$ 0.15	$ 0.32	$ 0.30
Avg. Shares Outstanding	8,565,553	8,591,402	8,565,553	8,591,725

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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands of dollars)

	Six Months Ended
	June 30
	2001	2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 7,602	$	7,761
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization	3,585		3,210
Changes in operating assets and liabilities	(1,851	)	380
NET CASH PROVIDED BY OPERATING ACTIVITIES	9,336		11,351
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions, net	(1,766	)	(7,662	)
Change in short-term investments	(2,000	)	(2,587	)
Other	0		46
NET CASH USED FOR INVESTING ACTIVITIES	(3,766	)	(10,203	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends	(2,741	)	(2,578	)
Change in treasury shares	0		(348	)
Repayments to bank	(3,413	)	(232	)
NET CASH USED FOR FINANCING ACTIVITIES	(6,154	)	(3,158	)
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS	(584	)	(2,010	)
CASH AND CASH EQUIVALENTS:
Beginning of year	7,630		4,114
June 30	$ 7,046	$	2,104

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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands of dollars)

	June 30 — 2001	2000
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ 7,046	$	7,630
Short-term investments	2,000		0
Accounts receivable	36,717		28,851
Inventories	36,999		39,760
Other current assets and deferred income taxes	5,118		6,048
TOTAL CURRENT ASSETS	87,880		82,289
OTHER ASSETS	2,816		1,593
DEFERRED INCOME TAXES	4,115		4,114
PROPERTY, PLANT AND EQUIPMENT	117,418		117,322
Less allowances for depreciation	61,352		59,437
PROPERTY, PLANT AND EQUIPMENT — NET	56,066		57,885
TOTAL ASSETS	$ 150,877	$	145,881
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$ 5,466	$	7,391
Payrolls and related liabilities	3,624		3,331
Accrued expenses	11,887		8,357
Income taxes	1,778		0
TOTAL CURRENT LIABILITIES	22,755		19,079
LONG TERM DEBT	0		3,413
POSTRETIREMENT BENEFITS	23,270		23,390
SHAREHOLDERS’ EQUITY
Common shares, without par value
at stated capital amount	5,106		5,106
Retained earnings	101,278		96,417
Accumulated other comprehensive income	(1,532	)	(1,524	)
TOTAL SHAREHOLDERS’ EQUITY	104,852		99,999
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 150,877	$	145,881
Common shares — authorized	14,000,000		14,000,000
* Common shares — outstanding	8,565,553		8,565,553
Common shares — treasury	299,623		299,623
* After deducting treasury shares

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link1 "THE GORMAN-RUPP COMPANY AND SUBSIDIARIES"

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2001

NOTE A — BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2001 are not necessarily indicative of results that may be expected for the year ending December 31, 2001. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10K for the year ended December 31, 2000.

NOTE B — INVENTORIES

The major components of inventories are as follows:

	June 30	December 31
(Thousands of dollars)	2001	2000
Raw materials and in-process	$ 24,100	$ 25,898
Finished parts	10,374	11,148
Finished products	2,525	2,714
	$ 36,999	$ 39,760

NOTE C — COMPREHENSIVE INCOME

During the three month periods ended June 30, 2001 and 2000, total comprehensive income was $4,337,000 and $3,720,000, respectively During the six month periods ended June 30, 2001 and 2000, total comprehensive income was $7,594,000 and $7,807,000, respectively Comprehensive income consists of foreign currency translation adjustments.

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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Second Quarter 2001 vs Second Quarter 2000

Net sales were $54,838,000 in 2001 compared to $48,008,000 in 2000, an increase of 14.2% A majority of the increase was due to increased sales of fabricated turbine diffusers.

Other income was $114,000 in 2001 compared to $229,000 in 2000. The decrease was due primarily to decreased currency exchange gains.

Cost of products sold in 2001 was $41,413,000 compared to $35,770,000 in 2000. The largest factors in the increase were material needed to support the increased sales and increased payroll related expenses. As a percentage of net sales, cost of products sold was 75.5% in 2000 compared to 74.5% in 2000. A change in product mix increased the percentage in 2001.

Selling, general and administrative expenses increased from $6,427,000 in 2000 to $6,951,000 in 2001 primarily as a result of an increase in professional services.

Income before income taxes was $6,588,000 in 2001 compared to $6,040,000 in 2000, an increase of $548,000. Income tax expense increased from $2,379,000 in 2000 to $2,590,000 in 2001, primarily as a result of the increase in profit. The effective tax rate was 39.3% in 2001 compared to 39.4% in 2000.

Net income in 2001 was $3,998,000 which resulted in an increase of $337,000 from $3,661,000 in 2000, an increase of 9.2%. As a percent of net sales, net income was 7.3% in 2001 and 7.7% in 2000. Net income per share was $.47 in 2001, an increase of $.05 from the $.42 in 2000.

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THE GORMAN-RUPP COMPANY AND SUBSIDIARIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Six Months 2001 vs Six Months 2000

Net sales were $104,509,000 in 2001, an increase of $7,477,000 or 7.7% over the $97,032,000 in 2000. A majority of the increase is related to increased sales of fabricated turbine diffusers.

Other income was $376,000 in 2000 compared to $399,000 in 1999. The decrease was primarily due to a decrease in interest income.

Cost of products sold in 2001 was $78,738,000 compared to $72,111,000 in 2000. The largest factor in the increase was material needed to support the increased sales. An increase in payroll related expenses, medical expenses and depreciation also contributed to the increase. As a percentage of net sales, cost of products sold was 75.3% in 2001 compared to 74.3% in 2000. Changes in product mix are responsible for the higher percentage in 2001.

Selling, general and administrative expenses increased from $12,576,000 in 2000 to $13,695,000 in 2001 with an increase in professional services being the largest single item with health care costs also contributing to the increase.

Income before income taxes was $12,452,000 in 2001 compared to $12,744,000 in 2000, a decrease of $292,000. Income tax expense decreased from $4,983,000 in 2000 to $4,850,000 in 2001. The effective income tax rate was 38.9% in 2001 compared to 39.1% in 2000.

Net income of $7,602,000 in 2001 decreased $159,000 from $7,761,000 in 2000, a decrease of 2.0%. As a percent of net sales, net income was 7.3% in 2001 and 8.0% in 2000. Net income per share was $.89 in 2001, a decrease from the $.90 in 2000.

FINANCIAL CONDITION

The Company continues to finance most of its capital expenditures and working capital requirements through internally generated funds and bank financing. The ratio of current assets to current liabilities was 3.9 to 1 at June 30, 2001 and 4.3 to 1 at December 31, 2000.

The Company presently has adequate working capital, adequate borrowing capacity and a healthy liquidity position.

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link1 "PART II — OTHER INFORMATION"

PART II — OTHER INFORMATION THE GORMAN-RUPP COMPANY AND SUBSIDIARIES link2 "Item 6. EXHIBITS AND REPORTS ON FORM 8-K"

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Reports filed on Form 8-K during the Quarter Ended June 30, 2001 — None

link1 "SIGNATURES"

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	(Registrant)
Date	August 3, 2001
	By:	/s/Kenneth E. Dudley
		Kenneth E. Dudley
		Principal Financial Officer

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