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 SEPTEMBER 30, 2001 COMMISSION FILE NUMBER 1-6747 THE GORMAN-RUPP COMPANY ------------------------------------------------------------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) <TABLE> <S> <C> OHIO 34-0253990 ------------------------------- ------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) </TABLE> 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 SEPTEMBER 30, 2001 ----- COMMON, WITHOUT PAR VALUE, 8,543,553 PAGE 1 OF 11 PAGES
PART I - FINANCIAL INFORMATION THE GORMAN-RUPP COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) <TABLE> <CAPTION> THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 2001 2000 2001 2000 ---- ---- ---- ---- <S> <C> <C> <C> <C> INCOME NET SALES $ 51,430 $ 46,904 $ 155,939 $ 142,481 OTHER INCOME 225 207 601 606 ---------- ---------- ---------- ---------- TOTAL INCOME 51,655 47,111 156,540 143,087 DEDUCTIONS FROM INCOME COST OF PRODUCTS SOLD 39,471 34,460 118,209 105,116 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 6,427 6,485 20,122 19,061 NON-RECURRING EXPENSE/ PLANT RELOCATION 0 1,051 0 1,051 ---------- ---------- ---------- ---------- TOTAL DEDUCTIONS 45,898 41,996 138,331 125,228 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 5,757 5,115 18,209 17,859 INCOME TAXES 2,120 1,987 6,970 6,970 ---------- ---------- ---------- ---------- NET INCOME $ 3,637 $ 3,128 $ 11,239 $ 10,889 ========== ========== ========== ========== BASIC AND DILUTED EARNINGS PER SHARE $ 0.42 $ 0.37 $ 1.31 $ 1.27 DIVIDENDS PAID PER SHARE $ 0.16 $ 0.16 $ 0.48 $ 0.46 AVG. SHARES OUTSTANDING 8,551,977 8,583,914 8,560,978 8,589,103 </TABLE> 2
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS OF DOLLARS) <TABLE> <CAPTION> NINE MONTHS ENDED SEPTEMBER 30 2001 2000 ---- ---- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME $ 11,239 $ 10,889 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION 5,351 4,985 CHANGES IN OPERATING ASSETS AND LIABILITIES 6,998 111 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 23,588 15,985 CASH FLOWS FROM INVESTING ACTIVITIES: CAPITAL ADDITIONS, NET (2,336) (9,472) CHANGE IN SHORT-TERM INVESTMENTS (2,000) (571) OTHER 0 (5) -------- -------- NET CASH USED FOR INVESTING ACTIVITIES (4,336) (10,048) CASH FLOWS FROM FINANCING ACTIVITIES: CASH DIVIDENDS (4,108) (3,952) CHANGE IN TREASURY SHARES (570) (723) BORROWINGS FROM BANK 2,882 16,768 REPAYMENTS TO BANK (6,295) (15,872) -------- -------- NET CASH USED FOR FINANCING ACTIVITIES (8,091) (3,779) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 11,161 2,158 CASH AND CASH EQUIVALENTS: BEGINNING OF YEAR 7,630 4,114 -------- -------- SEPTEMBER 30 $ 18,791 $ 6,272 ======== ======== </TABLE> 3
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS OF DOLLARS) <TABLE> <CAPTION> SEPT 30 DEC 31 2001 2000 ---- ---- <S> <C> <C> ASSETS CURRENT ASSETS CASH AND CASH EQUIVALENTS $ 18,791 $ 7,630 SHORT-TERM INVESTMENTS 2,000 0 ACCOUNTS RECEIVABLE 29,084 28,851 INVENTORIES 35,098 39,760 OTHER CURRENT ASSETS AND DEFERRED INCOME TAXES 5,967 6,048 ------------ ------------ TOTAL CURRENT ASSETS 90,940 82,289 OTHER ASSETS 2,665 1,593 DEFERRED INCOME TAXES 4,120 4,114 PROPERTY, PLANT AND EQUIPMENT 117,718 117,322 LESS ALLOWANCES FOR DEPRECIATION 62,848 59,437 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT - NET 54,870 57,885 ------------ ------------ TOTAL ASSETS $ 152,595 $ 145,881 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES ACCOUNTS PAYABLE $ 5,872 $ 7,391 PAYROLLS AND RELATED LIABILITIES 3,718 3,331 ACCRUED EXPENSES 12,016 8,357 INCOME TAXES 1,597 0 ------------ ------------ TOTAL CURRENT LIABILITIES 23,203 19,079 LONG TERM DEBT 0 3,413 POSTRETIREMENT BENEFITS 23,028 23,390 SHAREHOLDERS' EQUITY COMMON SHARES, WITHOUT PAR VALUE AT STATED CAPITAL AMOUNT 5,091 5,106 RETAINED EARNINGS 102,993 96,417 ACCUMULATED OTHER COMPREHENSIVE INCOME (1,720) (1,524) ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 106,364 99,999 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 152,595 $ 145,881 ============ ============ COMMON SHARES - AUTHORIZED 14,000,000 14,000,000 * COMMON SHARES - OUTSTANDING 8,543,553 8,565,553 COMMON SHARES - TREASURY 321,623 299,623 * AFTER DEDUCTING TREASURY SHARES </TABLE> 4
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 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. THE FUNCTIONAL CURRENCY FOR PRINCIPALLY ALL SUBSIDIARIES OUTSIDE THE UNITED STATES IS THE LOCAL CURRENCY. FINANCIAL STATEMENTS FOR THESE SUBSIDIARIES ARE TRANSLATED INTO UNITED STATES DOLLARS AT MONTH-END EXCHANGE RATES AS TO ASSETS AND LIABILITIES AND WEIGHTED-AVERAGE EXCHANGE RATES AS TO REVENUES AND EXPENSES. THE RESULTING TRANSLATION ADJUSTMENTS ARE RECORDED IN SHAREHOLDERS' EQUITY IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS). OPERATING RESULTS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 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: <TABLE> <CAPTION> SEPT 30 DEC 31 (THOUSANDS OF DOLLARS) 2001 2000 ---- ---- <S> <C> <C> RAW MATERIALS AND IN-PROCESS $22,861 $25,898 FINISHED PARTS 9,841 11,148 FINISHED PRODUCTS 2,396 2,714 ------- ------- $35,098 $39,760 ======= ======= </TABLE> NOTE C - COMPREHENSIVE INCOME DURING THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000, TOTAL COMPREHENSIVE INCOME WAS $3,449,000 AND $3,048,000, RESPECTIVELY. DURING THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2001 AND 2000, TOTAL COMPREHENSIVE INCOME WAS $11,043,000 AND $10,855,000, RESPECTIVELY. THE DIFFERENCE BETWEEN NET INCOME AND COMPREHENSIVE INCOME REPRESENTS FOREIGN CURRENCY TRANSLATION ADJUSTMENTS. 5
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2001 NOTE D - RECENT ACCOUNTING PRONOUNCEMENTS IN JUNE 2001, THE FINANCIAL ACCOUNTING STANDARDS BOARD ("FASB) ISSUED STATEMENT NO. 141, "BUSINESS COMBINATIONS", AND STATEMENT NO. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS", EFFECTIVE FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 2001. UNDER THE NEW RULES, GOODWILL WILL NO LONGER BE AMORTIZED BUT WILL BE SUBJECT TO ANNUAL IMPAIRMENT TESTS IN ACCORDANCE WITH THE STATEMENTS. OTHER INTANGIBLE ASSETS WILL CONTINUE TO BE AMORTIZED OVER THEIR USEFUL LIVES. THE COMPANY WILL APPLY THE NEW RULES ON ACCOUNTING FOR GOODWILL AND OTHER INTANGIBLE ASSETS BEGINNING IN THE FIRST QUARTER OF 2002. THE COMPANY HAS DETERMINED THERE WILL BE NO EFFECT ON THE EARNINGS AND FINANCIAL POSITION OF THE COMPANY. IN AUGUST 2001, THE FASB ISSUED STATEMENT NO. 143, "ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS" WHICH AMENDS STATEMENT NO. 19, "FINANCIAL ACCOUNTING AND REPORTING BY OIL AND GAS PRODUCING COMPANIES", AND IS EFFECTIVE FOR ALL COMPANIES. THIS STATEMENT ADDRESSES THE FINANCIAL ACCOUNTING AND REPORTING FOR OBLIGATIONS ASSOCIATED WITH THE RETIREMENT OF TANGIBLE LONG-LIVED ASSETS AND THE ASSOCIATED ASSET RETIREMENT COSTS. STATEMENT NO. 143 IS EFFECTIVE FOR FISCAL YEARS BEGINNING AFTER JUNE 15, 2002. THE COMPANY IS CURRENTLY REVIEWING THIS STATEMENT TO DETERMINE ITS EFFECT ON THE COMPANY'S FINANCIAL STATEMENTS. IN OCTOBER 2001, THE FASB ISSUED STATEMENT NO. 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS" WHICH SUPERSEDES STATEMENT NO. 121, "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG- LIVED ASSETS TO BE DISPOSED OF". STATEMENT NO. 144 ADDRESSES FINANCIAL ACCOUNTING AND REPORTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS AND IS EFFECTIVE FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 2001, AND INTERIM PERIODS WITHIN THOSE FISCAL YEARS. THE COMPANY IS CURRENTLY REVIEWING THIS STATEMENT TO DETERMINE ITS EFFECT ON THE COMPANY'S FINANCIAL STATEMENTS. 6
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIRD QUARTER 2001 VS THIRD QUARTER 2000 NET SALES WERE $51,430,000 IN 2001 COMPARED TO $46,904,000 IN 2000, AN INCREASE OF $4,526,000. A MAJORITY OF THE INCREASE IS RELATED TO INCREASED SALES OF FABRICATED TURBINE DIFFUSERS. PATTERSON PUMP COMPANY MANUFACTURES THE TURBINE DEFUSERS FOR GENERAL ELECTRIC AND THE DEMAND FOR GENERAL ELECTRIC'S GAS POWERED ELECTRIC POWER GENERATORS HAS INCREASED. THE TURBINE DIFFUSERS ARE ONE OF THE MAJOR COMPONENTS OF THE GAS POWERED ELECTRIC POWER GENERATORS. OTHER INCOME WAS $225,000 IN 2001 COMPARED TO $207,000 IN 2000. THE INCREASE WAS DUE PRIMARILY TO AN INCREASE IN INTEREST INCOME. COST OF PRODUCTS SOLD IN 2001 WAS $39,471,000 COMPARED TO $34,460,000 IN 2000. THE LARGEST FACTOR IN THE INCREASE WAS MATERIAL NEEDED TO SUPPORT THE INCREASED SALES. INCREASES IN PAYROLL RELATED EXPENSES AND EMPLOYEE MEDICAL BENEFITS WERE ALSO LARGE CONTRIBUTORS TO THE INCREASE. AS A PERCENTAGE OF NET SALES, COST OF PRODUCTS SOLD WAS 76.4% IN 2001 COMPARED TO 73.5% IN 2000. A MAJOR PART OF THE INCREASE IN PAYROLL RELATED EXPENSES WAS CAUSED BY THE INCREASE IN THE NUMBER OF EMPLOYEES AT PATTERSON PUMP COMPANY BECAUSE OF THE INCREASE OF THEIR BUSINESS WITH GENERAL ELECTRIC. THE COST OF MEDICAL BENEFITS WERE UP BECAUSE OF THE GENERAL INCREASE IN MEDICAL CARE RATES AND THE INCREASE IN THE NUMBER OF LARGE CLAIMS. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES DECREASED FROM $6,485,000 IN 2000 TO $6,427,000 IN 2001 PRIMARILY AS A RESULT OF DECREASES IN TRAVEL AND ADVERTISING EXPENSES. BECAUSE OF THE SOFTNESS IN THE ECONOMY, BUDGET REDUCTIONS HAVE CAUSED A SIGNIFICANT REDUCTION IN TRAVEL AND ADVERTISING EXPENSES. THESE ARE EXPENSES THAT CAN BE AFFECTED WITH SHORT NOTICE. A NON-RECURRING EXPENSE OF $1,051,000 WAS RECORDED AT THE MANSFIELD DIVISION IN 2000 AND WAS ASSOCIATED WITH THE MOVING OF MACHINES AND MATERIALS INTO THEIR NEWLY COMPLETED MANUFACTURING FACILITY. INCOME BEFORE INCOME TAXES WAS $5,757,000 IN 2001 COMPARED TO $5,115,000 IN 2000, AN INCREASE OF $642,000. INCOME TAX EXPENSE INCREASED FROM $1,987,000 IN 2000 TO $2,120,000 IN 2001, PRIMARILY AS A RESULT OF THE INCREASE IN PROFIT. THE EFFECTIVE TAX RATE WAS 36.8% IN 2001 COMPARED TO 38.8% IN 2000. NET INCOME OF $3,637,000 IN 2001 INCREASED $509,000 FROM $3,128,000 IN 2000, AN INCREASE OF 16.3%. AS A PERCENT OF NET SALES, NET INCOME WAS 7.1% IN 2001 AND 6.7% IN 2000. NET INCOME PER SHARE WAS $.42 IN 2001, AN INCREASE FROM THE $.37 IN 2000. 7
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NINE MONTHS 2001 VS NINE MONTHS 2000 NET SALES WERE $155,939,000 IN 2001, AN INCREASE OF $13,458,000 OR 9.4% OVER THE $142,481,000 IN 2000. A MAJORITY OF THE INCREASE IS RELATED TO INCREASED SALES OF FABRICATED TURBINE DIFFUSERS. PATTERSON PUMP COMPANY MANUFACTURES THE TURBINE DEFUSERS FOR GENERAL ELECTRIC AND THE DEMAND FOR GENERAL ELECTRIC'S GAS POWERED ELECTRIC POWER GENERATORS HAS INCREASED. THE TURBINE DIFFUSERS ARE ONE OF THE MAJOR COMPONENTS OF THE GAS POWERED ELECTRIC POWER GENERATORS. OTHER INCOME WAS $601,000 IN 2001 COMPARED TO $606,000 IN 2000. THE DECREASE WAS PRIMARILY DUE TO A DECREASE IN INTEREST INCOME. COST OF PRODUCTS SOLD IN 2001 WAS $118,209,000 COMPARED TO $105,116,000 IN 2000. THE LARGEST FACTOR IN THE INCREASE WAS MATERIAL NEEDED TO SUPPORT THE INCREASED SALES. INCREASES IN PAYROLL RELATED EXPENSES AND EMPLOYEE MEDICAL BENEFITS WERE ALSO LARGE CONTRIBUTORS TO THE INCREASE. AS A PERCENTAGE OF NET SALES, COST OF PRODUCTS SOLD WAS 75.8% IN 2001 COMPARED TO 73.8% IN 2000. A MAJOR PART OF THE INCREASE IN PAYROLL RELATED EXPENSES WAS CAUSED BY THE INCREASE IN THE NUMBER OF EMPLOYEES AT PATTERSON PUMP COMPANY BECAUSE OF THE INCREASE OF THEIR BUSINESS WITH GENERAL ELECTRIC. THE COST OF MEDICAL BENEFITS WERE UP BECAUSE OF THE GENERAL INCREASE IN MEDICAL CARE RATES AND THE INCREASE IN THE NUMBER OF LARGE CLAIMS. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES INCREASED FROM $19,061,000 IN 2000 TO $20,122,000 IN 2001. THE INCREASE IS PRIMARILY A RESULT OF INCREASES IN EMPLOYEE MEDICAL BENEFITS AND PAYROLL RELATED EXPENSES. THE MEDICAL COSTS WERE UP BECAUSE OF THE GENERAL INCREASE IN MEDICAL CARE RATES. EMPLOYEES WERE ADDED TO THE SALES FORCE AND THIS CAUSED PAYROLL RELATED EXPENSES TO INCREASE. A NON-RECURRING EXPENSE OF $1,051,000 WAS RECORDED AT THE MANSFIELD DIVISION IN 2000 AND WAS ASSOCIATED WITH THE MOVING OF MACHINES AND MATERIALS INTO THEIR NEWLY COMPLETED MANUFACTURING FACILITY. INCOME BEFORE INCOME TAXES WAS $18,209,000 IN 2001, COMPARED TO $17,859,000 IN 2000, AN INCREASE OF $350,000. INCOME TAX EXPENSE REMAINED UNCHANGED AT $6,970,000 IN 2000 AND $6,970,000 IN 2001. THE EFFECTIVE INCOME TAX RATE WAS 38.3% IN 2001 COMPARED TO 39.0% IN 2000. NET INCOME OF $11,239,000 IN 2001 INCREASED $350,000 FROM $10,889,000 IN 2000, AN INCREASE OF 3.2%. AS A PERCENT OF NET SALES, NET INCOME WAS 7.2% IN 2001 AND 7.6% IN 2000. NET INCOME PER SHARE WAS $1.31 IN 2001, AN INCREASE FROM THE $1.27 IN 2000. 8
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND SOURCES OF CAPITAL 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 SEPTEMBER 30, 2001 AND 4.3 TO 1 AT DECEMBER 31, 2000. THE CHANGE IN OPERATING ASSETS AND LIABILITIES SHOWN ON THE STATEMENT OF CASH FLOWS WAS CAUSED PRIMARILY BY THE REDUCTION OF INVENTORIES AND AN INCREASE IN THE PROFIT SHARING ACCRUAL. THE LARGEST INVENTORY REDUCTIONS WERE AT PATTERSON PUMP COMPANY AND THE MANSFIELD DIVISION. THE REDUCTIONS IN CAPITAL ADDITIONS WAS A RESULT OF A NEW BUILDING BEING COMPLETED IN 2000. CAPITAL EXPENDITURES WERE DOWN CONSIDERABLY IN 2001 BECAUSE THERE WERE NO PLANS FOR ANY LARGE ADDITIONS OF MACHINERY OR BUILDINGS. THE CHANGE IN SHORT-TERM INVESTMENTS REFLECTED THE $2,000,000 CERTIFICATE OF DEPOSIT THAT WAS PURCHASED IN 2001. THE CASH AND CASH EQUIVALENTS IS PRIMARILY IN CHECKING ACCOUNTS AND SWEEP ACCOUNTS THAT INVESTS OVERNIGHT. THE BORROWINGS FROM BANKS AND REPAYMENTS TO BANK WERE LOWER BECAUSE OF THE FREQUENT USE OF A LINE OF CREDIT THAT HAD BORROWINGS AND REPAYMENTS ALMOST DAILY. THE CASH AND CASH EQUIVALENTS ARE HIGHER THIS YEAR AND THERE HAS NOT BEEN THE NEED FOR THE BORROWINGS. THE COMPANY PRESENTLY HAS ADEQUATE WORKING CAPITAL, ADEQUATE BORROWING CAPACITY AND A HEALTHY LIQUIDITY POSITION. 9
THE GORMAN-RUPP COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RECENT ACCOUNTING PRONOUNCEMENTS IN JUNE 2001, THE FINANCIAL ACCOUNTING STANDARDS BOARD ("FASB) ISSUED STATEMENT NO. 141, "BUSINESS COMBINATIONS", AND STATEMENT NO. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS", EFFECTIVE FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 2001. UNDER THE NEW RULES, GOODWILL WILL NO LONGER BE AMORTIZED BUT WILL BE SUBJECT TO ANNUAL IMPAIRMENT TESTS IN ACCORDANCE WITH THE STATEMENTS. OTHER INTANGIBLE ASSETS WILL CONTINUE TO BE AMORTIZED OVER THEIR USEFUL LIVES. THE COMPANY WILL APPLY THE NEW RULES ON ACCOUNTING FOR GOODWILL AND OTHER INTANGIBLE ASSETS BEGINNING IN THE FIRST QUARTER OF 2002. THE COMPANY HAS DETERMINED THERE WILL BE NO EFFECT ON THE EARNINGS AND FINANCIAL POSITION OF THE COMPANY. IN AUGUST 2001, THE FASB ISSUED STATEMENT NO. 143, "ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS" WHICH AMENDS STATEMENT NO. 19, "FINANCIAL ACCOUNTING AND REPORTING BY OIL AND GAS PRODUCING COMPANIES", AND IS EFFECTIVE FOR ALL COMPANIES. THIS STATEMENT ADDRESSES THE FINANCIAL ACCOUNTING AND REPORTING FOR OBLIGATIONS ASSOCIATED WITH THE RETIREMENT OF TANGIBLE LONG-LIVED ASSETS AND THE ASSOCIATED ASSET RETIREMENT COSTS. STATEMENT NO. 143 IS EFFECTIVE FOR FISCAL YEARS BEGINNING AFTER JUNE 15, 2002. THE COMPANY IS CURRENTLY REVIEWING THIS STATEMENT TO DETERMINE ITS EFFECT ON THE COMPANY'S FINANCIAL STATEMENTS. IN OCTOBER 2001, THE FASB ISSUED STATEMENT NO. 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS" WHICH SUPERSEDES STATEMENT NO. 121, "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF". STATEMENT NO. 144 ADDRESSES FINANCIAL ACCOUNTING AND REPORTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS AND IS EFFECTIVE FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 2001, AND INTERIM PERIODS WITHIN THOSE FISCAL YEARS. THE COMPANY IS CURRENTLY REVIEWING THIS STATEMENT TO DETERMINE ITS EFFECT ON THE COMPANY'S FINANCIAL STATEMENTS. 10
PART II - OTHER INFORMATION THE GORMAN-RUPP COMPANY AND SUBSIDIARIES ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) REPORTS FILED ON FORM 8-K DURING THE QUARTER ENDED SEPTEMBER 30, 2001 - NONE SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. THE GORMAN-RUPP COMPANY ------------------------------ (REGISTRANT) DATE NOVEMBER 9, 2001 -------------------- BY: /S/KENNETH E. DUDLEY ------------------------------ KENNETH E. DUDLEY PRINCIPAL FINANCIAL OFFICER 11