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, 2001 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 of incorporation (I.R.S. Employer or organization) Identification No.) 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 ----------------------------------------------------------- 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 21, 2002. $119,221,487 ------------ Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of March 21 2002. Common Shares, without par value--8,537,553 ------------------------------------------- DOCUMENTS INCORPORATED BY REFERENCE Portions of the 2001 Annual Report to Shareholders incorporated by reference into Part II (Items 5-8). Portions of Notice of 2002 Annual Meeting of Shareholders and related Proxy Statement incorporated by reference into Part III (Items 10-12). ************** The Exhibit Index is located at Page 13
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 protection, 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 related fluid control equipment.) The following table sets forth, for the years 1999 through 2001, the total net sales, income before income taxes and identifiable assets ($000 omitted) of the Company. 2001 2000 1999 ---- ---- ---- Net Sales(1) $202,927 $190,144 $181,945 Income Before Income Taxes 23,035 22,196 21,541 Identifiable Assets 148,113 145,881 136,875 (1) Prior periods reclassified to conform to the 2000 presentation of freight costs. The Company's product line is composed of pump models ranging in size from 1/4" 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 boosting low residential water pressure; 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. Gorman-Rupp continues to emphasize product development. Several of the Company's existing products, which were designed with added features, have been expanded to various new applications. 2
PART I--CONTINUED ITEM 1. BUSINESS--CONTINUED 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. The Company is seeking alliances to further enhance marketing opportunities. 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 2001 shipments to one customer approximated 16.7% of total net sales; and at December 31, 2001, 6.3% of total accounts receivable were due from this one customer. In recent years, Gorman-Rupp has actively pursued international business opportunities by, among other efforts, opening facilities outside North America. In 1996 the Company established an office in Greece to improve access to Middle East and European markets. In 1998 Patterson Pump Company's majority-owned subsidiary, Patterson Pump Ireland Limited, started the assembly of pumps in Ireland to further serve the European market. In 1999 the Mansfield Division opened a warehouse in Grindstead, Denmark to further enhance marketing opportunities in Europe and the Middle East. This warehouse was closed in 2001 and a warehouse near Amsterdam, The Netherlands was opened in January, 2002 to better serve these purposes. The Company's foreign operations do not involve any material risks due to their small size, both individually and collectively. Approximately 16% of all 2001 sales were made to customers outside the United States (as compared to 19% in 2000 and 17% in 1999). The Company continues to penetrate international markets principally by its aggressive response to worldwide pump needs. COMPETITION During the 1990's, a number of consolidations occurred within the highly competitive pump business. Gorman-Rupp estimates that 80 other companies selling pumps and pump units 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, 3
PART I--CONTINUED ITEM 1. BUSINESS--CONTINUED 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 alternative vendors and motor components for its large submersible pumps from a limited number of suppliers. Small motor requirements are also currently sourced from alternative 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, 2001, the Company employed approximately 1,055 persons, of whom approximately 640 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, 2001, the value of the Company's backlog of unfilled orders was approximately $74,674,000, of which $55,925,000 was for the unfilled orders of Patterson Pump Company. All of the backlog at December 31, 2001 is scheduled to be shipped during 2002. As of December 31, 2000, the value of the backlog of unfilled orders was approximately $74,080,000, of which $50,402,000 was for the unfilled orders of Patterson Pump Company. ITEM 2. PROPERTIES All of the production operations of the Company are conducted at its plants located in Mansfield and Bellville, Ohio; Sand Springs, Oklahoma; Toccoa, Georgia; St.Thomas, Ontario; and County Westmeath, Ireland. The Company owns an approximately 26,000 square foot facility in Sparks, Nevada comprising a training center and warehouse. In addition, the Company leases an approximately 10,000 square foot warehouse facility near Amsterdam, The Netherlands to house pumps and pump parts. All of the Company's properties, except the leased facilities in Ireland and The Netherlands, are owned in fee without any material encumbrance. The Company's six production facilities are described below in more detail: 4
PART I--CONTINUED ITEM 2. PROPERTIES <TABLE> <CAPTION> Square Operation Location Footage Start Date Description of Production Activity -------- ------- ---------- ---------------------------------- <S> <C> <C> <C> Mansfield, Ohio 238,000 1947 Assembly, Warehousing and Office(1) 134,200 1968 Assembly, Warehousing and Office(2) 173,775 1975 Machining Operations(3) 11,500 1979 Training, Personnel and Advertising 83,500 1983 Warehousing(4) 360,000 2000 Machining, Assembly and Warehousing(5) Bellville, Ohio 93,200 1953 Assembly, Warehousing and Office(6) Sand Springs, Oklahoma 28,200 1977 Manufacturing, Warehousing and Office(7) Toccoa, Georgia 171,750 1988 Manufacturing, Warehousing and Office(8) St. Thomas, Ontario, Canada 52,600 1960 Manufacturing, Warehousing and Office(9) County Westmeath, Ireland 4,500 1998 Manufacturing(10) </TABLE> - ---------------- (1) The original production plant, located on a 26 acre site, was built in 1917 and has been expanded on several occasions, the latest in 1973. (2) This facility, also situated on the foregoing 26 acre site, has been frequently expanded, most recently in 1994 and includes a modern testing facility. (3) This plant, located on a 5-1/2 acre site and purchased in 1975, has been used mainly for machining operations and storage of raw materials. The latest addition was made in 1978. This facility is currently on the market for sale. (4) This facility was built in 1920 and is located on 3.4 acres adjacent to the Company's 26 acre site. This facility was renovated in 1983. (5) 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. In 2000 the first phase of the manufacturing and warehousing facility was completed, and the machining, weld and fabrication operations of the Mansfield Division were relocated to this new facility. (6) This facility is situated on an 8.5 acre site. The initial portion of this plant was built in 1953 and has been expanded on several occasions, most recently in 1973-74. (7) The Oklahoma facility is located on 4.5 acres of land. Originally built in 1973, the facility was expanded four times between 1978 and 1991. In 1980, a contiguous parcel of two acres of undeveloped land was purchased for future needs. (8) This facility, which supports Patterson Pump Company, is situated on a 31 acre site. Between 1989 and 2000, the facility has been expanded on several occasions, including the addition of a modern 400,000 gallon testing facility and office. 5
PART I--CONTINUED ITEM 2. PROPERTIES--CONTINUED (9) The plant in St. Thomas, Ontario is operated by Gorman-Rupp of Canada, Ltd. It is situated on an 11 acre site and has undergone a number of expansions since it was established in 1960, the latest being completed in 1998. (10) The manufacturing facilities occupied by Patterson Pump Ireland Limited 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 Numerous business entities in the pump and fluid-handling industries have been targeted in a series of lawsuits in several jurisdictions by various individuals seeking redress to claimed injury as a result of the entities' alleged use of asbestos in their products. The Company and two of its subsidiaries have been drawn into this mass-scaled litigation, typically as one of hundreds of co-defendants in a particular proceeding. The allegations in the lawsuits involving the Company and/or its subsidiaries are vague, general and speculative, and the cases have not advanced beyond the early stage of discovery. In certain situations, the plaintiffs have voluntarily dismissed the Company and/or its subsidiaries from some of the lawsuits after the plaintiffs have acknowledged that there is no basis for their claims. Insurers of the Company have engaged legal counsel to represent the Company and its subsidiaries and to protect their interests. In addition, the Company and/or its subsidiaries are parties in a small number of legal proceedings arising out of the ordinary course of business. Management does not currently believe that these proceedings, or the industry-wide asbestos litigation, will materially impact the Company's results of operations, liquidity or financial condition. 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
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 77 Chairman 1989 Jeffrey S. Gorman 49 President and Chief Executive Officer; General Manager, Mansfield Division 1998/1989 Kenneth E. Dudley 64 Chief Financial Officer 1999/1982 Robert E. Kirkendall 59 Vice President Corporate Development and Corporate Secretary 1999/1990 William D. Danuloff 54 Vice President Information Technology 1991 (formerly Information Services) Judith L. Sovine 57 Treasurer 2001 David P. Emmens 53 Corporate Counsel and Assistant Corporate Secretary 1997/1999 </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. (He has served as a Director of the Company continuously since 1946.) 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. (He has served as a Director of the Company continuously since 1989.) Mr. Dudley was elected as Chief Financial Officer in 1999 and served as Treasurer from 1982 to 2001. Mr. Kirkendall was elected as Corporate Secretary in 1990 and also served as Assistant Treasurer from 1982 to 1999. Mr. Danuloff was elected Vice President Information Technology (formerly Vice President Information Services) in 1991, after having served as Director of Information Services from 1981 to 1991. Ms. Sovine was elected Treasurer in 2001. She served as Assistant Treasurer from 1999 to 2001 and prior to 1999 held a variety of financial management positions within the Company. Mr. Emmens joined the Company as Corporate Counsel in 1997, and was elected as Assistant Corporate Secretary in 1999. 7
PART I -CONTINUED Mr. J. S. Gorman is the son of Mr. J. C. Gorman. Mr. Christopher H. Lake, a Director of the Company, is the son of Dr. Peter B. Lake, also a Director. Otherwise, there is no family relationship among any of the Executive Officers and Directors of the Company. 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 2001 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 2001 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 2001 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 2001 Annual Report to Shareholders, which are incorporated herein by this reference. Other than as indicated in paragraph 2 on page 16 referenced above, 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 2001 Annual Report to Shareholders, which are incorporated herein by this reference. 8
PART II -CONTINUED ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNT- ING 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. 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 2002 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 2002 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 AND RELATED STOCKHOLDER MATTERS Attention is directed to the sections "Principal Shareholders", "Election of Directors" and "Shareholdings by Executive Officers" in the Company's definitive Notice of 2002 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 The Company has no relationships or transactions required to be reported by Item 404 of Regulation S-K. 9
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, 2001 and 2000 (ii) Consolidated statements of income--Years ended December 31, 2001, 2000 and 1999 (iii) Consolidated statements of shareholders' equity--Years ended December 31, 2001, 2000 and 1999 (iv) Consolidated statements of cash flows--Years ended December 31, 2001, 2000 and 1999 (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 (b) No reports on Form 8-K were filed during the last quarter of the period covered by this report. 10
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 25, 2002 11
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 *JUDITH L.SOVINE Treasurer and Principal Financial -------------------------- and Accounting Officer Judith L. Sovine *JAMES C. GORMAN Director ------------------------ James C. Gorman *WILLIAM A. CALHOUN Director ------------------------ William A. Calhoun *THOMAS E. HOAGLIN Director ------------------------ Thomas E. Hoaglin *CHRISTOPHER H. LAKE Director ------------------------ Christopher H. Lake *PETER B. LAKE Director ------------------------ Peter B. Lake *W. WAYNE WALSTON Director ------------------------ W. Wayne Walston *JOHN A. WALTER Director ------------------------ John A. Walter *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 25, 2002 By: /S/ROBERT E. KIRKENDALL ------------------------ Robert E. Kirkendall Attorney-In-Fact 12
ANNUAL REPORT ON FORM 10-K THE GORMAN-RUPP COMPANY For the Year Ended December 31, 2001 EXHIBIT INDEX EXHIBIT (3)(4) Amended Articles of Incorporation, as amended * (3)(4) Regulations * (10) Form of Indemnification Agreement between the Company and its Directors and Officers ** (13) Incorporated Portions of 2001 Annual Report to Shareholders 14 (21) Subsidiaries of the Company 26 (23) Consent of Independent Auditors 27 (24) Powers of Attorney 28 - ---------------------------------- * Incorporated herein by this reference from Exhibits (3) (4) of the Company's Annual Report on Form 10-K for the year ended December 31, 2000. ** Incorporated herein by this reference from Exhibit (10) of the Company's Annual Report on Form 10-K for the year ended December 31, 2000. 13