10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2014

OR

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

For the transition period from              to             

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 Incorporation or Organization)	(I.R.S. Employer Identification No.)
600 South Airport Road, Mansfield, Ohio	44903
(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  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

There were 26,260,543 shares of common stock, without par value, outstanding at July 25, 2014.

*********************

Page 1 of 27 Pages

The Gorman-Rupp Company and Subsidiaries

Three and Six Months Ended June 30, 2014 and 2013

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Income -Three Months Ended June 30, 2014 and 2013 -Six Months Ended June 30, 2014 and 2013	3
	Condensed Consolidated Statements of Comprehensive Income -Three Months Ended June 30, 2014 and 2013 -Six Months Ended June 30, 2014 and 2013	4
	Condensed Consolidated Balance Sheets -June 30, 2014 and December 31, 2013	5
	Condensed Consolidated Statements of Cash Flows -Six Months Ended June 30, 2014 and 2013	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.	Controls and Procedures	18
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 6.	Exhibits	19
EX-31.1	Section 302 Principal Executive Officer (PEO) Certification	23
EX-31.2	Section 302 Principal Financial Officer (PFO) Certification	25
EX-32	Section 1350 Certifications	27
EX-101	Financial statements from the Quarterly Report on Form 10-Q of The Gorman-Rupp Company for the quarter ended June 30, 2014, formatted in eXtensible Business Reporting Language (XBRL)

2

PART I. FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS (UNAUDITED)

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2014			2013			2014			2013
Net sales	$	109,728		$	106,415		$	219,792		$	198,872
Cost of products sold		82,824			79,934			165,334			151,167
Gross profit		26,904			26,481			54,458			47,705
Selling, general and administrative expenses		13,483			12,964			26,344			25,931
Operating income		13,421			13,517			28,114			21,774
Other income		184			153			357			272
Other expense		(377	)		(174	)		(411	)		(323	)
Income before income taxes		13,228			13,496			28,060			21,723
Income taxes		4,368			4,328			9,246			6,737
Net income	$	8,860		$	9,168		$	18,814		$	14,986
Earnings per share	$	0.34		$	0.35		$	0.72		$	0.57
Cash dividends paid per share	$	0.09		$	0.08		$	0.18		$	0.16
Average shares outstanding		26,253,043			26,245,543			26,253,043			26,245,543

Share amounts have been restated to reflect the 5-for-4 stock split effective December 10, 2013.

See notes to condensed consolidated financial statements.

3

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands)	2014		2013			2014			2013
Net income	$	8,860	$	9,168		$	18,814		$	14,986
Cumulative translation adjustments		207		(726	)		(149	)		(1,559	)
Pension and postretirement medical liability adjustments, net of tax		37		1,369			211			2,578
Other comprehensive income		244		643			62			1,019
Total comprehensive income	$	9,104	$	9,811		$	18,876		$	16,005

See notes to condensed consolidated financial statements.

4

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)	June 30, 2014			December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	29,446		$	31,123
Short-term investments		255			253
Accounts receivable - net		75,864			59,374
Inventories - net		88,376			89,946
Deferred income taxes and other current assets		11,317			8,593
Total current assets		205,258			189,289
Property, plant and equipment		261,923			253,758
Less accumulated depreciation		129,113			122,569
Property, plant and equipment - net		132,810			131,189
Other assets		6,396			3,657
Goodwill and other intangible assets - net		41,170			31,503
Total assets	$	385,634		$	355,638
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	20,252		$	17,882
Short-term debt		22,667			9,000
Payroll and related liabilities		12,029			11,020
Commissions payable		6,709			6,081
Deferred revenue		5,366			7,190
Accrued expenses		9,001			9,587
Total current liabilities		76,024			60,760
Postretirement benefits		18,988			18,393
Deferred and other income taxes		12,331			12,345
Total liabilities		107,343			91,498
Shareholders’ equity
Common shares, without par value:
Authorized - 35,000,000 shares
Outstanding - 26,253,043 shares in 2014 and in 2013 (after deducting treasury shares of 795,753 in 2014 and in 2013) at stated capital amount		5,131			5,131
Additional paid-in capital		2,822			2,822
Retained earnings		278,737			264,648
Accumulated other comprehensive loss		(8,399	)		(8,461	)
Total shareholders’ equity		278,291			264,140
Total liabilities and shareholders’ equity	$	385,634		$	355,638

See notes to condensed consolidated financial statements.

5

THE GORMAN-RUPP COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
(Dollars in thousands)	2014			2013
Cash flows from operating activities:
Net income	$	18,814		$	14,986
Adjustments to reconcile net income attributable to net cash provided (used) by operating activities:
Depreciation and amortization		7,048			6,805
Pension expense, including 2013 non-cash settlement loss		1,437			4,641
Contributions to pension plan		(1,200	)		(3,600	)
Changes in operating assets and liabilities:
Accounts receivable		(13,660	)		(11,656	)
Inventories		3,396			5,222
Accounts payable		1,650			2,138
Commissions payable		628			(820	)
Other		(6,128	)		3,372
Net cash provided by operating activities		11,985			21,088
Cash flows from investing activities:
Capital additions		(5,586	)		(3,399	)
Acquisition, net of cash acquired		(16,280	)		—
Change in short-term investments		(2	)		3
Net cash used for investing activities		(21,868	)		(3,396	)
Cash flows from financing activities:
Cash dividends		(4,726	)		(4,199	)
Proceeds from bank borrowings		18,000			—
Payments to bank for borrowings		(4,333	)		(7,000	)
Net cash provided by (used for) financing activities		8,941			(11,199	)
Effect of exchange rate changes on cash		(735	)		239
Net (decrease) increase in cash and cash equivalents		(1,677	)		6,732
Cash and cash equivalents:
Beginning of period		31,123			20,119
End of period	$	29,446		$	26,851

See notes to condensed consolidated financial statements.

6

PART I

ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements include the accounts of The Gorman-Rupp Company (the “Company” or “Gorman-Rupp”) and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management of the Company, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of results that may be expected for the year ending December 31, 2014. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, from which related information herein has been derived.

NOTE B - RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2014, the Financial Accounting Standards Board issued ASU 2014-09, “Revenue from Contracts with Customers,” which supersedes most current revenue recognition guidance, including industry-specific guidance, and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company is currently assessing the impact of implementing this guidance on the Company’s financial position, results of operations, and cash flows. The Company does not expect the adoption of ASU 2014-09 will have a material impact on its consolidated financial statements.

NOTE C - INVENTORIES

Inventories are stated at the lower of cost or market. The costs for approximately 72% of inventories at June 30, 2014 and 76% of inventories at December 31, 2013 are determined using the last-in, first-out (LIFO) method, with the remainder determined using the first-in, first-out (FIFO) method applied on a consistent basis. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels and costs at that time. Interim LIFO calculations are based on management’s estimate of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation.

The major components of inventories are as follows (net of LIFO reserves of $57.4 million and $55.3 million at June 30, 2014 and December 31, 2013, respectively):

(Thousands of dollars)	June 30, 2014		December 31, 2013
Raw materials and in-process	$	18,498	$	26,877
Finished parts		42,069		46,491
Finished products		27,809		16,578
Total inventories	$	88,376	$	89,946

7

PART I – CONTINUED

ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – CONTINUED

NOTE D - PRODUCT WARRANTIES

A liability is established for estimated future warranty and service claims based on historical claims experience and specific product failures. The Company expenses warranty costs directly to cost of products sold. Changes in the Company’s product warranty liability are:

	June 30,
(Thousands of dollars)	2014			2013
Balance at beginning of year	$	1,170		$	1,133
Provision		811			676
Claims		(862	)		(644	)
Balance at end of period	$	1,119		$	1,165

NOTE E - PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company sponsors a defined benefit pension plan (“Plan”) covering certain domestic employees. Benefits are based on each covered employee’s years of service and compensation. The Plan is funded in conformity with the funding requirements of applicable U.S. regulations. The Plan was closed to new participants effective January 1, 2008. Employees hired after this date, in eligible locations, participate in an enhanced 401(k) plan instead of the defined benefit pension plan. Employees hired prior to this date continue to accrue benefits.

Additionally, the Company sponsors defined contribution pension plans made available to all domestic and Canadian employees.

The Company also sponsors a non-contributory defined benefit health care plan that provides health benefits to certain domestic and Canadian retirees and their spouses. The Company funds the cost of these benefits as incurred.

The following tables present the components of net periodic benefit cost:

	Pension Benefits						Postretirement Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
(Thousands of dollars)	2014			2013			2014			2013
Service cost	$	726		$	811		$	226		$	289
Interest cost		728			697			212			181
Expected return on plan assets		(1,170	)		(1,306	)		—			—
Recognized actuarial loss (gain)		457			532			(380	)		(180	)
Settlement loss		—			1,601			—			—
Net periodic benefit cost	$	741		$	2,335		$	58		$	290

8

PART I – CONTINUED

ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – CONTINUED

	Pension Benefits						Postretirement Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
(Thousands of dollars)	2014			2013			2014			2013
Service cost	$	1,452		$	1,660		$	453		$	577
Interest cost		1,448			1,363			424			363
Expected return on plan assets		(2,378	)		(2,599	)		—			—
Recognized actuarial loss (gain)		915			1,144			(577	)		(361	)
Settlement loss		—			2,987			—			—
Net periodic benefit cost	$	1,437		$	4,555		$	300		$	579

NOTE F – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes reclassifications out of accumulated other comprehensive income (loss):

	Three Months Ended June 30,						Six Months Ended June 30,
(Thousands of dollars)	2014			2013			2014			2013
Pension and other postretirement benefits:
Recognized actuarial loss (a)	$	77		$	352		$	338		$	783
Settlement loss (b)		—			1,058			—			1,974
Settlement loss (c)		—			543			—			1,013
Total before income tax		77			1,953			338			3,770
Income tax		(40	)		(584	)		(127	)		(1,192	)
Net of income tax	$	37		$	1,369		$	211		$	2,578

(a) The recognized actuarial loss is included in the computation of net periodic benefit cost. See Note D for additional details.

(b) This portion of the settlement loss is included in Cost of products sold on the Statements of Income.

(c) This portion of the settlement loss in included in Selling, general & administrative expenses on the Statements of Income.

The following tables summarize changes in accumulated balances for each component of other comprehensive income (loss):

(Thousands of dollars)	Currency Translation Adjustments			Pension and Other Postretirement Benefits		Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2014	$	(1,062	)	$	(7,399)	$	(8,461	)
Current period credit (charge)		(149	)		338		187
Income tax expense		—			(127)		(127	)
Balance at June 30, 2014	$	(1,211	)	$	(7,188)	$	(8,399	)

9

PART I – CONTINUED

ITEM 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – CONTINUED

(Thousands of dollars)	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2013	$	319		$	(16,601	)	$	(16,282	)
Current period credit (charge)		(1,559	)		3,770			2,211
Income tax expense		—			(1,192	)		(1,192	)
Balance at June 30, 2013	$	(1,240	)	$	(14,023	)	$	(15,263	)

NOTE G – ACQUISITION

In June 2014, the Company’s wholly-owned subsidiary, National Pump Company, acquired substantially all of the assets and certain liabilities of Bayou City Pump, Inc. (“BCP”). Founded in 1973, BCP is a leading manufacturer of and service provider for highly-reliable and energy-efficient vertical turbine pumping systems primarily for the inland and coastal marine liquid petroleum and chemical transportation market. BCP has steadily expanded its product designs and service capabilities in recent years to become a significant market share provider in North American marine transportation. BCP also has developed and manufactures a specialty sludge pumping system for use in a variety of industrial applications. During 2013, BCP had approximately $16 million in revenue from sales of its products and services through its Houston, Texas headquarters and its service facility location in Baton Rouge, Louisiana. BCP’s strong customer relationships and long history will help expand sales in targeted niche markets complementary to National Pump Company’s significant and growing vertical turbine products leadership position. In addition, its Houston, Texas base will provide additional capacity and machining capabilities in combination with National Pump’s existing location acquired late in 2012, which together will assist The Gorman-Rupp Company in expanding its growing Gulf Coast operations.

The results of operations of the acquired business have been included in Gorman-Rupp’s consolidated results since the effective date of the transaction. The company financed the all-cash acquisition through a short-term unsecured bank loan of $18.0 million. Supplemental pro forma information has not been provided as the acquisition did not have a material impact on the Company’s consolidated results of operations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview and Outlook

Net sales during the second quarter of 2014 increased 3.1% to $109.7 million compared to $106.4 million during the same period in 2013. Domestic sales increased 11.9% or $8.3 million while international sales decreased 13.5% or $5.0 million. Sales in water end markets increased 1.1% or $0.7 million and sales in non-water end markets increased 5.7% or $1.8 million during the second quarter.

10

PART I – CONTINUED

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – CONTINUED

The second quarter increase in water end market sales was largely due to increased sales in the municipal market of $5.1 million driven by large volume pumps related to wastewater and flood control. This increase was partially offset by lower fire protection sales of $3.2 million due to timing of shipments and lower agriculture sales driven by wet weather conditions. Sales increased $1.8 million in non-water markets primarily due to increased shipments for the OEM market related to power generation equipment and pumps for residential appliances.

Net sales for the six months ended June 30, 2014 were a record $219.8 million compared to $198.9 million during the same period in 2013, an increase of 10.5%. Domestic sales increased 16.0% or $20.7 million while international sales were comparable to the same period in 2013. Sales increased $12.7 million in water end markets primarily due to higher sales in the municipal market of $9.4 million driven by large volume pumps related to wastewater, water supply and flood control. In addition, sales in the construction market increased $4.6 million principally for pumps for rental businesses and for oil and gas drilling and fracking within North America. These increases were reduced by lower agriculture sales of $2.1 million in large part driven by wet weather conditions. Sales increased $6.6 million in non-water markets primarily due to increased shipments for the OEM market related to power generation equipment and pumps for military applications and residential appliances.

Gross profit was $26.9 million for the second quarter of 2014, resulting in gross margin of 24.5% compared to 24.9% in the same period in 2013. The decrease in gross margin was principally due to increased cost of material primarily from the purchase of completed components for our previously disclosed Permanent Canal Closure and Pumps (“PCCP”) project driven by timing and capacity constraints, and freight costs due mostly to PCCP flood control project specialized shipments. These costs and some additional temporary labor totaled 160 basis points. Operating income was $13.4 million, resulting in operating margin of 12.2% in the second quarter of 2014 compared to 12.7% in the same period in 2013. The gross margin and operating margin for the second quarter of 2013 were reduced by 100 and 150 basis points, respectively, due to a non-cash pension settlement charge which did not recur in the second quarter of 2014.

Net income was $8.9 million during the second quarter of 2014 compared to $9.2 million in the second quarter of 2013 and earnings per share were $0.34 and $0.35 for the respective periods. Earnings per share for the second quarter of 2013 included a reduction of $0.04 due to a non-cash pension settlement charge which did not recur in the second quarter of 2014.

Gross profit was a record $54.5 million in the first six months of 2014 resulting in gross margin of 24.8% compared to 24.0% in 2013. Operating income also was a record $28.1 million resulting in operating margin of 12.8% in the first six months of 2014 compared to 10.9% in 2013. The gross margin and operating margin for the first six months of 2013 were reduced by 100 and 160 basis points, respectively, due to a non-cash pension settlement charge which did not recur in the second quarter of 2014.

Net income for the first six months of 2014 was a record $18.8 million compared to $15.0 million in 2013 and earnings per share were $0.72 and $0.57 for the respective periods. Earnings per share for the first six months of 2013 included a reduction of $0.07 due to a non-cash pension settlement charge which did not recur in the first six months of 2014.

11

PART I – CONTINUED

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – CONTINUED

The Company’s backlog of orders was $173.8 million at June 30, 2014 compared to $182.2 million at December 31, 2013. Incoming orders grew 12.6% during the current quarter compared to the previous quarter reflecting increased activity across both our water and non-water end markets. The $8.4 million decrease in backlog is principally due to record shipments during the first six months of 2014. Approximately $53.5 million of the PCCP project to supply major flood control pumps to a member of a joint venture construction group for a significant New Orleans flood control project remain in the June 30, 2014 backlog total. The pumps for this project are expected to be shipped primarily in the second half of 2014 and first half of 2015.

Cash and short-term investments totaled $29.7 million and short-term bank debt was $22.7 million at June 30, 2014. During the second quarter of 2014, $18.0 million was borrowed to fund the acquisition of the assets of Bayou City Pump Company. Working capital rose $0.7 million from December 31, 2013 to $129.2 million at June 30, 2014. Net capital expenditures for 2014, consisting principally of machinery and equipment and building improvements, are estimated to be in the range of $12 to $14 million and are expected to be financed through internally generated funds.

At its July 24, 2014 meeting, the Board of Directors of the Company declared a quarterly cash dividend of $0.09 per share on the common stock of the Company, payable September 10, 2014, to shareholders of record August 15, 2014. This marks the 258th consecutive dividend paid by The Gorman-Rupp Company.

We believe that the Company is well positioned to grow organically at generally comparable operating margins over the long term by expanding our customer base both domestically and globally, and through new product offerings. We expect that the increasing need for water and wastewater infrastructure rehabilitation within the United States, and similar needs internationally, along with increasing demand for high quality pumps and pump systems for industrial and agricultural applications, will provide excellent growth opportunities for Gorman-Rupp in the future.

Second Quarter 2014 Compared to Second Quarter 2013

Net Sales

(Thousands of dollars)	Three Months Ended June 30,				$ Change		% Change
	2014		2013
Net sales	$	109,728	$	106,415	$	3,313		3.1	%

Sales increased $0.7 million in water end markets due to increased sales in the municipal market of $5.1 million driven by large volume pumps related to wastewater and flood control. This increase was reduced by lower fire protection sales of $3.2 million due to timing of shipments and lower agriculture sales driven by wet weather conditions.

Sales increased $1.8 million in non-water markets primarily due to increased shipments for the OEM market related to power generation equipment and pumps for residential appliances.

12

PART I – CONTINUED

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – CONTINUED

Cost of Products Sold and Gross Profit

(Thousands of dollars)	Three Months Ended June 30,						$ Change		% Change
	2014			2013
Cost of products sold	$	82,824		$	79,934		$	2,890		3.6	%
% of Net sales		75.5	%		75.1	%
Gross margin		24.5	%		24.9	%

The decrease in gross margin was principally due to increased cost of materials of 80 basis points primarily from the purchase of completed components for the PCCP project driven by capacity and timing constraints and increased freight cost. In addition, labor increased 70 basis points due to increased headcount. Cost of products sold for the second quarter of 2013 as a percent of net sales included 100 basis points due to a pension settlement charge which did not recur in the second quarter of 2014.

Selling, General and Administrative Expenses (SG&A)

(Thousands of dollars)	Three Months Ended June 30,						$ Change		% Change
	2014			2013
Selling, general and administrative expenses (SG&A)	$	13,483		$	12,964		$	519		4.0	%
% of Net sales		12.3	%		12.2	%

The increase in SG&A expenses as a percent of net sales is principally due to increases in travel and advertising of 20 basis points related to trade shows and in professional fees of 21 basis points due to legal and recruitment fees. The remaining increase in SG&A expenses as a percent of net sales is a combination of several smaller expense changes. SG&A expenses for the second quarter of 2013 as a percent of net sales included 50 basis points due to a pension settlement charge which did not recur in the second quarter of 2014.

13

PART I – CONTINUED

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – CONTINUED

Net Income

(Thousands of dollars)	Three Months Ended June 30,						$ Change			% Change
	2014			2013
Income before income taxes	$	13,228		$	13,496		$	(268	)		(2.0	)%
% of Net sales		12.1	%		12.7	%
Income taxes	$	4,368		$	4,328		$	40			0.9	%
Effective tax rate		33.0	%		32.1	%
Net income	$	8,860		$	9,168		$	(308	)		(3.4	)%
% of Net sales		8.1	%		8.6	%
Earnings per share	$	0.34		$	0.35		$	(0.01	)		(2.9	)%

The decreases in net income and earnings per share were primarily due to the factors explained above, including higher cost of materials, labor and SG&A expenses. The difference in the effective tax rate between the two periods is primarily due to the federal research and development tax credit that has not been extended for 2014.

Six Months 2014 Compared to Six Months 2013

Net Sales

(Thousands of dollars)	Six Months Ended June 30,				$ Change		% Change
	2014		2013
Net sales	$	219,792	$	198,872	$	20,920		10.5	%

Sales increased $12.7 million in water end markets due to increased sales in the municipal market of $9.4 million driven by large volume pumps related to wastewater, water supply and flood control. In addition, sales in the construction market increased $4.6 million principally for pumps for rental businesses and for oil and gas drilling and fracking within North America. These increases were reduced by lower agriculture sales of $2.1 million driven in large part by wet weather conditions.

Sales increased $6.6 million in non-water markets primarily due to increased shipments for the OEM market related to power generation equipment and pumps for military applications and residential appliances.

14

PART I – CONTINUED

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – CONTINUED

Cost of Products Sold and Gross Profit

(Thousands of dollars)	Six Months Ended June 30,						$ Change		% Change
	2014			2013
Cost of products sold	$	165,334		$	151,167		$	14,167		9.4	%
% of Net sales		75.2	%		76.0	%
Gross margin		24.8	%		24.0	%

The increase in gross margin for the six month period ended June 30, 2014 was principally due to a pension settlement charge in the first six month of 2013 of 100 basis points which did not recur during the same period of 2014.

Selling, General and Administrative Expenses (SG&A)

(Thousands of dollars)	Six Months Ended June 30,						$ Change		% Change
	2014			2013
Selling, general and administrative expenses (SG&A)	$	26,344		$	25,931		$	413		1.6	%
% of Net sales		12.0	%		13.0	%

The decrease in SG&A expenses as a percent of net sales is principally due to a pension settlement charge in the first six months of 2013 of 50 basis points which did not recur in the first six months of 2014.

Net Income

(Thousands of dollars)	Six Months Ended June 30,						$ Change		% Change
	2014			2013
Income before income taxes	$	28,060		$	21,723		$	6,337		29.2	%
% of Net sales		12.8	%		10.9	%
Income taxes	$	9,246		$	6,737		$	2,509		37.2	%
Effective tax rate		33.0	%		31.0	%
Net income	$	18,814		$	14,986		$	3,828		25.5	%
% of Net sales		8.6	%		7.5	%
Earnings per share	$	0.72		$	0.57		$	0.15		26.3	%

The increases in net income and earnings per share were primarily due to increased sales during the six month period ended June 30, 2014 of $20.9 million, and a pension settlement charge, net of income taxes, of $2.0 million in the first six months of 2013 which did not recur in the first six months of 2014. The difference in the effective tax rate between the two periods is primarily due to the federal research and development tax credit that has not been extended for 2014.

15

PART I – CONTINUED

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – CONTINUED

Liquidity and Capital Resources

(Thousands of dollars)	Six Months Ended June 30,
	2014			2013
Net cash provided by operating activities	$	11,985		$	21,088
Net cash used for investing activities		(21,868	)		(3,396	)
Net cash provided by (used for) financing activities		8,941			(11,199	)

Cash and cash equivalents and short-term investments totaled $29.7 million, and there was $22.7 million in outstanding bank debt at June 30, 2014. In addition, the Company had $26.1 million available in bank lines of credit after deducting $3.9 million in outstanding letters of credit primarily related to customer orders. The Company was in compliance with its nominal restrictive covenants, including limits on additional borrowings and maintenance of certain operating and financial ratios, at June 30, 2014.

Working capital increased $0.7 million from December 31, 2013 to $129.2 million at June 30, 2014 principally due to higher accounts receivable driven by record sales during the first six months of 2014.

The primary driver of operating cash flows during the first six months of 2014 was increased accounts receivable due to record sales during the period. During this same period in 2013 operating cash flows were primarily driven by a reduction in the use of cash required to fund inventory, partially offset by increased accounts receivable.

During the first six months of 2014, investing activities of $21.9 million primarily consisted of the purchase of the business of Bayou City Pump Company and capital expenditures for machinery and equipment and building improvements. Net capital expenditures for 2014, consisting principally of machinery and equipment and building improvements, are estimated to be in the range of $12 to $14 million and are expected to be principally financed through internally generated funds. During the first six months of 2013, investing activities of $3.4 million consisted primarily of capital expenditures for machinery and equipment.

Net cash used for financing activities for the first six months of 2014 consisted of dividend payments of $4.7 million and re-payment of $4.3 million in short-term debt. During the second quarter of 2014, $18.0 million was borrowed to fund the acquisition of Bayou City Pump Company. The ratio of current assets to current liabilities was 2.7 to 1 at June 30, 2014 and 3.1 to 1 at December 31, 2013.

On July 24, 2014, the Board of Directors of the Company declared a quarterly cash dividend of $0.09 per share on the common stock of the Company, payable September 10, 2014, to shareholders of record August 15, 2014. This marks the 258th consecutive dividend paid by The Gorman-Rupp Company.

16

PART I – CONTINUED

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – CONTINUED

The Company currently expects to continue its distinguished history of paying regular quarterly dividends and increased annual dividends. However, any future dividends will be reviewed individually and declared by our Board of Directors at its discretion, dependent on our assessment of the Company’s financial condition and business outlook at the applicable time.

Critical Accounting Policies

Our critical accounting policies are described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in the notes to our Consolidated Financial Statements for the year ended December 31, 2013 contained in our Fiscal 2013 Annual Report on Form 10-K. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been discussed in the notes to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The application of our critical accounting policies may require management to make judgments and estimates about the amounts reflected in the Consolidated Financial Statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.

Safe Harbor Statement

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: This Form 10-Q contains various forward-looking statements based on assumptions concerning The Gorman-Rupp Company’s operations, future results and prospects. These forward-looking statements are based on current expectations about important economic, political, and technological factors, among others, and are subject to risks and uncertainties, 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, but are not limited to: (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 initiatives of The Gorman-Rupp Company; (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) unforeseen delays or disruptions in the New Orleans flood control project; and (8) continuation of the favorable environment to make acquisitions, domestic and foreign, including regulatory requirements and market values of candidates and our ability to successfully integrate and realize the anticipated benefits of completed acquisitions. Except to the extent required by law, we do not undertake and specifically decline any obligation to review or update any forward-looking statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s foreign operations do not involve material risks due to their relative size, both individually and collectively. Approximately 90% of the Company’s sales are domiciled within or originated from the United States. The Company is not exposed to material market risks as a result of its diversified export sales. Export sales generally are denominated in U.S. Dollars and made on open account or under letters of credit.

17

PART I – CONTINUED

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. The Company’s disclosure controls and procedures are also designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act of 1934 is accumulated and communicated to the Company’s Management, including the principal executive officer and the principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

An evaluation was carried out under the supervision and with the participation of the Company’s Management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Based on that evaluation, the principal executive officer and the principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2014.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s disclosure controls and procedures that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Subsequent to the date of the evaluation, there have been no significant changes in the Company’s disclosure controls and procedures that could significantly affect the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no material changes from the legal proceedings previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

18

ITEM 6. EXHIBITS

Exhibit 10.1	Amended and Restated Non-Employee Directors’ Compensation Plan
Exhibit 31.1	Certification of Jeffrey S. Gorman, Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of Wayne L. Knabel, Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32	Certification pursuant to 18 U.S.C Section 1350, as adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
Exhibit 101	Financial statements from the Quarterly Report on Form 10-Q of The Gorman-Rupp Company for the quarter ended June 30, 2014, formatted in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

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: July 30, 2014
	By:	/s/ Wayne L. Knabel
		Wayne L. Knabel
		Chief Financial Officer

19

EX-10.1

EXHIBIT 10.1

THE GORMAN-RUPP COMPANY

AMENDED AND RESTATED

NON-EMPLOYEE DIRECTORS’

COMPENSATION PLAN

1. BACKGROUND, EFFECTIVE DATE AND TERM OF THE PLAN.

The Non-Employee Directors’ Compensation Plan (the “Original Plan”) of The Gorman-Rupp Company (the “Company”) became effective on May 22, 1997 with an original expiration date of May 21, 2007.

On July 27, 2006, the Company’s Board of Directors (the “Board”) adopted a resolution extending the Original Plan for an additional term during which Common Shares, without par value, of the Company (“Common Shares”) may be awarded under the Plan until the earliest of (i) May 21, 2017, (ii) at such time as all of the Company’s Common Shares authorized for award under the Plan and registered under Form S-8 Registration Statement No. 333-30159 (the “Registration Statement”) shall have been awarded and issued, (iii) at such time as the Company deregisters any Common Shares not issued under the Registration Statement, or (iv) at such time as the Plan is terminated by action of the Board.

On July 28, 2011, the Board amended the Original Plan to include an award of additional Common Shares reflecting prior Company stock split events.

The Original Plan is now being amended and restated in its entirety as the Amended and Restated Non-Employee Directors’ Compensation Plan (the “Plan”).

2. PURPOSE

The purpose of the Plan is to promote the interests of the Company and its shareholders by attracting and retaining Non-Employee Directors capable of furthering the future success of the Company and by aligning their economic interests more closely with those of the Company’s shareholders. “Non-Employee Director” means a member of the Board who is not employed by the Company or any of its subsidiaries.

3. ADMINISTRATION OF THE PLAN

The Plan will be administered by the Board.

4. COMMON SHARES AVAILABLE FOR AWARDS

The number of Common Shares which may be awarded to Non-Employee Directors shall not exceed 50,000 Common Shares in the aggregate. The Company previously filed the Registration Statement covering 50,000 Common Shares available for award to Non-Employee Directors.

5. COMPENSATION OF NON-EMPLOYEE DIRECTORS

Non-Employee Directors shall be compensated by the Company for their services as members of the Board through a combination of annual cash retainers and stock awards of Common Shares. Additional compensation may be awarded for service as the lead independent director and/or chairman of a Board committee.

20

At the Compensation Committee meeting held in July of each year, the Compensation Committee shall (a) review the total compensation for each Non-Employee Director for the regular services to be performed by such Non-Employee Director during the current year of July 1 through June 30 and (b) recommend to the Board any adjustments to such total compensation and the effective date of any such adjustments.

At the Board meeting held in July of each year, the Board shall (a) review the recommendations of the Compensation Committee, (b) determine whether to approve any adjustments to the total compensation for each Non-Employee Director for the regular services to be performed by such Non-Employee Director and (c) if any adjustments are approved, determine the effective date of any such adjustments. Notwithstanding the foregoing, the effective date of any approved adjustments to the stock awards of Common Shares shall be no earlier than the next succeeding stock award date.

The annual cash retainer portion of such total compensation shall be paid quarterly by the end of each calendar quarter from July 1 through June 30 to each Non-Employee Director then serving on the Board.

The stock award portion of such total compensation shall be paid effective as of July 1 through book-entry deposit of Common Shares to each Non-Employee Director then serving on the Board. In the event a Non-Employee Director is elected to the Board after July 1, then a pro-rated stock award shall be paid to such Non-Employee Director effective as of the date of his or her initial election. The Company will report to each Non-Employee Director the tax basis of each such stock award at the time of each such stock award. No Common Shares awarded under the Plan shall be subject to forfeiture upon the termination of a Non-Employee Director’s service prior to completion of his or her term.

Common Shares awarded under the Plan shall be treasury shares. The obligation of the Company to deliver Common Shares shall be subject to all applicable laws, rules and regulations, and to such approvals by governmental agencies as may be deemed necessary or advisable by the Company. In particular, upon advice from counsel for the Company, the Company shall take such steps as deemed necessary or advisable to comply with all requirements of the relevant securities laws, including the placement of a “restricted securities” legend on certificates (or book-entry ownership records) representing Common Shares and the application of a one-year holding period to Common Shares awarded. In addition, the Non-Employee Directors shall remain subject to the following requirements: (i) Common Shares received can only be sold in brokers’ transactions and in accordance with the standard volume limitations of Rule 144 of the Securities Act of 1933, and (ii) Common Shares cannot be sold in violation of the insider trading rules and policies of the NYSE MKT Exchange.

6. ADJUSTMENTS OF COMMON SHARES

The number and kind of Common Shares which will be awarded to each Non-Employee Director under Section 5 of the Plan will be automatically adjusted to prevent dilution or enlargement of the rights of Non-Employee Directors in the event of any changes in the number or kind of outstanding Common Shares resulting from a merger, recapitalization, stock exchange, stock split, stock dividend, other extraordinary dividend or distribution, corporate division or other change in the Company’s corporate or capital structure; provided, however, that no such adjustment will be made if the adjustment would cause the Plan to fail to comply with an exemption pursuant to Section 16 of the Securities Exchange Act of 1934 (the “1934 Act”).

21

7. AMENDMENT, SUSPENSION AND TERMINATION

The Board may at any time amend, suspend or terminate the Plan.

8. COMPLIANCE WITH RULE 16b-3

The Company intends that the Plan and all transactions hereunder meet or will meet all of the requirements of Rule 16b-3 under the 1934 Act.

9. RETENTION OF POWERS

Nothing contained in the Plan shall prevent the Board from exercising those powers granted to it by law, the Company’s Amended Articles of Incorporation, as amended, the Company’s Code of Regulations, or otherwise to set the compensation of directors from time to time.

10. GOVERNING LAW

The Plan shall be construed in accordance with and governed by the laws of the State of Ohio and applicable Federal laws.

22

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Jeffrey S. Gorman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Gorman-Rupp Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

23

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2014	/s/ Jeffrey S. Gorman
	Jeffrey S. Gorman
	President and Chief Executive Officer
	The Gorman-Rupp Company
	(Principal Executive Officer)

24

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Wayne L. Knabel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Gorman-Rupp Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

25

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2014	/s/ Wayne L. Knabel
	Wayne L. Knabel
	Chief Financial Officer
	The Gorman-Rupp Company
	(Principal Financial Officer)

26

EX-32

EXHIBIT 32

Certification Pursuant to 18 U. S. C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of The Gorman-Rupp Company on Form 10-Q for the quarter ended June 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: July 30, 2014	/s/ Jeffrey S. Gorman
	Jeffrey S. Gorman
	President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ Wayne L. Knabel
	Wayne L. Knabel
	Chief Financial Officer
	(Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to 18 U. S. C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

27

XML

Note C - Inventories

6 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

NOTE C - INVENTORIES

Inventories are stated at the lower of cost or market. The costs for approximately 72% of inventories at June 30, 2014 and 76% of inventories at December 31, 2013 are determined using the last-in, first-out (LIFO) method, with the remainder determined using the first-in, first-out (FIFO) method applied on a consistent basis. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels and costs at that time. Interim LIFO calculations are based on management’s estimate of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation.

The major components of inventories are as follows (net of LIFO reserves of $57.4 million and $55.3 million at June 30, 2014 and December 31, 2013, respectively):

(Thousands of dollars)	June 30, 2014		December 31, 2013
Raw materials and in-process	$	18,498	$	26,877
Finished parts		42,069		46,491
Finished products		27,809		16,578
Total inventories	$	88,376	$	89,946

XML

Note B - Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE B – RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2014, the Financial Accounting Standards Board issued ASU 2014-09, "Revenue from Contracts with Customers," which supersedes most current revenue recognition guidance, including industry-specific guidance, and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company is currently assessing the impact of implementing this guidance on the Company's financial position, results of operations, and cash flows. The Company does not expect the adoption of ASU 2014-09 will have a material impact on its consolidated financial statements.

XML

Condensed Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net sales	$ 109,728	$ 106,415	$ 219,792	$ 198,872
Cost of products sold	82,824	79,934	165,334	151,167
Gross profit	26,904	26,481	54,458	47,705
Selling, general and administrative expenses	13,483	12,964	26,344	25,931
Operating income	13,421	13,517	28,114	21,774
Other income	184	153	357	272
Other expense	(377)	(174)	(411)	(323)
Income before income taxes	13,228	13,496	28,060	21,723
Income taxes	4,368	4,328	9,246	6,737
Net income	$ 8,860	$ 9,168	$ 18,814	$ 14,986
Earnings per share (in Dollars per share)	$ 0.34	$ 0.35	$ 0.72	$ 0.57
Cash dividends paid per share (in Dollars per share)	$ 0.09	$ 0.08	$ 0.18	$ 0.16
Average shares outstanding (in Shares)	26,253,043	26,245,543	26,253,043	26,245,543

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income	$ 18,814	$ 14,986
Adjustments to reconcile net income attributable to net cash provided (used) by operating activities:
Depreciation and amortization	7,048	6,805
Pension expense, including 2013 non-cash settlement loss	1,437	4,641
Contributions to pension plan	(1,200)	(3,600)
Changes in operating assets and liabilities:
Accounts receivable	(13,660)	(11,656)
Inventories	3,396	5,222
Accounts payable	1,650	2,138
Commissions payable	628	(820)
Other	(6,128)	3,372
Net cash provided by operating activities	11,985	21,088
Cash flows from investing activities:
Capital additions	(5,586)	(3,399)
Acquisition, net of cash acquired	(16,280)
Change in short-term investments	(2)	3
Net cash used for investing activities	(21,868)	(3,396)
Cash flows from financing activities:
Cash dividends	(4,726)	(4,199)
Proceeds from bank borrowings	18,000
Payments to bank for borrowings	(4,333)	(7,000)
Net cash provided by (used for) financing activities	8,941	(11,199)
Effect of exchange rate changes on cash	(735)	239
Net (decrease) increase in cash and cash equivalents	(1,677)	6,732
Cash and cash equivalents:
Beginning of period	31,123	20,119
End of period	$ 29,446	$ 26,851

XML

Note F - Accumulated Other Comprehensive Income (Loss) (Details) - Reclassifications out of Accumulated Other Comprehensive Loss (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Settlement loss (b)	$ (82,824)		$ (79,934)		$ (165,334)		$ (151,167)
Settlement loss (c)	(13,483)		(12,964)		(26,344)		(25,931)
Total before income tax	13,228		13,496		28,060		21,723
Income tax	(4,368)		(4,328)		(9,246)		(6,737)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Recognized actuarial loss (a)	77	[1]	352	[1]	338	[1]	783	[1]
Settlement loss (b)		[2]	1,058	[2]		[2]	1,974	[2]
Settlement loss (c)		[3]	543	[3]		[3]	1,013	[3]
Total before income tax	77		1,953		338		3,770
Income tax	(40)		(584)		(127)		(1,192)
Net of income tax	$ 37		$ 1,369		$ 211		$ 2,578

[1] The recognized actuarial loss is included in the computation of net periodic benefit cost. See Note D for additional details.

[2] This portion of the settlement loss is included in Cost of products sold on the Statements of Income.

[3] This portion of the settlement loss in included in Selling, general & administrative expenses on the Statements of Income.

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Note G - Acquisition (Details) (Bayou City Pump, Inc. [Member], USD $) In Millions, unless otherwise specified		12 Months Ended
	Jun. 30, 2014 Loans Payable [Member]	Dec. 31, 2013
Note G - Acquisition (Details) [Line Items]
Business Acquisition, Revenue Reported by Acquired Entity for Last Annual Period		$ 16
Debt Instrument, Face Amount	$ 18.0

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Note A - Basis of Presentation of Financial Statements

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Basis of Accounting [Text Block]

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 (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by GAAP for complete financial statements. The consolidated financial statements include the accounts of The Gorman-Rupp Company (the “Company” or “Gorman-Rupp”) and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management of the Company, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of results that may be expected for the year ending December 31, 2014. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, from which related information herein has been derived.

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net income	$ 8,860	$ 9,168	$ 18,814	$ 14,986
Cumulative translation adjustments	207	(726)	(149)	(1,559)
Pension and postretirement medical liability adjustments, net of tax	37	1,369	211	2,578
Other comprehensive income	244	643	62	1,019
Total comprehensive income	$ 9,104	$ 9,811	$ 18,876	$ 16,005

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Note F - Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Loss [Abstract]

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

(Thousands of dollars)	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Pension and other postretirement benefits:
Recognized actuarial loss (a)	$	77		$	352		$	338		$	783
Settlement loss (b)		-			1,058			-			1,974
Settlement loss (c)		-			543			-			1,013
Total before income tax		77			1,953			338			3,770
Income tax		(40	)		(584	)		(127	)		(1,192	)
Net of income tax	$	37		$	1,369		$	211		$	2,578

Comprehensive Income (Loss) [Table Text Block]

(Thousands of dollars)	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2014	$	(1,062	)	$	(7,399	)	$	(8,461	)
Current period credit (charge)		(149	)		338			187
Income tax expense		-			(127	)		(127	)
Balance at June 30, 2014	$	(1,211	)	$	(7,188	)	$	(8,399	)

(Thousands of dollars)	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2013	$	319		$	(16,601	)	$	(16,282	)
Current period credit (charge)		(1,558	)		3,770			2,212
Income tax expense		-			(1,192	)		(1,192	)
Balance at June 30, 2013	$	(1,239	)	$	(14,023	)	$	(15,262	)

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Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 25, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	GORMAN RUPP CO
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		26,260,543
Amendment Flag	false
Entity Central Index Key	0000042682
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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Note C - Inventories (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Inventory Disclosure [Abstract]
Percentage of LIFO Inventory	72.00%	76.00%
Inventory, LIFO Reserve	$ 57.4	$ 55.3

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 29,446	$ 31,123
Short-term investments	255	253
Accounts receivable - net	75,864	59,374
Inventories - net	88,376	89,946
Deferred income taxes and other current assets	11,317	8,593
Total current assets	205,258	189,289
Property, plant and equipment	261,923	253,758
Less accumulated depreciation	129,113	122,569
Property, plant and equipment - net	132,810	131,189
Other assets	6,396	3,657
Goodwill and other intangible assets - net	41,170	31,503
Total assets	385,634	355,638
Current liabilities:
Accounts payable	20,252	17,882
Short-term debt	22,667	9,000
Payroll and related liabilities	12,029	11,020
Commissions payable	6,709	6,081
Deferred revenue	5,366	7,190
Accrued expenses	9,001	9,587
Total current liabilities	76,024	60,760
Postretirement benefits	18,988	18,393
Deferred and other income taxes	12,331	12,345
Total liabilities	107,343	91,498
Common shares, without par value:
Authorized - 35,000,000 shares, Outstanding - 26,253,043 shares in 2014 and in 2013 (after deducting treasury shares of / FONT>795,753 in 2014 and in 2013) at stated capital amount	5,131	5,131
Additional paid-in capital	2,822	2,822
Retained earnings	278,737	264,648
Accumulated other comprehensive loss	(8,399)	(8,461)
Total shareholders' equity	278,291	264,140
Total liabilities and shareholders' equity	$ 385,634	$ 355,638

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Note F - Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Loss [Abstract]

Accumulated Other Comprehensive Loss [Text Block]

NOTE F – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes reclassifications out of accumulated other comprehensive income (loss):

(Thousands of dollars)	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Pension and other postretirement benefits:
Recognized actuarial loss (a)	$	77		$	352		$	338		$	783
Settlement loss (b)		-			1,058			-			1,974
Settlement loss (c)		-			543			-			1,013
Total before income tax		77			1,953			338			3,770
Income tax		(40	)		(584	)		(127	)		(1,192	)
Net of income tax	$	37		$	1,369		$	211		$	2,578

(a) The recognized actuarial loss is included in the computation of net periodic benefit cost. See Note D for additional details.

(b) This portion of the settlement loss is included in Cost of products sold on the Statements of Income.

(c) This portion of the settlement loss in included in Selling, general & administrative expenses on the Statements of Income.

The following tables summarize changes in accumulated balances for each component of other comprehensive income (loss):

(Thousands of dollars)	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2014	$	(1,062	)	$	(7,399	)	$	(8,461	)
Current period credit (charge)		(149	)		338			187
Income tax expense		-			(127	)		(127	)
Balance at June 30, 2014	$	(1,211	)	$	(7,188	)	$	(8,399	)

(Thousands of dollars)	Currency Translation Adjustments			Pension and Other Postretirement Benefits			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2013	$	319		$	(16,601	)	$	(16,282	)
Current period credit (charge)		(1,558	)		3,770			2,212
Income tax expense		-			(1,192	)		(1,192	)
Balance at June 30, 2013	$	(1,239	)	$	(14,023	)	$	(15,262	)

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Note E - Pension and Other Postretirement Benefits

6 Months Ended

Jun. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE E - PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company sponsors a defined benefit pension plan (“Plan”) covering certain domestic employees. Benefits are based on each covered employee’s years of service and compensation. The Plan is funded in conformity with the funding requirements of applicable U.S. regulations. The Plan was closed to new participants effective January 1, 2008. Employees hired after this date, in eligible locations, participate in an enhanced 401(k) plan instead of the defined benefit pension plan. Employees hired prior to this date continue to accrue benefits.

Additionally, the Company sponsors defined contribution pension plans made available to all domestic and Canadian employees.

The Company also sponsors a non-contributory defined benefit health care plan that provides health benefits to certain domestic and Canadian retirees and their spouses. The Company funds the cost of these benefits as incurred.

The following tables present the components of net periodic benefit cost:

	Pension Benefits						Postretirement Benefits
(Thousands of dollars)	Three Months Ended June 30,						Three Months Ended June 30,
	2014			2013			2014			2013
Service cost	$	726		$	811		$	226		$	289
Interest cost		728			697			212			181
Expected return on plan assets		(1,170	)		(1,306	)		-			-
Recognized actuarial loss (gain)		457			532			(380	)		(180	)
Settlement loss		-			1,601			-			-
Net periodic benefit cost	$	741		$	2,335		$	58		$	290

	Pension Benefits						Postretirement Benefits
(Thousands of dollars)	Six Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Service cost	$	1,452		$	1,660		$	453		$	577
Interest cost		1,448			1,363			424			363
Expected return on plan assets		(2,378	)		(2,599	)		-			-
Recognized actuarial loss (gain)		915			1,144			(577	)		(361	)
Settlement loss		-			2,987			-			-
Net periodic benefit cost	$	1,437		$	4,555		$	300		$	579

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Note F - Accumulated Other Comprehensive Income (Loss) (Details) - Components of Accumulated Other Comprehensive Loss as Reported in the Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified			6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Currency Translation Adjustments [Member]	Jun. 30, 2013 Currency Translation Adjustments [Member]	Jun. 30, 2014 Pension And OPEB Adjustments [Member]	Jun. 30, 2013 Pension And OPEB Adjustments [Member]	Jun. 30, 2014 Accumulated Other Comprehensive Income (Loss) [Member]	Jun. 30, 2013 Accumulated Other Comprehensive Income (Loss) [Member]
Note F - Accumulated Other Comprehensive Income (Loss) (Details) - Components of Accumulated Other Comprehensive Loss as Reported in the Consolidated Balance Sheets [Line Items]
Balance	$ (8,399)	$ (8,461)	$ (1,062)	$ 319	$ (7,399)	$ (16,601)	$ (8,461)	$ (16,282)
Current period credit (charge)			(149)	(1,558)	338	3,770	187	2,212
Income tax benefit (charge)					(127)	(1,192)	(127)	(1,192)
Balance	$ (8,399)	$ (8,461)	$ (1,211)	$ (1,239)	$ (7,188)	$ (14,023)	$ (8,399)	$ (15,262)

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Note C - Inventories (Details) - Components of Inventories (Net of LIFO Reserves) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Components of Inventories (Net of LIFO Reserves) [Abstract]
Raw materials and in-process	$ 18,498	$ 26,877
Finished parts	42,069	46,491
Finished products	27,809	16,578
Total inventories	$ 88,376	$ 89,946

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Note D - Product Warranties (Tables)

6 Months Ended

Jun. 30, 2014

Product Warranties Disclosures [Abstract]

Schedule of Product Warranty Liability [Table Text Block]

(Thousands of dollars)	June 30,
	2014			2013
Balance at beginning of year	$	1,170		$	1,133
Provision		811			676
Claims		(862	)		(644	)
Balance at end of period	$	1,119		$	1,165

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Note G - Acquisition

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

NOTE G – ACQUISITION

In June 2014, the Company’s wholly-owned subsidiary, National Pump Company, acquired substantially all of the assets and certain liabilities of Bayou City Pump, Inc. (“BCP”). Founded in 1973, BCP is a leading manufacturer of and service provider for highly-reliable and energy-efficient vertical turbine pumping systems primarily for the inland and coastal marine liquid petroleum and chemical transportation market. BCP has steadily expanded its product designs and service capabilities in recent years to become a significant market share provider in North American marine transportation. BCP also has developed and manufactures a specialty sludge pumping system for use in a variety of industrial applications. During 2013, BCP had approximately $16 million in revenue from sales of its products and services through its Houston, Texas headquarters and its service facility location in Baton Rouge, Louisiana. BCP's strong customer relationships and long history will help expand sales in targeted niche markets complementary to National Pump Company's significant and growing vertical turbine products leadership position. In addition, its Houston, Texas base will provide additional capacity and machining capabilities in combination with National Pump's existing location acquired late in 2012, which together will assist The Gorman-Rupp Company in expanding its growing Gulf Coast operations.

The results of operations of the acquired business have been included in Gorman-Rupp’s consolidated results since the effective date of the transaction. The company financed the all-cash acquisition through a short-term unsecured bank loan of $18.0 million. Supplemental pro forma information has not been provided as the acquisition did not have a material impact on the Company’s consolidated results of operations.

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Note C - Inventories (Tables)

6 Months Ended

Jun. 30, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

(Thousands of dollars)	June 30, 2014		December 31, 2013
Raw materials and in-process	$	18,498	$	26,877
Finished parts		42,069		46,491
Finished products		27,809		16,578
Total inventories	$	88,376	$	89,946

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Note E - Pension and Other Postretirement Benefits (Tables)

6 Months Ended

Jun. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Schedule of Costs of Retirement Plans [Table Text Block]

	Pension Benefits						Postretirement Benefits
(Thousands of dollars)	Three Months Ended June 30,						Three Months Ended June 30,
	2014			2013			2014			2013
Service cost	$	726		$	811		$	226		$	289
Interest cost		728			697			212			181
Expected return on plan assets		(1,170	)		(1,306	)		-			-
Recognized actuarial loss (gain)		457			532			(380	)		(180	)
Settlement loss		-			1,601			-			-
Net periodic benefit cost	$	741		$	2,335		$	58		$	290

	Pension Benefits						Postretirement Benefits
(Thousands of dollars)	Six Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Service cost	$	1,452		$	1,660		$	453		$	577
Interest cost		1,448			1,363			424			363
Expected return on plan assets		(2,378	)		(2,599	)		-			-
Recognized actuarial loss (gain)		915			1,144			(577	)		(361	)
Settlement loss		-			2,987			-			-
Net periodic benefit cost	$	1,437		$	4,555		$	300		$	579

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Note E - Pension and Other Postretirement Benefits (Details) - Net Periodic Pension Benefit Cost (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Pension Plan [Member]
Note E - Pension and Other Postretirement Benefits (Details) - Net Periodic Pension Benefit Cost [Line Items]
Service cost	$ 726	$ 811	$ 1,452	$ 1,660
Interest cost	728	697	1,448	1,363
Expected return on plan assets	(1,170)	(1,306)	(2,378)	(2,599)
Recognized actuarial loss (gain)	457	532	915	1,144
Settlement loss		1,601		2,987
Net periodic benefit cost	741	2,335	1,437	4,555
Postretirement Health Coverage [Member]
Note E - Pension and Other Postretirement Benefits (Details) - Net Periodic Pension Benefit Cost [Line Items]
Service cost	226	289	453	577
Interest cost	212	181	424	363
Recognized actuarial loss (gain)	(380)	(180)	(577)	(361)
Net periodic benefit cost	$ 58	$ 290	$ 300	$ 579

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Common sharеs - authorizеd	35,000,000	35,000,000
Common sharеs - sharеs outstanding after deducting trеasury sharеs	26,253,043	26,253,043
Trеasury sharеs	795,753	795,753
Common sharеs, par valuе (in Dollars per share)	$ 0	$ 0

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Note D - Product Warranties

6 Months Ended

Jun. 30, 2014

Product Warranties Disclosures [Abstract]

Product Warranty Disclosure [Text Block]

NOTE D - PRODUCT WARRANTIES

A liability is established for estimated future warranty and service claims based on historical claims experience and specific product failures. The Company expenses warranty costs directly to cost of products sold. Changes in the Company’s product warranty liability are:

(Thousands of dollars)	June 30,
	2014			2013
Balance at beginning of year	$	1,170		$	1,133
Provision		811			676
Claims		(862	)		(644	)
Balance at end of period	$	1,119		$	1,165

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Note D - Product Warranties (Details) - Product Warranties (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Product Warranties [Abstract]
Balance at beginning of year	$ 1,170	$ 1,133
Provision	811	676
Claims	(862)	(644)
Balance at end of period	$ 1,119	$ 1,165