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: Certain statements in this section and elsewhere herein contain various forward-looking statements and include 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 risk and uncertainties, the absence of which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions.

Such factors include the following: (1) continuation of the current and projected future business environment, including interest rates and capital and consumer spending; (2) competitive factors and competitor responses to Gorman-Rupp initiatives; (3) successful development and market introductions of anticipated new products; (4) stability of government laws and regulations, including taxes; (5) stable governments and business conditions in emerging economies; (6) successful penetration of emerging economies; and
(7) continuation of the favorable environment to make acquisitions, domestic and foreign, including regulatory requirements and market values of candidates. First Quarter 2009 Compared to First Quarter 2008

Net Sales

                                       Three Months Ended
          (Thousands of dollars)           March 31,
                                       2009          2008       $ Change     % Change

Net sales $ 71,598 $ 81,434 $ (9,836 ) (12.1 )%

The decline in sales resulted from the continuing impact of the recent severe global economic downturn and affected most of the markets the Company serves, with the largest decline in the construction and rental markets of $3.7 million. Nonetheless, international sales increased $691,000 primarily related to the fire protection market.

Cost of Products Sold

                                       Three Months Ended
          (Thousands of dollars)           March 31,
                                       2009          2008       $ Change     % Change

          Cost of products sold      $ 56,253     $ 61,590     $ (5,337 )      (8.7 )%
          % of Net sales                 78.6 %       75.6 %

The decrease in cost of products sold was primarily due to lower sales volume, which resulted in decreased material costs of $4.2 million. Manufacturing costs included decreases in compensation and payroll taxes of $1.0 million and supplies, patterns and tooling of $343,000 primarily due to lower production levels. Partially offsetting these decreases is increased pension expense of $464,000 resulting from the significant market value declines in the worldwide equity markets. The overall increase in cost of products sold as a percent of net sales was due primarily to unfavorable product mix and decreased operating leverage on lower sales volume.

PART I - CONTINUED
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS - CONTINUED


Selling, General, and Administrative Expenses (SG&A)

                                                    Three Months Ended
(Thousands of dollars)                                   March 31,
                                                   2009             2008            $ Change         % Change

Selling, general, and administrative
expenses (SG&A)                                 $  8,988          $ 9,499          $   (511 )          (5.4 )%

The decrease in SG&A expenses is principally due to lower professional fees of $251,000 as 2008 included expenses associated with the acquisition of Gorman-Rupp Europe B.V. In addition, advertising and travel expenses are lower by $134,000 and $109,000, respectively, as 2008 included expenses related to the Construction Expo trade show held every three years.

Other Income

                                      Three Months Ended
         (Thousands of dollars)            March 31,
                                      2009           2008       $ Change     % Change

         Other income               $   765        $   616      $   149          24.2 %
         % of Net sales                 1.1 %          0.8 %

The increase in other income is due principally to gain recognized on the sale of assets, partially offset by reduced interest income primarily resulting from lower interest rates.

Net Income

                                        Three Months Ended
        (Thousands of dollars)              March 31,
                                        2009          2008       $ Change     % Change

        Income before income taxes    $  6,868     $ 10,888     $ (4,020 )     (36.9 )%
        % of Net sales                     9.6 %       13.4 %

        Income taxes                  $  2,362     $  3,736     $ (1,374 )     (36.8 )%
        Effective tax rate                34.4 %       34.3 %

        Net income                    $  4,506     $  7,152     $  2,646       (37.0 )%
        % of Net sales                     6.3 %        8.8 %

        Earnings per share            $   0.27     $   0.43     $  (0.16 )     (37.2 )%

Liquidity and Sources of Capital

Net cash provided by operating activities $ 10,807 $ 5,419 $ 5,388 99.4 % Net cash used for investing activities 7,929 1,874 6,055 323.1 Net cash provided (used) for financing
activities 4,000 (1,670 ) 5,670 339.5

Cash provided by operating activities resulted primarily from cash being made available due to lower accounts receivable balances of $4.7 million and reduced inventory levels of $3.1 million due to lower sales volume. Also, prepaid income taxes applied to the Company's current tax liability decreased by $2.2 million. Partially offsetting these increases to cash was a decrease in accounts payable of $5.7 million.
Investing activities for the three months ended March 31, 2009 primarily consisted of capital expenditures related to the consolidation and expansion of the Mansfield, Ohio facilities of $6.2 million and machinery and equipment additions of $2.0 million. Total capital expenditures for the previously announced consolidation and expansion of the Mansfield, Ohio facilities (facilities) of $30.1 million have been incurred as of March 31, 2009. Financing activities for the quarter consisted of short-term borrowings of $5.7 million to partially finance the above mentioned facilities. Also included were payments for dividends of $1.7 million. The ratio of current assets to current liabilities was 3.6 to 1 at March 31, 2009 and 3.8 to 1 at March 31, 2008.
As well publicized, a severe global recession is underway and negatively impacted the Company in the fourth quarter 2008 and the current quarter ended March 31, 2009. Current consensus expectations are that this recession will persist throughout most of 2009 and possibly into 2010. It is expected that the Company's operations and financial results will continue to be negatively impacted in similar fashion during the balance of 2009.