10-K

UNITED STATES

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, 2013
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-21220

ALAMO GROUP INC.

(Exact name of registrant as specified in its charter)

DELAWARE	74-1621248
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

1627 East Walnut, Seguin, Texas 78155

(Address of principal executive offices, including zip code)

830-379-1480

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange
Common Stock, par value	on which registered
$.10 per share	New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [  ] No [X]

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 requirement 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 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 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 definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10‑K. [X]

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

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]

The aggregate market value of the voting stock (which consists solely of shares of common stock) held by non-affiliates of the registrant as of June 28, 2013 (based upon the last reported sale price of $40.82 per share) was approximately $361,724,144 on such date.

The number of shares of the registrant’s common stock, par value $.10 per share, outstanding as of

February 28, 2014 was 12,126,783 shares.

Documents incorporated by reference:  Portions of the registrant’s proxy statement relating to the 2014 Annual Meeting of Stockholders to be held on May 7, 2014 have been incorporated by reference herein in response to Part III.

ALAMO GROUP INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-K

TABLE OF CONTENTS

	PART I	Page
Item 1.	Business	3
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	20
Item 3.	Legal Proceedings	21
Item 4.	Mine Safety Disclosures	22
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	Selected Financial Data	24
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 8.	Financial Statements and Supplementary Data	33
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	33
Item 9A.	Controls and Procedures	33
Item 9B.	Other Information	34
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	35
Item 11.	Executive Compensation	36
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
Item 13.	Certain Relationships, Related Transactions, and Director Independence	36
Item 14.	Principal Accountant Fees and Services	37
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	37
	Index to Consolidated Financial Statements

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PART I

Item 1. Business

Unless the context otherwise requires, the terms “the Company,”  “we,” “our” and “us” refer to Alamo Group Inc. and its subsidiaries on a consolidated basis.

General

The Company is a global leader in the design and manufacture of high quality agricultural equipment and infrastructure maintenance equipment for governmental and industrial use. The Company’s products include tractor-mounted mowing and other vegetation maintenance equipment, street sweepers, excavators, vacuum trucks, snow removal equipment, pothole patchers, zero turn radius mowers ("ZTR's"), agricultural implements and related aftermarket parts and services. The Company emphasizes high quality, cost-effective products for its customers and strives to develop and market innovative products while constantly monitoring and seeking to contain its manufacturing and overhead costs. The Company has a long-standing strategy of supplementing its internal growth through acquisitions of businesses or product lines that currently complement, command, or have the potential to achieve a meaningful share of their niche markets. The Company has approximately 2,550 employees and operates a total of eighteen plants in North America, Europe and Australia. The Company sells its products primarily through a network of independent dealers and distributors to governmental end-users, related independent contractors, as well as to the agricultural and commercial turf markets. The Company operates primarily in the United States, England, France, Canada and Australia.

The predecessor corporation to Alamo Group Inc. was incorporated in the State of Texas in 1969, as a successor to a business that began selling mowing equipment in 1955, and Alamo Group Inc. was reincorporated in the State of Delaware in 1987.

History

Since its founding in 1969, the Company has focused on satisfying customer needs through geographic market expansion, product development and refinement, and selected acquisitions. The Company’s first products were based on rotary cutting technology. Through acquisitions, the Company added flail cutting technology in 1983 and sickle-bar cutting technology in 1984. The Company added to its presence in the industrial and governmental vegetation markets with the acquisition of Tiger Corporation (“Tiger”) in late 1994.

The Company entered the agricultural mowing markets in 1986 with the acquisition of Rhino Products Inc. (“Rhino”), a leading manufacturer in this field. With this acquisition, the Company embarked on a strategy to increase the Rhino dealer distribution network during a period of industry contraction. The addition of M&W Gear Company (“M&W”) in early 1995 allowed the Company to enter into the manufacturing and distribution of tillage equipment, which complements the Rhino distribution network. M&W has been integrated into the agricultural marketing group.

In 1991, the Company began its international expansion with the acquisition of McConnel Ltd. (“McConnel”), a United Kingdom (“U.K.”) manufacturer of vegetation maintenance equipment, principally hydraulic boom-mounted hedge and grass cutters and related parts. Bomford-Turner Ltd. (“Bomford”), also a U.K. company, was acquired in 1993. Bomford is a manufacturer of heavy-duty, tractor-mounted grass and hedge mowing equipment. McConnel and Bomford sell their products to dealers and distributors through their respective sales forces.

In 1994, the Company acquired Signalisation Moderne Autoroutiere S.A. (“SMA”) located in Orleans, France. SMA manufactures and sells principally a line of heavy-duty, tractor-mounted grass and hedge mowing equipment and associated replacement parts primarily to departments of the French government. This acquisition, along with the acquisitions of Forges Gorce, a flail blade manufacturer in France, in 1996 and Rousseau Holdings S.A. (“Rousseau”), a leading French manufacturer of hedge and verge mowers, in 2004, when combined with McConnel and Bomford, has made the Company one of the largest manufacturers in the European market for the kind of equipment sold by the Company.

In 1995, the Company expanded its business in the agricultural market with the acquisition of Herschel Corporation (“Herschel”), a manufacturer and distributor of aftermarket farm equipment replacement and wear parts. 

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In 2000, the Company acquired Schwarze Industries, Inc. (“Schwarze”). Schwarze is a manufacturer of a broad range of street sweeping equipment which is sold to governmental agencies and contractors. The Company believes the Schwarze sweeper products fit the Company’s strategy of identifying product offerings with brand recognition in the industrial markets the Company serves. In 2004, the Company purchased the pothole patcher product line from Wildcat Manufacturing, Inc. The product line was merged into the Schwarze operation and is complementary to its current product offerings.

In 2000, the Company purchased the product line and associated assets of Twose of Tiverton Ltd. (“Twose”) in the U.K. and incorporated its production into the existing facilities at McConnel and Bomford while maintaining its own sales force and dealer distribution network. Twose was a small regional manufacturer of power arm flail mowers and parts, as well as harrows and rollers, which strengthened the Company’s market leadership position in the U.K.

In 2000, the Company acquired Schulte Industries Ltd. and its related entities (“Schulte”). Schulte is a Canadian manufacturer of mechanical rotary mowers, snow blowers, and rock removal equipment. Schulte strengthened the Company’s Canadian presence in both marketing and manufacturing. It also expanded the Company’s range of large, heavy-duty rotary mowers.

In 2001, the Company acquired all of the assets of SMC Corporation (“SMC”). SMC manufactures front-end loaders and backhoes principally for Original Equipment Manufacturer (“OEM”) customers and its own SMC brand. This acquisition expanded the product range of our agricultural division by branding a line of loaders for Rhino.

In 2002, the Company purchased inventory, fixed assets and certain other assets of Valu-Bilt Tractor Parts (“Valu-Bilt”), a subsidiary of Quality Stores, Inc., located in Des Moines, Iowa. Valu-Bilt is a distributor of new, used and rebuilt tractor parts and other agricultural spare and wear parts sold directly to customers through its catalog and the internet and on a wholesale basis to dealers. Subsequent to the purchase, the operations of Valu-Bilt in Des Moines, Iowa, were consolidated into the Company’s Herschel facility in Indianola, Iowa.

In 2002, the Company purchased substantially all of the assets of Faucheux Industries S.A. (“Faucheux”), a leading French manufacturer of front-end loaders and attachments. The Company acquired Faucheux out of administration, a form of bankruptcy in France. This acquisition broadened the range of our agricultural implements offered in the French market.

In 2005, the Company, through its European subsidiary Alamo Group (EUR) Ltd., acquired 100% of the issued and outstanding stock of Spearhead Machinery Limited (“Spearhead”) and subsequently merged its manufacturing operations into Bomford’s facility. Spearhead manufactures a range of tractor-mounted vegetation maintenance equipment, including reach mowers, flail mowers and rotary cutters. This acquisition extended our product lines and market coverage in Europe.

In early 2006, the Company purchased substantially all of the assets of the Gradall excavator business (“Gradall”) of JLG Industries, Inc., including their manufacturing plant in New Philadelphia, Ohio. Gradall is a leading manufacturer of both wheeled and crawler telescopic excavators in North America. This acquisition enhanced our Industrial Division product offering sold to governmental buyers and related contractors for maintenance along right-of-ways.

In 2006, the Company purchased the vacuum truck and sweeper lines of Clean Earth Environmental Group, LLC and Clean Earth Kentucky, LLC (collectively referred to as “VacAll”). This included the product lines, inventory and certain other assets that relate to this business. The production of the vacuum truck and sweeper lines were moved to the Gradall facility in New Philadelphia, Ohio.

In 2006, the Company acquired 100% of the ownership interests in Nite-Hawk Sweepers LLC (“Nite-Hawk”), a manufacturer of truck mounted sweeping equipment primarily for the contract sweeping market, which expanded its presence in that market and complements our Schwarze sweeper line.             

In 2007, the Company purchased Henke Manufacturing Corporation (“Henke”), a manufacturer of specialty snow removal attachments. Henke’s products are mounted on both heavy industrial equipment and medium to

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heavy-duty trucks. The primary end-users are governmental agencies, related contractors and other industrial users.

In 2008, the Company acquired Rivard Developpement S.A.S. (“Rivard”), a leading French manufacturer of vacuum trucks, high pressure cleaning systems and trenchers. The acquisition broadened the Company’s product offering to its customers in Europe and other markets we serve.

In 2009, the Company acquired substantially all the assets of Bush Hog, LLC (“Bush Hog”), a leading agricultural equipment manufacturer of rotary cutters, finishing mowers, ZTR's, front-end loaders, backhoes, landscape equipment and a variety of other implements. This acquisition, combined with the Company’s existing range of agricultural mowers, created one of the largest manufacturers of agricultural mowers in the world.

In 2011, the Company acquired substantially all of the assets and assumed certain specified liabilities of Tenco Group, Inc. ("Tenco") and its subsidiaries. Tenco is a Canadian-based manufacturer of snow removal equipment including snow blades, blowers, dump bodies, spreaders and/associated parts and service. Tenco has operations in Quebec as well as New York and Vermont. The equipment is sold primarily through dealers to governmental end-users as well as contractors.

On September 4, 2013, the Company acquired substantially all of the assets and assumed certain specified liabilities of Superior Equipment Australia PTY. LTD ("Superior"). Superior is an Australian based small manufacturer of agricultural mowing equipment and other attachments, parts, and services. The equipment is sold through dealers primarily to agricultural end-users with some sold to governmental entities.

Marketing and Marketing Strategy

The Company believes that within the U.S. it is a leading supplier to governmental markets, a leading supplier in the U.S. agricultural market, and one of the largest suppliers in the European market for its key niche product offerings. The Company’s products are sold through the Company’s various marketing organizations and extensive worldwide dealer and distributor networks under the Alamo Industrial^®, Terrain King^®, Tiger^®, Gradall^®, VacAll^®, Schwarze^®, Nite-Hawk^®, Henke^®, Tenco^®, Bush Hog^®, Rhino^®, Earthmaster^®, Herschel^®, Valu-Bilt^®, Schulte^®, Superior^®, McConnel^®, Bomford^®, Spearhead^™, Twose^™, SMA^®, Forges Gorce^™, Faucheux^™, Rousseau^™ and Rivard^®trademarks (some with related designs) as well as other trademarks and trade names.

Products and Distribution Channels

North American Industrial Division

Alamo Industrial equipment is principally sold through independent dealers to governmental end-users, related independent contractors and, to a lesser extent, utility and other dealers serving right-of-way maintenance operators and other applications in the U.S. and other countries. Governmental agencies and contractors that perform services for such agencies purchase primarily hydraulically-powered, tractor-mounted mowers, including boom-mounted mowers, other types of cutters and replacement parts for heavy-duty, intensive use applications, including maintenance around highway, airport, recreational and other public areas. A portion of Alamo Industrial’s sales includes tractors, which are not manufactured by Alamo Industrial.

Tiger equipment includes heavy duty, tractor- and truck-mounted mowing and vegetation maintenance equipment and replacement parts. Tiger sells to state, county and local governmental entities and related contractors, primarily through a network of independent dealers. Tiger’s dealer distribution network is independent of Alamo Industrial’s dealer distribution network. A portion of Tiger’s sales includes tractors, which are not manufactured by Tiger.

Schwarze equipment includes air, mechanical broom, and regenerative air sweepers, pothole patchers and replacement parts. Schwarze sells its products primarily to governmental agencies and independent contractors, either directly or through its independent dealer network. A portion of Schwarze’s sales includes truck chassis which are not manufactured by Schwarze. The Company believes that Schwarze complements AlamoIndustrial because the dealer and/or end-user for both products in many cases are the same.

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Gradall produces a range of models based on high-pressure hydraulic telescoping booms which are sold through dealers primarily to governmental agencies, contractors and to a lesser extent the mining industry, steel mills and other specialty applications in the U.S. and other countries. Many of these products are designed for excavation, grading, shaping and similar tasks involved in land clearing, road building or maintenance. These products are available mounted on various types of undercarriages: wheels for full-speed highway travel, wheels for on/off road use, and crawlers.

VacAll produces catch basin cleaners and roadway debris vacuum systems. These units are powerful and versatile with uses including, but not limited to, removal of wet and dry debris, spill elimination, and cleaning of sludge beds. VacAll also offers a line of sewer cleaners. Its products are primarily sold through dealers to industrial and commercial contractors as well as governmental agencies. A portion of VacAll’s sales includes truck chassis which are not manufactured by the Company.

Nite-Hawk manufactures parking lot sweepers with unique and innovative hydraulic designs. By eliminating the auxiliary engine, Nite-Hawk sweepers have proven to be fuel-efficient, environmentally conscious, and cost-effective to operate. Nite-Hawk focuses mainly on and sells direct to parking lot contractors. A portion of Nite-Hawk’s sales includes truck chassis which are not manufactured by Nite-Hawk.

Henke designs and manufactures snow plows and heavy duty snow removal equipment, hitches and attachments for trucks, loaders and graders sold primarily through independent truck and industrial dealers. Henke’s primary end-users are governmental agencies, related contractors and other industrial users.

Tenco designs and manufactures a heavy duty line of snow removal equipment, including snow plows, snow blowers, dump bodies and spreaders. Its products are primarily sold through independent dealers. End-users are governmental agencies, contractors and other industrial users.

North American Agricultural Division

Bush Hog,Rhino and Earthmaster equipment is generally sold to farmers and ranchers to clear brush, maintain pastures and unused farmland, shred crops and till fields, and for haymaking. It is also sold to other customers, such as mowing contractors and construction contractors, for non-agricultural purposes. Bush Hog and Rhino equipment consists principally of a comprehensive line of tractor-powered equipment, including rotary cutters, finishing mowers, flail mowers, disc mowers, ZTR's, front-end loaders, backhoes, rotary tillers, posthole diggers, scraper blades and replacement parts. This equipment is primarily sold through farm equipment dealers, as well as original equipment manufacturers (“OEMs”) and other distributors.

In 2012, the backhoe operations at SMC were consolidated into the Company's agricultural facility in Gibson City, Illinois, and front-end loaders for Bush Hog and Rhino were outsourced.

Herschel/Valu-Bilt aftermarket replacement parts are sold for many types of farm equipment and tractors and certain types of mowing and construction equipment. Herschel products include a wide range of cutting parts, plain and hard-faced replacement tillage tools, disc blades and fertilizer application components. Herschel replacement tools and parts are sold throughout the United States, Canada and Mexico to five major customer groups: farm equipment dealers; fleet stores; wholesale distributors; OEMs; and construction equipment dealers. Valu-Bilt complements the Herschel product lines while also expanding the Company’s offering of aftermarket agricultural parts and added catalog and internet sales direct to end-users.

Schulte equipment includes heavy-duty mechanical rotary mowers, snow blowers, rock removal equipment and related replacement parts. Schulte serves both the agricultural and governmental markets primarily in Canada and the U.S. Schulte also sells some of the Company’s other product lines in their markets and some of its products through independent distributors throughout the world.

European Division

McConnel equipment principally includes a broad line of hydraulic, boom-mounted hedge and grass cutters, as well as other tractor attachments and implements such as hydraulic backhoes, cultivators, subsoilers, buckets and other digger implements and related replacement parts. McConnel equipment is sold primarily in the U.K., Ireland and France and in other parts of Europe and, to a lesser extent, throughout the world, through independent dealers and distributors.

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Bomford equipment includes hydraulic, boom-mounted hedge and hedgerow cutters, industrial grass mowers, agricultural seedbed preparation cultivators and related replacement parts. Bomford equipment is sold to governmental agencies, contractors and agricultural end-users in the U.K., Ireland and France and, to a lesser extent, other countries in Europe, North America, Australia and the Far East. Bomford’s sales network is similar to that of McConnel in the U.K. Rhino sells some of Bomford’s product line in the U.S. 

Twose equipment includes light-duty power arm mowers, agricultural implements and related replacement parts. Twose products are manufactured at the Company’s U.K. facilities. These products are sold through Twose’s dealer distribution network in the U.K. and through Faucheux’s and other independent distributors internationally.

The addition of Spearhead expanded the Company’s product lines, particularly rotary cutters, and market coverage in Europe and increased utilization of our existing U.K. manufacturing facilities.

SMA equipment includes hydraulic, boom-mounted hedge and hedgerow cutters and related replacement parts. SMA’s principal customers are French local authorities. SMA’s product offerings include certain quick-attach boom mowers manufactured by the Company in the U.K. to expand its presence in agricultural dealerships. During the third quarter of 2010, the Company closed and sold its SMA facility located in Orleans, France and production was relocated to the Rousseau manufacturing facility near Lyon, France.

Forges Gorce manufactures cutting blades which are sold to some of the Company’s subsidiaries as well as to other customers.

Faucheux equipment includes front-end loaders, backhoes, attachments and related parts. In addition, Faucheux also market certain agricultural related products from other company units and third party suppliers.

Rousseau sells hydraulic and mechanical boom mowers, primarily in France, through its own sales force and dealer distribution network mainly to agricultural and governmental markets. These products have also been introduced into other markets outside of France.

Rivard manufactures vacuum trucks, high pressure cleaning systems and trenchers. Rivard’s equipment is primarily sold in France and certain other markets, mainly in Europe and North Africa, to governmental entities and related contractors. It also complements our product offerings in North America. The majority of Rivard's customers provide their own truck chassis.

Replacement Parts

In addition to the sales of Herschel/Valu-Bilt replacement parts, the Company derives a significant portion of its revenues from sales of replacement parts for each of its wholegoods lines. Replacement parts represented approximately 22%, 23% and 24% of the Company’s total sales for the years ended December 31, 2013, 2012 and 2011, respectively. The decrease in 2013 was mainly from a change in sales mix between wholegoods and parts. Proprietary replacement parts generally are more profitable and less cyclical than wholegoods.

While the Company believes that the end-users of its products evaluate their purchases on the basis of price, reputation and product quality, such purchases are also based on a dealer’s service, support of and loyalty to the dealer based on previous purchase experiences, as well as other factors such as product and replacement part availability.

Product Development

The Company’s ability to provide innovative responses to customer needs, to develop and manufacture new products, and to enhance existing product lines is important to its success. The Company continually conducts research and development activities in an effort to improve existing products and develop new products. As of December 31, 2013, the Company employed 141 people in its various engineering departments, 73 of whom are degreed engineers and the balance of whom are support staff. Amounts expended on research and development activities were approximately $7,164,000 in 2013, $5,686,000 in 2012 and $6,017,000 in 2011. As a percentage of sales, research and development was approximately 1.1% in 2013, 0.9% in 2012 and 1.0% in 2011, and is expected to continue at similar levels in 2014.

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Seasonality

The Company’s sales, both product and replacement parts, are generally higher in the second and third quarters of the year, because a substantial number of the Company’s products are used for maintenance activities such as vegetation maintenance, highway right-of-way maintenance, construction, and street and parking lot sweeping. Usage of this equipment is lower in harsh weather. The Company utilizes an annual twelve-month sales forecast provided by the Company’s marketing departments which is updated quarterly in order to develop a production plan for its manufacturing facilities. In addition, many of the Company’s marketing departments attempt to equalize demand for products throughout the calendar year by offering seasonal sales programs which may provide additional incentives, including discounts and extended payment terms.

Competition

The Company’s products are sold in highly competitive markets throughout the world. The principal competitive factors are price, quality, availability, service and reputation. The Company competes with several large national and international companies that offer a broad range of equipment and replacement parts, as well as with numerous small, privately-held manufacturers and suppliers of a limited number of products, mainly on a regional basis. Some of the Company’s competitors are significantly larger than the Company and have substantially greater financial and other resources at their disposal. The Company believes that it is able to compete successfully in its markets by effectively managing its manufacturing costs, offering high quality products, developing and designing innovative products and, to some extent, avoiding direct competition with significantly larger potential competitors. There can be no assurance that the Company’s competitors will not substantially increase the resources devoted to the development and marketing of products competitive with the Company’s products or that new competitors with greater resources will not enter the Company’s markets.

Unfilled Orders

As of December 31, 2013, the Company had unfilled customer orders of $129,004,000 compared to $124,453,000 at December 31, 2012. The 4% increase was primarily from our European Division as new orders increased during the last half of 2013 due to improved market conditions in Europe. Management expects that substantially all of the Company’s backlog as of December 31, 2013 will be shipped during fiscal year 2014. The amount of unfilled orders at a particular time is affected by a number of factors, including manufacturing and shipping schedules which, in most instances, are dependent on the Company’s seasonal sales programs and the requirements of its customers. Certain of the Company’s orders are subject to cancellation at any time before shipment; therefore, a comparison of unfilled orders from period to period is not necessarily meaningful and may not be indicative of future actual shipments. No single customer is responsible for 10% or more of the aggregate revenue of the Company.

Sources of Supply

The principal raw materials used by the Company include steel, other metal components, hydraulic hoses, paint and tires. During 2013, the raw materials needed by the Company were available from a variety of sources in adequate quantities and at prevailing market prices. No one supplier is responsible for supplying more than 10% of the principal raw materials used by the Company.

While the Company manufactures many of the parts for its products, a significant percentage of parts, including most drivelines, gearboxes, industrial engines, and hydraulic components, are purchased from outside suppliers which manufacture to the Company’s specifications. In addition, the Company, through its subsidiaries, purchases tractors and truck chassis as a number of the Company’s products are mounted and shipped with a tractor or truck chassis. Tractors and truck chassis are generally available, but some delays in receiving tractors or truck chassis can occur throughout the year. The Company sources its purchased goods from international and domestic suppliers. No single supplier is responsible for supplying more than 10% of the purchased goods used by the Company.

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Patents and Trademarks

The Company owns various U.S. and international patents. While the Company considers its patents to be advantageous to its business, it is not dependent on any single patent or group of patents. The net book value of trademarks was $5,500,000 as of December 31, 2013 and 2012.

The Company’s products are sold through the Company’s various marketing organizations and extensive worldwide dealer and distributor networks under the Alamo Industrial^®, Terrain King^®, Tiger^®, Gradall^®, VacAll^®, Schwarze^®, Nite-Hawk^®, Henke^®, Tenco^®, Bush Hog^®, Rhino^®, Earthmaster^®, Herschel^®, Valu-Bilt^®, Schulte^®, Superior^®, McConnel^®, Bomford^®, Spearhead^™, Twose^™, SMA^®, Forges Gorce^™, Faucheux^™, Rousseau^™ and Rivard^®trademarks (some with related designs) as well as other trademarks and trade names.

Environmental and Other Governmental Regulations

Like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws and requirements, including those concerning air emissions, discharges into waterways, and the generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances at the Company’s facilities and offsite disposal locations, workplace safety and equal employment opportunities. These laws and regulations are constantly changing, and it is impossible to predict with accuracy the effect that changes to such laws and regulations may have on the Company in the future. Like other industrial concerns, the Company’s manufacturing operations entail the risk of noncompliance, and there can be no assurance that the Company will not incur material costs or other liabilities as a result thereof.

The Company knows that its Indianola, Iowa property is contaminated with chromium which most likely resulted from chrome plating operations which were discontinued before the Company purchased the property. Chlorinated volatile organic compounds have also been detected in water samples on the property, though the source is unknown at this time. The Company voluntarily worked with an environmental consultant and the state of Iowa with respect to these issues and believes it completed its remediation program in June 2006. The work was accomplished within the Company’s environmental liability reserve balance. We requested a “no further action” classification from the state. We received a conditional “no further action” letter in January of 2009. When we demonstrate stable or improving conditions below residential standards for a certain period of time by monitoring existing wells, we will request an unconditional “no further action” letter.

Prior to December 31, 2012, the Company had an environmental reserve in the amount of $1,185,000 related to the acquisition of Gradall’s facility in New Philadelphia, Ohio. The reserve was for potential ground water contamination/remediation that was identified before the acquisition and believed to have been generated by a third party company located near the Gradall facility. Monitoring of the test wells by the City of New Philadelphia as required by the Ohio EPA has shown no increase in contamination over the past 30 years and the Company was informed in the fourth quarter of 2012 that the wells were plugged during the second half of the year. Based on this information, the Company has determined that a reserve is no longer required.

The Company knows that Bush Hog’s main manufacturing property in Selma, Alabama was contaminated with chlorinated volatile organic compounds which most likely resulted from painting and cleaning operations during the 1960s and 1970s. The contaminated areas were primarily in the location of underground storage tanks and underneath the former waste storage area. Under the Asset Purchase Agreement, Bush Hog’s prior owner agreed to and has removed the underground storage tanks at its cost and has remediated the identified contamination in accordance with the regulations of the Alabama Department of Environmental Management. An environmental consulting firm was retained by the prior owner to administer the cleanup and monitor the site on an ongoing basis until the remediation program is complete and approved by the applicable authorities.

Certain assets of the Company contain asbestos that may have to be remediated over time. The Company believes that any subsequent change in the liability associated with the asbestos removal will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

The Company is subject to various other federal, state, and local laws affecting its business, as well as a variety of regulations relating to such matters as working conditions, equal employment opportunities, and product safety. A variety of state laws regulate the Company’s contractual relationships with its dealers, some of which

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impose restrictive standards on the relationship between the Company and its dealers, including events of default, grounds for termination, non-renewal of dealer contracts, and equipment repurchase requirements. The Company believes it is currently in material compliance with all such applicable laws and regulations.

Employees

As of December 31, 2013, the Company employed approximately 2,550 employees. In North America, the Company has collective bargaining agreements at the Gradall facility which cover 187 employees and will expire on March 12, 2017 and at the Tenco facility in Canada covering 55 employees which will expire on December 13, 2015. The Company’s European operations, McConnel,Bomford, Spearhead, Twose, AMS-UK, SMA, Forges Gorce,Faucheux, Rousseau and Rivard, also have various collective bargaining agreements covering 866 employees. The Company considers its employee relations to be satisfactory.

Financial Information about Segments

See Note 14 of the accompanying consolidated financial statements.

International Operations and Geographic Information

See Note 15 of the accompanying consolidated financial statements.

Available Information

The Company files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any document we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for information on the operation of the Public Reference Room. The SEC maintains a website that contains annual, quarterly and current reports, proxy and information statements and other information that issuers (including the Company) file electronically with the SEC. The SEC’s website is www.sec.gov.

The Company’s website is www.alamo-group.com. The Company makes available free of charge through its website, via a link to the SEC’s website at www.sec.gov, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The Company also makes available through its website, via a link to the SEC’s website, statements of beneficial ownership of the Company’s equity securities filed by its directors, officers, 10% or greater shareholders and others required to file under Section 16 of the Exchange Act.

The Company also makes available free of charge on its website its most recent annual report on Form 10-K, its quarterly reports on Form 10-Q for the current fiscal year, its most recent proxy statement and its most recent annual report to stockholders, although in some cases these documents are not available on our site as soon as they are available on the SEC’s site. You will need to have on your computer the Adobe Acrobat Reader^® software to view the documents, which are in PDF format. In addition, the Company posts on its website its Charters for its Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee, as well as its Corporate Governance Policies and its Code of Conduct and Ethics for its directors, officers and employees. You can obtain a written copy of these documents, excluding exhibits, at no cost, by sending your request to the Corporate Secretary, Alamo Group Inc., 1627 E. Walnut Street, Seguin, Texas 78155, which is the principal corporate office of the Company. The telephone number is (830) 379-1480 ext. 1621. The information on the Company’s website is not incorporated by reference into this report.

Forward-Looking Information

Part I of this Annual Report on Form 10-K and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II of this Annual Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In addition, forward-looking statements may be made orally or in press releases, conferences, reports or otherwise, in the future by or on behalf of the Company.

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Statements that are not historical are forward-looking. When used by us or on our behalf, the words "expect," “will,” “estimate,” “believe,” “intend,” "would," “could,” “should,” “anticipate,” “project,” “forecast,” “plan,” “may” and similar expressions generally identify forward-looking statements made by us or on our behalf. Forward-looking statements involve risks and uncertainties. These uncertainties include factors that affect all businesses operating in a global market, as well as matters specific to the Company and the markets we serve. Certain particular risks and uncertainties that continually face us include the following:

• budget constraints and revenue shortfalls which could affect the purchases of our type of equipment by governmental customers and related contractors in both domestic and international markets;

• market acceptance of new and existing products;

• our ability to maintain good relations with our employees;

• our ability to hire and retain quality employees;

• changes in the prices of agricultural commodities, which could affect our customers’   income levels; and

• impairment in the carrying value of goodwill.

In addition, we are subject to risks and uncertainties facing the industry in general, including the following:

• changes in business and political conditions and the economy in general in both domestic and international markets;

• increase in unfunded pension plan liability due to financial market deterioration;

• price and availability of critical raw materials, particularly steel and steel products;

• increased competition;

• our ability to develop and manufacture new and existing products profitably;

• adverse weather conditions such as droughts, floods, snowstorms, etc., which can affect the buying patterns of our customers and related contractors;

• increased costs of complying with new regulations;

• the potential effects on the buying habits of our customers due to animal disease outbreaks;

• adverse market conditions and credit constraints which could affect our customers and end-users, such as cutbacks on dealer stocking levels;

• changes in market demand;

• financial market changes including changes in interest rates and fluctuations in foreign exchange rates;

• the inability of our suppliers, customers, creditors, public utility providers and financial service organizations to deliver or provide their products or services to us;

• abnormal seasonal factors in our industry;

• legal actions and litigation;

• changes in domestic and foreign governmental policies and laws, including increased levels of government regulation and changes in agricultural policies;

• government actions, including budget levels, regulations and legislation, relating to the environment, commerce, infrastructure spending, health and safety;

• risk of governmental defaults and resulting impact on the global economy and particularly financial institutions; and

• amount of farm subsidies and farm payments.

We wish to caution readers not to place undue reliance on any forward-looking statement and to recognize that the statements are not predictions of actual future results. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above and under “Risk Factors,” as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning us and our businesses, including factors that could potentially materially affect our financial results, may emerge from time to time. It is not possible for management to predict all risk factors or to assess the impact of such risk factors on the Company’s businesses.

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Executive Officers of the Company

Certain information is set forth below concerning the executive officers of the Company, each of whom has been elected to serve until the 2014 annual meeting of directors or until his successor is duly elected and qualified.

Name	Age	Position
Ronald A. Robinson	61	President and Chief Executive Officer
Dan E. Malone	53	Executive Vice President and Chief Financial Officer
Robert H. George	67	Vice President, Secretary and Treasurer
Richard J. Wehrle	57	Vice President and Controller
Donald C. Duncan	62	Vice President and General Counsel
Geoffrey Davies	66	Vice President, Alamo Group Inc. and Managing    Director, Alamo Group (EUR) Ltd., European Division
Richard D. Pummell	67	Vice President, Alamo Group Inc. and Executive Vice President Alamo Group (USA) Inc., Agricultural Division
Jeffery A. Leonard	54	Vice President, Alamo Group Inc. and Executive Vice President Alamo Group (USA) Inc., Industrial Division

Ronald A. Robinson was appointed President, Chief Executive Officer and a director of the Company on July 7, 1999. Mr. Robinson had previously been President of Svedala Industries, Inc., the U.S. subsidiary of Svedala Industries AB of Malmo, Sweden, a leading manufacturer of equipment and systems for the worldwide construction, mineral processing and materials handling industries. Mr. Robinson joined Svedala in 1992 when it acquired Denver Equipment Company of which he was Chairman and Chief Executive Officer.

Dan E. Malone was appointed Executive Vice President, Chief Financial Officer on January 15, 2007. Prior to joining the Company, Mr. Malone held the position of Executive Vice President, Chief Financial Officer & Corporate Secretary at Igloo Products Corporation, a manufacturer of insulated consumer goods, from 2002 to January 2007. Mr. Malone was Vice President and Chief Financial Officer of The York Group, Inc. from 2000 to 2002, and held various financial positions from 1987 to 2000 with Cooper Industries, Inc. and its various subsidiaries.

Robert H. George joined the Company in May 1987 as Vice President and Secretary/Treasurer and has served the Company in various executive capacities since that time. Prior to joining the Company, Mr. George was Senior Vice President of Frost National Bank, a national bank association, from 1978 to 1987.

Richard J. Wehrle has been Vice President and Controller of the Company since May 2001. Prior to his appointment, Mr. Wehrle served in various accounting management capacities within the Company since 1988.

Donald C. Duncan has been General Counsel of the Company since January 2002 and was elected Vice President in February 2003. Prior to joining the Company, Mr. Duncan was counsel for various publicly held companies in Houston, Texas and most recently was Associate General Counsel for EGL, Inc. from 2000 to 2001 and Senior Counsel for Weatherford International Inc. from 1997 to 1999.

Geoffrey Davies, OBE and PhD, has been Managing Director of Alamo Group (EUR) Ltd. since December 1993 and was elected Vice President of the Company in February 2003. From 1988 to 1993, Dr. Davies served McConnel Ltd., a U.K. company acquired by Alamo Group in 1991, in various capacities including serving as its Marketing Director from February 1992 until December 1993.

Richard D. Pummell was elected Vice President of Alamo Group Inc. in November 2009. Mr. Pummell joined the Company in 2005 as Executive Vice President of Alamo Group (USA) Inc. and is in charge of the Agricultural Division. Prior to joining the Company, Mr. Pummell was Vice President for Global Supply and General Manager of

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Metso Minerals, a supplier of technology and services for mining, constructions, power generation, automation, recycling, and pulp and paper industries.

Jeffery A. Leonard joined Alamo Group in September 2011 as Vice President of Alamo Group Inc. and Executive Vice President of Alamo Group (USA) Inc., in charge of the Industrial Division. Mr. Leonard previously was Senior Vice President of Metso Minerals Industries Inc., a supplier of technology and services for mining, constructions, power generation, automation, recycling, and pulp and paper industries.

Item 1A. Risk Factors

You should carefully consider each of the risks described below, together with all of the other information contained in this Annual Report on Form 10-K, before making an investment decision with respect to the Company’s securities. If any of the following risks develop into actual events, the Company’s business, financial condition or results from operations could be materially and adversely affected and you could lose all or part of your investment.

Risks related to our business

Deterioration of industry conditions could harm our business, results of operations and financial condition.

Our business depends to a large extent upon the prospects for the mowing, right-of-way maintenance and agricultural markets in general. Future prospects of the industry depend largely on factors outside of our control. Any of those factors could adversely impact demand for our products, which could adversely impact our business, results of operations and financial condition. These factors include the following:

• weakness in worldwide economy;

• the price and availability of raw materials, purchased components and energy;

• budget constraints and revenue shortfalls for our governmental customers;

• changes in domestic and foreign governmental policies and laws, including increased levels of governmental regulation;

• the levels of interest rates;

• the value of the U.S. dollar relative to the foreign currencies in countries where we sell our products but don’t have a manufacturing presence;

• impact of tighter credit markets on the Company, its dealers and end-users;

• impairment in the carrying value of goodwill; and

• increase in unfunded pension plan liability due to financial market deterioration.

In addition, our business is susceptible to a number of factors that specifically affect agricultural customer spending patterns, including the following:

• animal disease outbreaks, epidemics and crop pests;

• weather conditions, such as droughts, floods and snowstorms;

• changes in farm incomes;

• cattle and agricultural commodity prices;

• changes in governmental agricultural policies worldwide;

• the level of worldwide farm output and demand for farm products; and

• limits on agricultural imports.

A downturn in general economic conditions and outlook in the United States and around the world could adversely affect our net sales and earnings.

The strength and profitability of our business depends on the overall demand for our products and upon economic conditions and outlook, including but not limited to economic growth rates; consumer spending levels; financing availability, pricing and terms for our dealers and end-users; employment rates; interest rates; inflation; consumer confidence and general economic and political conditions and expectations in the United States and the other economies in which we conduct business. Slow or negative growth rates, inflationary pressures, higher commodity costs and energy prices, reduced credit availability or unfavorable credit terms for our dealers and end-user customers, increased unemployment rates, and continued recessionary economic conditions and outlook

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could cause consumers to continue to reduce spending, which may cause them to delay or forgo purchases of our products and could have an adverse effect on our net sales and earnings.

We depend on governmental sales and a decrease in such sales could adversely affect our business, results of operations and financial condition.

A substantial portion of our revenues is derived from sales to federal, state and local governmental entities both in the U.S. and in other countries in which we sell our products. These sales depend primarily on the levels of budgeted and appropriated expenditures for highway, airport, roadside and parks maintenance by various governmental entities and are affected by changes in local and national economic conditions.

Our dependence on, and the price and availability of, raw materials as well as purchased components may adversely affect our business, results of operations and financial condition.

We are subject to fluctuations in market prices for raw materials such as steel and energy. In addition, although most of the raw materials and purchase components we use are commercially available from a number of sources, we could experience disruptions in the availability of such materials. If we are unable to purchase materials we require or are unable to pass on price increases to our customers or otherwise reduce our cost of goods sold, our business, results of operations and financial condition may be adversely affected. In addition, higher energy costs may negatively affect spending by farmers, including their purchases of our products.

Impairment in the carrying value of goodwill could negatively impact our consolidated results of operations and net worth.

The Company estimates the fair value of its reporting units using a discounted cash flow analysis. This analysis requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The cash flows are estimated over a significant future period of time, which makes those estimates and assumptions subject to an even higher degree of uncertainty. The Company also utilizes market valuation models and other financial ratios, which require the Company to make certain assumptions and estimates regarding the applicability of those models to its assets and businesses. As of December 31, 2013, goodwill was $32,073,000, which represents 7% of total assets.

The Company recognized no goodwill impairment in 2013. The Company recognized goodwill impairment at one of its French operations, Faucheux, of $656,000 in 2012 and two of its French operations, SMA and Rousseau, of $1,898,000 in 2011. The primary reason for the goodwill impairment in 2012 and 2011 was the general economic downturn that continues to affect the Company's European operations. This caused the Company to revise its expectations about future revenue, which is a significant factor in the discounted cash flow analysis used to estimate the fair value of the Company's reporting units. During the 2013 impairment analysis review, we performed a sensitivity analysis for goodwill impairment with respect to each of our reporting units and determined that a hypothetical 15% decline in the fair value of each reporting unit as of December 31, 2013 would not result in an impairment of goodwill for any of the reporting units. During the 2012 impairment analysis review, it was noted that even though the Schwarze and Rivard reporting units' fair value was above carrying value, it was not materially different. On December 31, 2013, there was approximately $6.9 million and $12.3 million of goodwill related to the Schwarze and Rivard reporting units, respectively. These reporting units would be most likely affected by changes in the Company’s assumptions and estimates. The calculation of fair value could increase or decrease depending on changes in the inputs and assumptions used, such as changes in the reporting unit’s future growth rates, discount rates, etc.

We are significantly dependent on information technology.

We rely on information technology networks and systems, including the Internet, to process, transmit, and store electronic and financial information, to manage a variety of business processes and activities, and to comply with regulatory, legal, and tax requirements. We also depend on our information technology infrastructure for digital marketing activities and for electronic communications among our locations, personnel, customers, and suppliers. These information technology systems, [some of which are provided and maintained by third parties], may be susceptible to damage, disruptions, or shutdowns due to hardware failures, computer viruses, hacker attacks, telecommunication failures, user errors, catastrophic events or other factors. If our information technology systems suffer severe damage, disruption, or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience business disruptions, transaction errors, processing inefficiencies,

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and the loss of customers and sales, causing our product sales, financial condition, and operating results to be adversely affected and the reporting of our financial results to be delayed.

In addition, if we are unable to prevent security breaches or disclosure of non-public information, we may suffer financial and reputational damage, litigation or remediation costs or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers, consumers, or suppliers.

We operate in a highly competitive industry, and some of our competitors and potential competitors have greater resources than we do.

Our products are sold in highly competitive markets throughout the world. We compete with several large national and international companies that offer a broad range of equipment and replacement parts that compete with our products, as well as with numerous small, privately-held manufacturers and suppliers of a limited number of products mainly on a regional basis. Some of our competitors are significantly larger than we are and have substantially greater financial and other resources at their disposal. We believe that we are able to compete successfully in our markets by, to some extent, avoiding direct competition with significantly larger potential competitors. There can be no assurance that our competitors will not substantially increase the resources devoted to the development and marketing of products competitive with our products or that new competitors with greater resources will not enter our markets. Any failure to effectively compete could have an adverse effect on our business, results of operations and financial condition.

We operate and source internationally, which exposes us to the political, economic and other risks of doing business abroad.

We have operations in a number of countries outside of the United States and we source raw materials and components globally. Our international operations are subject to the risks normally associated with conducting business in foreign countries, including but not limited to the following:

• limitations on ownership and on repatriation of earnings;

• import and export restrictions, tariffs and quotas;

• additional expenses relating to the difficulties and costs of staffing and managing international operations;

• labor disputes and uncertain political and economic environments and the impact of foreign business cycles;

• changes in laws or policies;

• delays in obtaining or the inability to obtain necessary governmental permits;

• potentially adverse consequences resulting from the applicability of foreign tax laws;

• cultural differences;

• increased expenses due to inflation;

• weak economic conditions in foreign markets where our subsidiaries distribute their products;

• changes in currency exchange rates;

• disruptions in transportation and port authorities; and

• new regulations involving international freight shipments.

Our international operations may also be adversely affected by laws and policies of the United States and the other countries in which we operate affecting foreign trade, investment and taxation.

In addition, political developments and governmental regulations and policies in the countries in which we operate directly affect the demand for our products. For example, decreases or delays in farm subsidies to our agricultural customers, or changes in environmental policies aimed at limiting mowing activities, could adversely affect our business, results of operations and financial condition.

Our acquisition strategy may not be successful, which may adversely affect our business, results of operations and financial condition.

We intend to grow internally and through the acquisition of businesses and assets that will complement our current businesses. To date, a material portion of our growth has come through acquisitions. We cannot be certain that we will be able to identify attractive acquisition targets, obtain financing for acquisitions on satisfactory terms or successfully acquire identified targets. Competition for acquisition opportunities may also increase our costs of

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making acquisitions or prevent us from making certain acquisitions. These and other acquisition-related factors may adversely impact our business, results of operations and financial condition.

We may be unable to complete or integrate existing or future acquisitions effectively, and businesses we have acquired, or may acquire in the future, may not perform as expected.

We may not be successful in integrating acquired businesses into our existing operations and achieving projected synergies. We could face many risks in integrating acquired businesses, including but not limited to the following:

• we may incur substantial costs, delays or other operational or financial challenges in integrating acquired businesses, including integrating each company's accounting, information technology, human resource and other administrative systems to permit effective management;

• we may be unable to achieve expected cost reductions, to take advantage of cross-selling opportunities, or to eliminate redundant operations, facilities and systems;

• we may need to implement or improve controls, procedures and policies appropriate for a public company;

• acquisitions may divert our management’s attention from the operation of our existing businesses;

• we may not be able to retain key personnel of acquired businesses;

• there may be cultural challenges associated with integrating management and employees from the acquired businesses into our organization; and

• we may encounter unanticipated events, circumstances or legal liabilities.

Our integration of acquired businesses requires significant efforts from the management of each entity, including coordinating existing business plans and research and development efforts. Integrating operations may distract management’s attention from the day-to-day operation of the combined companies. Ultimately, our attempts to integrate the operations, technology and personnel of acquired businesses may not be successful. If we are unable to successfully integrate acquired businesses, our future results may be negatively impacted.

In addition, we may be adversely affected if businesses that we have acquired, or that we acquire in the future, do not perform as expected. An acquired business could perform below our expectations for a number of reasons, including legislative or regulatory changes that affect the areas in which the acquired business specializes, the loss of customers and dealers, general economic factors that directly affect the acquired business, and the cultural incompatibility of its management team. Any or all of these reasons could adversely affect our business, results of operation and financial condition.

The agricultural industry and the mowing and right of way maintenance industry are seasonal and are affected by the weather, and seasonal fluctuations may cause our results of operations and working capital to fluctuate from quarter to quarter.

In general, agricultural and governmental end-users typically purchase new equipment during the first and second calendar quarters. Other products such as street sweepers, excavators, snow blowers, front-end loaders and pothole patchers have different seasonal patterns, as do replacement parts in general. In attempting to achieve efficient utilization of manpower and facilities throughout the year, we estimate seasonal demand months in advance and manufacturing capacity is scheduled in anticipation of such demand. We utilize a rolling twelve-month sales forecast provided by our marketing divisions and order backlog in order to develop a production plan for our manufacturing facilities. In addition, many of our marketing departments attempt to equalize demand for their products throughout the calendar year by offering seasonal sales programs which may provide additional incentives, including discounts and extended payment terms, on equipment that is ordered during off-season periods. Because we spread our production and wholesale shipments throughout the year to take into account the factors described above, sales in any given period may not reflect the timing of dealer orders and retail demand.

Weather conditions and general economic conditions may affect the timing of purchases and actual industry conditions might differ from our forecasts. Consequently, sudden or significant declines in industry demand could adversely affect our working capital or results of operations.

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If we do not retain key personnel and attract and retain other highly skilled employees, our business may suffer.

Our continued success will depend on, among other things, the efforts and skills of our executive officers, including our president and chief executive officer, and our ability to attract and retain additional highly qualified managerial, technical, manufacturing, and sales and marketing personnel. We do not maintain “key man” life insurance for any of our employees, and all of our senior management are employed at will. We cannot assure you that we will be able to attract and hire suitable replacements for any of our key employees. We believe the loss of a key executive officer or other key employee could have an adverse effect on our business, results of operations and financial condition.

We are subject on an ongoing basis to the risk of product liability claims and other litigation arising in the ordinary course of business.

Like other manufacturers, we are subject to various claims, including product liability claims, arising in the ordinary course of business, and we are a party to various legal proceedings that constitute routine litigation incidental to our business. We may be exposed to product liability claims in the event that the use of our products results, or is alleged to result, in bodily injury, property damage, or both. We cannot assure you that we will not experience any material product liability losses in the future or that we will not incur significant costs to defend the Company against such claims. While we currently have product liability insurance, we cannot assure you that our product liability insurance coverage will be adequate for any liabilities that may ultimately be incurred or that it will continue to be available on terms acceptable to us. A successful claim brought against us in excess of available insurance coverage or a requirement to participate in a product recall may have a materially adverse effect on our business.

We are subject to environmental, health and safety and employment laws and regulations and related compliance expenditures and liabilities.

Like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws and requirements, including those concerning air emissions, discharges into waterways, and the generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances at the Company’s facilities and offsite disposal locations, workplace safety and equal employment opportunities. These laws and regulations are constantly changing, and it is impossible to predict with accuracy the effect that changes to such laws and regulations may have on the Company in the future. Like other industrial concerns, the Company’s manufacturing operations entail the risk of noncompliance, and there can be no assurance that the Company will not incur material costs or other liabilities as a result thereof.

The Company knows that its Indianola, Iowa property is contaminated with chromium which most likely resulted from chrome plating operations which were discontinued before the Company purchased the property. Chlorinated volatile organic compounds have also been detected in water samples on the property, though the source is unknown at this time. The Company voluntarily worked with an environmental consultant and the state of Iowa with respect to these issues and believes it completed its remediation program in June 2006. The work was accomplished within the Company’s environmental liability reserve balance. We requested a “no further action” classification from the state. We received a conditional “no further action” letter in January of 2009. When we demonstrate stable or improving conditions below residential standards for a certain period of time by monitoring existing wells, we will request an unconditional “no further action” letter.

The Company knows that Bush Hog’s main manufacturing property in Selma, Alabama was contaminated with chlorinated volatile organic compounds which most likely resulted from painting and cleaning operations during the 1960s and 1970s. The contaminated areas were primarily in the location of underground storage tanks and underneath the former waste storage area. Under the Asset Purchase Agreement, Bush Hog’s prior owner agreed to and has removed the underground storage tanks at its cost and has remediated the identified contamination in accordance with the regulations of the Alabama Department of Environmental Management. An environmental consulting firm was retained by the prior owner to administer the cleanup and monitor the site on an ongoing basis until the remediation program is complete and approved by the applicable authorities.

Certain properties of the Company contain asbestos that may have to be remediated over time and it could be additional expense to the Company.

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The Company is subject to various other federal, state, and local laws affecting its business, as well as a variety of regulations relating to such matters as working conditions, equal employment opportunities, and product safety. A variety of state laws regulate the Company’s contractual relationships with its dealers, some of which impose restrictive standards on the relationship between the Company and its dealers, including events of default, grounds for termination, non-renewal of dealer contracts, and equipment repurchase requirements.

If we are unable to comply with the terms of our credit arrangements, especially the financial covenants, our credit arrangements could be terminated.

We cannot assure you that we will be able to comply with all of the terms of our credit arrangements, especially the financial covenants. Our ability to comply with such terms depends on the success of our business and our operating results. Various risks, uncertainties, and events beyond our control could affect our ability to comply with the terms of our credit arrangements. If we were out of compliance with any covenant required by our credit arrangements following any applicable cure periods, the banks could terminate their commitments unless we could negotiate a covenant waiver. The banks could condition such waiver on amendments to the terms of our credit arrangements that may be unfavorable to us, including, a potential increase to the interest rate we currently pay on outstanding debt under our credit arrangements could increase, which could adversely affect our operating results.

Fluctuations in currency exchange rates may adversely affect our financial results.

Our earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies, predominantly in European countries, Canada and Australia, as a result of the sale of our products in international markets. While we do hedge against such fluctuations to an extent (primarily in the U.K. market), we cannot assure you that we will be able to effectively manage these risks. Significant long-term fluctuations in relative currency values, such as a devaluation of the Euro against the U.S. dollar, could have an adverse effect on our future results of operations or financial condition.

Risks related to investing in our common stock

Because the price of our common stock may fluctuate significantly and its trading volume has generally been low, it may be difficult for you to resell our common stock when desired or at attractive prices.

The trading price of our common stock has and may continue to fluctuate. The closing prices of our common stock on the New York Stock Exchange during 2013 ranged from $60.69 to $33.89 per share, and during 2012 from $34.07 to $26.20 per share. Our stock price may fluctuate in response to the risk factors set forth herein and to a number of events and factors, such as quarterly variations in operating and financial results, litigation, changes in financial estimates and recommendations by securities analysts, the operating and stock performance of other companies that investors may deem comparable to us, news reports relating to us or trends in our industry or general economic conditions. Furthermore, the trading volume of our common stock has generally been low, which may increase the volatility of the market price for our stock. The stock price volatility and low trading volume may make it difficult for you to resell your shares of our common stock when desired or at attractive prices.

You may experience dilution of your ownership interests due to the future issuance of additional shares of our common stock.

We may issue shares of our previously authorized and unissued securities which will result in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue 20,000,000 shares of common stock. On December 31, 2013, 12,123,083 shares of our common stock were issued and outstanding, and there were outstanding options and restricted stock awards totaling an additional 417,774 shares of our common stock. We also have additional shares available for grant under our 2005 Incentive Stock Option Plan and our 2009 Equity Incentive Plan. Additional stock option or other compensation plans or amendments to existing plans for employees and directors may be adopted. Issuance of these shares of common stock may dilute the ownership interests of our then existing stockholders. We may also issue additional shares of our common stock in connection with the hiring of personnel, future acquisitions, such as the 1,700,000 shares issued as consideration for the acquisition of Bush Hog in 2009, future private placements of our securities for capital raising purposes or for other business purposes. This would further dilute the interests of our existing stockholders.

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There is no assurance that we will continue declaring dividends or have the available cash to make dividend payments.

On January 2, 2013, the Board of Directors of the Company increased its quarterly dividend from $.06 per share to $.07 per share. Although we have paid a cash dividend in each quarter since becoming a public company in 1993, there can be no assurance that we will continue to declare dividends or that funds will continue to be available for this purpose in the future. The declaration and payment of dividends are restricted by the terms of our amended and restated revolving credit agreement, are subject to the discretion of our Board of Directors, are not cumulative, and will depend upon our profitability, financial condition, capital needs, future prospects, and other factors deemed relevant by our Board of Directors.

Provisions of our corporate documents may have anti-takeover effects that could prevent a change in control.

Provisions of our charter, bylaws and Delaware law could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. These provisions include supermajority voting requirements, prohibiting the stockholder from calling stockholder meetings, removal of directors for cause only and prohibiting shareholder actions by written consent. Our Certificate of Incorporation and By-laws state that any amendment to certain provisions, including those provisions regarding the removal of directors and limitations on action by written consent discussed above, be approved by the holders of at least two-thirds of our common stock. We are also afforded the protections of Section 203 of the Delaware General Corporation Law, which would prevent us from engaging in a business combination with a person who becomes a 15% or greater shareholder for a period of three years from the date such person acquired such status unless certain board or shareholder approvals were obtained.

Future sales, or the possibility of future sales, of a substantial amount of our common stock may depress the price of the shares of our common stock.

Future sales, or the availability for sale in the public market, of substantial amounts of our common stock could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through future sales of equity securities. If we or our existing stockholders sell substantial amounts of our common stock in the public market, or if there is a perception that these sales may occur, the market price of our common stock could decline.

Certain stockholders own a significant amount of our common stock, and their interests may conflict with those of our other stockholders.

As of December 31, 2013, Capital Southwest Corporation, and its subsidiary Capital Southwest Venture Corporation, beneficially owned approximately 23% of our outstanding common stock and, four other investors - Bgear LLC, Henry Crown and Company, Royce & Associates, LLC, and Dimensional Fund Advisors LP - beneficially own approximately 32% of our outstanding common stock. As a result, either Capital Southwest or the other major stockholders combined could be able to significantly influence the direction of the Company, the election of our Board of Directors and the outcome of any other matter requiring stockholder approval, including mergers, consolidations and the sale of all or substantially all of our assets, and together with other beneficially owned investors, to prevent or cause a change in control of the Company. Also, pursuant to contractual obligations, each of Capital Southwest Venture Corporation, Capital Southwest Corporation and Duroc LLC, an affiliate of Bgear LLC and Henry Crown and Company, was entitled to certain rights with respect to the registration of the common stock owned by them under the Securities Act. Pursuantto such registration rights, on March 12, 2012 we filed a registration statement related to the common stock owned by such entities and such registration statement was declared effective by the SEC. The interests of Capital Southwest and other major stockholders may conflict with the interests of our other stockholders.

Item 1B. Unresolved Staff Comments 

The Company has no unresolved staff comments to report pursuant to Item 1B.

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Item 2. Properties

As of December 31, 2013, the Company utilized nine principal manufacturing plants located in the United States, six in Europe, two in Canada, and one in Australia. The facilities are listed below:

Facility	Square Footage		Principal Types of Products Manufactured And Assembled
Selma, Alabama	767,700	Owned	Mechanical Rotary Mowers, Finishing Mowers, Zero Turn Radius Mowers, Backhoes, Front-end Loaders for Bush Hog
New Philadelphia, Ohio	430,000	Owned	Telescopic Excavators for Gradall and Vacuum Trucks for VacAll
Gibson City, Illinois	275,000	Owned	Mechanical Mowers, Blades, Post Hole Diggers, Deep Tillage Equipment, Front-end Loaders and Backhoes and other implements for, Rhino, Bush Hog and OEM's
Seguin, Texas	230,000	Owned	Hydraulic and Mechanical Rotary and Flail Mowers, Sickle-Bar Mowers, and Boom-Mounted Equipment for Alamo Industrial
Indianola, Iowa	200,000	Owned	Distribution and Manufacturing of Aftermarket Farm Equipment Replacement and Wear Parts for Herschel/Valu-Bilt
Neuville, France	195,000	Owned	Hydraulic and Mechanical Boom-Mounted Hedge and Grass Cutters for Rousseau and SMA
Ludlow, England	160,000	Owned	Hydraulic Boom-Mounted Hedge and Grass Cutters and other Equipment for McConnel and Twose
Salford Priors, England	157,000	Owned	Tractor-Mounted Power Arm Flails and other Equipment for Bomford and Twose and Spearhead
Chartres, France	136,000	Owned	Front-end Loaders, Backhoes and Attachments for Faucheux and McConnel
Huntsville, Alabama	136,000	Owned	Air and Mechanical Sweeping Equipment for Schwarze
St. Valerien, Quebec, Canada	100,000	Owned	Snow and Ice Removal Equipment for Tenco
Daumeray, France	100,000	Leased	Vacuum trucks, high pressure cleaning systems and trenchers for Rivard
Englefeld, Saskatchewan, Canada	85,000	Owned	Mechanical Rotary Mowers, Snow Blowers, and Rock Removal Equipment for Schulte
Leavenworth, Kansas	70,000	Owned	Snow Plows and Heavy-duty Snow Removal Equipment for Henke
Sioux Falls, South Dakota	66,000	Owned	Hydraulic and Mechanical Mowing Equipment for Tiger
Kent, Washington	42,800	Leased	Truck Mounted Sweeping Equipment for the contractor market branded Nite-Hawk
Peschadoires, France	22,000	Owned	Replacement Parts for Blades, Knives and Shackles for Forges Gorce
Wacol, Australia	18,000	Leased	Agriculture mowing equipment and other attachments for Superior
Ipswich, Australia	15,000	Leased	Air and Mechanical Sweeping Equipment for Schwarze
Installation Facilities, Warehouses & Sales	72,000	Leased	Services Parts Distribution, Installation Facilities and Sales Office
Offices, Seguin, Texas	10,400	Owned	Corporate Office
Total	3,287,900	0.9246327443

20

Approximately92% of the manufacturing, warehouse and office space is owned. In July of 2012, the Company closed its SMC manufacturing facility located in Sioux Falls, South Dakota and consolidated the operations into the Company's Gibson City, Illinois facility. The Company has entered into a contract to sell the SMC plant for $900,000 and anticipates a gain on the sale of the facility which is expected to close in the second quarter of 2014. The Company considers this facility to be well maintained, in good operating condition and adequate for its present level of operations. The Company's Memphis warehouse totaling 28,000 sq. ft. was sold during the first quarter of 2013.

Item 3. Legal Proceedings

Like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws and requirements, including those concerning air emissions, discharges into waterways, and the generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances at the Company’s facilities and off-site disposal locations, workplace safety and equal employment opportunities. These laws and regulations are constantly changing, and it is impossible to predict with accuracy the effect that changes to such laws and regulations may have on the Company in the future. Like other industrial concerns, the Company’s manufacturing operations entail the risk of noncompliance, and there can be no assurance that the Company will not incur material costs or other liabilities as a result thereof.

The Company knows that its Indianola, Iowa property is contaminated with chromium which most likely resulted from chrome plating operations which were discontinued before the Company purchased the property. Chlorinated volatile organic compounds have also been detected in water samples on the property, though the source is unknown at this time. The Company voluntarily worked with an environmental consultant and the state of Iowa with respect to these issues and believes it completed its remediation program in June 2006. The work was accomplished within the Company’s environmental liability reserve balance. We requested a “no further action” classification from the state. We received a conditional “no further action” letter in January of 2009. When we demonstrate stable or improving conditions below residential standards for a certain period of time by monitoring existing wells, we will request an unconditional “no further action” letter.

The Company knows that Bush Hog’s main manufacturing property in Selma, Alabama was contaminated with chlorinated volatile organic compounds which most likely resulted from painting and cleaning operations during the 1960s and 1970s. The contaminated areas were primarily in the location of underground storage tanks and underneath the former waste storage area. Under the Asset Purchase Agreement, Bush Hog’s prior owner agreed to and has removed the underground storage tanks at its cost and has remediated the identified contamination in accordance with the regulations of the Alabama Department of Environmental Management. An environmental consulting firm was retained by the prior owner to administer the cleanup and monitor the site on an ongoing basis until the remediation program is complete and approved by the applicable authorities.

Certain properties of the Company contain asbestos that may have to be remediated over time. The Company believes that any subsequent change in the liability associated with the asbestos removal will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

In December of 2012, a federal district court jury in Louisiana found that Gradall was unjustly enriched in the amount of $1,000,000 plus interest when it sold several telescopic fire apparatuses after properly terminating what the jury determined to be an enforceable contract with the plaintiff, a fire truck manufacturer. Gradall is appealing the decision and has reserved the full amount.

Alamo Group Inc.  and Bush Hog, Inc. were added as defendants in 2013 to ongoing litigation by Deere & Company as plaintiff against Bush Hog, LLC (now Duroc, LLC) and Great Plains Manufacturing Incorporated, in which Deere alleged infringement of a mower-related patent. The jury concluded that not only did the defendants not infringe the patent but that the patent was invalid as well. The Company expensed $2,100,000 in legal fees related to this lawsuit in 2013.

Some of the former employees of SMA in Orleans, France, contested the severance offered by the Company as a result of the closure of that facility in 2010 and were awarded additional payments by a French labor court. The Company is appealing the award but did accrue the full exposure of the severance.

21

The Company is subject to various other federal, state, and local laws affecting its business, as well as a variety of regulations relating to such matters as working conditions, equal employment opportunities, and product safety. A variety of state laws regulate the Company’s contractual relationships with its dealers, some of which impose restrictive standards on the relationship between the Company and its dealers, including events of default, grounds for termination, non-renewal of dealer contracts, and equipment repurchase requirements. The Company believes it is currently in material compliance with all such applicable laws and regulations.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s common stock trades on the New York Stock Exchange under the symbol: ALG. On February 28, 2014, there were 12,126,783 shares of common stock outstanding, held by approximately 79 holders of record, but the total number of beneficial owners of the Company’s common stock exceeds this number. On February 28, 2014, the closing price of the common stock on the New York Stock Exchange was $52.58 per share.

The following table sets forth, for the period indicated, on a per share basis, the range of high and low sales prices for the Company’s common stock as quoted by the New York Stock Exchange. These price quotations reflect inter-dealer prices, without adjustment for retail markups, markdowns or commissions, and may not necessarily represent actual transactions.

2013								2012
					Cash								Cash
	Sales Price				Dividends				Sales Price				Dividends
Quarter Ended	High		Low		Declared			Quarter Ended	High		Low		Declared
March 31, 2013	$	40.64	$	33.12		$	.07	March 31, 2012	$	30.93	$	25.51		$	.06
June 30, 2013	44.13		37.39			.07		June 30, 2012	34.23		29.40			.06
September 30, 2013	49.45		40.48			.07		September 30, 2012	34.00		27.07			.06
December 31, 2013	61.27		45.51			.07		December 31, 2012	34.63		29.66			.06

The Company expects to continue its policy of paying regular cash dividends, although there is no assurance as to future dividends as they depend on future earnings, capital requirements and financial condition. In addition, the payment of dividends is subject to restrictions under the Company’s bank revolving credit agreement. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” in Item 7 of Part II of this Annual Report on Form 10‑K for a further description of the bank revolving credit agreement.

The Company was authorized by its Board of Directors in 1997 to repurchase up to 1,000,000 shares of the Company’s common stock to be funded through working capital and credit facility borrowings. There were no shares repurchased in 2012 or in 2013. The authorization to repurchase up to 1,000,000 shares remains available, less 42,600 shares previously purchased.

Information relating to compensation plans under which equity securities of the Company are authorized for issuance is set forth in Part III, Item 12 of this Annual Report on Form 10-K.

22

Stock Price Performance Graph

The information contained in this Stock Performance Graph section shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act except to the extent that Alamo Group Inc. specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act.

The following graph and table set forth the cumulative total return to the Company's stockholders of our Common Stock  during a five-year period ended December 31, 2013, as well as the performance of an overall stock market index (the S&P 500 Index) and the Company's selected peer group index (the Russell 2000 Index).

The Company believes a representative industry peer group of companies with a similar business segment profile does not exist. The SEC has indicated that companies may use a base other than industry or line of business for determining its peer group index, such as an index of companies with similar market capitalization. Accordingly, the Company has selected the Russell 2000 Index, a widely used small market capitalization index, to use as a representative peer group.

*$100 invested on 12/31/08 in stock or index, including reinvestment of dividends.

Fiscal year ending December 31.

Copyright© 2014 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

Copyright© 2014 Russell Investment Group. All rights reserved.

	December 31, 2008	December 31, 2009	December 31, 2010	December 31, 2011	December 31, 2012	December 31, 2013
Alamo Group Inc.	100.00	116.89	191.74	187.42	228.94	428.69
S&P 500	100.00	126.46	145.51	148.59	172.37	228.19
Russell 2000	100.00	127.17	161.32	154.59	179.86	249.69

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Item 6. Selected Financial Data

The following selected financial data is derived from the consolidated financial statements of Alamo Group Inc. and its subsidiaries. The data should be read in conjunction with the consolidated financial statements, related notes and other financial information included herein.

				Fiscal Year Ended December 31, (1)
(in thousands, except per share amounts)	2013			2012			2011			2010			2009
Operations:
Net sales	$	676,836		$	628,402		$	603,593		$	538,548		$	454,825
Income before income taxes	51,388			43,446			48,129			29,032			31,106
Net income	36,094			28,903			32,687			21,117			18,633
Percent of sales	5.3		%	4.6		%	5.4		%	3.9		%	4.1		%
Earnings per share
Basic	3.00			2.43			2.76			1.79			1.80
Diluted	2.96			2.40			2.73			1.78			1.80
Dividends per share	0.28			0.24			0.24			0.24			0.24
Average common shares
Basic	12,050			11,899			11,848			11,782			10,330
Diluted	12,212			12,058			11,966			11,893			10,363
Financial Position:
Total assets	$	438,476		$	404,339		$	381,665		$	370,983		$	379,957
Short-term debt and current maturities	420			588			1,190			2,319			5,453
Long-term debt, excluding current maturities	8			118			8,621			23,106			44,336
Stockholders’ equity	$	350,465		$	310,286		$	277,276		$	253,260		$	236,919

(1)   Includes the results of operations of companies acquired from the effective dates of acquisitions.

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Item 7. Management’s Discussion and Analysis of Financial Condition

And Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements of the Company and the notes thereto included elsewhere in this Annual Report on Form 10-K.

The following tables set forth, for the periods indicated, certain financial data:

	Fiscal Year Ended December 31,
Net sales (data in thousands):	2013			2012			2011
North American
Industrial	$	296,617		$	263,353		$	229,594
Agricultural	215,340			200,467			203,993
European	164,879			164,582			170,006
Total net sales	$	676,836		$	628,402		$	603,593
Cost and profit margins, as percentages of net sales:
Cost of sales	76.6		%	77.2		%	77.6		%
Gross profit	23.4		%	22.8		%	22.4		%
Selling, general and administrative expenses	15.9		%	15.5		%	15.3		%
Income from operations	7.5		%	7.2		%	8.2		%
Income before income taxes	7.6		%	6.9		%	8.0		%
Net income	5.3		%	4.6		%	5.4		%

Results of Operations

Fiscal 2013 compared to Fiscal 2012

The Company’s net sales in the fiscal year ended December 31, 2013 (“2013”) were $676,836,000, an increase of $48,434,000 or 7.7% compared to $628,402,000 for the fiscal year ended December 31, 2012 (“2012”). The increase was mainly from improved sales in the Company's North American and Agricultural Divisions. The Industrial Division was up 12.6% as sales of all product lines increased over 2012. Likewise, sales in the Agricultural Division were up 7.4% over last year as mowing products for all three major brands showed improvement. Sales in the European Division were slightly up compared to 2012 as markets for our products showed increases in the second half of 2013 for the first time in several years.

North American Industrial sales (net) were $296,617,000 in 2013 compared to $263,353,000 in 2012, an increase of $33,264,000 or 12.6%. The increase was primarily from higher sales of sweepers, excavator, vacuum trucks and snow equipment as demand for infrastructure maintenance equipment was strong for most of 2013.

North American Agricultural sales (net) were $215,340,000 in 2013 compared to $200,467,000 in 2012, representing an increase of $14,873,000 or 7.4%. The increase in sales compared to 2012 was from improved demand for Bush Hog, Schulte and Rhino products in the agricultural market in North America. Favorable weather conditions during the middle of 2013 helped improve sales to both row crop and hobby farmers. Commodity prices retreated somewhat during the year from levels experienced over prior years, but still remain strong.

European sales (net) increased $297,000 or 0.2% to $164,879,000 in 2013 compared to $164,582,000 in 2012. This slight increase was mainly from improved sales during the last half of 2013 as European markets showed some signs of improvement after being in decline for the last several years. However, challenging market conditions and uncertainty in the European economy continued to affect this Division.

25

Gross margins for 2013 were $158,510,000 (23.4% of net sales) compared to $143,512,000 (22.8% of net sales) in 2012, an increase of $14,998,000. The increase was from higher sales volume during 2013 which led to favorable production efficiencies. Increased lower margin tractor and chassis sales combined with lower sales of higher margin replacement parts negatively affecting the gross profit in 2013.

Selling, general and administrative expenses (“SG&A”) were $107,773,000 (15.9% of net sales) in 2013 compared to $97,507,000 (15.5% of net sales) in 2012. The increase of $10,266,000 in SG&A in 2013 was primarily litigation expenses from a patent infringement lawsuit, which we were successful in defending, in the amount of $2,137,000, $972,000 of acquisition related expenses and $586,000 of additional stock option expense related to the accelerated vesting of options to retirement eligible recipients. Also during 2013, the Company had restructuring costs at one of its French operations, higher performance based incentive compensation expense, increased sales commissions on higher sales and increased trade show expenses in both North America and Europe.

Interest expense for 2013 was $1,161,000 compared to $1,620,000 in 2012, a decrease of $459,000 or 28.3%. The decrease came from reduced borrowings in 2013 compared to 2012.

Other income (expense), net was income of $1,626,000 during 2013 compared to an expense of $517,000 in 2012. The income in 2013 included a grant of $475,000 from the UK government related to R&D training and employment, a $70,000 gain realized from the sale of the Company's Memphis warehouse in the first quarter of 2013 and fluctuations in foreign exchange rates. In 2012 the expense was entirely the result of foreign exchange rate fluctuations.

Provision for Income Taxes was $15,294,000 (29.8% of income before income taxes) for 2013 compared to $14,543,000 (33.5% of income before income taxes) in 2012. Due to the delay in signing the American Taxpayer Relief Act of 2012 which extended the research and development tax credits, the Company was not able to include $350,000 of tax credits in its 2012 financial statements but instead recognized this tax benefit in the first quarter of 2013. Also included in the 2013 provision is a credit related to the reversal of reserves for uncertain tax positions and a tax benefit relating to current losses in one of our French companies.

Net Income for 2013 was $36,094,000 compared to $28,903,000 in 2012 due to the factors described above.

Fiscal 2012 compared to Fiscal 2011

The Company’s net sales in the fiscal year ended December 31, 2012 (“2012”) were $628,402,000, an increase of $24,809,000 or 4.1% compared to $603,593,000 for the fiscal year ended December 31, 2011 (“2011”). The increase was mainly due to the acquisition of Tenco in October of 2011 and improved sales of mowing and vacuum truck equipment in the Industrial Division. The Company's Agricultural Division was slightly down as agricultural markets experienced slower growth as farmers remained cautious about the weak U.S. economy. Sales in the European Division were also down in 2012 compared to 2011 as governmental markets remained soft due to the economic slowdown that has continued to affect Europe.

North American Industrial sales (net) were $263,353,000 in 2012 compared to $229,594,000 in 2011, an increase of $33,759,000 or 14.7%. The increase was from the acquisition of Tenco which contributed $21,444,000 of sales in 2012 compared to $6,950,000 in 2011, and improved sales from VacAll vacuum trucks and mowing equipment from both the Alamo Industrial and Tiger branded products. Sales of excavators and street sweepers were negatively affected by slower markets resulting from continued budget pressures at governmental entities.

North American Agricultural sales (net) were $200,467,000 in 2012 compared to $203,993,000 in 2011, representing a decrease of $3,526,000 or 1.7%. The decrease was from market conditions and the summer drought that affected the Midwest part of the U.S. during the first nine months of 2012.However, preseason orders during the last quarter of 2012 for both Bush Hog and Rhino products were up compared to 2011. This improvement reflected strengthening in the agricultural sector by increases in commodity prices and farm incomes.

26

European sales (net) decreased $5,424,000 or 3.2% to $164,582,000 in 2012 compared to $170,006,000 in 2011. This decrease reflected soft governmental market conditions that affected this Division for all of 2012. French markets in particular were down as economic uncertainty in the European economy negatively affected product sales in France.

Gross margins for 2012 were $143,512,000 (22.8% of net sales) compared to $135,085,000 (22.4% of net sales) in 2011, an increase of $8,427,000. The increase was from the acquisition of Tenco in the amount of $4,378,000 and improved vacuum trucks and mowers sales in the Company's Industrial Division. Gross margin percentages also improved over last year as a result of continued improvements from efficiency initiatives which helped lower manufacturing costs.

Selling, general and administrative expenses (“SG&A”) were $97,507,000 (15.5% of net sales) in 2012 compared to $92,347,000 (15.3% of net sales) in 2011. The increase of $5,160,000 in SG&A in 2012 was primarily from the acquisition of Tenco in the amount of $3,515,000. During the fourth quarter of 2012, the Company incurred $2,420,000 in expenses relating to various litigation matters. These additional SG&A expenses were partially offset by the reversal of an environmental reserve at Gradall in the amount of $1,185,000.

The Company incurred goodwill impairment non-cash charges of $656,000 in 2012 and $1,898,000 in 2011. In 2012, the Company wrote off all the goodwill at its French company Faucheux. In 2011, the Company wrote off all of the goodwill pertaining to two of its French companies, SMA and Rousseau. The primary reason for the goodwill impairment in 2012 and 2011 was the general economic downturn that continues to affect the Company's European operations.All three companies are part of its European Division.

Interest expense for 2012 was $1,620,000 compared to $2,422,000 in 2011, a decrease of $802,000 or 33.1% . The decrease came from reduced borrowings in 2012 compared to 2011.

Other income (expense), net was an expense of $517,000 during 2012 compared to income of $848,000 in 2011. The loss and gain in 2012 and 2011 were entirely from changes in exchange rates.

Provision for Income Taxes was $14,543,000 (33.5% of income before income taxes) for 2012 compared to $15,442,000 (32.1% of income before income taxes) in 2011. Due to the delay in signing the American Taxpayer Relief Act of 2012 which extended the research and development tax credits, the Company was not able to include these tax credits in its 2012 financial statements.This benefit will be recognized in the first quarter of 2013.

Net Income for 2012 was $28,903,000 compared to $32,687,000 in 2011 due to the factors described above.

Recent Developments

On February 24, 2014, the Company entered into an agreement to acquire the operating units of Specialized Industries, LP. This includes the businesses of Super Products LLC, Wausau-Everest LP and Howard P. Fairfield LLC (the “Pending Acquisition”). Super Products is a manufacturer of vacuum trucks and related equipment, parts and service, which is complementary to Alamo’s VacAll operation. Wausau-Everest is a manufacturer of snow removal equipment which is complementary to Alamo’s Tenco and hence operations. Howard P. Fairfield is a dealer/distribution operation primarily in the New England area. Total consideration for the purchase is approximately $186 million, subject to certain adjustments. The purchase is anticipated to close within 30 to 45 days and is subject to receiving regulatory approval and completion of other pre-closing requirements.

Liquidity and Capital Resources

In addition to normal operating expenses, the Company has ongoing cash requirements which are necessary to conduct the Company’s business, including inventory purchases and capital expenditures. The Company’s inventory and accounts payable levels, particularly in its North American Agricultural Division, build in the first quarter and early spring and, to a lesser extent, in the fourth quarter in anticipation of the spring and fall selling seasons. Accounts receivable historically build in the first and fourth quarters of each year as a result of pre-season sales. These sales help balance the Company’s production during the first and fourth quarters. Some of the Company’s recent acquisitions which are not involved in vegetation maintenance have helped to soften this seasonality pattern.

27

As of December 31, 2013, the Company had working capital of $256,332,000, which represents an increase of $27,660,000 from working capital of $228,672,000 as of December 31, 2012. The increase in working capital was primarily from cash and cash equivalents as the Company experienced solid cash flow from its operations .

Capital expenditures were $13,639,000 for 2013, compared to $4,654,000 for 2012. The increase in 2013 was primarily related to plant expansions at both the Bomford facility in the U.K. and the Schulte facility in Canada. The Company expects to fund capital expenditures from operating cash flows or through its revolving credit facility, described below.

The Company was authorized by its Board of Directors in 1997 to repurchase up to 1,000,000 shares of the Company’s common stock to be funded through working capital and credit facility borrowings. There were no shares repurchased in 2012 or in 2013. The authorization to repurchase up to 1,000,000 shares remains available less 42,600 shares previously purchased.

The Company has $44,922,000 in cash and cash equivalents held by its foreign subsidiaries as of December 31, 2013. The majority of these funds are at our UK and Canadian facilities and would not be available for use in the United States without incurring US federal and state tax consequences. The Company plans to use these funds for capital expenditures or acquisitions outside the United States.  

During the fourth quarter of 2011, the Company announced its plans to close the SMC manufacturing facility located in Sioux Falls, South Dakota and consolidate the operations into the Company's Gibson City, Illinois facility. The closure resulted in a pretax charge of $867,000 in redundancy costs. The Company completed the consolidation in July of 2012 with no additional costs. The Company has entered into a contract to sell the SMC plant for $900,000 and anticipates a gain on the sale of the facility which is expected to close in the second quarter of 2014.

Net cash provided by operating activities was $31,627,000 for 2013, compared to $51,263,000 for 2012. The decrease of cash from operating activities resulted from sales driven increases in accounts receivable levels.

Net cash used by financing activities was $2,484,000 for 2013, compared to net cash used of $9,942,000 for 2012. The net cash used in both years was repayment of amounts borrowed from our bank credit facility due to cash provided by operating activities.

The Company maintains a revolving credit facility with certain lenders under its Amended and Restated Revolving Credit Agreement. The aggregate commitments from lenders under such revolving credit facility is $100,000,000 and, subject to certain conditions, the Company has the option to request an increase in aggregate commitments of up to an additional $50,000,000. The revolving credit agreement requires us to maintain various financial covenants including a minimum EBIT to interest expense ratio, a minimum leverage ratio and a minimum asset coverage ratio. The agreement also contains various covenants relating to limitations on indebtedness, limitations on investments and acquisitions, limitations on sale of properties and limitations on liens and capital expenditures. The revolving credit agreement also contains other customary covenants, representations and events of defaults. As of December 31, 2013, the Company was in compliance with the covenants under the revolving credit facility. The expiration date of the revolving credit facility is March 28, 2016. As of December 31, 2013, no amounts were outstanding under the revolving credit facility. On December 31, 2013, $722,000 of the revolver capacity was committed to irrevocable standby letters of credit issued in the ordinary course of business as required by vendors' contracts resulting in $99,278,000 in available borrowings. As of December 31, 2013, the Company is in compliance with the terms and conditions of its credit facilities.

The Company is planning on amending its revolving credit facility and increasing its line of credit from $100 million to $250 million to accommodate the Pending Acquisition and meet the ongoing needs of the combined entities.

Management believes the bank credit facility and the Company’s ability to internally generate funds from operations should be sufficient to meet the Company’s cash requirements for the foreseeable future. However, challenges affecting the banking industry and credit markets in general can potentially cause changes to credit availability, which creates a level of uncertainty.

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Inflation

The Company believes that inflation generally has not had a material impact on its operations or liquidity. The Company is exposed to the risk that the price of energy, steel and other purchased components may increase and the Company may not be able to increase the price of its products correspondingly. If this occurs, the Company’s results of operations would be adversely impacted.

Recent Accounting Pronouncements and Legislative Changes

In July 2013, the provisions of Accounting Standards Codification Topic 740, “Income Taxes,” were amended to provide specific guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendment requires entities to present an unrecognized tax benefit as a reduction to the deferred tax asset generated by the net operating loss carryforward, similar tax loss, or tax credit carryforward, if such items are available to be used to offset the unrecognized tax benefit. These provisions are effective for interim and annual reporting periods beginning after December 15, 2013 and should be applied prospectively to all unrecognized tax benefits that exist at the effective date, with retrospective application permitted.

On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012 (the “ATR Act”) which included an extension of the federal research and development credit retroactively to 2012 and prospectively through 2013. The effects of the ATR Act are recognized in 2013. 

The SEC adopted the conflict mineral rules under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act on August 22, 2012. The rules require public companies to disclose information about their use of specific minerals originating from and financing armed groups in the Democratic Republic of the Congo or adjoining countries. The conflict mineral rules cover minerals frequently used to manufacture a wide array of electronic and industrial products including semiconductor devices. The rules do not ban the use of minerals from conflict sources, but require public disclosure beginning with calendar year 2013. We have determined that we are subject to the rules and are evaluating our supply chain and continue to develop processes to assess the impacts and comply with the regulation.

Off-Balance Sheet Arrangements

The Company does not have any obligation, under any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, that has or is reasonably likely to have a material effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual and Other Obligations

The following table shows the Company’s approximate obligations and commitments to make future payments under contractual obligations as of December 31, 2013:

	Payment due by period
(in thousands)			Less than		1-3		3-5		More than
Contractual Obligations	Total		1 Year		Years		Years		5 Years
Long-term debt obligations	$	308	$	308	$	—	$	—	$	—
Capital lease obligations	120		112		8		—		—
Interest obligations	13		13		—		—		—
Operating lease obligations	3,346		1,507		1,442		397		—
Purchase obligations	83,105		83,105		—		—		—
Total	$	86,892	$	85,045	$	1,450	$	397	$	—

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Definitions:

(A) Long-term debt obligation means a principal payment obligation under long-term borrowings.

(B) Capital lease obligation means a principal payment obligation under a lease classified as a capital lease.

(C) Interest obligation represents interest due on long-term debt and capital lease obligations. Interest on long-term debt assumes all floating rates of interest remain the same as those in effect at December 31, 2013.

(D) Operating lease obligation means a payment obligation under a lease classified as an operating lease.

(E) Purchase obligation means an agreement to purchase goods or services that is enforceable and legally binding on the registrant that specifies all significant terms, including:  fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transactions.

Critical Accounting Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Critical Accounting Policies

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Management believes the following critical accounting policies reflect its more significant estimates and assumptions used in the preparation of the Consolidated Financial Statements. For further information on the critical accounting policies, see Note 1 of our Notes to Consolidated Financial Statements.

Allowance for Doubtful Accounts

The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations, the Company records a specific reserve to reduce the amounts recorded to what it believes will be collected. For all other customers, it recognizes reserves for bad debt based on historical experience of bad debts as a percent of revenues for each business unit, adjusted for relative improvements or deteriorations in the aging and changes in current economic conditions.

The Company evaluates all receivables that are over 60 days old and will reserve specifically on a 90-day basis. The Company has a secured or insured interest on most of its wholegoods that each customer purchases. This allows the Company, in times of a difficult economy when the customer is unable to pay or has filed for bankruptcy, to repossess its inventory. This also allows Alamo Group to maintain only a reserve over its cost, which usually represents the margin on the original sales price.

The allowance for doubtful accounts balance was $2,738,000 on December 31, 2013, and $3,077,000 on December 31, 2012. The decrease was mainly from the Company’s Industrial Division.

Sales Discounts

On December 31, 2013, the Company had $16,724,000 in reserves for sales discounts compared to $15,005,000 on December 31, 2012 on product shipped to our customers under various promotional programs. The increase was due primarily to increased sales volume of the Company’s agricultural products during the 2013 pre-season, which runs during the third and fourth quarters of each year with orders shipped through the second quarter of 2014. The Company reviews the reserve quarterly based on analysis made on each program outstanding at the time.

The Company bases its reserves on historical data relating to discounts taken by the customer under each program. Historically, between 85% and 95% of the Company’s customers who qualify for each program actually take the discount that is available.

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Inventories – Obsolete and Slow Moving

The Company had a reserve of $8,596,000 on December 31, 2013 and $9,099,000 on December 31, 2012 to cover obsolete and slow moving inventory. The decrease in the reserve was mainly from the Industrial Division and to a lesser extent the Company's Agricultural Division. The obsolete and slow moving inventory policy states that the reserve is to be calculated as follows: 1) no inventory usage over a three-year period is deemed obsolete and reserved at 100 percent; and 2) slow moving inventory with little usage requires a 100 percent reserve on items that have a quantity greater than a three-year supply. There are exceptions to the obsolete and slow moving classifications if approved by an officer of the Company, based on specific identification of an item or items that are deemed to be either included or excluded from this classification. In cases where there is no historical data, management makes a judgment based on a specific review of the inventory in question to determine what reserves, if any, are appropriate. New products or parts are generally excluded from the reserve policy until a three-year history has been established.

The reserve is reviewed and, if necessary, adjustments are made on a quarterly basis. The Company relies on historical information when available to support its reserve. The Company does not adjust the reserve balance until the inventory is liquidated.

Warranty

The Company’s warranty policy is generally to provide its customers warranty for up to one year on all wholegood units and 90 days on parts, though some components can have warranty for longer terms.

Warranty reserve, as a percentage of sales, is generally calculated by looking at the current twelve months’ expenses and prorating that amount based on twelve months’ sales with a ninety-day to six-month lag period. The Company’s historical experience is that an end-user takes approximately 90 days to six months from the receipt of the unit to file a warranty claim. A warranty reserve is established for each different marketing group. Reserve balances are evaluated on a quarterly basis and adjustments made when required.

The current liability warranty reserve balance was $4,994,000 on December 31, 2013 and $5,007,000 on December 31, 2012.

Goodwill

We test goodwill for impairment annually, at the reporting unit level, and whenever events or circumstances make it likely that an impairment may have occurred, such as a significant adverse change in the business climate or a decision to sell all or a portion of a reporting unit. We perform our annual goodwill impairment test as of October 1 and monitor for interim triggering events on an ongoing basis. Goodwill is reviewed for impairment utilizing a qualitative assessment or a two-step process. We have an option to make a qualitative assessment of a reporting unit's goodwill for impairment. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. For reporting units where we perform the two-step process, the first step requires us to compare the fair value of each reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is higher than the fair value, there is an indication that an impairment may exist and the second step is required. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized as an impairment loss.

The Company estimates the fair value of its reporting units using a discounted cash flow analysis. This analysis requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The cash flows are estimated over a significant future period of time, which makes those estimates and assumptions subject to an even higher degree of uncertainty. The Company also utilizes market valuation models and other financial ratios, which require the Company to make certain assumptions and estimates regarding the applicability of those models to its assets and businesses. As of December 31, 2013, goodwill was $32,073,000, which represents 7% of total assets.

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The Company recognized no goodwill impairment in 2013. The Company recognized goodwill impairment at one of its French operations, Faucheux of $ 656,000 in 2012 and at two of its French operations, SMA and Rousseau of$1,898,000 in 2011. The primary reason for the goodwill impairment in 2012 and 2011 was the general economic downturn that continues to affect the Company's European operations. This caused the Company to revise its expectations about future revenue, which is a significant factor in the discounted cash flow analysis used to estimate the fair value of the Company's reporting units. During the 2013 impairment analysis review, we performed a sensitivity analysis for goodwill impairment with respect to each of our reporting units and determined that a hypothetical 15% decline in the fair value of each reporting unit as of December 31, 2013 would not result in an impairment of goodwill for any of the reporting units. During the 2012 impairment analysis review, it was noted that even though the Schwarze and Rivard reporting units' fair value was above carrying value, it was not materially different. On December 31, 2013, there was approximately $6.9 million and $12.3 million of goodwill related to the Schwarze and Rivard reporting units, respectively. These reporting units would be most likely affected by changes in the Company’s assumptions and estimates. The calculation of fair value could increase or decrease depending on changes in the inputs and assumptions used, such as changes in the reporting unit’s future growth rates, discount rates, etc.

Management believes that the estimated valuations it arrived at are reasonable and consistent with what other marketplace participants would use in valuing the Company's components.  However, management cannot give any assurance that these market values will not change in the future.  For example, if discount rates demanded by the market increase, this could lead to reduced valuations under the income approach.  If the Company's projections are not achieved in the future, this could lead management to reassess their assumptions and lead to reduced valuations under the income approach.  If the market price of the Company's stock decreases, this could cause the Company to reassess the reasonableness of the implied control premium, which might cause management to assume a higher discount rate under the income approach which could lead to reduced valuations.  If future similar transactions exhibit lower multiples than those observed in the past, this could lead to reduced valuations under the similar transactions approach.  And finally, if there is a general decline in the stock market and particularly in those companies selected as comparable to the Company's components, this could lead to reduced valuations under the public company market multiple approach.  The Company's annual impairment test is performed during the fourth quarter of each fiscal year.  Given the current market conditions and continued economic uncertainty, the fair value of the Company's components could deteriorate which could result in the need to record impairment charges in future periods.  The Company also monitors potential triggering events including changes in the business climate in which it operates, attrition of key personnel, volatility in the capital markets, the Company's market capitalization compared to its book value, the Company's recent operating performance, and the Company's financial projections.  The occurrence of one or more triggering events could require additional impairment testing, which could result in future impairment charges.  In particular, since the Schwarze and Rivard, reporting units' carrying value are not materially different from fair value, any changes to the Company's assumptions could lead to an indicated impairment in step one, requiring the Company to proceed to step two and potentially record an impairment charge. See Note 6 to the Consolidated Financial Statements for more information regarding goodwill.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to various financial market risks. Market risk is the potential loss arising from adverse changes in market prices and rates. The Company does not enter into derivative or other financial instruments for trading or speculative purposes.

Foreign Currency Risk

International Sales

A portion of the Company’s operations consists of manufacturing and sales activities in international jurisdictions. The Company manufactures its products primarily in the United States, the U.K., France, Canada and Australia. The Company sells its products primarily within the markets where the products are produced, but certain of the Company’s sales from its U.K. and Canadian operations are denominated in other currencies. As a result, the Company’s financials, specifically the value of its foreign assets, could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the other markets in which the subsidiaries of the Company distribute their products.

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To mitigate the short-term effect of changes in currency exchange rates on the Company’s functional currency-based sales, the Company’s U.K. and Canadian subsidiaries regularly enter into foreign exchange contracts to hedge over 90% of its future net foreign currency cash receipts over a period of six months. As of December 31, 2013, the Company had $2,884,000 outstanding in forward exchange contracts related to accounts receivable. A 15% fluctuation in exchange rates for these currencies would change the fair value by approximately $433,000. However, since these contracts hedge foreign currency denominated transactions, any change in the fair value of the contracts should be offset by changes in the underlying value of the transaction being hedged.

On December 31, 2013, the fair value of these agreements was in an unfavorable position; therefore, the derivative financial instruments were recorded as a gain of $17,000, which has been recognized in other income (expense), net.

Exposure to Exchange Rates

The Company’s earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies, predominantly in European countries, Canada and Australia, as a result of the sale of its products in international markets. Foreign currency forward exchange contracts in the U.K. are used to hedge against the earnings effects of such fluctuations. On December 31, 2013, the result of a uniform 10% strengthening in the value of the U.S. dollar relative to the currencies in which the Company’s sales are denominated would have resulted in a decrease in gross profit of $5,475,000. Comparatively, on December 31, 2012, the result of a uniform 10% strengthening in the value of the dollar relative to the currencies in which the Company’s sales are denominated would have resulted in a decrease in gross profit of approximately $5,275,000. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effects of changes in exchange rates, which are a changed dollar value of the resulting sales, changes in exchange rates may also affect the volume of sales or the foreign currency sales price as competitors’ products become more or less attractive. The Company’s sensitivity analysis of the effects of changes in foreign currency exchange rates does not factor in a potential change in sales levels or local currency prices. The translation adjustment during 2013 was a loss of $479,000 . On December 31, 2013, the British pound closed at 0.6040 relative to the U.S. dollar, and the Euro closed at 0.7275 relative to the U.S. dollar. By comparison, on December 31, 2012, the British pound closed at 0.6155 relative to the U.S. dollar, and the Euro closed at 0.7579 relative to the U.S. dollar. No assurance can be given as to future valuation of the British pound or Euro or how further movements in those or other currencies could affect future earnings or the financial position of the Company.

Interest Rate Risk

The majority of the Company’s long-term debt bears interest at variable rates. Accordingly, the Company’s net income is affected by changes in interest rates. Assuming the average level of borrowings at variable rates and a two hundred basis point change in the 2013 average interest rate under these borrowings, the Company’s 2013 interest expense would have changed by approximately $50,000. In the event of an adverse change in interest rates, management could take actions to mitigate its exposure. Further, this analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment. However, challenges affecting the banking industry and credit markets in general can potentially cause changes to credit availability and cost of borrowing which creates a level of uncertainty.

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data described in Item 15 of this report and included on pages 45 through 76 of this report are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures. An evaluation was carried out, under the supervision and with the participation of Alamo’s management, including our President and Chief Executive Officer, Executive Vice President and Chief Financial Officer (Principal Financial Officer), and Vice President and Corporate Controller (Principal Accounting Officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as

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defined in Rule 13a-15(e) under the Securities Exchange Act of 1933). Based upon the evaluation, the President & Chief Executive Officer, Executive Vice President & Chief Financial Officer (Principal Financial Officer), and Vice President & Corporate Controller (Principal Accounting Officer) concluded that the Company’s disclosure controls and procedures were effective at the end of the period covered by this report.

Management’s Annual Report on Internal Control Over Financial Reporting. Management’s report on the Company’s internal control over financial reporting is included on page 42 of this Annual Report on Form 10-K and incorporated by reference herein. The Company’s independent public accounting firm has audited and issued a report on the Company’s internal control over financial reporting which is included on page 43 of this Annual Report on Form 10-K and incorporated by reference herein.

Changes in Internal Controls over Financial Reporting. There have not been any changes in Alamo’s internal control over financial reporting (as such term is defined by paragraph (d) of Rule 13a-15) under the Securities Exchange Act during the fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, Alamo’s internal control over financial reporting.

Item 9B. Other Information

The following disclosure is made by Alamo Group Inc. (the “Company”) in lieu of disclosure on Form 8-K under Item 5.03, “Amendment of Articles of Incorporation or By-laws; Change in Fiscal Year.”

On March 6, 2014, the Board of Directors of the Company approved amendments (the “Amendments”) to the Company’s By-laws (the “By-laws”), effective March 6, 2014.

Article II, Section 2 of the By-laws was amended to clarify that the Board of Directors may postpone, reschedule or cancel any annual meeting of stockholders previously scheduled by the Board of Directors.

Article II, Section 4 of the By-laws was amended to clarify that the stockholders do not have a right to call a special meeting of stockholders. In addition, Article II, Section 4 was amended to provide that the Board of Directors may postpone, reschedule or cancel any special meeting of stockholders previously scheduled by the Board of Directors.

Article II, Section 7 of the By-laws was amended to clarify that the Chairman of the Board of Directors shall act as chairman of meetings of stockholders of the Company and that the Board of Directors may designate any other director or officer of the Company to act as chairman of any meeting in the absence of the Chairman.

Article II, Section 8 of the By-laws was amended to remove the specific order of business applicable to the conduct of stockholders’ meeting previously provided and to provide that the Board of Directors may adopt such rules and regulations for the conduct of any meeting of stockholders as it shall deem appropriate.

Article II of the By-laws was amended to add a new Section 13 that provides that no business may be transacted at an annual meeting of stockholders, other than business that is either (i) specified in the Company’s proxy materials with respect to such meeting given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (iii) otherwise properly brought before the annual meeting by any stockholder of the Company (A) who is a stockholder of record on the date of the giving of the notice provided for in Section 13 and on the record date for the determination of stockholders entitled to notice of and to vote at such annual meeting, (B) who is entitled to vote at such annual meeting and (C) who complies with the notice procedures set forth in Section 13. Section 13 provides that submission of a proposal in accordance with its provisions is the exclusive means by which a stockholder may present a proposal, other than matters that are properly brought under Rule 14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”). Section 13 provides, among other things, requirements as to the timing and form of any notice permitted thereunder.

Article II of the By-laws was amended to add a new Section 14 that provides procedures for nomination of directors. Section 14 states that nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any stockholder of the Company (A) who is a stockholder of record on the date of the giving of the notice provided for in Section 14 and on the record date for the determination of stockholders entitled to notice of and to vote at such meeting, (B) who is entitled to vote

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at such meeting and (C) who complies with the notice procedures. Section 14 provides, among other things, requirements as to the timing and form of any notice permitted thereunder.

Article II of the By-laws was amended to add a new Section 15 that provides that notwithstanding the provisions of Article II, Sections 13 and 14, a stockholder shall also comply with all applicable requirements of the Exchange Act.

Article VII, Section 1 of the By-laws was amended to provide that the Board of Directors may provide that all or some of all classes or series of stock of the Company may be uncertificated shares.

Article VII, Section 4 of the By-laws was amended to provide certain provisions applicable to the issuance or transfer of uncertificated stock.

Article VIII of the By-laws was amended to add a new Section 7, that provides that unless a majority of the Board of Directors, acting on behalf of the Company, consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court located within the State of Delaware or, if no state court within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for certain actions for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim against the Company or any of its directors, officers or other employees arising pursuant to any provision of the DGCL, the Company’s Certificate of Incorporation or the By-laws (in each case, as may be amended from time to time) or (iv) any action asserting a claim against the Company or any of its directors, officers or other employees governed by the internal affairs doctrine of the State of Delaware, in all cases subject to the court’s having personal jurisdiction over all indispensible parties named as defendants. New Section 7 further provides that any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Company is deemed to have notice of and consented to the foregoing provision.

The foregoing description of the Amendments does not purpose to be complete and is qualified in its entirety by reference to the By-laws, as amended, a copy of which is attached hereto as Exhibit 3.2 and incorporated by reference in its entirety.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

There are incorporated in this Item 10, by reference, those portion of the Company’s definitive proxy statement for the 2014 Annual Meeting of Stockholders, which appear therein under the captions “Proposal 1 -  Election of Directors,” “Nominees for Election to the Board of Directors,” “Information Concerning Directors,” “Meetings and Committees of the Board,” “The Audit Committee,” “The Nominating/Corporate Governance Committee” and “Section 16(a) Beneficial Ownership Reporting Compliance.”  See also the information under the caption “Executive Officers of the Company” in Part I of this Report.

The Board of Directors has delegated certain responsibilities to three Committees of the Board. The Committees are the Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee. The Board of Directors has also adopted Corporate Governance guidelines and a Code of Business Conduct and Ethics for all employees, including the Chief Executive Officer, Principal Financial Officer, Principal Accounting Officer and those individuals performing similar functions.

The Committee Charters, Code of Business Conduct and Ethics, and Corporate Governance Guidelines may be found on the Company’s website ( www.alamo-group.com) under the “Our Commitment” tab and are also available without charge in print by sending a request to the Corporate Secretary, Alamo Group Inc., 1627 E. Walnut Street, Seguin, Texas, 78155, which is the principal executive office of the Company. The telephone number is 830-379-1480. The Company will post any amendments to the Code of Conduct and Ethics, and any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange, on the Company’s website.

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Item 11. Executive Compensation

There are incorporated in this Item 11, by reference, those portions of the Company’s definitive proxy statement for the 2014 Annual Meeting of Stockholders which appear therein under the captions “Executive Compensation,” “The Compensation Committee,” “Compensation Discussion and Analysis,” Compensation Committee Report” and “Director Compensation during 2013.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

There is incorporated in this Item 12, by reference, that portion of the Company’s definitive proxy statement for the 2014 Annual Meeting of Stockholders which appears under the caption “Beneficial Ownership of Common Stock.”

Information on Alamo Group Inc.’s Equity Compensation Plans

The following table provides information on the shares that are available under the Company’s stock compensation plans and, in the case of plans where stock options may be granted, the number of shares of common stock issuable upon exercise of those stock options. The Company currently does not have an Equity Compensation Plan not approved by the Stockholders.

The numbers in the table are as of December 31, 2013, the last day of Alamo Group Inc.’s 2013 fiscal year.

	A	B	C
Equity Compensation Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of Securities that remain available for future issuance  under equity compensation plans (excluding securities reflected in column A)
Plans approved by stockholders
Amended and Restated 1994 Incentive Stock Option Plan	3,000	$17.85	—
First Amended and Restated 1999 Non-Qualified Stock Option Plan	49,700	$17.66	—
2005 Incentive Stock Option Plan	289,350	$26.78	66,100
2009 Equity Incentive Plan	75,724	$30.69	293,526
Plans not approved by stockholders	—	—	—
Total	417,774		359,626

Item 13. Certain Relationships, Related Transactions and Director Independence

Information regarding certain relationships and related transactions is set forth under the caption “Certain Relationships and Related Transactions” in the Company’s definitive proxy statement for the 2014 Annual Meeting of Stockholders and such information is incorporated by reference herein. There were no such reportable relationships or related party transactions in the fiscal year ended December 31, 2013. In 1999, the Company approved a supplemental retirement benefit for Donald J. Douglass which is paid on a quarterly basis over a period of fourteen and one-half years that began in the year 2000. The remaining balances on December 31, 2013 and 2012 were $40,000 and $115,000, respectively, and are included in the Accrued liabilities and Other long-term liabilities sections of the Company’s balance sheets.

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Information regarding director independence is set forth under the caption “Information Concerning Directors” in the Company’s definitive proxy statement for the 2014 Annual Meeting of Stockholders and such information is incorporated by reference herein.

Item 14. Principal Accountant Fees and Services

Information regarding principal accountant fees and services is set forth under the caption “Proposal 3 – Ratification of Appointment of Independent Auditors” in the Company’s definitive proxy statement for the 2014 Annual Meeting of Stockholders and such information is incorporated by reference herein.

PART IV

Item 15. Exhibits and Financial Statement Schedules

Financial Statements

	Page
Report of Management on Internal Control Over Financial Reporting	42
Reports of Independent Registered Public Accounting Firm (KPMG LLP)	43
Consolidated Balance Sheets	45
Consolidated Statements of Income	46
Consolidated Statements of Comprehensive Income	47
Consolidated Statements of Stockholders’ Equity	48
Consolidated Statements of Cash Flows	49
Notes to Consolidated Financial Statements	50

Financial Statement Schedules

All schedules for which a provision is made in the applicable accounting regulation of the Securities and Exchange Commission are omitted because they are not required or because the required information is included in the consolidated financial statements or notes thereto.

Exhibits

Exhibits – The following exhibits are incorporated by reference to the filing indicated or are included following the index to Exhibits.

INDEX TO EXHIBITS

			Incorporated by Reference
			From the Following
Exhibits		Exhibit Title	Documents
2.1	—	Asset Purchase Agreement, dated September 4, 2009, between Alamo Group Inc. and Bush Hog, LLC	Filed as Exhibit 2.1 to Form 8-K, September 10, 2009, as amended by Form 8-K/A, November 9, 2009
2.2	—	Membership Interests and Partnership Interests Purchase Agreement by and between Alamo Group (USA) Inc., as Purchaser, and Specialized Industries LP, as Seller Dated as of February 24, 2014	Filed as Exhibit 10.1 to Form 8-K, February 28, 2014
3.1	—	Certificate of Incorporation, as amended, of Alamo Group Inc.	Filed as Exhibit 3.1 to Form S-1, February 5, 1993
3.2	—	By-Laws of Alamo Group Inc. as amended	Filed Herewith

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10.1	—	Loan Agreement, dated April 30, 1969, between Douglass Industries, Inc. and Capital Southwest Corporation	Filed as Exhibit 10.6 to Form S-1, February 5, 1993
10.2	—	First Amendment to Loan Agreement, dated February 12, 1970, between Engler Manufacturing Corporation (formerly known as Douglass Industries, Inc.) and Capital Southwest Corporation	Filed as Exhibit 10.7 to Form S-1, February 5, 1993
10.3	—	Second Amendment to Loan Agreement, dated December 21, 1972, between Terrain King Corporation (formerly known as Engler Manufacturing Corporation and Douglass Industries, Inc.) and Capital Southwest Corporation	Filed as Exhibit 10.8 to Form S-1, February 5, 1993
10.4	—	Note and Warrant Purchase Agreement, dated October 15, 1971, among Terrain King Corporation and CSC Capital Corporation, First Dallas Capital Corporation and possibly an additional purchaser or purchasers	Filed as Exhibit 10.9 to Form S-1, February 5, 1993
10.5	—	Warrant Agreement, dated November 25, 1991, between Alamo Group Inc. and Capital Southwest Corporation	Filed as Exhibit 10.11 to Form S-1, February 5, 1993
10.6	—	Form of indemnification agreements with Directors of Alamo Group Inc.	Filed as Exhibit 10.1 to Form 10-Q, May 15, 1997
10.7	—	Form of indemnification agreements with certain executive officers of Alamo Group Inc.	Filed as Exhibit 10.2 to Form 10-Q, May 15, 1997
*10.8	—	Incentive Compensation Plan, adopted on December 9, 1997	Filed as Exhibit 10.14 to Form 10-K, March 31, 1998
*10.9	—	401(k) Restoration Plan for Highly Compensated Employees, adopted on December 9, 1997	Filed as Exhibit 10.15 to Form 10-K, March 31, 1998
*10.10	—	Amended and Restated 1994 Incentive Stock Option Plan adopted by the Board of Directors on July 7, 1999	Filed as Exhibit B to Schedule 14A, July 30, 1999
*10.11	—	First Amended and Restated 1999 Non-Qualified Stock Option Plan, adopted by the Board of Directors on February 13, 2001	Filed as Exhibit B to Schedule 14A, May 3, 2001
*10.12	—	2005 Incentive Stock Option Plan, adopted by the Board of Directors on May 4, 2005	Filed as Appendix E to Schedule 14A, May 4, 2005
*10.13	—	2009 Equity Incentive Plan, adopted by the Board of Directors on May 7, 2009	Filed as Exhibit 10.1 to Form 8-K, May 13, 2009
10.14		Amended and Restated Revolving Credit Agreement, dated August 25, 2004, between the Company and Bank of America, N.A., JPMorgan Chase Bank and Guaranty Bank	Filed as Exhibit 10.3 to Form 8-K, August 25, 2004
10.15	—	Third Amendment of the Amended and Restated Revolving Credit Agreement, dated February 3, 2006 between the Company and Bank of America, N.A., Chase Manhattan Bank, and Guaranty Bank	Filed as Exhibit 10.3 to Form 8-K, February 8, 2006
10.16	—	Fourth Amendment of the Amended and Restated Revolving Credit Agreement, dated March 30, 2006, between the Company and Bank of America, N.A., JPMorgan Chase Bank and Guaranty Bank	Filed as Exhibit 10.1 to Form 8-K, April 5, 2006
10.17	—	Fifth Amendment of the Amended and Restated Revolving Credit Agreement, dated May 7, 2007, between the Company and Bank of America, N.A., JPMorgan Chase Bank, Guaranty Bank and Rabobank	Filed as Exhibit 10.13 to Form 10 Q, May 7, 2007

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10.18	—	Sixth Amendment of and Waiver under Amended and Restated Revolving Credit Agreement, dated October 14, 2008, between the Company and Bank of America, N.A., JPMorgan Chase Bank, Guaranty Bank and Rabobank	Filed as Exhibit 10.12 to Form 10K, March 10, 2009
10.19	—	Seventh Amendment of the Amended and Restated Revolving Credit Agreement, dated November 5, 2009, between the Company and Bank of America, N.A., Wells Fargo Bank, N.A., BBVA Compass Bank, and Rabobank	Filed as Exhibit 10.1 to Form 10 Q, November 9, 2009
10.20	—	Eighth Amendment of the Amended and Restated Revolving Credit Agreement, dated March 28, 2011, between the Company and Bank of America, N.A., Wells Fargo Bank, N.A., BBVA Compass Bank, and Rabobank	Filed as Exhibit 10.1 to Form 8K, March 28, 2011
*10.21	—	Form of Restricted Stock Award Agreement under the 2009 Equity Incentive Plan	Filed as Exhibit 10.2 to Form 8-K, May 13, 2009
*10.22	—	Form of Restricted Stock Unit Award Agreement under the 2009 Equity Incentive Plan	Filed as Exhibit 10.3 to Form 8-K, May 13, 2009
*10.23	—	Form of Nonqualified Stock Option Agreement under the 2009 Equity Incentive Plan	Filed as Exhibit 10.4 to Form 8-K, May 13, 2009
*10.24	—	Form of Nonqualified Stock Option Agreement under the First Amended and Restated 1999 Nonqualified Stock Option Plan	Filed as Exhibit 10.5 to Form 8-K, May 13, 2009
*10.25	—	Form of Stock Option Agreement under the 2005 Stock Option Plan	Filed as Exhibit 10.6 to Form 8-K, May 13, 2009
10.26	—	Investor Rights Agreement, dated October 22, 2009, between Alamo Group Inc. and Bush Hog, LLC	Filed as Exhibit 10.25 to Form 10-K, March 12, 2011
*10.27	—	Supplemental Executive Retirement Plan	Filed as Exhibit 10.1 to Form 8-K, January 18, 2011
*10.28	—	Amended Incentive Compensation Plan	Filed as Exhibit 10.1 to Form 8-K, March 11, 2011
21.1	—	Subsidiaries of the Registrant	Filed Herewith
23.1	—	Consent of KPMG LLP	Filed Herewith
31.1	—	Certification by Ronald A. Robinson under Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
31.2	—	Certification by Dan E. Malone under Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
31.3	—	Certification by Richard J. Wehrle under Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
32.1	—	Certification by Ronald A. Robinson under Section 906 of the Sarbanes-Oxley Act of 2002	Filed Herewith
32.2	—	Certification by Dan E. Malone under Section 906 of the  Sarbanes-Oxley Act of 2002	Filed Herewith
32.3	—	Certification by Richard J. Wehrle under Section 906 of the  Sarbanes-Oxley Act of 2002	Filed Herewith
101.INS	—	XBRL Instance Document	Filed Herewith
101.SCH	—	XBRL Taxonomy Extension Schema Document	Filed Herewith
101.CAL	—	XBRL Taxonomy Extension Calculation Linkbase Document	Filed Herewith
101.LAB	—	XBRL Taxonomy Extension Label Linkbase Document	Filed Herewith
101.PRE	—	XBRL Taxonomy Extension Presentation Linkbase Document	Filed Herewith

39

101.DEF — XBRL Taxonomy Extension Definition Linkbase Document Filed Herewith

________________________________________________________________________________________________________________________

*Compensatory Plan

40

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.

		ALAMO GROUP INC.
Date:	March 11, 2014
		/s/ Ronald A. Robinson
		Ronald A. Robinson
		President & Chief Executive Officer

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 their capacities and on 11th day of March, 2014.

Signature	Title
/s/JAMES B. SKAGGS James B. Skaggs	Chairman of the Board & Director
/s/RONALD A. ROBINSON Ronald A. Robinson	President, Chief Executive Officer & Director (Principal Executive Officer)
/s/DAN E. MALONE Dan E. Malone	Executive Vice President & Chief Financial Officer (Principal Financial Officer)
/s/RICHARD J. WEHRLE Richard J. Wehrle	Vice President & Corporate Controller (Principal Accounting Officer)
/s/RODERICK R. BATY Roderick R. Baty	Director
/s/HELEN W. CORNELL Helen W. Cornell	Director
/s/JERRY E. GOLDRESS Jerry E. Goldress	Director
/s/DAVID W. GRZELAK David W. Grzelak	Director
/s/GARY L. MARTIN Gary L. Martin	Director

41

Report of Management on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2013 using the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the Company’s management concludes that, as of December 31, 2013, the Company’s internal controls over financial reporting were effective based on the framework in Internal Control – Integrated Framework.

KPMG LLP, an independent registered public accounting firm, has issued an attestation report on the effectiveness of internal control over financial reporting, which is included herein.

Date:	March 11, 2014	/s/Ronald A. Robinson
		President & Chief Executive Officer
		/s/Dan E. Malone
		Executive Vice President &
		Chief Financial Officer
		/s/Richard J. Wehrle
		Vice President & Corporate Controller
		Principal Accounting Officer

42

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders Alamo Group Inc:

We have audited Alamo Group Inc.’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Alamo Group Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Alamo Group Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Alamo Group Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and our report dated March 11, 2014 expressed an unqualified opinion on those consolidated financial statements.

	/s/KPMG LLP
San Antonio, Texas
March 11, 2014

43

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders Alamo Group Inc:

We have audited the accompanying consolidated balance sheets of Alamo Group Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Alamo Group Inc. and subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Alamo Group Inc.’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 11, 2014, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

	/s/KPMG LLP
San Antonio, Texas
March 11, 2014

44

Alamo Group Inc. and Subsidiaries

Consolidated Balance Sheets

	December 31,
(in thousands, except per share amounts)	2013			2012
ASSETS
Current assets:
Cash and cash equivalents	$	63,960		$	48,291
Accounts receivable, net	151,396			140,268
Inventories	109,104			108,758
Deferred income taxes	5,741			3,824
Prepaid expenses	5,129			5,659
Income tax receivable	1,623			—
Total current assets	336,953			306,800
Property, plant and equipment	158,376			146,454
Less:  Accumulated depreciation	(96,472		)	(89,653		)
	61,904			56,801
Goodwill	32,073			31,648
Intangible assets	5,500			5,500
Deferred income taxes	457			2,593
Other assets	1,589			997
Total assets	$	438,476		$	404,339
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	45,593		$	41,641
Income taxes payable	1,126			4,045
Accrued liabilities	33,482			31,601
Current maturities of long-term debt and capital lease obligations	420			588
Deferred income taxes	—			253
Total current liabilities	80,621			78,128
Long-term debt and capital lease obligation, net of current maturities	8			118
Accrued pension liabilities	2,538			9,871
Other long-term liabilities	3,494			3,646
Deferred income taxes	1,350			2,290
Stockholders’ equity:
Common stock, $.10 par value, 20,000,000 shares authorized;12,113,109 and 12,028,354 issued at December 31, 2013 and December 31, 2012, respectively	1,211			1,203
Additional paid-in capital	91,439			88,660
Treasury stock, at cost: 42,600 shares at December 31, 2013 and December 31, 2012	(426		)	(426		)
Retained earnings	255,203			222,480
Accumulated other comprehensive income (loss)	3,038			(1,631		)
Total stockholders’ equity	350,465			310,286
Total liabilities and stockholders’ equity	$	438,476		$	404,339

See accompanying notes.

45

Alamo Group Inc. and Subsidiaries

Consolidated Statements of Income

	Year Ended December 31,
(in thousands, except per share amounts)	2013			2012			2011
Net sales:
North American
Industrial	$	296,617		$	263,353		$	229,594
Agricultural	215,340			200,467			203,993
European	164,879			164,582			170,006
Total net sales	676,836			628,402			603,593
Cost of sales	518,326			484,890			468,508
Gross profit	158,510			143,512			135,085
Selling, general and administrative expenses	107,773			97,507			92,347
Gain on bargain purchase	—			—			(8,616		)
Goodwill impairment	—			656			1,898
Income from operations	50,737			45,349			49,456
Interest expense	(1,161		)	(1,620		)	(2,422		)
Interest income	186			234			247
Other income (expense), net	1,626			(517		)	848
Income before income taxes	51,388			43,446			48,129
Provision for income taxes	15,294			14,543			15,442
Net income	$	36,094		$	28,903		$	32,687
Net income per common share:
Basic	$	3.00		$	2.43		$	2.76
Diluted	$	2.96		$	2.40		$	2.73
Average common shares:
Basic	12,050			11,899			11,848
Diluted	12,212			12,058			11,966

See accompanying notes.

46

Alamo Group Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

			Year Ended December 31,
(in thousands, except per share amounts)			2013			2012			2011
Net income			$	36,094		$	28,903		$	32,687
Other comprehensive income (loss):
	Foreign currency translation adjustment		479			4,445			(2,788		)
	Unrealized gains on derivative instruments		—			—			144
	Net gain (loss) on pension and other postretirement benefits		6,706			(574		)	(6,533		)
		Other comprehensive income (loss) before income tax expense (benefit)	7,185			3,871			(9,177		)
		Income tax expense (benefit) related to items of other comprehensive income (loss)	(2,516		)	121			2,021
		Other comprehensive income (loss)	4,669			$	3,992		$	(7,156	)
Comprehensive income			$	40,763		$	32,895		$	25,531

47

Alamo Group Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total Stock- holders’ Equity
(in thousands)	Shares	Amount
Balance at December 31, 2010	11,830	$	1,187	$	84,377		$	(426	)	$	166,589		$	1,533		$	253,260
Net income	—	—		—			—			32,687			—			32,687
Translation adjustment	—	—		—			—			—			(2,788		)	(2,788		)
Unrealized derivative gain, net of taxes	—	—		—			—			—			144			144
Net actuarial loss arising during period net of taxes	—	—		—			—			—			(4,512		)	(4,512		)
Tax effect of non-qualified stock options	—	—		63			—			—			—			63
Stock-based compensation	—	—		986			—			—			—			986
Exercise of stock options	30	3		278			—			—			—			281
Dividends paid ($.24 per share)	—	—		—			—			(2,845		)	—			(2,845		)
Balance at December 31, 2011	11,860	$	1,190	$	85,704		$	(426	)	$	196,431		$	(5,623	)	$	277,276
Net income	—	—		—			—			28,903			—			28,903
Translation adjustment	—	—		—			—			—			4,445			4,445
Net actuarial loss arising during period net of taxes	—	—		—			—			—			(453		)	(453		)
Tax effect of non-qualified stock options	—	—		(102		)	—			—			—			(102		)
Stock-based compensation	—	—		940			—			—			—			940
Exercise of stock options	126	13		2,118			—			—			—			2,131
Dividends paid ($.24 per share)	—	—		—			—			(2,854		)	—			(2,854		)
Balance at December 31, 2012	11,986	$	1,203	$	88,660		$	(426	)	$	222,480		$	(1,631	)	$	310,286
Net income	—	—		—			—			36,094			—			36,094
Translation adjustment	—	—		—			—			—			479			479
Net actuarial gain arising during period net of taxes	—	—		—			—			—			4,190			4,190
Tax effect of non-qualified stock options	—	—		—			—			—			—			—
Stock-based compensation	—	—		1,501			—			—			—			1,501
Exercise of stock options	85	8		1,278			—			—			—			1,286
Dividends paid ($.24 per share)	—	—		—			—			(3,371		)	—			(3,371		)
Balance at December 31, 2013	12,071	$	1,211	$	91,439		$	(426	)	$	255,203		$	3,038		$	350,465

See accompanying notes.

Alamo Group Inc. and Subsidiaries

Consolidated Statements of Cash Flows

	Year Ended December 31,
(in thousands)	2013			2012			2011
Operating Activities
Net income	$	36,094		$	28,903		$	32,687
Adjustments to reconcile net income to cash provided by     operating activities:
Provision for doubtful accounts	31			253			992
Depreciation	8,898			9,948			10,418
Amortization of debt issuance	126			126			188
Gain on bargain purchase	—			—			(8,616		)
Goodwill impairment charge	—			656			1,898
Stock-based compensation	1,501			940			985
Excess tax benefits from stock-based payment arrangements	—			102			(63		)
Provision for deferred income tax expense (benefit)	(877		)	(405		)	850
Gain (Loss) on sale of equipment	(237		)	155			(263		)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(10,515		)	4,770			(15,152		)
Inventories	776			6,932			(8,680		)
Prepaid expenses and other	(925		)	(2,376		)	(72		)
Trade accounts payable and accrued liabilities	4,420			960			(4,162		)
Income taxes payable	(4,565		)	2,338			397
Other assets and liabilities, net	(3,100		)	(2,039		)	(740		)
Net cash provided by operating activities	31,627			51,263			10,667
Investing Activities
Acquisitions, net of cash acquired	(1,002		)	—			(6,536		)
Purchase of property, plant and equipment	(13,639		)	(4,654		)	(5,766		)
Proceeds from sale of property, plant and equipment	475			564			440
Net cash used in investing activities	(14,166		)	(4,090		)	(11,862		)
Financing Activities
Net change in bank revolving credit facility	—			(7,000		)	(14,000		)
Principal payments on long-term debt and capital leases	(399		)	(2,117		)	(2,570		)
Dividends paid	(3,371		)	(2,854		)	(2,845		)
Proceeds from sale of common stock	1,286			2,131			281
Excess tax benefits from stock-based payment arrangements	—			(102		)	63
Net cash provided by (used in) financing activities	(2,484		)	(9,942		)	(19,071		)
Effect of exchange rate changes on cash	692			772			311
Net change in cash and cash equivalents	15,669			38,003			(19,955		)
Cash and cash equivalents at beginning of the year	48,291			10,288			30,243
Cash and cash equivalents at end of the year	$	63,960		$	48,291		$	10,288
Cash paid during the year for:
Interest	$	1,118		$	1,837		$	2,295
Income taxes	21,580			13,533			15,247

See accompanying notes.

49

Alamo Group Inc.

Notes to Consolidated Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES

Description of the Business and Segments

The Company manufactures, distributes and services high quality tractor-mounted mowing and other vegetation maintenance equipment, street sweepers, excavators, vacuum trucks, snow removal equipment, pothole patchers, zero turn radius mowers, agricultural implements and related aftermarket parts and services.

The Company manages its business in three principal reporting segments: North American Agricultural, North American Industrial and European, which are discussed in Notes 15 and 16.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Alamo Group Inc. and its subsidiaries (the “Company” or “Alamo Group”), all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

 The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Judgments related to asset impairment and certain reserves are particularly subject to change. Actual results could differ from those estimates.

Foreign Currency

The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the end of the year. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive income within the statement of stockholders’ equity.

The Company enters into foreign currency forward contracts to hedge its exposure to certain foreign currency transactions. The Company does not hold or issue financial instruments for trading purposes. Changes in the market value of the foreign currency instruments are recognized in the financial statements upon settlement of the hedged transaction. On December 31, 2013, the Company had $2,884,000 in outstanding forward exchange contracts related to sales. The unrealized loss of the December 31, 2013 contracts that the Company expects to incur during the first quarter of 2014 is approximately $11,000, net of taxes. Foreign currency transaction gains or losses are included in Other income (expense), net. For 2013, 2012 and 2011, such transactions netted gains (losses) of $921,000, $(476,000), and $816,000, respectively.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. The credit risk is limited because of the large numbers and types of customers and their geographic dispersion.

Inventories

Inventories of U.S. operating subsidiaries are stated at the lower of cost (last-in, first-out method) (“LIFO”) or market, and the Company’s international subsidiaries’ inventories are stated at the lower of cost (first-in, first-out) (“FIFO”) or market.

50

Property, Plant and Equipment

Property, plant, and equipment are stated on the basis of cost. Major renewals and betterments are charged to the property accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed to the current period. Depreciation is provided at amounts calculated to amortize the cost of the assets over their estimated useful economic lives using the straight-line method.

Goodwill

Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. We perform our annual goodwill impairment test as of October 1 and monitor for interim triggering events on an ongoing basis. Goodwill is reviewed for impairment utilizing a qualitative assessment or a two-step process. We have an option to make a qualitative assessment of a reporting unit's goodwill for impairment. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. For reporting units where we perform the two-step process, the first step requires us to compare the fair value of each reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is higher than the fair value, there is an indication that an impairment may exist and the second step is required. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized as an impairment loss.

The Company estimates the fair value of its reporting units using a discounted cash flow analysis. This analysis requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The cash flows are estimated over a significant future period of time, which makes those estimates and assumptions subject to an even higher degree of uncertainty. The Company also utilizes market valuation models and other financial ratios, which require the Company to make certain assumptions and estimates regarding the applicability of those models to its assets and businesses. As of December 31, 2013, goodwill was $32,073,000, which represents 7% of total assets.

The Company recognized no goodwill impairment in 2013. The Company recognized goodwill impairment at one of its French operations, Faucheux, of $656,000 in 2012 and two of its French operations, SMA and Rousseau, of $1,898,000 in 2011. The primary reason for the goodwill impairment in 2012 and 2011 was the general economic downturn that continues to affect the Company's European operations. This caused the Company to revise its expectations about future revenue, which is a significant factor in the discounted cash flow analysis used to estimate the fair value of the Company's reporting units. During the 2013 impairment analysis review, we performed a sensitivity analysis for goodwill impairment with respect to each of our reporting units and determined that a hypothetical 15% decline in the fair value of each reporting unit as of December 31, 2013 would not result in an impairment of goodwill for any of the reporting units. During the 2012 impairment analysis review, it was noted that even though the Schwarze and Rivard reporting units' fair value was above carrying value, it was not materially different. On December 31, 2013, there was approximately $6.9 million and $12.3 million of goodwill related to the Schwarze and Rivard reporting units, respectively. These reporting units would be most likely affected by changes in the Company’s assumptions and estimates. The calculation of fair value could increase or decrease depending on changes in the inputs and assumptions used, such as changes in the reporting unit’s future growth rates, discount rates, etc.

Management believes that the estimated valuations it arrived at are reasonable and consistent with what other marketplace participants would use in valuing the Company's components.  However, management cannot give any assurance that these market values will not change in the future.  For example, if discount rates demanded by the market increase, this could lead to reduced valuations under the income approach.  If the Company's projections are not achieved in the future, this could lead management to reassess their assumptions and lead to reduced valuations under the income approach.  If the market price of the Company's stock decreases, this could cause the Company to reassess the reasonableness of the implied control premium, which might cause management to assume a higher discount rate under the income approach which could lead to reduced valuations.  If future similar transactions exhibit lower multiples than those observed in the past, this could lead to reduced valuations under the similar transactions approach.  And finally, if there is a general decline in the stock market and particularly in those companies selected as comparable to the Company's components, this could lead to reduced valuations under the public company market multiple approach.  The Company's annual impairment test is performed during the fourth

51

quarter of each fiscal year.  Given the current market conditions and continued economic uncertainty, the fair value of the Company's components could deteriorate which could result in the need to record impairment charges in future periods.  The Company also monitors potential triggering events including changes in the business climate in which it operates, attrition of key personnel, volatility in the capital markets, the Company's market capitalization compared to its book value, the Company's recent operating performance, and the Company's financial projections.  The occurrence of one or more triggering events could require additional impairment testing, which could result in future impairment charges.  In particular, since the Schwarze and Rivard reporting units' carrying values are not materially different from fair value, any changes to the Company's assumptions could lead to an indicated impairment in step one, requiring the Company to proceed to step two and potentially record an impairment charge.  

See Note 6 to the Consolidated Financial Statements for more information regarding goodwill.

Intangible Assets    

The Company's intangible assets with indefinite useful lives not subject to amortization consists of trade names. The net book value of these trade names was $5,500,000 as of December 31, 2013 and 2012 . This consisted of the Gradall trade name valued at $3,600,000 and the Bush Hog trade name valued at $1,900,000.

The Company tests its indefinite-lived intangible assets for impairment on an annual basis at year-end, or more frequently if an event occurs or circumstances change that indicate that the fair value of an indefinite-lived intangible asset could be below its carrying amount. The impairment test consists of comparing the fair value of the indefinite-lived intangible asset, determined using the relief from royalty method, with its carrying amount. An impairment loss would be recognized for the carrying amount in excess of its fair value.

Identifiable intangible assets are recorded at estimated cost. Definite-lived intangible assets are amortized over their estimated useful lives.

Pensions

In connection with the February 3, 2006 purchase of all the net assets of the Gradall excavator business, the Company assumed sponsorship of twoGradall non-contributory defined benefit pension plans, both of which were frozen with respect to both future benefit accruals and future new entrants.

The Gradall Company Hourly Employees’ Pension Plan covers approximately 330 former employees and 133 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were covered by a collective bargaining agreement and (iii) first participated in the plan before April 6, 1997. An amendment ceasing all future benefit accruals was effective April 6, 1997.

The Gradall Company Employees’ Retirement Plan covers approximately 239 former employees and 87 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were not covered by a collective bargaining agreement, and (iii) first participated in the plan before December 31, 2004. An amendment ceasing future benefit accruals for certain participants was effective December 31, 2004. A second amendment discontinued all future benefit accruals for all participants effective April 24, 2006.

The Company recognizes the funded status of the defined benefit pension plans as a liability in its statement of financial position and recognizes any changes in that funded status in the year in which the changes occur through other comprehensive income.

Related Party Transactions

There were no reportable relationships or related party transactions for the years ended December 31, 2013 and 2012. In1999, the Company approved a supplemental retirement benefit for Donald J. Douglass which is paid on a quarterly basis over a period of fourteen and one-half years that began in the year 2000. The balance on December 31, 2013 and 2012 was $40,000 and $115,000, respectively, and is included in the Accrued liabilities and Other long-term liabilities sections of the Company’s consolidated balance sheet.

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Revenue Recognition

The Company recognizes revenue when each of the following four criteria are met: 1) a contract or sales arrangement exists; 2) products have been shipped per agreed terms and title has been transferred or services have been rendered; 3) the prices of the products or services are fixed or determinable; and 4) collectability is reasonably assured. Pre-season sales orders are solicited in the fall in advance of the dealer’s sales season in the spring and summer. Pre-season sales orders are shipped beginning in the fall and continuing through the spring and represent an opportunity for the Company’s factories to level their production/shipping volumes through the winter months. These pre-season shipments carry descending discounts in conjunction with delayed payment terms of up to six months from the dealer’s requested delivery date. Revenue from sales is recorded net of a provision for discounts that are anticipated to be earned and deducted at time of payment by the customer. These approximated discounts represent an average of historical amounts taken and are adjusted as program terms are changed. The reserves for discounts are reviewed and adjusted quarterly. From time to time, revenue is recognized under a bill and hold arrangement. Revenue recognized under bill and hold arrangements for 2013, 2012, and 2011 was immaterial.

Accounting for Internal Use Software

The Company capitalizes certain costs associated with the development and installation of internal use software. Internal use software costs are expensed or capitalized depending on whether they are incurred in the preliminary project stage, application development stage or the post-implementation stage. Amounts capitalized are amortized over the estimated useful lives of the software.

The book value of capitalized software net of depreciation was approximately $944,000 and $1,092,000 on December 31, 2013 and December 31, 2012, respectively. Software depreciation expense was $488,000, $676,000 and $822,000 in 2013, 2012 and 2011, respectively. Internal use software is amortized for financial reporting purposes using the straight-line method over the estimated life of two to seven years.

Shipping and Handling Costs

The Company’s policy is to include shipping and handling costs in costs of goods sold.

Advertising

We charge advertising costs to expense as incurred. Advertising and marketing expense related to operations for fiscal years 2013, 2012 and 2011 was approximately $6,646,000, $6,353,000 and $6,441,000, respectively. Advertising and marketing expenses are included in Selling, General and Administrative expenses (“SG&A”).

Research and Development

Product development and engineering costs charged to SG&A amounted to $7,164,000, $5,686,000, and $6,017,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

Legal Costs

The Company’s policy is to accrue for legal costs expected to be incurred in connection with loss contingencies.

Federal Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial reporting basis and tax basis of assets and liabilities, and are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon projections of future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these deductible differences.

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We do not provide for a U.S. income tax liability on undistributed earnings of our foreign subsidiaries. The earnings of non-U.S. subsidiaries, which reflect full provision for non-U.S. income taxes, are currently indefinitely reinvested in non-U.S. operations.

Stock-Based Compensation

The Company has granted options to purchase its common stock to certain employees and directors of the Company and its affiliates under various stock option plans at no less than the fair market value of the underlying stock on the date of grant.  These options are granted for a term not exceeding ten years and are forfeited in the event the employee or director terminates his or her employment or relationship with the Company or one of its affiliates other than by retirement or death.  These options generally vest over five years.  All option plans contain anti-dilutive provisions that permit an adjustment of the number of shares of the Company’s common stock represented by each option for any change in capitalization.

The Company calculated the fair value for options with the following weighted-average assumptions for 2013, 2012, and 2011:

	December 31,
	2013		2012		2011
Risk-free interest rate	1.38	%	1.44	%	2.64	%
Dividend yield	0.8	%	1.2	%	1.2	%
Volatility factors	47.9	%	46.7	%	46.7	%
Weighted-average expected life	8.0 years		8.0 years		8.0 years

Fair Value of Financial Instruments

The carrying values of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate fair value because of the short-term nature of these items. The carrying value of our debt approximates the fair value as of December 31, 2013 and 2012.

2. EARNINGS PER SHARE

The following table sets forth the reconciliation from basic to diluted average common shares and the calculations of net income per common share. Net income for basic and diluted calculations does not differ.

(in thousands, except per share amounts)	2013		2012		2011
Net income	$	36,094	$	28,903	$	32,687
Average common shares:
Basic (weighted-average outstanding shares)	12,050		11,899		11,848
Dilutive potential common shares from stock options	162		159		118
Diluted (weighted-average outstanding shares)	12,212		12,058		11,966
Basic earnings per share	$	3.00	$	2.43	$	2.76
Diluted earnings per share	$	2.96	$	2.40	$	2.73

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Stock options totaling 3,831 shares in 2013, 38,954 shares in 2012, and 78,337 shares in 2011 were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive.

3. VALUATION AND QUALIFYING ACCOUNTS

Valuation and qualifying accounts included the following:

(in thousands)	Balance Beginning of Year		Net Charged to Costs and Expenses		Translations, Reclassifications and Acquisitions				Net Write-Offs or Discounts Taken			Balance End of Year
2013
Allowance for doubtful accounts	$	3,077	$	31		$	62		$	(432	)	$	2,738
Reserve for sales discounts	15,005		76,184			—			(74,465		)	16,724
Reserve for inventory obsolescence	9,099		2,586			(157		)	(2,932		)	8,596
Reserve for warranty	5,007		6,410			80			(6,503		)	4,994
2012
Allowance for doubtful accounts	$	3,215	$	253		$	113		$	(504	)	$	3,077
Reserve for sales discounts	14,567		65,481			(16		)	(65,027		)	15,005
Reserve for inventory obsolescence	7,630		2,998			79			(1,608		)	9,099
Reserve for warranty	5,083		6,646			82			(6,804		)	5,007
2011
Allowance for doubtful accounts	$	2,852	$	995		$	(65	)	$	(567	)	$	3,215
Reserve for sales discounts	11,903		62,935			9			(60,280		)	14,567
Reserve for inventory obsolescence	7,506		3,403			(123		)	(3,156		)	7,630
Reserve for warranty	5,554		6,070			17			(6,558		)	5,083

Allowance for Doubtful Accounts

The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations, the Company records a specific reserve to reduce the amounts recorded to what it believes will be collected. For all other customers, it recognizes reserves for bad debt based on historical experience of bad debts as a percent of revenues for each business unit, adjusted for relative improvements or deteriorations in the aging and changes in current economic conditions.

The Company evaluates all receivables that are over 60 days old and will reserve specifically on a 90-day basis. The Company has a secured or insured interest on most of its wholegoods that each customer purchases. This allows the Company, in times of a difficult economy when the customer is unable to pay or has filed for bankruptcy, to repossess its inventory. This also allows Alamo Group to maintain only a reserve over its cost, which usually represents the margin on the original sales price.

The allowance for doubtful accounts balance was $2,738,000 on December 31, 2013, and $3,077,000 on December 31, 2012. The decrease was mainly from the Company’s Industrial Division.

Sales Discounts

On December 31, 2013, the Company had $16,724,000 in reserves for sales discounts compared to $15,005,000 on December 31, 2012 on product shipped to our customers under various promotional programs. The increase was due primarily to increased sales volume of the Company’s agricultural products during the 2013 pre-season, which runs during the third and fourth quarters of each year with orders shipped through the second quarter of 2014. The Company reviews the reserve quarterly based on analysis made on each program outstanding at the time.

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The Company bases its reserves on historical data relating to discounts taken by the customer under each program. Historically, between 85% and 95% of the Company’s customers who qualify for each program actually take the discount that is available.

Inventories – Obsolete and Slow Moving

The Company had a reserve of $8,596,000 on December 31, 2013 and $9,099,000 on December 31, 2012 to cover obsolete and slow moving inventory. The decrease in the reserve was mainly from the Industrial Division and to a lesser extent the Company's Agricultural Division. The obsolete and slow moving inventory policy states that the reserve is to be calculated as follows: 1) no inventory usage over a three-year period is deemed obsolete and reserved at 100 percent; and 2) slow moving inventory with little usage requires a 100 percent reserve on items that have a quantity greater than a three-year supply. There are exceptions to the obsolete and slow moving classifications if approved by an officer of the Company, based on specific identification of an item or items that are deemed to be either included or excluded from this classification. In cases where there is no historical data, management makes a judgment based on a specific review of the inventory in question to determine what reserves, if any, are appropriate. New products or parts are generally excluded from the reserve policy until a three-year history has been established.

Warranty

The Company’s warranty policy is generally to provide its customers warranty for up to one year on all wholegood units and 90 days on parts though some components can have warranty for longer terms.

Warranty reserve, as a percentage of sales, is generally calculated by looking at the current twelve months’ expenses and prorating that amount based on twelve months’ sales with a ninety-day to six-month lag period. The Company’s historical experience is that an end-user takes approximately 90 days to six months from the receipt of the unit to file a warranty claim. A warranty reserve is established for each different marketing group. Reserve balances are evaluated on a quarterly basis and adjustments made when required.

The current liability warranty reserve balance was $4,994,000 on December 31, 2013 and $5,007,000 on December 31, 2012.

4. INVENTORIES

Inventories valued at LIFO represented 55% and 56% of total inventory for the years ended December 31, 2013 and 2012, respectively. The excess of current costs over LIFO-valued inventories was $9,483,000 and $8,975,000 on December 31, 2013 and December 31, 2012, respectively. (The $508,000 increase in LIFO reserve during 2013 came from reductions in inventory levels within U.S. operations. The impact of the application of the LIFO method on the Statement of Income for the years ended December 31, 2013, was a decrease to cost of sales of $508,000, and an decrease in 2012 of $484,000 and an increase in 2011 of $1,805,000.) Inventories consisted of the following on a cost basis, net of reserves:

	December 31,
(in thousands)	2013		2012
Finished goods and parts	$	84,548	$	93,095
Work in process	9,906		7,922
Raw materials	14,650		7,741
	$	109,104	$	108,758

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5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	December 31,
(in thousands)	2013			2012			Useful Lives
Land	$	8,708		$	8,576
Buildings and improvements	62,169			59,309			10-20 yrs.
Machinery and equipment	65,451			57,320			3-15 yrs.
Office furniture and equipment	6,705			5,984			3-7 yrs.
Computer software	10,557			10,602			2-7 yrs.
Transportation equipment	4,786			4,663			3 yrs.
	158,376			146,454
Accumulated depreciation	(96,472		)	(89,653		)
	$	61,904		$	56,801

Property, plant and equipment on December 31, 2013 and December 31, 2012 include capital leases in the amount of $7,246,000 and $6,944,000, respectively, which are included in the listings above. Accumulated depreciation relating to the capital leases on December 31, 2013 and 2012 was $4,749,000 and $4,132,000, respectively. Amortization related to the capital lease is included in depreciation expense.

6. GOODWILL

The changes in the carrying amount of goodwill for the twelve months ended December 31,2011, 2012 and 2013 are as follows:

(in thousands)
Balance at December 31, 2010	$	34,073
Translation adjustment	(424		)
Goodwill impairment	(1,898		)
Balance at December 31, 2011	$	31,751
Translation adjustment	553
Goodwill impairment	$	(656	)
Balance at December 31, 2012	$	31,648
Translation adjustment	425
Goodwill impairment	—
Balance at December 31, 2013	$	32,073

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7. ACCRUED LIABILITIES

Accrued liabilities consist of the following balances:

	December 31,
(in thousands)	2013		2012
Salaries, wages and bonuses	$	15,509	$	12,433
Warranty	4,994		5,007
State taxes	5,217		4,922
Other	7,762		9,239
	$	33,482	$	31,601

8. LONG-TERM DEBT

The components of long-term debt are as follows:

	December 31,
(in thousands)	2013		2012
Bank revolving credit facility	$	—	$	—
Capital lease obligations	120		394
Other notes payable	308		312
Total debt	428		706
Less current maturities	420		588
Total long-term debt	$	8	$	118

The Company maintains a revolving credit facility with certain lenders under its Amended and Restated Revolving Credit Agreement. The aggregate commitments from lenders under such revolving credit facility total$100,000,000 and, subject to certain conditions, the Company has the option to request an increase in aggregate commitments of up to an additional $50,000,000. The revolving credit agreement requires us to maintain various financial covenants including a minimum EBIT to interest expense ratio, a minimum leverage ratio and a minimum asset coverage ratio. The agreement also contains various covenants relating to limitations on indebtedness, limitations on investments and acquisitions, limitations on sale of properties and limitations on liens and capital expenditures. The revolving credit agreement also contains other customary covenants, representations and events of defaults. As of December 31, 2013, the Company was in compliance with the covenants under the revolving credit facility. The termination date of the revolving credit facility is March 28, 2016. As of December 31, 2013, no amounts were outstanding under the revolving credit facility. On December 31, 2013, $722,000 of the revolver capacity was committed to irrevocable standby letters of credit issued in the ordinary course of business as required by vendors’ contracts resulting in $99,278,000 in available borrowings. As of December 31, 2013, the Company is in compliance with the terms and conditions of its credit facilities.

The aggregate maturities of long-term debt, as of December 31, 2013, are as follows: $420,000 in 2014; $8,000 in 2015; and zero thereafter.

The fair value of the Company’s debt is based on secondary market indicators. Since the Company’s debt is not quoted, estimates are based on each obligation’s characteristics, including remaining maturities, interest rate, credit rating, collateral, amortization schedule and liquidity. The carrying amount approximates fair value.

9. FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. There is a three-tier fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources,

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while unobservable inputs (lowest level) reflect internally developed market assumptions. In fair value measurements are classified under the following hierarchy:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

Level 3 – Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable

The Company uses quoted market prices, when available, to determine fair value, and the Company classifies such measurements within Level 1. In some cases where market prices are not available, the Company makes use of observable market-based inputs to calculate fair value, in which case the measurements are classified with Level 2. If quoted or observable market prices are not available, fair value is based upon internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves, currency rates, etc. These measurements are classified within Level 3.

Fair value measurements are classified to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.

10. INCOME TAXES

The jurisdictional components of income before taxes consist of the following:

	December 31,
(in thousands)	2013		2012		2011
Income before income taxes:
Domestic	$	35,146	$	29,390	$	28,109
Foreign	16,242		14,056		20,020
	$	51,388	$	43,446	$	48,129

The components of income tax expense (benefit) consist of the following:

	December 31,
(in thousands)	2013			2012			2011
Current:
Domestic	$	10,605		$	9,273		$	7,771
Foreign	3,200			4,919			5,682
State	2,366			756			1,139
	16,171			14,948			14,592
Deferred:
Domestic	(1,074		)	(192		)	397
Foreign	249			(363		)	331
State	(52		)	150			122
	(877		)	(405		)	850
Total income taxes	$	15,294		$	14,543		$	15,442

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The difference between income tax expense (benefit) for financial statement purposes and the amount of income tax expense computed by applying the domestic statutory income tax rate of 35% to income loss before income taxes consist of the following:

	December 31,
(in thousands)	2013			2012			2011
Domestic statutory rate at 35% (34% for 2011 and 2010)	$	17,985		$	15,206		$	16,364
Increase (reduction) from:
Jurisdictional rate differences	(1,959		)	(1,477		)	(1,315		)
Goodwill impairment	—			157			633
Valuation allowance	(114		)	825			—
Stock based compensation	136			214			161
U.S. state taxes	1,496			589			740
Domestic Production Deduction	(1,162		)	(948		)	(796		)
R&E Credit Reserve	(856		)	(130		)	(252		)
Other, net	(232		)	107			(93		)
Provision for income taxes	$	15,294		$	14,543		$	15,442
Effective tax rate	30		%	33		%	32		%

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Deferred income taxes arise from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The components of the Company’s deferred income tax assets and liabilities consist of the following:

	December 31,
(in thousands)	2013			2012
Deferred income tax assets:
Inventory basis difference	$	1,576		$	1,475
Accounts receivable reserve	201			299
Stock based compensation	904			614
Pension liability	1,604			3,595
Employee benefit accrual	601			459
Product liability and warranty reserves	1,417			1,120
Expenses not deductible for tax purposes	1,064			487
Foreign net operating loss	2,954			1,608
State net operating loss	76			82
Other	34			3
Total deferred income tax assets	$	10,431		$	9,742
Less: Valuation allowance	(711		)	(825		)
Net deferred income tax assets	$	9,720		$	8,917
Deferred income tax liabilities:
Inventory basis differences	$	—		$	(253	)
Depreciation	(3,068		)	(2,867		)
Intangible assets	(1,277		)	(1,011		)
Deferred revenue	(66		)	(135		)
Expenses not deductible for tax purposes	(461		)	(777		)
Total deferred income tax liabilities	$	(4,872	)	$	(5,043	)
Net deferred income tax assets	$	4,848		$	3,874

As of December 31, 2013, the Company had foreign deferred tax assets consisting of foreign net operating losses and other tax benefits available to reduce future taxable income in a foreign jurisdiction. These foreign jurisdictions' net operating loss carryforwards are in the approximate amount of $10.6 million with an unlimited carryforward period. The Company also has state net operating loss carryforwards in the U.S. of approximately $5.0 million which will expire between 2014 to 2028.

The company recorded a valuation allowance as of December 31, 2013 and 2012 due to uncertainties related to the ability to utilize some of the deferred income tax assets, primarily consisting of certain U.S. state NOLs and income tax credits, and international NOLs, before they expire. The valuation allowance is based on estimates of taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. The realization of net deferred income tax assets recorded as of December 31, 2013 is primarily dependent upon the ability to generate future taxable income in certain U.S. states and international jurisdictions.

Deferred income taxes have not been provided on the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and the respective tax bases of

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the Company’s foreign subsidiaries, based on the determination that such differences are essentially permanent in duration in that the earnings of the subsidiaries are expected to be indefinitely reinvested in foreign operations. As of December 31, 2013, the cumulative undistributed earnings of these subsidiaries approximated $138,531,000. If these earnings were not considered indefinitely reinvested, deferred income taxes would have been recorded after the consideration of foreign tax credits. At this time, it is not practicable to estimate the amount of additional income taxes that might be payable on those earnings, if distributed.

The Company adopted the provisions of FASB ASC Section 740-10-25 (formerly FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”) on January 1, 2007. Unrecognized tax benefits in the amount of$257,000 and $146,000 for 2012 and 2013, respectively, are included in other noncurrent liabilities on the balance sheet. The unrecognized tax benefits, if recognized, would favorably impact our effective tax rate in a future period. We do not expect our unrecognized tax benefits disclosed above to change significantly over the next 12 months.

	December 31,
	2013			2012
Balance as of beginning of year	$	257,000		$	235,000
Additions for tax positions related to the current year	56,000			—
Additions for tax positions related to prior years	27,000			22,000
Reduction due to lapse of statute of limitations	(194,000		)	—
Balance as of end of year	$	146,000		$	257,000

The Company's policy is to include interest and penalty expense related to income taxes as interest and other expense, respectively. As of December 31, 2013, no interest or penalties has been accrued. The Company’s open tax years for its federal and state income tax returns are for the tax years ended 2009 through 2013. The Company's open tax years for its foreign income tax returns are for the tax years ended 2009 through 2013.

On January 2, 2013, the American Taxpayer Relief Act of 2012 (Act) was enacted. The Act provided tax relief for businesses by reinstating certain tax benefits retroactively to January 1, 2012. There are several provisions of the Act that impacted the Company, most notably the extension of the Research and Development credit through 2013. Income tax accounting rules require tax law changes to be recognized in the period of enactment; as such, the additional Research and Development Credit in 2013 tax provision that related to the 2012 tax year was approximately $450,000. Currently, the Research and Development credit has not been extended for 2014.

11. COMMON STOCK

The Company was authorized by its Board of Directors in 1997 to repurchase up to 1,000,000 shares of the Company’s common stock to be funded through working capital and credit facility borrowings. No shares were repurchased in 2012 or 2013. The authorization to repurchase up to 1,000,000 shares remains available less 42,600 shares, previously purchased.

Subsequent to December 31, 2013, the Company declared and paid a dividend of $0.07 per share.

12. STOCK OPTIONS

Incentive Options

On April 28, 1994, the stockholders approved the 1994 Incentive Stock Option Plan (“1994 ISO Plan”) for key employees. Each option becomes vested and exercisable for up to 20% of the total optioned shares each year after grant. Under the terms of this plan, the exercise price of the shares subject to each option granted would not be less than the fair market value of the common stock at the date the option is granted. There are 3,000 shares outstanding under this option plan. No further option grants can be made under this plan.

On May 3, 2005, the stockholders of the Company approved the 2005 Incentive Stock Option Plan (“2005 ISO Plan”) and the Company reserved 500,000 shares of common stock for options to be issued under the 2005 ISO Plan . During the years ended December 31, 2013, 2012 and 2011, options to purchase 49,000 shares, 61,000 shares and 35,000 shares, respectively, were granted under this plan. Each option becomes vested and exercisable for up to 20% of the total optioned shares one year following the grant of the option and for an

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additional 20% of the total optioned shares after each succeeding year until the option is fully exercisable at the end of the fifth year.

Following is a summary of activity in the Incentive Stock Option Plans for the periods indicated:

	2013				2012				2011
	Shares		Exercise    Price*		Shares		Exercise    Price*		Shares		Exercise    Price*
Options outstanding at beginning of year	330,730		$	21.82	377,480		$	19.27	360,130		$	18.29
Granted	49,000		42.70		61,000		32.76		35,000		26.45
Exercised	(81,880	)	16.77		(99,650	)	19.26		(15,650	)	12.03
Canceled	(5,500	)	24.24		(8,100	)	17.20		(2,000	)	24.69
Options outstanding at end of year	292,350		26.68		330,730		21.82		377,480		19.27
Options exercisable at end of year	154,950		$	21.57	192,830		$	19.48	243,180		$	19.32
Options available for grant at end of year	66,100				109,600				162,500

*Weighted Averages

Options outstanding and exercisable at December 31, 2013 were as follows:

Qualified Stock Options	Options Outstanding				Options Exercisable
	Shares	Remaining Contractual Life (yrs)*	Exercise          Price*		Shares	Exercise      Price*
Range of Exercise Price
$11.45 - $17.85	54,550	5.07	$	11.80	38,350	$	11.95
$19.79 - $32.76	188,800	5.77	$	26.83	116,600	$	24.73
$42.70 - $42.70	49,000	9.35	$	42.70	—	$	—
Total	292,350				154,950

*Weighted Averages

The weighted-average grant-date fair values of options granted during 2013, 2012, and 2011 were $20.56, $14.76 and $12.50, respectively. As of December 31, 2013, there was $1,322,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a period of five years.

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Non-Qualified Options

On May 7, 2009, the stockholders of the Company approved the 2009 Equity Incentive Plan and the Company reserved 400,000 shares of common stock for this plan. Options become vested and exercisable for up to 20% of the total optioned shares one year following the grant of the option and for an additional 20% of the total optioned shares after each succeeding year until the option is fully exercisable at the end of the fifth year.

Following is a summary of activity in the Non-Qualified Stock Option Plans for the periods indicated:

	2013			2012				2011
	Shares	Exercise    Price*		Shares		Exercise    Price*		Shares		Exercise    Price*
Options outstanding at beginning of year	89,700	$	19.91	112,800		$	18.62	102,400		$	15.62
Granted	25,000	42.70		—		—		30,000		26.45
Exercised	—	—		(23,100	)	13.62		(14,600	)	11.45
Cancelled	—	—		—		—		(5,000	)	25.18
Options outstanding at end of year	114,700	24.87		89,700		19.91		112,800		18.62
Options exercisable at end of year	57,900	$	19.89	38,100		$	21.91	37,400		$	19.57
Options available for grant at end of year	293,526			322,750				32,500

*Weighted Averages

Options outstanding and exercisable as of December 31, 2013 were as follows:

Non-Qualified Stock Options	Options Outstanding				Options Exercisable
	Shares	Remaining    Contractual    Life(yrs)*	Exercise           Price*		Shares	Exercise      Price*
Range of Exercise Price
$11.45 - $17.85	37,200	5.36	$	11.45	23,400	$	11.45
$19.79 - $32.76	52,500	5.61	25.90		34,500	25.61
$42.70 - $42.70	25,000	9.35	$	42.70	—	$	—
Total	114,700				57,900

*Weighted Averages

The weighted-average grant-date fair values of options granted during 2013 and 2011 were $20.56 and $12.50, respectively. There were no options granted in 2012. As of December 31, 2013, there was $213,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a period of five years.

During 2013, 2012 and 2011, 0, 23,100, and 14,600 non-qualified options were exercised, respectively, were exercised, $0, $315,000, and $167,000 of cash receipts were received, respectively, and tax deductions of $0, $284,000, and $178,000 were realized, respectively, for the tax deductions from option exercises.

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Restricted Stock Units

Following is a summary of activity in the Restricted Stock Units for the periods indicated:

	2013				2012				2011
	Shares		Exercise    Price*		Shares		Exercise    Price*		Shares		Exercise    Price*
Options outstanding at beginning of year	11,375		$	24.24	19,750		$	22.96	9,000		$	15.86
Granted	4,224		42.70		—		—		13,500		26.08
Exercised	(4,875	)	22.07		(6,125	)	21.13		(2,750	)	15.06
Cancelled	—		—		(2,250	)	21.45		—		—
Options outstanding at end of year	10,724		32.49		11,375		24.24		19,750		22.96

Restricted stock units vest 25% after one year following the award date and for an additional 25% of total awarded shares each succeeding year until fully vested. The weighted-average remaining contractual life in years for 2013, 2012, and 2011 were 2.09, 2.65 and 3.48, respectively. As of December 31, 2013, there was $90,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a period of four years.

13. RETIREMENT BENEFIT PLANS

Defined Benefit Plans

In connection with the February 3, 2006 purchase of all the net assets of the Gradall excavator business, the Company assumed sponsorship of two Gradall non-contributory defined benefit pension plans, both of which are frozen with respect to both future benefit accruals and future new entrants.

The Gradall Company Hourly Employees’ Pension Plan covers approximately 330 former employees and 133 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were covered by a collective bargaining agreement and (iii) first participated in the plan before April 6, 1997. An amendment ceasing all future benefit accruals was effective April 6, 1997.

The Gradall Company Employees’ Retirement Plan covers approximately 239 former employees and 87 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were not covered by a collective bargaining agreement and (iii) first participated in the plan before December 31, 2004. An amendment ceasing future benefit accruals for certain participants was effective December 31, 2004. A second amendment discontinued all future benefit accruals for all participants effective April 24, 2006.

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The following tables set forth the change in plan assets, change in projected benefit obligation, rate assumptions and components of net periodic benefit cost as of December 31 with respect to these plans. The measurement dates of the assets and liabilities of both plans were December 31 of the respective years presented.

	Year Ended December 31, 2013
(in thousands)	Hourly   Employees’ Pension Plan				Employees’ Retirement Plan				Total
Change in projected benefit obligation
Benefit obligation at beginning of year		$	10,786			$	20,923		$	31,709
Service cost		11				5			16
Interest cost		371				760			1,131
Liability actuarial (gain)/loss		(1,060		)		(2,620		)	(3,680		)
Benefits paid		(631		)		(733		)	(1,364		)
Benefit obligation at end of year		9,477				18,335			27,812
Change in fair value of plan assets
Fair value of plan assets at beginning of year		7,690				14,148			21,838
Return on plan assets		1,136				2,090			3,226
Employer contributions		678				896			1,574
Benefits paid		(631		)		(733		)	(1,364		)
Fair value of plan assets at end of year		8,873				16,401			25,274
Underfunded status – December 31, 2012		$	(604	)		$	(1,934	)	$	(2,538	)
Accumulated benefit obligation – December 31, 2013		$	9,477			$	18,335		$	27,812

	Year Ended December 31, 2012
(in thousands)	Hourly   Employees’ Pension Plan				Employees’ Retirement Plan				Total
Change in projected benefit obligation
Benefit obligation at beginning of year		$	10,454			$	19,238		$	29,692
Service cost		10				4			14
Interest cost		411				788			1,199
Liability actuarial (gain)/loss		549				1,619			2,168
Benefits paid		(638		)		(726		)	(1,364		)
Benefit obligation at end of year		10,786				20,923			31,709
Change in fair value of plan assets
Fair value of plan assets at beginning of year		6,663				12,237			18,900
Return on plan assets		937				1,722			2,659
Employer contributions		728				915			1,643
Benefits paid		(638		)		(726		)	(1,364		)
Fair value of plan assets at end of year		7,690				14,148			21,838
Underfunded status – December 31, 2011		$	(3,096	)		$	(6,775	)	$	(9,871	)
Accumulated benefit obligation – December 31, 2012		$	10,786			$	20,923		$	31,709

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The Company recognizes the overfunded or underfunded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of defined benefit postretirement plans as an asset or liability in its statement of financial position and recognizes changes in the funded status in the year in which the changes occur. The Company measures the funded status of a plan as of the date of its year-end statement of financial position.

The underfunded status of the plans of $2,538,000 and $9,871,000 as of December 31, 2013 and 2012, respectively, is recognized in the accompanying consolidated balance sheets as long-term accrued pension liability because plan assets are less than the value of benefit obligations expected to be paid.

The accumulated benefit obligation for our pension plans represents the actuarial present value of benefits based on employee service and compensation as of a certain date and does not include an assumption about future compensation levels.

In determining the projected benefit obligation and the net pension cost, we used the following significant weighted-average assumptions:

Assumptions used to determine benefit obligations at December 31:

	Hourly Employees’ Pension Plan		Employees’ Retirement Plan
	2013	2012	2013	2012
Discount rate	4.60%	3.55%	4.75%	3.70%
Composite rate of compensation increase	N/A	N/A	N/A	N/A

Assumptions used to determine net periodic benefit cost for the years ended December 31:

	Hourly Employees’ Pension Plan		Employees’ Retirement Plan
	2013	2012	2013	2012
Discount rate	3.55%	4.06%	3.70%	4.18%
Long-term rate of return on plan assets	7.25%	7.75%	7.25%	7.75%
Composite rate of compensation increase	N/A	N/A	N/A	N/A

The Company employs a building block approach in determining the expected long-term rate on return on plan assets. Historical markets are studied and long-term historical relationships between equities and fixed income are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term market assumptions are determined. The long-term portfolio return is established via a building block approach with proper consideration of diversification and rebalancing. Peer data and historical returns are reviewed to check for reasonability and appropriateness.

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The following tables present the components of net periodic benefit cost (gains are denoted with parentheses and losses are not):

	Year Ended December 31, 2013
(in thousands)	Hourly Employees’ Pension Plan				Employees’ Retirement Plan				Total
Service cost		$	11			$	5		$	16
Interest cost		371				760			1,131
Expected return on plan assets		(549		)		(1,018		)	(1,567		)
Amortization of prior service cost		—				—			—
Amortization of net (gain)/loss		285				418			703
Net periodic benefit cost		$	118			$	165		$	283

	Year Ended December 31, 2012
(in thousands)	Hourly Employees’ Pension Plan				Employees’ Retirement Plan				Total
Service cost		$	10			$	4		$	14
Interest cost		411				788			1,199
Expected return on plan assets		(520		)		(951		)	(1,471		)
Amortization of prior service cost		—				—			—
Amortization of net (gain)/loss		280				379			659
Net periodic benefit cost		$	181			$	220		$	401

 The Company estimates that $132,000 of unrecognized actuarial expense will be amortized from accumulated other comprehensive income into net periodic benefit costs during 2014.

The Company employs a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, and small and large capitalizations. Other assets such as real estate, private equity, and hedge funds are used judiciously to enhance long-term returns while improving portfolio diversification. Derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset/liability studies.

The pension plans' weighted-average asset allocations as a percentage of plan assets at December 31 are as follows:

	Hourly Employees’ Pension Plan		Employees’ Retirement Plan
	2013	2012	2013	2012
Equity securities	55%	55%	55%	55%
Debt securities	38%	38%	38%	38%
Short-term investments	2%	2%	2%	2%
Other	5%	5%	5%	5%
Total	100%	100%	100%	100%

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As of December 31, 2013, we used the following valuation techniques to measure fair value for assets. There were no changes to these methodologies during 2013: Level 1 - Assets were valued using the closing price reported in the active market in which the individual security was traded. Level 2 - Assets were valued using quoted prices in markets that are not active, broker dealer quotations, net asset value of shares held by the plans, and other methods by which all significant input were observable at the measurement date. Level 3 - Assets were valued using valuation reports from the respective institutions at the measurement date. The following table presents the hierarchy levels for our postretirement benefit plan investments as of December 31:

(in thousands)	December 31, 2013			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Mutual Funds:
Small Cap		$	—		$	—		$	—	$	—
Mid Cap		1,577			1,577
Large Cap		6,826			6,826
International		2,531			2,531
Common/Collective:
Wells Fargo Liability Driven Solution		3,521						3,521
Wells Fargo International Equity Index Fund		1,286						1,286
Wells Fargo Thornburg International		1,273						1,273
Wells Fargo Large Cap Growth Index Fund		1,423						1,423
Wells Fargo Large Cap Value Index Fund		1,427						1,427
Wells Fargo Multi-Manager Small Cap		1,683						1,683
Wells Fargo Russell 2000 Index Fund		841						841
Wells Fargo S&P Mid Cap Index Fund		950						950
T Rowe Price Equity Income		1,424						1,424
Cash & Short-term Investments		512			512
Total		$	25,274		$	11,446		$	13,828	$	—

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(in thousands)	December 31, 2012			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Mutual Funds:
Small Cap		$	—		$	—		$	—	$	—
Mid Cap		1,376			1,376
Large Cap		7,126			7,126
International		2,201			2,201
Common/Collective:
Wells Fargo Liability Driven Solution Fund		3,074			—			3,074		—
Wells Fargo International Equity Index Fund		1,097						1,097
Wells Fargo Thornburg International		1,103						1,103
Wells Fargo Large Cap Growth Index Fund		1,216						1,216
Wells Fargo Large Cap Value Index Fund		1,210						1,210
Wells Fargo Multi-Manager Small Cap		1,481						1,481
Wells Fargo Russell 2000 Index Fund		708						708
Wells Fargo S&P Mid Cap Index Fund		825						825
Cash & Short-term Investments		421			421
Total		$	21,838		$	11,124		$	10,714	$	—

Our interests in the common collective trust investments are managed by one custodian. Consistent with our investment policy, the custodian has invested the assets across a widely diversified portfolio of U.S. and international equity and fixed income securities. Fair values of each security within the collective trust as of December 31, 2013 were obtained from the custodian and are based on quoted market prices of individual investments; however, since the fund itself does not have immediate liquidity or a quoted market price, these assets are considered Level 2.

The common collective funds noted in the above table have estimated fair value using the net asset value per share of investments. Investments can be redeemed immediately at the current net asset value per share based on the fair value of the underlying assets. Redemption frequency is daily. The categories contain investments in equity securities of smaller growing companies, medium-sized U.S. companies, large value-oriented and growth-oriented companies and foreign companies traded on international markets.

Expected benefit payments are estimated using the same assumptions used in determining our benefit obligation as of December 31, 2013. The following table illustrates the estimated pension benefit payments which reflect expected future service, as appropriate, that are projected to be paid:

(in thousands)	Hourly Employees’ Pension Plan			Employees’ Retirement Plan			Total
2014		$	643		$	862	$	1,505
2015		634			896		1,530
2016		635			932		1,567
2017		644			1,021		1,665
2018		651			1,112		1,763
Years 2019 through 2023		$	3,231		$	6,096	$	9,327

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Supplemental Retirement Plan

The Board of Directors of the Company adopted the Alamo Group Inc. Supplemental Executive Retirement Plan (the “SERP”), effective as of January 3, 2011.  The SERP will benefit certain key management or other highly compensated employees of the Company and/or certain subsidiaries who are selected by the Compensation Committee and approved by the Board to participate.

The SERP is intended to provide a benefit from the Company upon retirement, death or disability, or a change in control of the Company.  Accordingly, the SERP obligates the Company to pay to a participant a Retirement Benefit (as defined in the SERP) upon the occurrence of certain payment events to the extent a participant has a vested right thereto.  A participant’s right to his or her Retirement Benefit becomes vested in the Company’s contributions upon 10 years of Credited Service (as defined in the SERP) or a change in control of the Company.  The Retirement Benefit is based on 20% of the final three-year average salary of each participant on or after his or her normal retirement age (65 years of age).  In the event of the participant’s death or a change in control, the participant’s vested retirement benefit will be paid in a lump sum to the participant or his or her estate, as applicable, within 90 days after the participant’s death or a change in control, as applicable.  In the event the participant is entitled to a benefit from the SERP due to disability, retirement or other termination of employment, the benefit will be paid in monthly installments over a period of fifteen years.

The Company records amounts relating to the SERP based on calculations that incorporate various actuarial and other assumptions, including discount rates, rate of compensation increases, retirement dates and life expectancies.  The net periodic costs are recognized as employees render the services necessary to earn the SERP benefits.

In connection with the initiation of the SERP, the Company had an unfunded long-term liability of $1,964,301, a deferred tax asset of $746,000 and $1,218,301 in accumulated other comprehensive income.  The $1,964,301 includes prior service cost which will be amortized over the average remaining service periods of the employees.  The prior service cost is included as a component of net periodic pension cost. 

The change in the Projected Benefit Obligation (PBO) as of December 31, 2013 and 2012, is shown below in thousands:

	Year Ended December 31,
(in thousands)	2013			2012
Benefit obligation at January 1,	$	3,057		$	2,584
Service cost	114			101
Interest cost	102			104
Liability actuarial (gain)/loss	(252		)	268
Plan Amendments	—			—
Benefit obligation at December 31,	$	3,021		$	3,057

The components of net periodic pension expense were as follows in thousands:

	Year Ended December 31,
(in thousands)	2013		2012
Service Cost	$	114	$	101
Interest Cost	102		104
Amortization of Prior Service Cost	327		287
Net Periodic Benefit Cost	$	543	$	492

The Company estimates that $270,000 of unrecognized actuarial expense will be amortized from accumulated other comprehensive income into net periodic benefit costs during 2014.

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In determining the projected benefit obligation and the net pension cost, we used the following significant weighted-average assumptions:

Assumptions used to determine benefit obligations at December 31:

	2013	2012
Discount rate	4.60%	3.37%
Composite rate of compensation increase	3.00%	3.00%

Assumptions used to determine net periodic benefit cost for the years ended December 31:

	2013	2012
Discount rate	3.37%	4.04%
Composite rate of compensation increase	3.00%	3.00%
Long-term rate of return on plan assets	N/A	N/A

Future estimated benefits expected to be paid from the plan over the next ten years as follows in thousands:

2014	$	44
2015	51
2016	101
2017	140
2018	241
Years 2019 through 2023	$	1,305

Defined Contribution Plans

The Company has three defined contribution plans, The Gradall Salaried Employees’ Savings and Investment Plan (“Salary Plan”), The Gradall Hourly Employees’ Savings and Investment Plan (“Hourly Plan”) and The International Association of Machinist and Aerospace Workers Retirement Plan (“IAM Plan”). The Company contributed $422,000 and $388,000 to the IAM Plan for the plan years ended December 31, 2013 and 2012, respectively. The Company converted the Salary Plan into its 401(k) retirement and savings plan and put the Hourly Plan into a separate 401(k) retirement and savings plan.

The Company provides a defined contribution 401(k) retirement and savings plan for eligible U.S. employees. Company matching contributions are based on a percentage of employee contributions. Company contributions to the plan during 2013, 2012 and 2011 were $1,331,000, $1,678,000, and $992,000, respectively. A U.S. subsidiary of the Company had an Hourly Employee Pension Plan of Trust covering collective bargaining which was terminated on December 31, 2006. As of January 1, 2006 the employees were added to the existing 401(k) retirement and salary plan.

Three of the Company’s international subsidiaries also participate in a defined contribution and savings plan covering eligible employees. The Company’s international subsidiaries contribute between 3% and 10% of the participant’s salary up to a specific limit. Total contributions made to the above plans were $697,000, $696,000, and $676,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

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14.  SEGMENT REPORTING

The Company reports three business segments: North American Industrial, North American Agricultural and European. The Company’s sales are principally within the United States, United Kingdom, France, Canada and Australia. The Company sells its products primarily through a network of independent dealers and distributors to governmental end-users, related independent contractors, as well as to the agricultural and commercial turf markets.

The Company has included a summary of the financial information by reporting segment. The following table presents the revenues, income from operations (loss), goodwill and total identifiable assets by reporting segment for the years ended December 31, 2013, 2012 and 2011:

	December 31,
(in thousands)	2013		2012		2011
Net Revenue
North American Industrial	$	296,617	$	263,353	$	229,594
North American Agricultural	215,340		200,467		203,993
European	164,879		164,582		170,006
Consolidated	$	676,836	$	628,402	$	603,593
Income from Operations
North American Industrial	$	25,743	$	19,313	$	24,649
North American Agricultural	17,880		18,319		16,644
European	7,114		7,717		8,163
Consolidated	$	50,737	$	45,349	$	49,456
Goodwill
North American Industrial	$	13,176	$	13,418	$	13,316
North American Agricultural	—		—		—
European	18,897		18,230		18,435
Consolidated	$	32,073	$	31,648	$	31,751
Total Identifiable Assets
North American Industrial	$	161,080	$	153,234	$	144,763
North American Agricultural	123,352		118,829		121,320
European	154,044		132,276		115,582
Consolidated	$	438,476	$	404,339	$	381,665

15. INTERNATIONAL OPERATIONS AND GEOGRAPHIC INFORMATION

Following is selected financial information on the Company’s international operations which include Europe, Canada and Australia:

	December 31,
(in thousands)	2013		2012		2011
Net sales	$	236,839	$	227,568	$	216,201
Income from operations	14,822		14,470		19,362
Income before income taxes	16,241		13,731		20,051
Identifiable assets	$	205,317	$	179,263	$	155,188

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Following is other selected geographic financial information on the Company’s operations:

	December 31,
(in thousands)	2013		2012		2011
Geographic net sales:
United States	$	444,151	$	401,415	$	381,390
United Kingdom	36,892		40,734		39,967
France	97,958		92,964		101,124
Canada	45,045		36,190		26,029
Australia	11,517		10,225		14,171
Other	41,273		46,874		40,912
Total net sales	$	676,836	$	628,402	$	603,593
Geographic location of long-lived assets:
United States	$	42,053	$	46,749	$	52,262
United Kingdom	19,718		13,809		13,511
France	25,751		25,166		26,746
Canada	12,562		11,719		12,221
Australia	768		190		158
Total long-lived assets	$	100,852	$	97,633	$	104,898

Net sales are attributed to countries based on the location of customers.

16. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases office space and equipment under various operating leases, which generally are expected to be renewed or replaced by other leases. The Company has certain capitalized leases consisting principally of leases of buildings. As of December 31, 2013, future minimum lease payments under these non-cancelable leases and the present value of the net minimum lease payments for the capitalized leases are:

(in thousands)	Operating Leases		Capitalized Leases
2014	$	1,507	$	115
2015	927		8
2016	515		—
2017	287		—
2018	110		—
Thereafter	—		—
Total minimum lease payments	$	3,346	$	123
Less amount representing interest			3
Present value of net minimum lease payments			$	120
Less current portion			112
Long-term portion			$	8

Rental expense for operating leases was $2,293,000 for 2013, $2,088,000 for 2012, and $1,879,000 for 2011.

Purchase obligations of $83,105,000 represent an estimate of goods and services to be purchased under outstanding purchase orders not reflected on the Company’s balance sheet. New purchase obligations should be received and paid for during the current fiscal year.

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Other

Like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws and requirements, including those concerning air emissions, discharges into waterways, and the generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances at the Company’s facilities and offsite disposal locations, workplace safety and equal employment opportunities. These laws and regulations are constantly changing, and it is impossible to predict with accuracy the effect that changes to such laws and regulations may have on the Company in the future. Like other industrial concerns, the Company’s manufacturing operations entail the risk of noncompliance, and there can be no assurance that the Company will not incur material costs or other liabilities as a result thereof.

The Company knows that its Indianola, Iowa property is contaminated with chromium which most likely resulted from chrome plating operations which were discontinued before the Company purchased the property. Chlorinated volatile organic compounds have also been detected in water samples on the property, though the source is unknown at this time. The Company voluntarily worked with an environmental consultant and the state of Iowa with respect to these issues and believes it completed its remediation program in June 2006. The work was accomplished within the Company’s environmental liability reserve balance. We requested a “no further action” classification from the state. We received a conditional “no further action” letter in January of 2009. When we demonstrate stable or improving conditions below residential standards for a certain period of time by monitoring existing wells, we will request an unconditional “no further action” letter.

The Company knows that Bush Hog’s main manufacturing property in Selma, Alabama was contaminated with chlorinated volatile organic compounds which most likely resulted from painting and cleaning operations during the 1960s and 1970s. The contaminated areas were primarily in the location of underground storage tanks and underneath the former waste storage area. Under the Asset Purchase Agreement, Bush Hog’s prior owner agreed to and has removed the underground storage tanks at its cost and has remediated the identified contamination in accordance with the regulations of the Alabama Department of Environmental Management. An environmental consulting firm was retained by the prior owner to administer the cleanup and monitor the site on an ongoing basis until the remediation program is complete and approved by the applicable authorities.

In December of 2012, a federal district court jury in Louisiana found that Gradall was unjustly enriched in the amount of $1,000,000 plus interest when it sold several telescopic fire apparatuses after properly terminating what the jury determined to be an enforceable contract with the plaintiff, a fire truck manufacturer. Gradall is appealing the decision and has reserved the full amount.

Alamo Group Inc.  and Bush Hog, Inc. were added as defendants in 2013 to ongoing litigation by Deere & Company as plaintiff against Bush Hog, LLC (now Duroc, LLC) and Great Plains Manufacturing Incorporated, in which Deere alleged infringement of a mower-related patent. The jury concluded that not only did the defendants not infringe the patent but that the patent was invalid as well. The Company expensed $2,100,000 in legal fees related to this lawsuit in 2013.

Certain assets of the Company contain asbestos that may have to be remediated over time. The Company believes that any subsequent change in the liability associated with the asbestos removal will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

The Company is subject to various other federal, state, and local laws affecting its business, as well as a variety of regulations relating to such matters as working conditions, equal employment opportunities, and product safety. A variety of state laws regulate the Company’s contractual relationships with its dealers, some of which impose restrictive standards on the relationship between the Company and its dealers, including events of default, grounds for termination, non-renewal of dealer contracts, and equipment repurchase requirements. The Company believes it is currently in material compliance with all such applicable laws and regulations.

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17. QUARTERLY FINANCIAL DATA (Unaudited)

Summarized quarterly financial data for 2013 and 2012 is presented below. Seasonal influences affect the Company’s sales and profits, with peak business occurring in May through August.

(in thousands, except per share amounts)

	2013								2012
	First		Second		Third		Fourth		First		Second		Third		Fourth
Sales	$	158,429	$	178,064	$	174,738	$	165,605	$	155,911	$	167,009	$	156,078	$	149,404
Gross profit	34,912		44,091		43,156		36,351		35,238		39,161		37,070		32,043
Net income	6,950		11,787		11,333		6,024		6,785		9,344		8,575		4,199
Earnings per share
Diluted	$	0.57	$	0.97	$	0.93	$	0.49	$	0.56	$	0.77	$	0.71	$	0.35
Average shares
Diluted	12,158		12,200		12,229		12,262		12,027		12,058		12,056		12,090
Dividends per share	$	0.07	0.07		$	0.07	$	0.07	$	0.06	$	0.06	$	0.06	$	0.06
Market price of     common stock
High	$	40.64	$	44.13	$	49.45	$	61.27	$	30.93	$	34.23	$	34.00	$	34.63
Low	$	33.12	$	37.39	$	40.48	$	45.51	$	25.51	$	29.40	$	27.07	$	29.66

The sum of quarterly earnings per share may not equal total year earnings per share due to rounding of earnings per share amounts, and differences in weighted-average shares and equivalent shares outstanding for each of the periods presented.

The fourth quarter 2013 results includes $1.8 million in pretax legal expenses related to the patent infringement lawsuit filed against the Company.

The fourth quarter 2012 results include the following items: (1) a pretax charge of $0.7 million related to goodwill impairment; (2) a $2.4 million charge relating to various litigation matters;and (3) a $1.2 million reversal of an environmental reserve at our Gradall facility.

18. SUBSEQUENT EVENTS

On February 24, 2014 the Company announced that it has entered into an agreement to acquire the operating units of Specialized Industries, LP. This includes the businesses of Super Products LLC, Wausau-Everest LP and Howard P. Fairfield LLC. Super Products is a manufacturer of vacuum trucks and related equipment, parts and service, which is complementary to Alamo’s VacAll operation. Wausau-Everest is a manufacturer of snow removal equipment which is complementary to Alamo’s Tenco and Henke operations. And, Howard P. Fairfield is a dealer/distribution operation primarily in the New England area. Together the three operations had net sales of approximately $139 million in the fiscal year ending December 31, 2013. Total consideration for the purchase is approximately $186 million, subject to certain adjustments. The purchase is anticipated to close within 45 days and is subject to receiving regulatory approval and completion of other pre-closing requirements.

In anticipation of this acquisition, the Company is expanding its revolving credit facility and increasing its line of credit from $100 million to $250 million to meet the ongoing needs of the combined entities.

The Company has entered into a contract to sell the SMC plant for $900,000 and anticipates a gain on the sale of the facility which is expected to close in the second quarter of 2014.

76

EX-3.2

Exhibit 3.2

BY-LAWS

OF

ALAMO GROUP INC.
(FORMERLY ALAMO GROUP HOLDINGS INC.)
(A DELAWARE CORPORATION)

Rev 2-14-2014

ACTIVE 59169567v.4

TABLE OF CONTENTS
			Page
ARTICLE I
OFFICES			1
	Section 1.	Registered Office	1
	Section 2.	Other Offices	1
ARTICLE II
MEETINGS OF STOCKHOLDERS			1
	Section 1.	Time and Place of Meetings	1
	Section 2.	Annual Meetings	1
	Section 3.	Notice of Annual Meetings	1
	Section 4.	Special Meetings	1
	Section 5.	Notice of Special Meetings	1
	Section 6.	Quorum	1
	Section 7.	Organization	2
	Section 8.	Conduct of Meeting	2
	Section 9.	Voting	2
	Section 10.	List of Stockholders	4
	Section 11.	Inspectors of Votes	4
	Section 12.	Actions Without a Meeting	4
	Section 13.	Nature of Business at Meetings of Stockholders	4
	Section 14.	Nomination of Directors	6
	Section 15.	Exchange Act	8
ARTICLE III
BOARD OF DIRECTORS			8
	Section 1.	Powers	8
	Section 2.	Number, Election and Term of Office	8
	Section 3.	Resignations	8
	Section 4.	Removal of Directors	9
	Section 5.	Vacancies	9
	Section 6.	Place of Meetings	9
	Section 7.	Annual Meetings	9

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	Section 8.	Regular Meetings	9
	Section 9.	Special Meetings; Notice	9
	Section 10.	Quorum and Manner of Acting	9
	Section 11.	Remuneration	9
	Section 12.	Executive Committee; How Constituted and Powers	10
	Section 13.	Organization	10
	Section 14.	Meetings	10
	Section 15.	Quorum and Manner of Acting	10
	Section 16.	Other Committees	11
	Section 17.	Alternate Members of Committees	11
	Section 18.	Minutes of Committees	11
	Section 19.	Actions Without a Meeting	11
	Section 20.	Presence at Meetings by Means of Communications Equipment	11
ARTICLE IV
NOTICES			11
	Section 1.	Type of Notice	11
	Section 2.	Waiver of Notice	12
ARTICLE V
OFFICERS			12
	Section 1.	Elected and Appointed Officers	12
	Section 2.	Time of Election or Appointment	12
	Section 3.	Salaries of Elected Officers	12
	Section 4.	Term	12
	Section 5.	Duties of the Chairman of the Board	12
	Section 6.	Duties of the President	12
	Section 7.	Duties of Vice Presidents	13
	Section 8.	Duties of Assistant Vice Presidents	13
	Section 9.	Duties of the Secretary	13
	Section 10.	Duties of Assistant Secretaries	13
	Section 11.	Duties of the Treasurer	14
	Section 12.	Duties of Assistant Treasurers	14
	Section 13.	Duties of the Controller	14
	Section 14.	Duties of Assistant Controllers	14

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ARTICLE VI
INDEMNIFICATION			14
	Section 1.	Actions Other Than by or in the Right of the Corporation	14
	Section 2.	Actions by or in the Right of the Corporation	15
	Section 3.	Determination of Right to Indemnification	15
	Section 4.	Right to Indemnification	15
	Section 5.	Prepaid Expenses	15
	Section 6.	Other Rights and Remedies	16
	Section 7.	Insurance	16
	Section 8.	Mergers	16
ARTICLE VII
CERTIFICATES REPRESENTING STOCK			16
	Section 1.	Right to Certificate	16
	Section 2.	Facsimile Signatures	16
	Section 3.	New Certificates	17
	Section 4.	Transfers	17
	Section 5.	Record Date	17
	Section 6.	Registered Stockholders	17
ARTICLE VIII
GENERAL PROVISIONS			17
	Section 1.	Dividends	17
	Section 2.	Reserves	18
	Section 3.	Annual Statement	18
	Section 4.	Checks	18
	Section 5.	Fiscal Year	18
	Section 6.	Corporate Seal	18
	Section 7.	Forum for Certain Actions	18
ARTICLE IX
AMENDMENTS			18

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ARTICLE IOFFICES

Section 1.Registered Office. The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 2.Other Offices. The Corporation may also have offices at such other place or places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE IIMEETINGS OF STOCKHOLDERS

Section 1.Time and Place of Meetings. All meetings of the stockholders for the election of directors shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 2.Annual Meetings. Annual meetings of stockholders, commencing with the year 1988, shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meeting the stockholders shall elect new members of the Board of Directors in accordance with the Certificate of Incorporation and transact such other business as may properly be brought before the meeting. The Board of Directors may postpone, reschedule or cancel any annual meeting of stockholders previously scheduled by the Board of Directors.

Section 3.Notice of Annual Meetings. Written notice of the annual meeting, stating the place, date, and hour of the meeting, shall be given to each stockholder of record entitled to vote at such meeting not less than 10 or more than 60 days before the date of the meeting.

Section 4.Special Meetings. Special meetings of the stockholders for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called at any time by order of the Board of Directors and shall be called by the Chairman of the Board, the President, or the Secretary at the request in writing of a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed special meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. The ability of the stockholders of the Corporation to call a special meeting of stockholders is hereby specifically denied. The Board of Directors may postpone, reschedule or cancel any special meeting of stockholders previously scheduled by the Board of Directors.

Section 5.Notice of Special Meetings. Written notice of a special meeting, stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given to each stockholder of record entitled to vote at such meeting not less than 10 or more than 60 days before the date of the meeting.

Section 6.Quorum. Except as otherwise provided by statute or the Certificate of Incorporation, the holders of stock having a majority of the voting power of the stock entitled to be voted thereat, present

ACTIVE 59169567v.4

in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time without notice (other than announcement at the meeting at which the adjournment is taken of the time and place of the adjourned meeting) until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 7.Organization. The Chairman of the Board shall act as chairman of meetings of stockholders of the Corporation. The Board of Directors may designate any other director or officer of the Corporation to act as chairman of any meeting in the absence of the Chairman of the Board, and the Board of Directors may further provide for determining who shall act as chairman of any meeting of stockholders in the absence of the Chairman of the Board and such designee. The Secretary, or if he shall be absent from such meeting or shall be required pursuant to the provisions of this Section 7 to act as chairman of such meeting, the person (who shall be an Assistant Secretary, if an Assistant Secretary shall be present thereat) whom the chairman of such meeting shall appoint, shall act as secretary of such meeting and keep the minutes thereof.

Section 8.Conduct of Meeting. The Board of Directors may adopt such rules and regulations for the conduct of any meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess or adjourn the meeting and to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants. Except to the extent determined by the Board of Directors or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 9.Voting.

(a)Except as otherwise provided in the Certificate of Incorporation, each stockholder shall, at each meeting of the stockholders, be entitled to one vote in person or by proxy for each share of stock of the Corporation held by him and registered in his name on the books of the Corporation on the date fixed pursuant to the provisions of Section 5 of Article VII of these By-Laws as the record date for the determination of stockholders who shall be entitled to notice of and to vote at such meeting. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held directly or indirectly by the Corporation, shall not be entitled to vote. Any vote by stock of the Corporation may be given at any meeting of the stockholders by the stockholder entitled thereto, in person or by his proxy appointed by an instrument in writing subscribed by such stockholder

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or by his attorney thereunto duly authorized and delivered to the Secretary of the Corporation or to the secretary of the meeting; provided, however, that no proxy shall be voted or acted upon after three years from its date, unless said proxy shall provide for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable and unless otherwise made irrevocable by law. At all meetings of the stockholders all matters, except where other provision is made by law, the Certificate of Incorporation, or these By-Laws (including as set forth in subsection (b) below with respect to the election of directors), shall be decided by the vote of a majority of the shares present in person or by proxy and entitled to vote thereat, a quorum being present.

(b)(i) Except as otherwise provided in this Section 9(b) of Article II, each director shall be elected by the vote of the majority of the votes cast with respect to that director’s election at any meeting for the election of directors at which a quorum is present, provided that if, as of the tenth day preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders of the Corporation, the number of nominees exceeds the number of directors to be elected (a “Contested Election”), the directors shall be elected by the vote of a plurality of the votes cast. For purposes of this Section 9(b) of Article II, a majority of votes cast shall mean that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election).

(ii)Subject to Section 14 of Article II of these By-Laws, in order for any incumbent director to become a nominee of the Board of Directors for further service on the Board of Directors, such person must submit an irrevocable resignation, provided that such resignation shall be effective if (A) that person shall not receive a majority of the votes cast in an election that is not a Contested Election and (B) the Board of Directors shall accept that resignation in accordance with the policies and procedures adopted by the Board of Directors for such purpose. In the event an incumbent director fails to receive a majority of the votes cast in an election that is not a Contested Election, the nominating/corporate governance committee of the Board of Directors, or such other committee designated by the Board of Directors pursuant to Article III of these By-Laws, shall make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board of Directors shall act on the resignation, taking into account the committee’s recommendation, and publicly disclose (by a press release and filing an appropriate disclosure with the Securities and Exchange Commission) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision within 90 days following certification of the election results.

(iii)If the Board of Directors accepts a director’s resignation pursuant to this Section 9(b) of Article II, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors may fill the resulting vacancy pursuant to Section 5 of Article III of these By-Laws or may decrease the size of the Board of Directors pursuant to the provisions of Section 2 of Article III of these By-Laws.

(c)Unless demanded by a stockholder of the Corporation present in person or by proxy at any meeting of the stockholders and entitled to vote thereat, or so directed by the chairman of the meeting, the vote thereat on any question other than the election or removal of directors need not be by written ballot. Upon a demand of any such stockholder for a vote by written ballot on any question or at the direction of such chairman that a vote by written ballot be taken on any question, such vote shall be taken by written ballot. On a vote by written ballot, each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and shall state the number of shares voted.

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Section 10.List of Stockholders. It shall be the duty of the Secretary or other officer of the Corporation who shall have charge of its stock ledger, either directly or through another officer of the Corporation designated by him or through a transfer agent appointed by the Board of Directors, to prepare and make, at least 10 days before every meeting of the stockholders, a complete list of the stockholders entitled to vote thereat, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days before said meeting, either at a place within the city where said meeting is to be held, which place shall be specified in the notice of said meeting, or, if not so specified, at the place where said meeting is to be held. The list shall also be produced and kept at the time and place of said meeting during the whole time thereof, and may be inspected by any stockholder of record who shall be present thereat. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, such list or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

Section 11.Inspectors of Votes. At each meeting of the stockholders, the chairman of such meeting may appoint two Inspectors of Votes to act thereat, unless the Board of Directors shall have theretofore made such appointments. Each Inspector of Votes so appointed shall first subscribe an oath or affirmation faithfully to execute the duties of an Inspector of Votes at such meeting with strict impartiality and according to the best of his ability. Such Inspectors of Votes, if any, shall take charge of the ballots, if any, at such meeting and, after the balloting thereat on any question, shall count the ballots cast thereon and shall make a report in writing to the secretary of such meeting of the results thereof. An Inspector of Votes need not be a stockholder of the Corporation, and any officer of the Corporation may be an Inspector of Votes on any question other than a vote for or against his election to any position with the Corporation or on any other question in which he may be directly interested.

Section 12.Actions Without a Meeting. No action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without such meeting, and the power of the stockholders to consent in writing without a meeting to any action to be taken by them is denied as set forth in the Certificate of Incorporation.

Section 13.Nature of Business at Meetings of Stockholders.

(a)General. No business may be transacted at an annual meeting of stockholders, other than business that is either (i) specified in the Corporation’s proxy materials with respect to such meeting given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (iii) otherwise properly brought before the annual meeting by any stockholder of the Corporation (A) who is a stockholder of record on the date of the giving of the notice provided for in this Section 13 and on the record date for the determination of stockholders entitled to notice of and to vote at such annual meeting, (B) who is entitled to vote at such annual meeting and (C) who complies with the notice procedures set forth in this Section 13. In addition to the other requirements set forth in this Section 13, a stockholder may not transact any business at an annual meeting unless (1) such stockholder and any beneficial owner on whose behalf such business is proposed (each, a “Proposing Party”) acted in a manner consistent with the representation made in the Business Solicitation Representation (as defined below) and (2) such business is a proper matter for stockholder action under the General Corporation Law of the State of Delaware, as amended (the “DGCL”). For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a stockholder to propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended

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(such act, and the rules and regulations promulgated thereunder, the “Exchange Act”)) at an annual meeting of stockholders.

(b)Timing of Notice. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary. To be timely, a stockholder’s notice must be received by the Secretary at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the annual meeting is convened more than thirty (30) days before or more than sixty (60) days after such anniversary date, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so received no more than one hundred twenty (120) days prior to such annual meeting nor less than the later of (i) ninety (90) days prior to such annual meeting and (ii) ten (10) days after the earlier of (A) the day on which notice of the date of the meeting was mailed or (B) the day on which public disclosure of the date of the meeting was made. In no event shall an adjournment of an annual meeting, or a postponement of an annual meeting for which notice has been given, or the public disclosure thereof, commence a new time period for the giving of a stockholder’s notice as described above.

(c)Form of Notice. To be in proper written form, a stockholder’s notice to the Secretary must set forth (i) as to each matter each Proposing Party proposes to bring before the annual meeting, a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address of each Proposing Party, (iii)(A) the class or series and number of shares of capital stock of the Corporation that are owned, directly or indirectly, beneficially or of record by each Proposing Party or any Stockholder Associated Person (as defined below) and (B) any derivative positions held or beneficially held by each Proposing Party and Stockholder Associated Person and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including, without limitation, any short position or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, any such Proposing Party or any Stockholder Associated Person with respect to shares of the Corporation (which information described in this clause (iii) shall be supplemented by such Proposing Party not later than ten (10) days after the record date for the meeting to disclose such ownership as of the record date); (iv) a description of all arrangements or understandings between each Proposing Party or any Stockholder Associated Person and any other person or persons (including their names) in connection with the proposal of such business by such Proposing Party and any material interest of each Proposing Party and any Stockholder Associated Person in such business; (v) a representation that such Proposing Party intends to appear in person or by proxy at the annual meeting to bring such business before the meeting; (vi) a Business Solicitation Representation (as defined below); and (vii) any other information relating to each Proposing Party that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for stockholder proposals pursuant to Section 14 of the Exchange Act or the rules and regulations promulgated thereunder (the “Proxy Rules”).

(d)Definitions. For purposes of these By-Laws, (i) “Business Solicitation Representation” shall mean, with respect to any Proposing Party, a representation as to whether or not such Proposing Party or any Stockholder Associated Person will deliver a proxy statement and form of proxy to the holders of at least the percentage of the Corporation’s voting shares required under applicable law to adopt such proposed business or otherwise to solicit proxies from stockholders in support of such proposal; (ii) “public disclosure” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act; and (iii) “Stockholder

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Associated Person” shall mean, with respect to any Proposing Party or any Nominating Party (as defined below), (A) any person directly or indirectly controlling, controlled by, under common control with or acting in concert with such Proposing Party or (B) any member of such Proposing Party’s immediate family sharing the same household.

(e)Improper Business. No business shall be conducted at the annual meeting of stockholders of the Corporation except business brought before the annual meeting in accordance with the procedures set forth in this Section 13. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting, and such business shall not be transacted. Notwithstanding the foregoing provisions of this Section 13, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation to propose business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 13, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders, and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

Section 14.Nomination of Directors.

(a)General. Subject to Section 9(b)(ii) of Article II of these By-laws and subject to Section 5 of Article III of these By-laws, only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation with respect to the right, if any, of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances and except as may otherwise be provided in the Proxy Rules. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any stockholder of the Corporation (A) who is a stockholder of record on the date of the giving of the notice provided for in this Section 14 and on the record date for the determination of stockholders entitled to notice of and to vote at such meeting, (B) who is entitled to vote at such meeting and (C) who complies with the notice procedures set forth in this Section 14. In addition to the other requirements set forth herein, a stockholder may not present a nominee for election at an annual or special meeting unless such stockholder, and any beneficial owner on whose behalf such nomination is made, acted in a manner consistent with the representations made in the Nominee Solicitation Representation (as defined below).

(b)Timing of Notice. In addition to any other applicable requirements, for a nomination to be made by a stockholder of the Corporation, such stockholder must have given timely notice thereof in proper written form to the Secretary. To be timely, a stockholder’s notice must be received by the Secretary at the principal executive offices of the Corporation (i) in the case of an annual meeting, not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the annual meeting is convened more than thirty (30) days before or more than sixty (60) days after such anniversary date, or if no annual meeting was held in the preceding year, notice by the stockholder to be timely must be so received no more than one hundred twenty (120) days prior to such annual meeting nor less than the later of (A) ninety (90) days prior to such annual meeting and (B) ten (10) days after the earlier of (1) the day on which notice of the date of the meeting was mailed or (2) the day on which public disclosure of the date of the meeting was made; and (ii) in the

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case of a special meeting of stockholders called for the purpose of electing directors, no more than ten (10) days after the earlier of (A) the day on which notice of the date of the special meeting was mailed or (B) the day on which public disclosure of the date of the special meeting was made. In no event shall an adjournment of an annual or special meeting, or a postponement of such a meeting for which notice has been given, or the public disclosure thereof, commence a new time period for the giving of a stockholder’s notice as described above. Notwithstanding the foregoing, in the event that the number of directors to be elected to the Board of Directors at the annual meeting is increased effective after the time period for which nominations would otherwise be due under this Section 14 and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 14 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

(c)Form of Notice. To be in proper written form, a stockholder’s notice to the Secretary must set forth (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of such person; (B) the principal occupation or employment of such person; (C) the class or series and number of shares of capital stock (if any) of the Corporation that are owned, directly or indirectly, beneficially or of record by such person; and (D) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors required pursuant to the Proxy Rules; and (ii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf such nomination is made (each, a “Nominating Party”) (A) the name and address of each Nominating Party, (B)(1) the class or series and number of shares of capital stock of the Corporation that are owned, directly or indirectly, beneficially or of record by each Nominating Party or any Stockholder Associated Person and (2) any derivative positions held or beneficially held by each Nominating Party and Stockholder Associated Person and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including, without limitation, any short position or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, any such Nominating Party or any Stockholder Associated Person with respect to shares of the Corporation (which information described in this clause (ii)(B) shall be supplemented by such Nominating Party not later than ten (10) days after the record date for the meeting to disclose such ownership as of the record date); (C) a description of all arrangements or understandings between each Nominating Party or any Stockholder Associated Person and each proposed nominee or any other person or persons (including their names) pursuant to which the nomination(s) are to be made, (D) a representation that such Nominating Party intends to appear in person or by proxy at the meeting to nominate the persons named in its notice, (E) a representation (a “Nominee Solicitation Representation”) as to whether or not such Nominating Party or any Stockholder Associated Person will deliver a proxy statement and form of proxy to a number of holders of the Corporation’s voting shares reasonably believed by such Nominating Party to be sufficient to elect its nominee or nominees or otherwise to solicit proxies from stockholders in support of such nominations and (F) any other information relating to each Nominating Party that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to the Proxy Rules. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

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(d)Defective Nominations. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 14. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective, and such defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 14, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 14, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders, and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

Section 15.Exchange Act. Notwithstanding the provisions of Section 13 and Section 14 above, a stockholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in such sections. Nothing in such sections shall be deemed to affect any rights of (i) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act, (ii) stockholders to request inclusion of nominees in the Corporation’s proxy statement pursuant to the Proxy Rules or (iii) the holders of any series of preferred stock to elect directors under specified circumstances.

ARTICLE IIIBOARD OF DIRECTORS

Section 1.Powers. The business and affairs of the Corporation shall be managed by its Board of Directors, which shall have and may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute, the Certificate of Incorporation, or these By-Laws directed or required to be exercised or done by the stockholders.

Section 2.Number, Election and Term of Office. The number of directors that shall constitute the Board of Directors upon the adoption of these By-laws shall be five (5). Thereafter, the number of directors shall be established from time to time by resolution of the Board of Directors. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 5 of this Article III, and each director elected shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

Section 3.Resignations. Any director may resign at any time by giving written notice of his resignation to the Corporation. Any such resignation shall take effect at the time specified therein, or if the time when it shall become effective shall not be specified therein, then it shall take effect immediately upon its receipt by the Secretary. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 4.Removal of Directors. Any director may be removed, but only for cause, upon the affirmative vote by written ballot of the holders of two-thirds (2/3) of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, given at an annual meeting or at a special meeting of the stockholders called for that purpose.

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Section 5.Vacancies. Newly created directorships resulting from any increase in the authorized number of directors and vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the affirmative vote of a majority of the directors then in office, even though less than a quorum, or by a sole remaining director. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until his successor is elected and qualified. If there are no directors in office, then an election of directors may be held in the manner provided by statute. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent Director.

MEETINGS OF THE BOARD OF DIRECTORS

Section 6.Place of Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware.

Section 7.Annual Meetings. The first meeting of each newly elected Board of Directors shall be held immediately following the annual meeting of stockholders, and no notice of such meeting to the newly elected directors shall be necessary in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held immediately following the annual meeting of stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.

Section 8.Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors.

Section 9.Special Meetings; Notice. Special meetings of the Board of Directors may be called by the Chairman of the Board, the President, or the Secretary on 24 hours’ notice to each director, either personally or by telephone or by mail, telegraph, telex, cable, wireless, or other form of recorded communication; special meetings shall be called by the Chairman of the Board, the President, or the Secretary in like manner and on like notice on the written request of two directors. Notice of any such meeting need not be given to any director, however, if waived by him in writing or by telegraph, telex, cable, wireless, or other form of recorded communication, or if he shall be present at such meeting.

Section 10.Quorum and Manner of Acting. At all meetings of the Board of Directors, a majority of the directors at the time in office (but not less than one-third of the whole Board of Directors) shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 11.Remuneration. Unless otherwise expressly provided by resolution adopted by the Board of Directors, none of the directors shall, as such, receive any stated remuneration for his services; but the Board of Directors may at any time and from time to time by resolution provide that a specified sum shall be paid to any director of the Corporation, either as his annual remuneration as such director or member of any committee of the Board of Directors or as remuneration for his attendance at each meeting of the Board of Directors or any such committee. The Board of Directors may also likewise provide that the Corporation shall reimburse each director for any expenses paid by him on account of his attendance at any

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meeting. Nothing in this Section 11 shall be construed to preclude any director from serving the Corporation in any other capacity and receiving remuneration therefor.

COMMITTEES OF DIRECTORS

Section 12.Executive Committee; How Constituted and Powers. The Board of Directors may in its discretion, by resolution passed by a majority of the whole Board of Directors, designate an Executive Committee consisting of one or more of the directors of the Corporation. Subject to the provisions of Section 141 of the DGCL, the Certificate of Incorporation, and these By-Laws, the Executive Committee shall have and may exercise, when the Board of Directors is not in session, all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and shall have the power to authorize the seal of the Corporation to be affixed to all papers which may require it; but the Executive Committee shall not have the power to fill vacancies in the Board of Directors, the Executive Committee, or any other committee of directors or to elect or approve officers of the Corporation. The Executive Committee shall have the power and authority to authorize the issuance of common stock and grant and authorize options and other rights with respect to such issuance. The Board of Directors shall have the power at any time, by resolution passed by a majority of the whole Board of Directors, to change the membership of the Executive Committee, to fill all vacancies in it, or to dissolve it, either with or without cause.

Section 13.Organization. The Chairman of the Executive Committee, to be selected by the Board of Directors, shall act as chairman at all meetings of the Executive Committee and the Secretary shall act as secretary thereof. In case of the absence from any meeting of the Executive Committee of the Chairman of the Executive Committee or the Secretary, the Executive Committee may appoint a chairman or secretary, as the case may be, of the meeting.

Section 14.Meetings. Regular meetings of the Executive Committee, of which no notice shall be necessary, may be held on such days and at such places, within or without the State of Delaware, as shall be fixed by resolution adopted by a majority of the Executive Committee and communicated in writing to all its members. Special meetings of the Executive Committee shall be held whenever called by the Chairman of the Executive Committee or a majority of the members of the Executive Committee then in office. Notice of each special meeting of the Executive Committee shall be given by mail, telegraph, telex, cable, wireless, or other form of recorded communication or be delivered personally or by telephone to each member of the Executive Committee not later than the day before the day on which such meeting is to be held. Notice of any such meeting need not be given to any member of the Executive Committee, however, if waived by him in writing or by telegraph, telex, cable, wireless, or other form of recorded communication, or if he shall be present at such meeting; and any meeting of the Executive Committee shall be a legal meeting without any notice thereof having been given, if all the members of the Executive Committee shall be present thereat. Subject to the provisions of this Article III, the Executive Committee, by resolution adopted by a majority of the whole Executive Committee, shall fix its own rules of procedure.

Section 15.Quorum and Manner of Acting. A majority of the Executive Committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at a meeting thereof at which a quorum is present shall be the act of the Executive Committee.

Section 16.Other Committees. The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board of Directors, designate one or more other committees consisting of one or more directors of the Corporation, which, to the extent provided in said resolution or resolutions, shall have and may exercise, subject to the provisions of Section 141 of the DGCL, the Certificate of Incorporation, and these By-Laws, the powers and authority of the Board of Directors in the management of the business

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and affairs of the Corporation, and shall have the power to authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power to fill vacancies in the Board of Directors, the Executive Committee, or any other committee or in their respective membership, to appoint or remove officers of the Corporation, or to authorize the issuance of shares of the capital stock of the Corporation, except that such a committee may, to the extent provided in said resolutions, grant and authorize options and other rights with respect to the common stock of the Corporation pursuant to and in accordance with any plan approved by the Board of Directors. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. A majority of all the members of any such committee may determine its action and fix the time and place of its meetings and specify what notice thereof, if any, shall be given, unless the Board of Directors shall otherwise provide. The Board of Directors shall have power to change the members of any such committee at any time to fill vacancies, and to discharge any such committee, either with or without cause, at any time.

Section 17.Alternate Members of Committees. The Board of Directors may designate one or more directors as alternate members of the Executive Committee or any other committee, who may replace any absent or disqualified member at any meeting of the committee, or if none be so appointed, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Section 18.Minutes of Committees. Each committee shall keep regular minutes of its meetings and proceedings and report the same to the Board of Directors at the next meeting thereof.

GENERAL

Section 19.Actions Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board of Directors or the committee.

Section 20.Presence at Meetings by Means of Communications Equipment. Members of the Board of Directors, or of any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting conducted pursuant to this Section 20 shall constitute presence in person at such meeting.

ARTICLE IVNOTICES

Section 1.Type of Notice. Whenever, under the provisions of any applicable statute, the Certificate of Incorporation, or these By-Laws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, in person or by mail, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given in any manner permitted by Article III hereof and shall be deemed to be given at the time when first transmitted by the method of communication so permitted.

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Section 2.Waiver of Notice. Whenever any notice is required to be given under the provisions of any applicable statute, the Certificate of Incorporation, or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto, and transmission of a waiver of notice by a director or stockholder by mail, telegraph, telex, cable, wireless, or other form of recorded communication may constitute such a waiver.

ARTICLE VOFFICERS

Section 1.Elected and Appointed Officers. The elected officers of the Corporation shall be a President, one or more Vice Presidents, with or without such descriptive titles as the Board of Directors shall deem appropriate, a Secretary, and a Treasurer, and, if the Board of Directors so elects, a Chairman of the Board (who shall be a director) and a Controller. The Board of Directors or the Executive Committee of the Board of Directors by resolution also may appoint one or more Assistant Vice Presidents, Assistant Treasurers, Assistant Secretaries, Assistant Controllers, and such other officers and agents as from time to time may appear to be necessary or advisable in the conduct of the affairs of the Corporation.

Section 2.Time of Election or Appointment. The Board of Directors at its annual meeting shall elect or appoint, as the case may be, the officers to fill the positions designated in or pursuant to Section 1 of this Article V. Officers of the Corporation may also be elected or appointed, as the case may be, at any other time.

Section 3.Salaries of Elected Officers. The salaries of all elected officers of the Corporation shall be fixed by the Board of Directors.

Section 4.Term. Each officer of the Corporation shall hold his office until his successor is duly elected or appointed and qualified or until his earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Any officer elected or appointed by the Board of Directors or the Executive Committee may be removed at any time by the affirmative vote of a majority of the whole Board of Directors. Any vacancy occurring in any office of the Corporation by death, resignation, removal, or otherwise may be filled by the Board of Directors or the appropriate committee thereof.

Section 5.Duties of the Chairman of the Board. The Chairman of the Board of Directors shall preside at meetings of the Board of Directors unless he shall be absent and he shall have power to call special meetings of the Board of Directors for any purpose or purposes. He is authorized to make and sign contracts and agreements in the name and on behalf of the Corporation.

Section 6.Duties of the President. The President shall be the chief executive officer of the Corporation, shall have general and active control of all of its business and shall preside at meetings of its stockholders. He shall have the power to call special meetings of the Board of Directors, and, in the absence of the Chairman of the Board, he shall preside, when present, at all meetings of the Board of Directors. He shall see that all orders and resolutions of the Board of Directors and the stockholders are carried into effect. He shall have general authority to execute bonds, deeds, contracts and agreements in the name of the Corporation and affix the corporate seal thereto; to sign stock certificates; to cause the employment or appointment of such employees and agents of the Corporation as the proper conduct of operations may require, and to fix their compensation, subject to the provisions of these By-Laws; to remove or suspend any employee or agent who shall have been employed or appointed under his authority, or under authority of any officer subordinate to him; to suspend for cause, pending final action by the authority which shall have elected or appointed him, any officer subordinate to the President; and, in general, to exercise all the powers

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and authority usually appertaining to the chief executive officer of a corporation, except as otherwise provided in these By-Laws.

Section 7.Duties of Vice Presidents. In the absence of the President or in the event of his inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President and, when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents shall perform such other duties and have such other powers as the Board of Directors, the Chairman of the Board or the President may from time to time prescribe.

Section 8.Duties of Assistant Vice Presidents. In the absence of a Vice President or in the event of his inability or refusal to act, the Assistant Vice President (or in the event there shall be more than one, the Assistant Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their appointment) shall perform the duties and exercise the powers of that Vice President, and shall perform such other duties and have such other powers as the Board of Directors, the Chairman of the Board, the President, or the Vice President under whose supervision he is appointed may from time to time prescribe.

Section 9.Duties of the Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the Executive Committee or other standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board, or the President, under whose supervision he shall be. He shall have custody of the corporate seal of the Corporation, and he, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it, and when so affixed, it may be attested by his signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature. The Secretary shall keep and account for all books, documents, papers, and records of the Corporation, except those for which some other officer or agent is properly accountable. He shall have authority to sign stock certificates and shall generally perform all the duties usually appertaining to the office of the secretary of a corporation.

Section 10.Duties of Assistant Secretaries. In the absence of the Secretary or in the event of his inability or refusal to act, the Assistant Secretary (or, if there shall be more than one, the Assistant Secretaries in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their appointment) shall perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors, the Chairman of the Board, the President, or the Secretary may from time to time prescribe.

Section 11.Duties of the Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, he shall give the Corporation a bond (which shall

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be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement, or removal from office, of all books, papers, vouchers, money, and other property of whatever kind in his possession or under his control belonging to the Corporation. The Treasurer shall be under the supervision of the Vice President in charge of finance or Chief Financial Officer, if one is so designated, and he shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board, the President, or any such Vice President in charge of finance.

Section 12.Duties of Assistant Treasurers. The Assistant Treasurer or Assistant Treasurers shall assist the Treasurer, and in the absence of the Treasurer or in the event of his inability or refusal to act, the Assistant Treasurer (or in the event there shall be more than one, the Assistant Treasurers in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their appointment) shall perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors, the Chairman of the Board, the President, or the Treasurer may from time to time prescribe.

Section 13.Duties of the Controller. The Controller, if one is appointed, shall have supervision of the accounting practices of the Corporation and shall prescribe the duties and powers of any other accounting personnel of the Corporation. He shall cause to be maintained an adequate system of financial control through a program of budgets and interpretive reports. He shall initiate and enforce measures and procedures whereby the business of the Corporation shall be conducted with the maximum efficiency and economy. If required, he shall prepare a monthly report covering the operating results of the Corporation. The Controller shall be under the supervision of the Vice President in charge of finance or Chief Financial Officer, if one is so designated, and he shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board, the President, or any such Vice President in charge of finance or Chief Financial Officer.

Section 14.Duties of Assistant Controllers. The Assistant Controller or Assistant Controllers shall assist the Controller, and in the absence of the Controller or in the event of his inability or refusal to act, the Assistant Controller (or, if there shall be more than one, the Assistant Controllers in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their appointment) shall perform the duties and exercise the powers of the Controller and perform such other duties and have such other powers as the Board of Directors, the Chairman of the Board, the President, or the Controller may from time to time prescribe.

ARTICLE VIINDEMNIFICATION

Section 1.Actions Other Than by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or contemplated action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The

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termination of any action, suit, or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal action or proceeding, that he had reasonable cause to believe that his conduct was unlawful.

Section 2.Actions by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or contemplated action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation, unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Section 3.Determination of Right to Indemnification. Any indemnification under Sections 1 or 2 of this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee, or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 1 or 2 of this Article VI. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit, or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders.

Section 4.Right to Indemnification. Notwithstanding the other provisions of this Article VI, to the extent that a director, officer, employee, or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Sections 1 or 2 of this Article VI, or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.

Section 5.Prepaid Expenses. Expenses incurred in defending a civil or criminal action, suit, or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit, or proceeding, as authorized by the Board of Directors in the specific case, upon receipt of an undertaking by or on behalf of the director, officer, employee, or agent to repay such amount unless it shall ultimately be determined he is entitled to be indemnified by the Corporation as authorized in this Article VI.

Section 6.Other Rights and Remedies. The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which any person seeking indemnification may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.

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Section 7.Insurance. Upon resolution passed by the Board of Directors, the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VI.

Section 8.Mergers. For purposes of this Article VI, references to “the Corporation” shall include, in addition to the resulting or surviving corporation, constituent corporations (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, or agents, so that any person who is or was a director, officer, employee, or agent of such constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

ARTICLE VIICERTIFICATES REPRESENTING STOCK

Section 1.Right to Certificate. Every holder of stock in the Corporation shall be entitled to have a certificate, signed by, or in the name of the Corporation by, the Chairman of the Board, the President, or a Vice President and by the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation; provided, however, that the Board of Directors may provide by resolution or resolutions that all or some of all classes or series of stock of the Corporation shall be represented by uncertificated shares. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences, and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations, or restrictions of such preferences or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock; provided, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences, and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations, or restrictions of such preferences or rights.

Section 2.Facsimile Signatures. Any of or all the signatures on the certificates (if any) may be facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.

Section 3.New Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation and alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof,

16

ACTIVE 59169567v.4

require the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed or the issuance of such new certificate.

Section 4.Transfers. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation, or authority to transfer, it shall be the duty of the Corporation, subject to any proper restrictions on transfer, to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be canceled and issuance of new equivalent uncertificated stock or certificated shares (if authorized) shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation. Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to the DGCL or, unless otherwise provided in the DGCL, a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Section 5.Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be less than 10 or more than 60 days before the date of such meeting or any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 6.Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not provided by the laws of the State of Delaware.

ARTICLE VIIIGENERAL PROVISIONS

Section 1.Dividends. Dividends upon the capital stock of the Corporation, if any, subject to the provisions of the Certificate of Incorporation, may be declared by the Board of Directors (but not any committee thereof) at any regular meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.

Section 2.Reserves. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, thinks proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the

17

ACTIVE 59169567v.4

Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

Section 3.Annual Statement. The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation.

Section 4.Checks. All checks or demands for money and promissory notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time prescribe.

Section 5.Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors.

Section 6.Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization, and the word “Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed, affixed, reproduced, or otherwise.

Section 7.Forum for Certain Actions, Unless a majority of the Board, acting on behalf of the Corporation, consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court located within the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation or any of its directors, officers or other employees arising pursuant to any provision of the DGCL, the Corporation’s Certificate of Incorporation or these By-Laws (in each case, as may be amended from time to time) or (iv) any action asserting a claim against the Corporation or any of its directors, officers or other employees governed by the internal affairs doctrine of the State of Delaware, in all cases subject to the court’s having personal jurisdiction over all indispensible parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 7.

ARTICLE IXAMENDMENTS

These By-Laws may be altered, amended, or repealed or new By-Laws may be adopted by the stockholders or by the Board of Directors at any regular meeting of the stockholders or the Board of Directors or at any special meeting of the stockholders or the Board of Directors if notice of such alteration, amendment, repeal, or adoption of new By-Laws be contained in the notice of such special meeting, provided, however, that any such adoption, amendment or repeal of Article II, Section 12, Article III, Sections 2, 4, and 5, Article V, Sections 2 and 3 or this Article IX, or adoption of any provision inconsistent therewith, shall require the affirmative vote of two-thirds (2/3) of the voting power of the outstanding shares of the Common Stock of the Corporation.

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EX-21.1

Exhibit 21.1

SUBSIDIARIES OF ALAMO GROUP INC.

Name	Jurisdiction of Incorporation
Alamo Group (USA) Inc. (1)	Delaware
Alamo Group Europe Limited (1)	United Kingdom
Alamo Group (Canada) Inc. (1)	New Brunswick
Gradall Industries, Inc. (2)	Delaware
NP Real Estate Inc. (2)	Ohio
Bush Hog, Inc. (2)	Delaware
Henke Manufacturing Corporation (2)	Kansas
Alamo Group (TX) Inc. (2)	Delaware
Alamo Group Services Inc.(2)	Delaware
Alamo Group Management Inc. (2)	Texas
Tenco Industries Inc. (2)	Delaware
Alamo Sales Corp. (2)	Delaware
Alamo Group (IL) Inc. (2)	Delaware
Tiger Corporation (2)	Nevada
Terrain King Corporation (2)	Nevada
Schwarze Industries, Inc. (2)	Alabama
Schwarze Industries Australia PTY Ltd. (3)	Australia
Schulte (USA) Inc. (2)	Florida
Alamo Group (SMC) Inc. (2)	Nevada
Nite-Hawk Sweepers, LLC (2)	Washington
ALG (HK) Limited (2)	Hong Kong
Alamo Group (IA) Inc. (2)	Nevada
Alamo Group (FR) SAS (4)	France
Alamo Manufacturing Services (UK) Limited (4)	United Kingdom
McConnel Ltd. (4)	United Kingdom
Twose of Tiverton Ltd. (5)	United Kingdom
Spearhead Machinery Ltd. (4)	United Kingdom
Bomford & Evershed Ltd. (5)	United Kingdom
Bomford Turner Ltd. (5)	United Kingdom
Turner International (ENG) Ltd. (5)	United Kingdom
SMA SAS (10)	France
Forges Gorce SAS(6)	France
Faucheux SAS (6)	France
Rousseau SAS (6)	France
Rivard SAS (6)	France
Schulte Industries Ltd. (7)	New Brunswick
Tenco Inc. (7)	New Brunswick
ALG (Beijing) Trading Co. Ltd. (9)	Hong Kong

_____________________

(1) 100% owned by Alamo Group Inc.

(2) 100% owned by Alamo Group (USA) Inc.

(3) 100% owned by Schwarze Industries, Inc.

(4) 100% owned by Alamo Group (Europe) Limited

(5) 100% owned by Alamo Manufacturing Services (UK) Limited

(6) 100% owned by Alamo Group (FR) SAS

(7) 100% owned by Alamo Group (Canada) Inc.

(8) 100% owned by SMA SAS

(9) 100% owned by ALG (HK) Limited

(10) 100% owned by Faucheux

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statements Nos. 333-174755, 333-88454, and 333-143216 on Form S-8 and registration statement No. 333-180049 on Form S-3, of Alamo Group Inc. of our reports dated March 11, 2014, with respect to the consolidated balance sheets of Alamo Group Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and the effectiveness of internal control over financial reporting as of December 31, 2013, which reports appear in the December 31, 2013 annual report on Form 10-K of Alamo Group Inc.

	/s/KPMG LLP
San Antonio, Texas
March 11, 2014

EX-31.1

Exhibit 31.1

I, Ronald A. Robinson, certify that:

1. I have reviewed this annual report on Form 10-K of Alamo Group Inc;

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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 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

5. The registrant's other certifying officer(s) 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.

March 11, 2014	/s/Ronald A. Robinson
	Ronald A. Robinson President & Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Dan E. Malone, certify that:

1. I have reviewed this annual report on Form 10-K of Alamo Group Inc;

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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 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

5. The registrant's other certifying officer(s) 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.

March 11, 2014	/s/Dan E. Malone
	Dan E. Malone Executive Vice President & Chief Financial Officer

EX-31.3

Exhibit 31.3

 I, Richard J. Wehrle, certify that:

1. I have reviewed this annual report on Form 10-K of Alamo Group Inc;

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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 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

5. The registrant's other certifying officer(s) 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.

March 11, 2014	/s/Richard J. Wehrle
	Richard J. Wehrle Vice President & Corporate Controller

EX-32.1

Exhibit 32.1

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 Annual Report of Alamo Group Inc. (the “Company”) on Form 10-K for the period ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald A. Robinson, President & Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 11, 2014	/s/Ronald A. Robinson
	Ronald A. Robinson President & Chief Executive Officer

EX-32.2

Exhibit 32.2

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 Annual Report of Alamo Group Inc. (the “Company”) on Form 10-K for the period ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dan E. Malone, Executive Vice President & Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 11, 2014	/s/Dan E. Malone
	Dan E. Malone Executive Vice President & Chief Financial Officer
	(Principal Financial Officer)

EX-32.3

Exhibit 32.3

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 Annual Report of Alamo Group Inc. (the “Company”) on Form 10-K for the period ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard J. Wehrle, Vice President & Corporate Controller of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 11, 2014	/s/Richard J. Wehrle
	Richard J. Wehrle Vice President & Corporate Controller
	(Principal Accounting Officer)

XML

Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following table presents the revenues, income from operations (loss), goodwill and total identifiable assets by reporting segment for the years ended December 31, 2013, 2012 and 2011:

	December 31,
(in thousands)	2013		2012		2011
Net Revenue
North American Industrial	$	296,617	$	263,353	$	229,594
North American Agricultural	215,340		200,467		203,993
European	164,879		164,582		170,006
Consolidated	$	676,836	$	628,402	$	603,593
Income from Operations
North American Industrial	$	25,743	$	19,313	$	24,649
North American Agricultural	17,880		18,319		16,644
European	7,114		7,717		8,163
Consolidated	$	50,737	$	45,349	$	49,456
Goodwill
North American Industrial	$	13,176	$	13,418	$	13,316
North American Agricultural	—		—		—
European	18,897		18,230		18,435
Consolidated	$	32,073	$	31,648	$	31,751
Total Identifiable Assets
North American Industrial	$	161,080	$	153,234	$	144,763
North American Agricultural	123,352		118,829		121,320
European	154,044		132,276		115,582
Consolidated	$	438,476	$	404,339	$	381,665

XML

Long-Term Debt (Narrative) (Details) (USD $)	Dec. 31, 2013
Debt Instrument [Line Items]
2014	$ 420,000
2015	8,000
Thereafter	0
Bank revolving credit facility | Amended and Restated Revolving Credit Agreement
Debt Instrument [Line Items]
Aggregate commitments	100,000,000
Maximum amount of aggregate commitments (up to $50,000,000)	50,000,000
Available borrowings	99,278,000
Bank revolving credit facility | Amended and Restated Revolving Credit Agreement | Standby Letters of Credit
Debt Instrument [Line Items]
Amount of capacity	$ 722,000

XML

Inventories (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Inventory Disclosure [Abstract]
Percentage of LIFO inventory	55.00%	56.00%
Excess of current costs over stated LIFO value	$ 9,483	$ 8,975
LIFO reserve impact on earnings	$ (508)	$ (484)	$ 1,805

XML

Retirement Benefit Plans (Schedule of Changes in Plan Assets, Changes in Projected Benefit Obligation, Rate Assumptions, and Components of Net Periodic Benefit Costs) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Change in fair value of plan assets
Fair value of plan assets at end of year	$ 25,274	$ 21,838
Pension Plans, Defined Benefit
Change in projected benefit obligation
Benefit obligation at beginning of year	31,709	29,692
Service cost	16	14
Interest cost	1,131	1,199
Liability actuarial (gain)/loss	(3,680)	2,168
Benefits paid	(1,364)	(1,364)
Benefit obligation at end of year	27,812	31,709
Change in fair value of plan assets
Fair value of plan assets at beginning of year	21,838	18,900
Return on plan assets	3,226	2,659
Employer contributions	1,574	1,643
Fair value of plan assets at end of year	25,274	21,838
Underfunded status – December 31, 2012	(2,538)	(9,871)
Accumulated benefit obligation – December 31, 2013	27,812	31,709
Supplemental Employee Retirement Plans, Defined Benefit
Change in projected benefit obligation
Benefit obligation at beginning of year	3,057	2,584
Service cost	114	101
Interest cost	102	104
Liability actuarial (gain)/loss	(252)	268
Plan Amendments	0	0
Benefit obligation at end of year	3,021	3,057
Hourly Employees’ Pension Plan | Pension Plans, Defined Benefit
Change in projected benefit obligation
Benefit obligation at beginning of year	10,786	10,454
Service cost	11	10
Interest cost	371	411
Liability actuarial (gain)/loss	(1,060)	549
Benefits paid	(631)	(638)
Benefit obligation at end of year	9,477	10,786
Change in fair value of plan assets
Fair value of plan assets at beginning of year	7,690	6,663
Return on plan assets	1,136	937
Employer contributions	678	728
Fair value of plan assets at end of year	8,873	7,690
Underfunded status – December 31, 2012	(604)	(3,096)
Accumulated benefit obligation – December 31, 2013	9,477	10,786
Employees’ Retirement Plan | Pension Plans, Defined Benefit
Change in projected benefit obligation
Benefit obligation at beginning of year	20,923	19,238
Service cost	5	4
Interest cost	760	788
Liability actuarial (gain)/loss	(2,620)	1,619
Benefits paid	(733)	(726)
Benefit obligation at end of year	18,335	20,923
Change in fair value of plan assets
Fair value of plan assets at beginning of year	14,148	12,237
Return on plan assets	2,090	1,722
Employer contributions	896	915
Fair value of plan assets at end of year	16,401	14,148
Underfunded status – December 31, 2012	(1,934)	(6,775)
Accumulated benefit obligation – December 31, 2013	$ 18,335	$ 20,923

XML

Long-Term Debt (Schedule of Long Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Total debt	$ 428	$ 706
Current maturities of long-term debt and capital lease obligations	420	588
Long-term debt and capital lease obligation, net of current maturities	8	118
Bank revolving credit facility | Amended and Restated Revolving Credit Agreement
Debt Instrument [Line Items]
Total debt	0	0
Capital lease obligations
Debt Instrument [Line Items]
Total debt	120	394
Other notes payable
Debt Instrument [Line Items]
Total debt	$ 308	$ 312

XML

International Operations and Geographic Information (Schedule of Geographic Net Sales and Location of Long-lived assets) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 676,836	$ 628,402	$ 603,593
Long-Lived Assets	100,852	97,633	104,898
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	444,151	401,415	381,390
Long-Lived Assets	42,053	46,749	52,262
United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	36,892	40,734	39,967
Long-Lived Assets	19,718	13,809	13,511
France
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	97,958	92,964	101,124
Long-Lived Assets	25,751	25,166	26,746
Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	45,045	36,190	26,029
Long-Lived Assets	12,562	11,719	12,221
Australia
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	11,517	10,225	14,171
Long-Lived Assets	768	190	158
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 41,273	$ 46,874	$ 40,912

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Valuation and Qualifying Accounts (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables aging period	60 days
Accounts receivable reserve period	90 days
Allowance for doubtful accounts	$ 2,738	$ 3,077
Sales Discounts	16,724	15,005
Inventory obsolescence reserves	8,596	9,099
Inventory usage period	3 years
Inventory reserve percentage	100.00%
Product warranty accrual period of expenses used in calculation	12 months
Product warranty accrual period for sales used in calculation	12 months
Warranty	$ 4,994	$ 5,007
Wholegood Units
Accounts, Notes, Loans and Financing Receivable [Line Items]
Product warranty period	1 year
Parts
Accounts, Notes, Loans and Financing Receivable [Line Items]
Product warranty period	90 days
Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Sales discount percentage of customers who qualify for each program that discount available	85.00%
Product warranty accrual lag period	90 days
Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Sales discount percentage of customers who qualify for each program that discount available	95.00%
Product warranty accrual lag period	6 months

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Goodwill (Tables)

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the carrying amount of goodwill for the twelve months ended December 31,2011, 2012 and 2013 are as follows:

(in thousands)
Balance at December 31, 2010	$	34,073
Translation adjustment	(424		)
Goodwill impairment	(1,898		)
Balance at December 31, 2011	$	31,751
Translation adjustment	553
Goodwill impairment	$	(656	)
Balance at December 31, 2012	$	31,648
Translation adjustment	425
Goodwill impairment	—
Balance at December 31, 2013	$	32,073

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Commitments and Contingencies (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended				1 Months Ended
	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Deere and Company v Bush Hog LLC and Great Plains Manufacturing Inc	Dec. 31, 2012 Unfavorable litigation action
Loss Contingencies [Line Items]
Rental expense for operating leases		$ 2,293,000	$ 2,088,000	$ 1,879,000
Purchase obligations		83,105,000
Amount of unjust enrichment per federal district court						1,000,000
Legal fees incurred	$ 2,400,000				$ 2,100,000

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Retirement Benefit Plans (Weighted Average Asset Allocations) (Details) (Pension Plans, Defined Benefit)	Dec. 31, 2013	Dec. 31, 2012
Hourly Employees’ Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	100.00%	100.00%
Hourly Employees’ Pension Plan | Equity securities
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	55.00%	55.00%
Hourly Employees’ Pension Plan | Debt securities
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	38.00%	38.00%
Hourly Employees’ Pension Plan | Short-term investments
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	2.00%	2.00%
Hourly Employees’ Pension Plan | Other
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	5.00%	5.00%
Employees’ Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	100.00%	100.00%
Employees’ Retirement Plan | Equity securities
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	55.00%	55.00%
Employees’ Retirement Plan | Debt securities
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	38.00%	38.00%
Employees’ Retirement Plan | Short-term investments
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	2.00%	2.00%
Employees’ Retirement Plan | Other
Defined Benefit Plan Disclosure [Line Items]
Asset allocations as a percentage of plan assets	5.00%	5.00%

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Income Taxes (Schedule of Income (loss) before Provision for Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Domestic	$ 35,146	$ 29,390	$ 28,109
Foreign	16,242	14,056	20,020
Income before income taxes	$ 51,388	$ 43,446	$ 48,129

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Segment Reporting (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 Reportable_Segment	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Segment Reporting Information [Line Items]
Number of principal reporting segments	3
Net Revenue	$ 676,836	$ 628,402	$ 603,593
Income from Operations	50,737	45,349	49,456
Goodwill, balance at the end of the period	32,073	31,648	31,751	34,073
Total Identifiable Assets	438,476	404,339	381,665
North American Industrial
Segment Reporting Information [Line Items]
Net Revenue	296,617	263,353	229,594
Income from Operations	25,743	19,313	24,649
Goodwill, balance at the end of the period	13,176	13,418	13,316
Total Identifiable Assets	161,080	153,234	144,763
North American Agricultural
Segment Reporting Information [Line Items]
Net Revenue	215,340	200,467	203,993
Income from Operations	17,880	18,319	16,644
Goodwill, balance at the end of the period	0	0	0
Total Identifiable Assets	123,352	118,829	121,320
European
Segment Reporting Information [Line Items]
Net Revenue	164,879	164,582	170,006
Income from Operations	7,114	7,717	8,163
Goodwill, balance at the end of the period	18,897	18,230	18,435
Total Identifiable Assets	$ 154,044	$ 132,276	$ 115,582

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Quarterly Financial Information (Unaudited) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Schedule of Quarterly Financial Information Disclosure [Line Items]
Sales	$ 165,605	$ 174,738	$ 178,064	$ 158,429	$ 149,404	$ 156,078	$ 167,009	$ 155,911
Gross profit	36,351	43,156	44,091	34,912	32,043	37,070	39,161	35,238	158,510	143,512	135,085
Net income	$ 6,024	$ 11,333	$ 11,787	$ 6,950	$ 4,199	$ 8,575	$ 9,344	$ 6,785	$ 36,094	$ 28,903	$ 32,687
Per common share - diluted
Diluted (in dollars per share)	$ 0.49	$ 0.93	$ 0.97	$ 0.57	$ 0.35	$ 0.71	$ 0.77	$ 0.56	$ 2.96	$ 2.40	$ 2.73
Average shares
Diluted (in shares)	12,262	12,229	12,200	12,158	12,090	12,056	12,058	12,027	12,212,000	12,058,000	11,966,000
Dividends per share (in dollars per share)	$ 0.07	$ 0.07	$ 0.07	$ 0.07	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.24	$ 0.24	$ 0.24
High
Market price of common stock
Share Price (in dollars per share)	$ 61.27	$ 49.45	$ 44.13	$ 40.64	$ 34.63	$ 34.00	$ 34.23	$ 30.93	$ 61.27	$ 34.63
Low
Market price of common stock
Share Price (in dollars per share)	$ 45.51	$ 40.48	$ 37.39	$ 33.12	$ 29.66	$ 27.07	$ 29.40	$ 25.51	$ 45.51	$ 29.66

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International Operations and Geographic Information (Schedule of Selected Financial Information for International Operations) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Net sales	$ 676,836	$ 628,402	$ 603,593
Income from operations	50,737	45,349	49,456
Identifiable assets	438,476	404,339	381,665
Other
Segment Reporting Information [Line Items]
Net sales	236,839	227,568	216,201
Income from operations	14,822	14,470	19,362
Income before income taxes	16,241	13,731	20,051
Identifiable assets	$ 205,317	$ 179,263	$ 155,188

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Retirement Benefit Plans (Schedule of Assumptions Used) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Net periodic pension expense, rate of compensation increase	3.00%	3.00%
Supplemental Employee Retirement Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.60%	3.37%
Composite rate of compensation increase	3.00%	3.00%
Net periodic pension expense, discount rate	3.37%	4.04%
Hourly Employees’ Pension Plan | Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.60%	3.55%
Net periodic pension expense, discount rate	3.55%	4.06%
Net periodic pension expense, Long-term rate of return on plan assets	7.25%	7.75%
Employees’ Retirement Plan | Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.75%	3.70%
Net periodic pension expense, discount rate	3.70%	4.18%
Net periodic pension expense, Long-term rate of return on plan assets	7.25%	7.75%

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Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

QUARTERLY FINANCIAL DATA (Unaudited)

Summarized quarterly financial data for 2013 and 2012 is presented below. Seasonal influences affect the Company’s sales and profits, with peak business occurring in May through August.

(in thousands, except per share amounts)

	2013								2012
	First		Second		Third		Fourth		First		Second		Third		Fourth
Sales	$	158,429	$	178,064	$	174,738	$	165,605	$	155,911	$	167,009	$	156,078	$	149,404
Gross profit	34,912		44,091		43,156		36,351		35,238		39,161		37,070		32,043
Net income	6,950		11,787		11,333		6,024		6,785		9,344		8,575		4,199
Earnings per share
Diluted	$	0.57	$	0.97	$	0.93	$	0.49	$	0.56	$	0.77	$	0.71	$	0.35
Average shares
Diluted	12,158		12,200		12,229		12,262		12,027		12,058		12,056		12,090
Dividends per share	$	0.07	0.07		$	0.07	$	0.07	$	0.06	$	0.06	$	0.06	$	0.06
Market price of     common stock
High	$	40.64	$	44.13	$	49.45	$	61.27	$	30.93	$	34.23	$	34.00	$	34.63
Low	$	33.12	$	37.39	$	40.48	$	45.51	$	25.51	$	29.40	$	27.07	$	29.66

The sum of quarterly earnings per share may not equal total year earnings per share due to rounding of earnings per share amounts, and differences in weighted-average shares and equivalent shares outstanding for each of the periods presented.

The fourth quarter 2013 results includes $1.8 million in pretax legal expenses related to the patent infringement lawsuit filed against the Company.

The fourth quarter 2012 results include the following items: (1) a pretax charge of $0.7 million related to goodwill impairment; (2) a $2.4 million charge relating to various litigation matters;and (3) a $1.2 million reversal of an environmental reserve at our Gradall facility.

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Property Plant and Equipment (Schedule of Property Plant and Equipment) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 158,376	$ 146,454
Less: Accumulated depreciation	(96,472)	(89,653)
Property, Plant and Equipment, Net	61,904	56,801
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment	8,708	8,576
Buildings and improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment	62,169	59,309
Buildings and improvements | Minimum
Property, Plant and Equipment [Line Items]
Useful Lives	10 years
Buildings and improvements | Maximum
Property, Plant and Equipment [Line Items]
Useful Lives	20 years
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	65,451	57,320
Machinery and equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful Lives	3 years
Machinery and equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful Lives	15 years
Office furniture and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	6,705	5,984
Office furniture and equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful Lives	3 years
Office furniture and equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful Lives	7 years
Computer software
Property, Plant and Equipment [Line Items]
Property, plant and equipment	10,557	10,602
Computer software | Minimum
Property, Plant and Equipment [Line Items]
Useful Lives	2 years
Computer software | Maximum
Property, Plant and Equipment [Line Items]
Useful Lives	7 years
Transportation equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 4,786	$ 4,663
Useful Lives	3 years

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Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2013

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

Summarized quarterly financial data for 2013 and 2012 is presented below. Seasonal influences affect the Company’s sales and profits, with peak business occurring in May through August.

(in thousands, except per share amounts)

	2013								2012
	First		Second		Third		Fourth		First		Second		Third		Fourth
Sales	$	158,429	$	178,064	$	174,738	$	165,605	$	155,911	$	167,009	$	156,078	$	149,404
Gross profit	34,912		44,091		43,156		36,351		35,238		39,161		37,070		32,043
Net income	6,950		11,787		11,333		6,024		6,785		9,344		8,575		4,199
Earnings per share
Diluted	$	0.57	$	0.97	$	0.93	$	0.49	$	0.56	$	0.77	$	0.71	$	0.35
Average shares
Diluted	12,158		12,200		12,229		12,262		12,027		12,058		12,056		12,090
Dividends per share	$	0.07	0.07		$	0.07	$	0.07	$	0.06	$	0.06	$	0.06	$	0.06
Market price of     common stock
High	$	40.64	$	44.13	$	49.45	$	61.27	$	30.93	$	34.23	$	34.00	$	34.63
Low	$	33.12	$	37.39	$	40.48	$	45.51	$	25.51	$	29.40	$	27.07	$	29.66

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Retirement Benefit Plans (Schedule of Expected Benefit Payments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
2014	$ 1,505
2015	1,530
2016	1,567
2017	1,665
2018	1,763
Years 2019 through 2023	9,327
Supplemental Employee Retirement Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
2014	44
2015	51
2016	101
2017	140
2018	241
Years 2019 through 2023	1,305
Hourly Employees’ Pension Plan | Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
2014	643
2015	634
2016	635
2017	644
2018	651
Years 2019 through 2023	3,231
Employees’ Retirement Plan | Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
2014	862
2015	896
2016	932
2017	1,021
2018	1,112
Years 2019 through 2023	$ 6,096

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Stock Options (Tables)

12 Months Ended

Dec. 31, 2013

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

Following is a summary of activity in the Restricted Stock Units for the periods indicated:

	2013				2012				2011
	Shares		Exercise    Price*		Shares		Exercise    Price*		Shares		Exercise    Price*
Options outstanding at beginning of year	11,375		$	24.24	19,750		$	22.96	9,000		$	15.86
Granted	4,224		42.70		—		—		13,500		26.08
Exercised	(4,875	)	22.07		(6,125	)	21.13		(2,750	)	15.06
Cancelled	—		—		(2,250	)	21.45		—		—
Options outstanding at end of year	10,724		32.49		11,375		24.24		19,750		22.96

Qualified Stock Options

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Share-based Compensation, Stock Options, Activity

Following is a summary of activity in the Incentive Stock Option Plans for the periods indicated:

	2013				2012				2011
	Shares		Exercise    Price*		Shares		Exercise    Price*		Shares		Exercise    Price*
Options outstanding at beginning of year	330,730		$	21.82	377,480		$	19.27	360,130		$	18.29
Granted	49,000		42.70		61,000		32.76		35,000		26.45
Exercised	(81,880	)	16.77		(99,650	)	19.26		(15,650	)	12.03
Canceled	(5,500	)	24.24		(8,100	)	17.20		(2,000	)	24.69
Options outstanding at end of year	292,350		26.68		330,730		21.82		377,480		19.27
Options exercisable at end of year	154,950		$	21.57	192,830		$	19.48	243,180		$	19.32
Options available for grant at end of year	66,100				109,600				162,500

*Weighted Averages

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range

Options outstanding and exercisable at December 31, 2013 were as follows:

Qualified Stock Options	Options Outstanding				Options Exercisable
	Shares	Remaining Contractual Life (yrs)*	Exercise          Price*		Shares	Exercise      Price*
Range of Exercise Price
$11.45 - $17.85	54,550	5.07	$	11.80	38,350	$	11.95
$19.79 - $32.76	188,800	5.77	$	26.83	116,600	$	24.73
$42.70 - $42.70	49,000	9.35	$	42.70	—	$	—
Total	292,350				154,950

*Weighted Averages

Non Qualified Options

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Share-based Compensation, Stock Options, Activity

Following is a summary of activity in the Non-Qualified Stock Option Plans for the periods indicated:

	2013			2012				2011
	Shares	Exercise    Price*		Shares		Exercise    Price*		Shares		Exercise    Price*
Options outstanding at beginning of year	89,700	$	19.91	112,800		$	18.62	102,400		$	15.62
Granted	25,000	42.70		—		—		30,000		26.45
Exercised	—	—		(23,100	)	13.62		(14,600	)	11.45
Cancelled	—	—		—		—		(5,000	)	25.18
Options outstanding at end of year	114,700	24.87		89,700		19.91		112,800		18.62
Options exercisable at end of year	57,900	$	19.89	38,100		$	21.91	37,400		$	19.57
Options available for grant at end of year	293,526			322,750				32,500

*Weighted Averages

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range

Options outstanding and exercisable as of December 31, 2013 were as follows:

Non-Qualified Stock Options	Options Outstanding				Options Exercisable
	Shares	Remaining    Contractual    Life(yrs)*	Exercise           Price*		Shares	Exercise      Price*
Range of Exercise Price
$11.45 - $17.85	37,200	5.36	$	11.45	23,400	$	11.45
$19.79 - $32.76	52,500	5.61	25.90		34,500	25.61
$42.70 - $42.70	25,000	9.35	$	42.70	—	$	—
Total	114,700				57,900

*Weighted Averages

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Goodwill (Schedule of Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Goodwill [Roll Forward]
Goodwill, Balance at the beginning of the period		$ 31,648	$ 31,751	$ 34,073
Translation adjustment		425	553	(424)
Goodwill impairment	(656)	0	(656)	(1,898)
Goodwill, balance at the end of the period	$ 31,648	$ 32,073	$ 31,648	$ 31,751

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Stock Options (Schedule of Non-Qualified Stock Options Outstanding and Exercisable) (Details) (Non Qualified Options, USD $)					12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2013 $11.45 - $17.85		Dec. 31, 2013 $19.79 - $32.76		Dec. 31, 2013 $42.70 - $42.70
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, Lower Range Limit					$ 11.45		$ 19.79		$ 42.70
Range of Exercise Price, Upper Range Limit					$ 17.85		$ 32.76		$ 42.7
Options Outstanding, Shares					37,200		52,500		25,000
Options Outstanding, Shares, Total	114,700	89,700	112,800	102,400
Options Outstanding, Remaining Contractual Life					5 years 4 months 10 days	[1]	5 years 7 months 10 days		9 years 4 months 6 days	[1]
Options Outstanding, Exercise Price					$ 11.45	[1]	$ 25.90	[1]	$ 42.70	[1]
Options Exercisable, Shares					23,400		34,500		0
Options Exercisable, Shares, Total	57,900	38,100	37,400
Options Exercisable, Exercise Price					$ 11.45	[1]	$ 25.61	[1]	$ 0.00	[1]

[1] Weighted Averages

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Income Taxes Income Taxes (Schedule of Unrecognized Tax Benefits) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance as of beginning of year	$ 257	$ 235
Additions for tax positions related to the current year	56	0
Additions for tax positions related to prior years	27	22
Reduction due to lapse of statute of limitations	(194)	0
Balance as of end of year	$ 146	$ 257

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Valuation and Qualifying Accounts (Schedule of Valuation and Qualifying Accounts) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Allowance for doubtful accounts
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance Beginning of Year	$ 3,077	$ 3,215	$ 2,852
Net Charged to Costs and Expenses	31	253	995
Translations, Reclassifications and Acquisitions	62	113	(65)
Net Write-Offs or Discounts Taken	(432)	(504)	(567)
Balance End of Year	2,738	3,077	3,215
Reserve for sales discounts
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance Beginning of Year	15,005	14,567	11,903
Net Charged to Costs and Expenses	76,184	65,481	62,935
Translations, Reclassifications and Acquisitions	0	(16)	9
Net Write-Offs or Discounts Taken	(74,465)	(65,027)	(60,280)
Balance End of Year	16,724	15,005	14,567
Reserve for inventory obsolescence
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance Beginning of Year	9,099	7,630	7,506
Net Charged to Costs and Expenses	2,586	2,998	3,403
Translations, Reclassifications and Acquisitions	(157)	79	(123)
Net Write-Offs or Discounts Taken	(2,932)	(1,608)	(3,156)
Balance End of Year	8,596	9,099	7,630
Reserve for warranty
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance Beginning of Year	5,007	5,083	5,554
Net Charged to Costs and Expenses	6,410	6,646	6,070
Translations, Reclassifications and Acquisitions	80	82	17
Net Write-Offs or Discounts Taken	(6,503)	(6,804)	(6,558)
Balance End of Year	$ 4,994	$ 5,007	$ 5,083

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Significant Accounting Policies

SIGNIFICANT ACCOUNTING POLICIES

Description of the Business and Segments

The Company manufactures, distributes and services high quality tractor-mounted mowing and other vegetation maintenance equipment, street sweepers, excavators, vacuum trucks, snow removal equipment, pothole patchers, zero turn radius mowers, agricultural implements and related aftermarket parts and services.

The Company manages its business in three principal reporting segments: North American Agricultural, North American Industrial and European, which are discussed in Notes 15 and 16.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Alamo Group Inc. and its subsidiaries (the “Company” or “Alamo Group”), all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

 The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Judgments related to asset impairment and certain reserves are particularly subject to change. Actual results could differ from those estimates.

Foreign Currency

The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the end of the year. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive income within the statement of stockholders’ equity.

The Company enters into foreign currency forward contracts to hedge its exposure to certain foreign currency transactions. The Company does not hold or issue financial instruments for trading purposes. Changes in the market value of the foreign currency instruments are recognized in the financial statements upon settlement of the hedged transaction. On December 31, 2013, the Company had $2,884,000 in outstanding forward exchange contracts related to sales. The unrealized loss of the December 31, 2013 contracts that the Company expects to incur during the first quarter of 2014 is approximately $11,000, net of taxes. Foreign currency transaction gains or losses are included in Other income (expense), net. For 2013, 2012 and 2011, such transactions netted gains (losses) of $921,000, $(476,000), and $816,000, respectively.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. The credit risk is limited because of the large numbers and types of customers and their geographic dispersion.

Inventories

Inventories of U.S. operating subsidiaries are stated at the lower of cost (last-in, first-out method) (“LIFO”) or market, and the Company’s international subsidiaries’ inventories are stated at the lower of cost (first-in, first-out) (“FIFO”) or market.

Property, Plant and Equipment

Property, plant, and equipment are stated on the basis of cost. Major renewals and betterments are charged to the property accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed to the current period. Depreciation is provided at amounts calculated to amortize the cost of the assets over their estimated useful economic lives using the straight-line method.

Goodwill

Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. We perform our annual goodwill impairment test as of October 1 and monitor for interim triggering events on an ongoing basis. Goodwill is reviewed for impairment utilizing a qualitative assessment or a two-step process. We have an option to make a qualitative assessment of a reporting unit's goodwill for impairment. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. For reporting units where we perform the two-step process, the first step requires us to compare the fair value of each reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is higher than the fair value, there is an indication that an impairment may exist and the second step is required. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized as an impairment loss.

The Company estimates the fair value of its reporting units using a discounted cash flow analysis. This analysis requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The cash flows are estimated over a significant future period of time, which makes those estimates and assumptions subject to an even higher degree of uncertainty. The Company also utilizes market valuation models and other financial ratios, which require the Company to make certain assumptions and estimates regarding the applicability of those models to its assets and businesses. As of December 31, 2013, goodwill was $32,073,000, which represents 7% of total assets.

The Company recognized no goodwill impairment in 2013. The Company recognized goodwill impairment at one of its French operations, Faucheux, of $656,000 in 2012 and two of its French operations, SMA and Rousseau, of $1,898,000 in 2011. The primary reason for the goodwill impairment in 2012 and 2011 was the general economic downturn that continues to affect the Company's European operations. This caused the Company to revise its expectations about future revenue, which is a significant factor in the discounted cash flow analysis used to estimate the fair value of the Company's reporting units. During the 2013 impairment analysis review, we performed a sensitivity analysis for goodwill impairment with respect to each of our reporting units and determined that a hypothetical 15% decline in the fair value of each reporting unit as of December 31, 2013 would not result in an impairment of goodwill for any of the reporting units. During the 2012 impairment analysis review, it was noted that even though the Schwarze and Rivard reporting units' fair value was above carrying value, it was not materially different. On December 31, 2013, there was approximately $6.9 million and $12.3 million of goodwill related to the Schwarze and Rivard reporting units, respectively. These reporting units would be most likely affected by changes in the Company’s assumptions and estimates. The calculation of fair value could increase or decrease depending on changes in the inputs and assumptions used, such as changes in the reporting unit’s future growth rates, discount rates, etc.

Management believes that the estimated valuations it arrived at are reasonable and consistent with what other marketplace participants would use in valuing the Company's components.  However, management cannot give any assurance that these market values will not change in the future.  For example, if discount rates demanded by the market increase, this could lead to reduced valuations under the income approach.  If the Company's projections are not achieved in the future, this could lead management to reassess their assumptions and lead to reduced valuations under the income approach.  If the market price of the Company's stock decreases, this could cause the Company to reassess the reasonableness of the implied control premium, which might cause management to assume a higher discount rate under the income approach which could lead to reduced valuations.  If future similar transactions exhibit lower multiples than those observed in the past, this could lead to reduced valuations under the similar transactions approach.  And finally, if there is a general decline in the stock market and particularly in those companies selected as comparable to the Company's components, this could lead to reduced valuations under the public company market multiple approach.  The Company's annual impairment test is performed during the fourth quarter of each fiscal year.  Given the current market conditions and continued economic uncertainty, the fair value of the Company's components could deteriorate which could result in the need to record impairment charges in future periods.  The Company also monitors potential triggering events including changes in the business climate in which it operates, attrition of key personnel, volatility in the capital markets, the Company's market capitalization compared to its book value, the Company's recent operating performance, and the Company's financial projections.  The occurrence of one or more triggering events could require additional impairment testing, which could result in future impairment charges.  In particular, since the Schwarze and Rivard reporting units' carrying values are not materially different from fair value, any changes to the Company's assumptions could lead to an indicated impairment in step one, requiring the Company to proceed to step two and potentially record an impairment charge.  

See Note 6 to the Consolidated Financial Statements for more information regarding goodwill.

Intangible Assets    

The Company's intangible assets with indefinite useful lives not subject to amortization consists of trade names. The net book value of these trade names was $5,500,000 as of December 31, 2013 and 2012 . This consisted of the Gradall trade name valued at $3,600,000 and the Bush Hog trade name valued at $1,900,000.

The Company tests its indefinite-lived intangible assets for impairment on an annual basis at year-end, or more frequently if an event occurs or circumstances change that indicate that the fair value of an indefinite-lived intangible asset could be below its carrying amount. The impairment test consists of comparing the fair value of the indefinite-lived intangible asset, determined using the relief from royalty method, with its carrying amount. An impairment loss would be recognized for the carrying amount in excess of its fair value.

Identifiable intangible assets are recorded at estimated cost. Definite-lived intangible assets are amortized over their estimated useful lives.

Pensions

In connection with the February 3, 2006 purchase of all the net assets of the Gradall excavator business, the Company assumed sponsorship of twoGradall non-contributory defined benefit pension plans, both of which were frozen with respect to both future benefit accruals and future new entrants.

The Gradall Company Hourly Employees’ Pension Plan covers approximately 330 former employees and 133 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were covered by a collective bargaining agreement and (iii) first participated in the plan before April 6, 1997. An amendment ceasing all future benefit accruals was effective April 6, 1997.

The Gradall Company Employees’ Retirement Plan covers approximately 239 former employees and 87 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were not covered by a collective bargaining agreement, and (iii) first participated in the plan before December 31, 2004. An amendment ceasing future benefit accruals for certain participants was effective December 31, 2004. A second amendment discontinued all future benefit accruals for all participants effective April 24, 2006.

The Company recognizes the funded status of the defined benefit pension plans as a liability in its statement of financial position and recognizes any changes in that funded status in the year in which the changes occur through other comprehensive income.

Related Party Transactions

There were no reportable relationships or related party transactions for the years ended December 31, 2013 and 2012. In1999, the Company approved a supplemental retirement benefit for Donald J. Douglass which is paid on a quarterly basis over a period of fourteen and one-half years that began in the year 2000. The balance on December 31, 2013 and 2012 was $40,000 and $115,000, respectively, and is included in the Accrued liabilities and Other long-term liabilities sections of the Company’s consolidated balance sheet.

Revenue Recognition

The Company recognizes revenue when each of the following four criteria are met: 1) a contract or sales arrangement exists; 2) products have been shipped per agreed terms and title has been transferred or services have been rendered; 3) the prices of the products or services are fixed or determinable; and 4) collectability is reasonably assured. Pre-season sales orders are solicited in the fall in advance of the dealer’s sales season in the spring and summer. Pre-season sales orders are shipped beginning in the fall and continuing through the spring and represent an opportunity for the Company’s factories to level their production/shipping volumes through the winter months. These pre-season shipments carry descending discounts in conjunction with delayed payment terms of up to six months from the dealer’s requested delivery date. Revenue from sales is recorded net of a provision for discounts that are anticipated to be earned and deducted at time of payment by the customer. These approximated discounts represent an average of historical amounts taken and are adjusted as program terms are changed. The reserves for discounts are reviewed and adjusted quarterly. From time to time, revenue is recognized under a bill and hold arrangement. Revenue recognized under bill and hold arrangements for 2013, 2012, and 2011 was immaterial.

Accounting for Internal Use Software

The Company capitalizes certain costs associated with the development and installation of internal use software. Internal use software costs are expensed or capitalized depending on whether they are incurred in the preliminary project stage, application development stage or the post-implementation stage. Amounts capitalized are amortized over the estimated useful lives of the software.

The book value of capitalized software net of depreciation was approximately $944,000 and $1,092,000 on December 31, 2013 and December 31, 2012, respectively. Software depreciation expense was $488,000, $676,000 and $822,000 in 2013, 2012 and 2011, respectively. Internal use software is amortized for financial reporting purposes using the straight-line method over the estimated life of two to seven years.

Shipping and Handling Costs

The Company’s policy is to include shipping and handling costs in costs of goods sold.

Advertising

We charge advertising costs to expense as incurred. Advertising and marketing expense related to operations for fiscal years 2013, 2012 and 2011 was approximately $6,646,000, $6,353,000 and $6,441,000, respectively. Advertising and marketing expenses are included in Selling, General and Administrative expenses (“SG&A”).

Research and Development

Product development and engineering costs charged to SG&A amounted to $7,164,000, $5,686,000, and $6,017,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

Legal Costs

The Company’s policy is to accrue for legal costs expected to be incurred in connection with loss contingencies.

Federal Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial reporting basis and tax basis of assets and liabilities, and are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon projections of future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these deductible differences.

We do not provide for a U.S. income tax liability on undistributed earnings of our foreign subsidiaries. The earnings of non-U.S. subsidiaries, which reflect full provision for non-U.S. income taxes, are currently indefinitely reinvested in non-U.S. operations.

Stock-Based Compensation

The Company has granted options to purchase its common stock to certain employees and directors of the Company and its affiliates under various stock option plans at no less than the fair market value of the underlying stock on the date of grant.  These options are granted for a term not exceeding ten years and are forfeited in the event the employee or director terminates his or her employment or relationship with the Company or one of its affiliates other than by retirement or death.  These options generally vest over five years.  All option plans contain anti-dilutive provisions that permit an adjustment of the number of shares of the Company’s common stock represented by each option for any change in capitalization.

The Company calculated the fair value for options with the following weighted-average assumptions for 2013, 2012, and 2011:

	December 31,
	2013		2012		2011
Risk-free interest rate	1.38	%	1.44	%	2.64	%
Dividend yield	0.8	%	1.2	%	1.2	%
Volatility factors	47.9	%	46.7	%	46.7	%
Weighted-average expected life	8.0 years		8.0 years		8.0 years

Fair Value of Financial Instruments

The carrying values of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate fair value because of the short-term nature of these items. The carrying value of our debt approximates the fair value as of December 31, 2013 and 2012.

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Common Stock (Details) (USD $)	3 Months Ended								12 Months Ended			2 Months Ended	12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Mar. 11, 2014 Subsequent Event	Dec. 31, 2013 Subsequent Event
Class of Stock [Line Items]
Authorized shares to be repurchased	1,000,000								1,000,000
Shares previously purchased									42,600
Dividends declared (in dollars per share)	$ 0.07	$ 0.07	$ 0.07	$ 0.07	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.24	$ 0.24	$ 0.24	$ 0.07
Dividends paid (in dollars per share)													$ 0.07

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Significant Accounting Policies (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2013 Reportable_Segment	Dec. 31, 2012 Operation	Dec. 31, 2011 Operation	Dec. 31, 2013	Feb. 03, 2006 Defined_Benefit_Plan
Accounting Policies [Line Items]
Number of principal reporting segments		3
Outstanding forward exchange contracts related to sales		$ 2,884,000
Goodwill, Balance at the beginning of the period		31,648,000	31,751,000	34,073,000	32,073,000
Goodwill percentage of total assets		7.00%
Number of operations			1	2
Goodwill impairment	656,000	0	656,000	1,898,000
Hypothetical percentage decline in fair value of each reporting unit		15.00%
Intangible assets	5,500,000		5,500,000
Number of defined benefit pension plans						2
Period for payment for supplemental retirement benefit		14 years 6 months
Book value of capitalized software	1,092,000	944,000	1,092,000
Option term (years)		10 years
Options
Accounting Policies [Line Items]
Award vesting period (years)		5 years
Accrued liabilities and Other long-term liabilities
Accounting Policies [Line Items]
Supplemental retirement benefit liability	115,000	40,000	115,000		40,000
Software Development
Accounting Policies [Line Items]
Software depreciation		488,000	676,000	822,000
Software Development | Low
Accounting Policies [Line Items]
Useful Lives		2 years
Software Development | High
Accounting Policies [Line Items]
Useful Lives		7 years
Gradall | Trade Names
Accounting Policies [Line Items]
Indefinite-lived intangible assets		3,600,000			3,600,000
Bush Hog | Trade Names
Accounting Policies [Line Items]
Indefinite-lived intangible assets		1,900,000			1,900,000
Trademarks
Accounting Policies [Line Items]
Intangible assets		5,500,000			5,500,000
Hourly Employees’ Pension Plan
Accounting Policies [Line Items]
Former employees		330
Current employees		133
Employees’ Retirement Plan
Accounting Policies [Line Items]
Former employees		239
Current employees		87
Schwarze
Accounting Policies [Line Items]
Goodwill, Balance at the beginning of the period					6,900,000
Rivard
Accounting Policies [Line Items]
Goodwill, Balance at the beginning of the period					12,300,000
Other income (expense)
Accounting Policies [Line Items]
Foreign currency transaction gains		921,000	(476,000)	816,000
Selling, General and Administrative expenses
Accounting Policies [Line Items]
Advertising expense		6,646,000	6,353,000	6,441,000
Product development and engineering costs		7,164,000	5,686,000	6,017,000
Scenario, Forecast
Accounting Policies [Line Items]
Unrealized gain of contracts		$ 11,000

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the reconciliation from basic to diluted average common shares and the calculations of net income per common share. Net income for basic and diluted calculations does not differ.

(in thousands, except per share amounts)	2013		2012		2011
Net income	$	36,094	$	28,903	$	32,687
Average common shares:
Basic (weighted-average outstanding shares)	12,050		11,899		11,848
Dilutive potential common shares from stock options	162		159		118
Diluted (weighted-average outstanding shares)	12,212		12,058		11,966
Basic earnings per share	$	3.00	$	2.43	$	2.76
Diluted earnings per share	$	2.96	$	2.40	$	2.73

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The Company calculated the fair value for options with the following weighted-average assumptions for 2013, 2012, and 2011:

	December 31,
	2013		2012		2011
Risk-free interest rate	1.38	%	1.44	%	2.64	%
Dividend yield	0.8	%	1.2	%	1.2	%
Volatility factors	47.9	%	46.7	%	46.7	%
Weighted-average expected life	8.0 years		8.0 years		8.0 years

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Income Taxes (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating Loss Carryforwards [Line Items]
Federal statutory rate	35.00%	35.00%	34.00%
Undistributed earnings of foreign subsidiaries	$ 138,531,000
Additional unrecognized tax benefit that would affect our annual effective tax rate	146,000	257,000
Tax Benefit from the American Taxpayer Relief Act	(450,000)
Federal
Operating Loss Carryforwards [Line Items]
Federal statutory rate	35.00%
Foreign
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	10,600,000
State
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	$ 5,000,000

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Significant Accounting Policies (Schedule of Fair Value Assumptions and Methodology) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounting Policies [Abstract]
Risk-free interest rate	1.38%	1.44%	2.64%
Dividend yield	0.80%	1.20%	1.20%
Volatility factors	47.90%	46.70%	46.70%
Weighted-average expected life	8 years	8 years	8 years

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Valuation and Qualifying Accounts (Tables)

12 Months Ended

Dec. 31, 2013

Receivables [Abstract]

Schedule Of Valuation And Qualifying Accounts

Valuation and qualifying accounts included the following:

(in thousands)	Balance Beginning of Year		Net Charged to Costs and Expenses		Translations, Reclassifications and Acquisitions				Net Write-Offs or Discounts Taken			Balance End of Year
2013
Allowance for doubtful accounts	$	3,077	$	31		$	62		$	(432	)	$	2,738
Reserve for sales discounts	15,005		76,184			—			(74,465		)	16,724
Reserve for inventory obsolescence	9,099		2,586			(157		)	(2,932		)	8,596
Reserve for warranty	5,007		6,410			80			(6,503		)	4,994
2012
Allowance for doubtful accounts	$	3,215	$	253		$	113		$	(504	)	$	3,077
Reserve for sales discounts	14,567		65,481			(16		)	(65,027		)	15,005
Reserve for inventory obsolescence	7,630		2,998			79			(1,608		)	9,099
Reserve for warranty	5,083		6,646			82			(6,804		)	5,007
2011
Allowance for doubtful accounts	$	2,852	$	995		$	(65	)	$	(567	)	$	3,215
Reserve for sales discounts	11,903		62,935			9			(60,280		)	14,567
Reserve for inventory obsolescence	7,506		3,403			(123		)	(3,156		)	7,630
Reserve for warranty	5,554		6,070			17			(6,558		)	5,083

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Inventories (Tables)

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

Inventories consisted of the following on a cost basis, net of reserves:

	December 31,
(in thousands)	2013		2012
Finished goods and parts	$	84,548	$	93,095
Work in process	9,906		7,922
Raw materials	14,650		7,741
	$	109,104	$	108,758

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Operating Activities
Net income	$ 36,094	$ 28,903	$ 32,687
Adjustments to reconcile net income to cash provided by operating activities:
Provision for doubtful accounts	31	253	992
Depreciation	8,898	9,948	10,418
Amortization of debt issuance	126	126	188
Gain on bargain purchase	0	0	(8,616)
Goodwill impairment	0	656	1,898
Stock-based compensation	1,501	940	985
Excess tax benefits from stock-based payment arrangements	0	102	(63)
Provision for deferred income tax expense (benefit)	(877)	(405)	850
Gain (Loss) on sale of equipment	(237)	155	(263)
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(10,515)	4,770	(15,152)
Inventories	776	6,932	(8,680)
Prepaid expenses and other	(925)	(2,376)	(72)
Trade accounts payable and accrued liabilities	4,420	960	(4,162)
Income taxes payable	(4,565)	2,338	397
Other assets and liabilities, net	(3,100)	(2,039)	(740)
Net cash provided by operating activities	31,627	51,263	10,667
Investing Activities
Acquisitions, net of cash acquired	(1,002)	0	(6,536)
Purchase of property, plant and equipment	(13,639)	(4,654)	(5,766)
Proceeds from sale of property, plant and equipment	475	564	440
Net cash used in investing activities	(14,166)	(4,090)	(11,862)
Financing Activities
Net change in bank revolving credit facility	0	(7,000)	(14,000)
Principal payments on long-term debt and capital leases	(399)	(2,117)	(2,570)
Dividends paid	(3,371)	(2,854)	(2,845)
Proceeds from sale of common stock	1,286	2,131	281
Excess tax benefits from stock-based payment arrangements	0	(102)	63
Net cash provided by (used in) financing activities	(2,484)	(9,942)	(19,071)
Effect of exchange rate changes on cash	692	772	311
Net change in cash and cash equivalents	15,669	38,003	(19,955)
Cash and cash equivalents at beginning of the year	48,291	10,288	30,243
Cash and cash equivalents at end of the year	63,960	48,291	10,288
Cash paid during the year for:
Interest	1,118	1,837	2,295
Income taxes	$ 21,580	$ 13,533	$ 15,247

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Property Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment consist of the following:

	December 31,
(in thousands)	2013			2012			Useful Lives
Land	$	8,708		$	8,576
Buildings and improvements	62,169			59,309			10-20 yrs.
Machinery and equipment	65,451			57,320			3-15 yrs.
Office furniture and equipment	6,705			5,984			3-7 yrs.
Computer software	10,557			10,602			2-7 yrs.
Transportation equipment	4,786			4,663			3 yrs.
	158,376			146,454
Accumulated depreciation	(96,472		)	(89,653		)
	$	61,904		$	56,801

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Subsequent Events (Details) (Subsequent Event, USD $)				0 Months Ended
	Feb. 24, 2014	Dec. 31, 2013	Mar. 11, 2014 SMC Plant	Feb. 24, 2014 Super Products LLC, Wausau-Everest LP, and Howard P Fairfield LLC Operation
Subsequent Event [Line Items]
Number of operations acquired				3
Net sales of acquired operations during 2013				$ 139,000,000
Total consideration transferred				186,000,000
Anticipated period for completion of purchase				45 days
Line of credit	250,000,000	100,000,000
Sales price for SMC plant			$ 900,000

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International Operations and Geographic Information (Tables)

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

Following is selected financial information on the Company’s international operations which include Europe, Canada and Australia:

	December 31,
(in thousands)	2013		2012		2011
Net sales	$	236,839	$	227,568	$	216,201
Income from operations	14,822		14,470		19,362
Income before income taxes	16,241		13,731		20,051
Identifiable assets	$	205,317	$	179,263	$	155,188

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

Following is other selected geographic financial information on the Company’s operations:

	December 31,
(in thousands)	2013		2012		2011
Geographic net sales:
United States	$	444,151	$	401,415	$	381,390
United Kingdom	36,892		40,734		39,967
France	97,958		92,964		101,124
Canada	45,045		36,190		26,029
Australia	11,517		10,225		14,171
Other	41,273		46,874		40,912
Total net sales	$	676,836	$	628,402	$	603,593
Geographic location of long-lived assets:
United States	$	42,053	$	46,749	$	52,262
United Kingdom	19,718		13,809		13,511
France	25,751		25,166		26,746
Canada	12,562		11,719		12,221
Australia	768		190		158
Total long-lived assets	$	100,852	$	97,633	$	104,898

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Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Payables and Accruals [Abstract]
Salaries, wages and bonuses	$ 15,509	$ 12,433
Warranty	4,994	5,007
State taxes	5,217	4,922
Other	7,762	9,239
Accrued liabilities	$ 33,482	$ 31,601

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Retirement Benefit Plans (Schedule of Net Periodic Benefit Cost) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 16	$ 14
Interest cost	1,131	1,199
Expected return on plan assets	(1,567)	(1,471)
Amortization of prior service cost	0	0
Amortization of net (gain)/loss	703	659
Net periodic benefit cost	283	401
Supplemental Employee Retirement Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Service cost	114	101
Interest cost	102	104
Amortization of prior service cost	327	287
Net periodic benefit cost	543	492
Hourly Employees’ Pension Plan | Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Service cost	11	10
Interest cost	371	411
Expected return on plan assets	(549)	(520)
Amortization of prior service cost	0	0
Amortization of net (gain)/loss	285	280
Net periodic benefit cost	118	181
Employees’ Retirement Plan | Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Service cost	5	4
Interest cost	760	788
Expected return on plan assets	(1,018)	(951)
Amortization of prior service cost	0	0
Amortization of net (gain)/loss	418	379
Net periodic benefit cost	$ 165	$ 220

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 63,960	$ 48,291
Accounts receivable, net	151,396	140,268
Inventories	109,104	108,758
Deferred income taxes	5,741	3,824
Prepaid expenses	5,129	5,659
Income tax receivable	1,623	0
Total current assets	336,953	306,800
Property, plant and equipment	158,376	146,454
Less: Accumulated depreciation	(96,472)	(89,653)
Property, Plant and Equipment, Net	61,904	56,801
Goodwill	32,073	31,648
Intangible assets	5,500	5,500
Deferred income taxes	457	2,593
Other assets	1,589	997
Total assets	438,476	404,339
Current liabilities:
Trade accounts payable	45,593	41,641
Income taxes payable	1,126	4,045
Accrued liabilities	33,482	31,601
Current maturities of long-term debt and capital lease obligations	420	588
Deferred income taxes	0	253
Total current liabilities	80,621	78,128
Long-term debt and capital lease obligation, net of current maturities	8	118
Accrued pension liabilities	2,538	9,871
Other long-term liabilities	3,494	3,646
Deferred income taxes	1,350	2,290
Stockholders’ equity:
Common stock, $.10 par value, 20,000,000 shares authorized;12,113,109 and 12,028,354 issued at December 31, 2013 and December 31, 2012, respectively	1,211	1,203
Additional paid-in capital	91,439	88,660
Treasury stock, at cost: 42,600 shares at December 31, 2013 and December 31, 2012	(426)	(426)
Retained earnings	255,203	222,480
Accumulated other comprehensive income (loss)	3,038	(1,631)
Total stockholders’ equity	350,465	310,286
Total liabilities and stockholders’ equity	$ 438,476	$ 404,339

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Earnings Per Share (Calculation of Basic and Diluted EPS) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Earnings Per Share [Abstract]
Net income	$ 6,024	$ 11,333	$ 11,787	$ 6,950	$ 4,199	$ 8,575	$ 9,344	$ 6,785	$ 36,094	$ 28,903	$ 32,687
Average common shares:
Basic (weighted-average outstanding shares)									12,050,000	11,899,000	11,848,000
Dilutive potential common shares from stock options, shares									162,000	159,000	118,000
Diluted (weighted-average outstanding shares)	12,262	12,229	12,200	12,158	12,090	12,056	12,058	12,027	12,212,000	12,058,000	11,966,000
Basic earnings per share (in dollars per share)									$ 3.00	$ 2.43	$ 2.76
Diluted earnings per share (in dollars per share)	$ 0.49	$ 0.93	$ 0.97	$ 0.57	$ 0.35	$ 0.71	$ 0.77	$ 0.56	$ 2.96	$ 2.40	$ 2.73
Stock options excluded from diluted earnings per share calculation (shares)									3,831	38,954	78,337

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Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Statement of Stockholders' Equity [Abstract]
Dividends per share (in dollars per share)	$ 0.07	$ 0.07	$ 0.07	$ 0.07	$ 0.06	$ 0.06	$ 0.06	$ 0.06	$ 0.24	$ 0.24	$ 0.24

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Income Taxes (Income Tax Reconciliation) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Domestic statutory rate at 35% (34% for 2011 and 2010)	$ 17,985,000	$ 15,206,000	$ 16,364,000
Increase (reduction) from:
Jurisdictional rate differences	(1,959,000)	(1,477,000)	(1,315,000)
Goodwill impairment	0	157,000	633,000
Valuation allowance	(114,000)	825,000	0
Stock based compensation	136,000	214,000	161,000
U.S. state taxes	1,496,000	589,000	740,000
Domestic Production Deduction	(1,162,000)	(948,000)	(796,000)
R&E Credit Reserve	(856,000)	(130,000)	(252,000)
Other, net	(232,000)	107,000	(93,000)
Total income taxes	$ 15,294,000	$ 14,543,000	$ 15,442,000
Effective tax rate	30.00%	33.00%	32.00%
Federal statutory rate	35.00%	35.00%	34.00%

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Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Schedule of Components of Long-Term Debt

The components of long-term debt are as follows:

	December 31,
(in thousands)	2013		2012
Bank revolving credit facility	$	—	$	—
Capital lease obligations	120		394
Other notes payable	308		312
Total debt	428		706
Less current maturities	420		588
Total long-term debt	$	8	$	118

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Stock Options (Schedule of Qualified Stock Options Outstanding and Exercisable) (Details) (Qualified Stock Options, USD $)					12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2013 $11.45 - $17.85		Dec. 31, 2013 $19.79 - $32.76		Dec. 31, 2013 $42.70 - $42.70
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, Lower Range Limit					$ 11.45		$ 19.79		$ 42.7
Range of Exercise Price, Upper Range Limit					$ 17.85		$ 32.76		$ 42.7
Options Outstanding, Shares					54,550		188,800		49,000
Options Outstanding, Shares, Total	292,350	330,730	377,480	360,130
Options Outstanding, Remaining Contractual Life					5 years 0 months 26 days	[1]	5 years 9 months 7 days	[1]	9 years 4 months 6 days	[1]
Options, Outstanding, Exercise Price					$ 11.80	[1]	$ 26.83	[1]	$ 42.70	[1]
Options Exercisable, Shares					38,350		116,600		0
Options Exercisable, Shares, Total	154,950	192,830	243,180
Options Exercisable, Exercise Price					$ 11.95	[1]	$ 24.73	[1]	$ 0.00	[1]

[1] Weighted Averages

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Segment Reporting

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

The Company reports three business segments: North American Industrial, North American Agricultural and European. The Company’s sales are principally within the United States, United Kingdom, France, Canada and Australia. The Company sells its products primarily through a network of independent dealers and distributors to governmental end-users, related independent contractors, as well as to the agricultural and commercial turf markets.

The Company has included a summary of the financial information by reporting segment. The following table presents the revenues, income from operations (loss), goodwill and total identifiable assets by reporting segment for the years ended December 31, 2013, 2012 and 2011:

	December 31,
(in thousands)	2013		2012		2011
Net Revenue
North American Industrial	$	296,617	$	263,353	$	229,594
North American Agricultural	215,340		200,467		203,993
European	164,879		164,582		170,006
Consolidated	$	676,836	$	628,402	$	603,593
Income from Operations
North American Industrial	$	25,743	$	19,313	$	24,649
North American Agricultural	17,880		18,319		16,644
European	7,114		7,717		8,163
Consolidated	$	50,737	$	45,349	$	49,456
Goodwill
North American Industrial	$	13,176	$	13,418	$	13,316
North American Agricultural	—		—		—
European	18,897		18,230		18,435
Consolidated	$	32,073	$	31,648	$	31,751
Total Identifiable Assets
North American Industrial	$	161,080	$	153,234	$	144,763
North American Agricultural	123,352		118,829		121,320
European	154,044		132,276		115,582
Consolidated	$	438,476	$	404,339	$	381,665

INTERNATIONAL OPERATIONS AND GEOGRAPHIC INFORMATION

Following is selected financial information on the Company’s international operations which include Europe, Canada and Australia:

	December 31,
(in thousands)	2013		2012		2011
Net sales	$	236,839	$	227,568	$	216,201
Income from operations	14,822		14,470		19,362
Income before income taxes	16,241		13,731		20,051
Identifiable assets	$	205,317	$	179,263	$	155,188

Following is other selected geographic financial information on the Company’s operations:

	December 31,
(in thousands)	2013		2012		2011
Geographic net sales:
United States	$	444,151	$	401,415	$	381,390
United Kingdom	36,892		40,734		39,967
France	97,958		92,964		101,124
Canada	45,045		36,190		26,029
Australia	11,517		10,225		14,171
Other	41,273		46,874		40,912
Total net sales	$	676,836	$	628,402	$	603,593
Geographic location of long-lived assets:
United States	$	42,053	$	46,749	$	52,262
United Kingdom	19,718		13,809		13,511
France	25,751		25,166		26,746
Canada	12,562		11,719		12,221
Australia	768		190		158
Total long-lived assets	$	100,852	$	97,633	$	104,898

Net sales are attributed to countries based on the location of customers.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

The jurisdictional components of income before taxes consist of the following:

	December 31,
(in thousands)	2013		2012		2011
Income before income taxes:
Domestic	$	35,146	$	29,390	$	28,109
Foreign	16,242		14,056		20,020
	$	51,388	$	43,446	$	48,129

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) consist of the following:

	December 31,
(in thousands)	2013			2012			2011
Current:
Domestic	$	10,605		$	9,273		$	7,771
Foreign	3,200			4,919			5,682
State	2,366			756			1,139
	16,171			14,948			14,592
Deferred:
Domestic	(1,074		)	(192		)	397
Foreign	249			(363		)	331
State	(52		)	150			122
	(877		)	(405		)	850
Total income taxes	$	15,294		$	14,543		$	15,442

Schedule of Effective Income Tax Rate Reconciliation

The difference between income tax expense (benefit) for financial statement purposes and the amount of income tax expense computed by applying the domestic statutory income tax rate of 35% to income loss before income taxes consist of the following:

	December 31,
(in thousands)	2013			2012			2011
Domestic statutory rate at 35% (34% for 2011 and 2010)	$	17,985		$	15,206		$	16,364
Increase (reduction) from:
Jurisdictional rate differences	(1,959		)	(1,477		)	(1,315		)
Goodwill impairment	—			157			633
Valuation allowance	(114		)	825			—
Stock based compensation	136			214			161
U.S. state taxes	1,496			589			740
Domestic Production Deduction	(1,162		)	(948		)	(796		)
R&E Credit Reserve	(856		)	(130		)	(252		)
Other, net	(232		)	107			(93		)
Provision for income taxes	$	15,294		$	14,543		$	15,442
Effective tax rate	30		%	33		%	32		%

Schedule of Deferred Tax Assets and Liabilities

The components of the Company’s deferred income tax assets and liabilities consist of the following:

	December 31,
(in thousands)	2013			2012
Deferred income tax assets:
Inventory basis difference	$	1,576		$	1,475
Accounts receivable reserve	201			299
Stock based compensation	904			614
Pension liability	1,604			3,595
Employee benefit accrual	601			459
Product liability and warranty reserves	1,417			1,120
Expenses not deductible for tax purposes	1,064			487
Foreign net operating loss	2,954			1,608
State net operating loss	76			82
Other	34			3
Total deferred income tax assets	$	10,431		$	9,742
Less: Valuation allowance	(711		)	(825		)
Net deferred income tax assets	$	9,720		$	8,917
Deferred income tax liabilities:
Inventory basis differences	$	—		$	(253	)
Depreciation	(3,068		)	(2,867		)
Intangible assets	(1,277		)	(1,011		)
Deferred revenue	(66		)	(135		)
Expenses not deductible for tax purposes	(461		)	(777		)
Total deferred income tax liabilities	$	(4,872	)	$	(5,043	)
Net deferred income tax assets	$	4,848		$	3,874

Schedule of Unrecognized Tax Benefits Roll Forward

	December 31,
	2013			2012
Balance as of beginning of year	$	257,000		$	235,000
Additions for tax positions related to the current year	56,000			—
Additions for tax positions related to prior years	27,000			22,000
Reduction due to lapse of statute of limitations	(194,000		)	—
Balance as of end of year	$	146,000		$	257,000

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Leases

The Company leases office space and equipment under various operating leases, which generally are expected to be renewed or replaced by other leases. The Company has certain capitalized leases consisting principally of leases of buildings. As of December 31, 2013, future minimum lease payments under these non-cancelable leases and the present value of the net minimum lease payments for the capitalized leases are:

(in thousands)	Operating Leases		Capitalized Leases
2014	$	1,507	$	115
2015	927		8
2016	515		—
2017	287		—
2018	110		—
Thereafter	—		—
Total minimum lease payments	$	3,346	$	123
Less amount representing interest			3
Present value of net minimum lease payments			$	120
Less current portion			112
Long-term portion			$	8

Rental expense for operating leases was $2,293,000 for 2013, $2,088,000 for 2012, and $1,879,000 for 2011.

Purchase obligations of $83,105,000 represent an estimate of goods and services to be purchased under outstanding purchase orders not reflected on the Company’s balance sheet. New purchase obligations should be received and paid for during the current fiscal year.

Other

Like other manufacturers, the Company is subject to a broad range of federal, state, local and foreign laws and requirements, including those concerning air emissions, discharges into waterways, and the generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste materials, as well as the remediation of contamination associated with releases of hazardous substances at the Company’s facilities and offsite disposal locations, workplace safety and equal employment opportunities. These laws and regulations are constantly changing, and it is impossible to predict with accuracy the effect that changes to such laws and regulations may have on the Company in the future. Like other industrial concerns, the Company’s manufacturing operations entail the risk of noncompliance, and there can be no assurance that the Company will not incur material costs or other liabilities as a result thereof.

The Company knows that its Indianola, Iowa property is contaminated with chromium which most likely resulted from chrome plating operations which were discontinued before the Company purchased the property. Chlorinated volatile organic compounds have also been detected in water samples on the property, though the source is unknown at this time. The Company voluntarily worked with an environmental consultant and the state of Iowa with respect to these issues and believes it completed its remediation program in June 2006. The work was accomplished within the Company’s environmental liability reserve balance. We requested a “no further action” classification from the state. We received a conditional “no further action” letter in January of 2009. When we demonstrate stable or improving conditions below residential standards for a certain period of time by monitoring existing wells, we will request an unconditional “no further action” letter.

The Company knows that Bush Hog’s main manufacturing property in Selma, Alabama was contaminated with chlorinated volatile organic compounds which most likely resulted from painting and cleaning operations during the 1960s and 1970s. The contaminated areas were primarily in the location of underground storage tanks and underneath the former waste storage area. Under the Asset Purchase Agreement, Bush Hog’s prior owner agreed to and has removed the underground storage tanks at its cost and has remediated the identified contamination in accordance with the regulations of the Alabama Department of Environmental Management. An environmental consulting firm was retained by the prior owner to administer the cleanup and monitor the site on an ongoing basis until the remediation program is complete and approved by the applicable authorities.

In December of 2012, a federal district court jury in Louisiana found that Gradall was unjustly enriched in the amount of $1,000,000 plus interest when it sold several telescopic fire apparatuses after properly terminating what the jury determined to be an enforceable contract with the plaintiff, a fire truck manufacturer. Gradall is appealing the decision and has reserved the full amount.

Alamo Group Inc.  and Bush Hog, Inc. were added as defendants in 2013 to ongoing litigation by Deere & Company as plaintiff against Bush Hog, LLC (now Duroc, LLC) and Great Plains Manufacturing Incorporated, in which Deere alleged infringement of a mower-related patent. The jury concluded that not only did the defendants not infringe the patent but that the patent was invalid as well. The Company expensed $2,100,000 in legal fees related to this lawsuit in 2013.

Certain assets of the Company contain asbestos that may have to be remediated over time. The Company believes that any subsequent change in the liability associated with the asbestos removal will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

The Company is subject to various other federal, state, and local laws affecting its business, as well as a variety of regulations relating to such matters as working conditions, equal employment opportunities, and product safety. A variety of state laws regulate the Company’s contractual relationships with its dealers, some of which impose restrictive standards on the relationship between the Company and its dealers, including events of default, grounds for termination, non-renewal of dealer contracts, and equipment repurchase requirements. The Company believes it is currently in material compliance with all such applicable laws and regulations.

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Stock Options (Schedule of Restricted Stock Award Activity) (Details) (Restricted Stock, USD $)	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at beginning of year, Shares	11,375		19,750		9,000
Granted, Shares	4,224		0		13,500
Vested, Shares	(4,875)		(6,125)		(2,750)
Forfeited or Cancelled, Shares	0		(2,250)		0
Outstanding at end of year, Shares	10,724		11,375		19,750
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Intrinsic Value [Roll Forward]
Outstanding at beginning of year, Price	$ 24.24	[1]	$ 22.96	[1]	$ 15.86	[1]
Granted, Price	$ 42.70	[1]	$ 0.00	[1]	$ 26.08	[1]
Vested, Price	$ 22.07	[1]	$ 21.13	[1]	$ 15.06	[1]
Forfeited or Cancelled, Price	$ 0.00	[1]	$ 21.45	[1]	$ 0.00	[1]
Outstanding at end of year, Price	$ 32.49	[1]	$ 24.24	[1]	$ 22.96	[1]

[1] Weighted Averages

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net income	$ 36,094	$ 28,903	$ 32,687
Other comprehensive income (loss):
Foreign currency translation adjustment	479	4,445	(2,788)
Unrealized gains on derivative instruments	0	0	144
Net gain (loss) on pension and other postretirement benefits	6,706	(574)	(6,533)
Other comprehensive income (loss) before income tax expense (benefit)	7,185	3,871	(9,177)
Income tax expense (benefit) related to items of other comprehensive income (loss)	(2,516)	121	2,021
Other comprehensive income (loss)	4,669	3,992	(7,156)
Comprehensive income	$ 40,763	$ 32,895	$ 25,531

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Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Stockholders' equity:
Common stock, par value	$ 0.1	$ 0.1
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	12,113,109	12,028,354
Treasury stock, at cost	42,600	42,600

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Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. There is a three-tier fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In fair value measurements are classified under the following hierarchy:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

Level 3 – Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable

The Company uses quoted market prices, when available, to determine fair value, and the Company classifies such measurements within Level 1. In some cases where market prices are not available, the Company makes use of observable market-based inputs to calculate fair value, in which case the measurements are classified with Level 2. If quoted or observable market prices are not available, fair value is based upon internally developed models that use, where possible, current market-based parameters such as interest rates, yield curves, currency rates, etc. These measurements are classified within Level 3.

Fair value measurements are classified to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be significant inputs that are readily observable.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2013	Feb. 28, 2014	Jun. 28, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	ALAMO GROUP INC
Entity Central Index Key	0000897077
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		12,126,783
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 361,724,144

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Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The jurisdictional components of income before taxes consist of the following:

	December 31,
(in thousands)	2013		2012		2011
Income before income taxes:
Domestic	$	35,146	$	29,390	$	28,109
Foreign	16,242		14,056		20,020
	$	51,388	$	43,446	$	48,129

The components of income tax expense (benefit) consist of the following:

	December 31,
(in thousands)	2013			2012			2011
Current:
Domestic	$	10,605		$	9,273		$	7,771
Foreign	3,200			4,919			5,682
State	2,366			756			1,139
	16,171			14,948			14,592
Deferred:
Domestic	(1,074		)	(192		)	397
Foreign	249			(363		)	331
State	(52		)	150			122
	(877		)	(405		)	850
Total income taxes	$	15,294		$	14,543		$	15,442

The difference between income tax expense (benefit) for financial statement purposes and the amount of income tax expense computed by applying the domestic statutory income tax rate of 35% to income loss before income taxes consist of the following:

	December 31,
(in thousands)	2013			2012			2011
Domestic statutory rate at 35% (34% for 2011 and 2010)	$	17,985		$	15,206		$	16,364
Increase (reduction) from:
Jurisdictional rate differences	(1,959		)	(1,477		)	(1,315		)
Goodwill impairment	—			157			633
Valuation allowance	(114		)	825			—
Stock based compensation	136			214			161
U.S. state taxes	1,496			589			740
Domestic Production Deduction	(1,162		)	(948		)	(796		)
R&E Credit Reserve	(856		)	(130		)	(252		)
Other, net	(232		)	107			(93		)
Provision for income taxes	$	15,294		$	14,543		$	15,442
Effective tax rate	30		%	33		%	32		%

Deferred income taxes arise from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The components of the Company’s deferred income tax assets and liabilities consist of the following:

	December 31,
(in thousands)	2013			2012
Deferred income tax assets:
Inventory basis difference	$	1,576		$	1,475
Accounts receivable reserve	201			299
Stock based compensation	904			614
Pension liability	1,604			3,595
Employee benefit accrual	601			459
Product liability and warranty reserves	1,417			1,120
Expenses not deductible for tax purposes	1,064			487
Foreign net operating loss	2,954			1,608
State net operating loss	76			82
Other	34			3
Total deferred income tax assets	$	10,431		$	9,742
Less: Valuation allowance	(711		)	(825		)
Net deferred income tax assets	$	9,720		$	8,917
Deferred income tax liabilities:
Inventory basis differences	$	—		$	(253	)
Depreciation	(3,068		)	(2,867		)
Intangible assets	(1,277		)	(1,011		)
Deferred revenue	(66		)	(135		)
Expenses not deductible for tax purposes	(461		)	(777		)
Total deferred income tax liabilities	$	(4,872	)	$	(5,043	)
Net deferred income tax assets	$	4,848		$	3,874

As of December 31, 2013, the Company had foreign deferred tax assets consisting of foreign net operating losses and other tax benefits available to reduce future taxable income in a foreign jurisdiction. These foreign jurisdictions' net operating loss carryforwards are in the approximate amount of $10.6 million with an unlimited carryforward period. The Company also has state net operating loss carryforwards in the U.S. of approximately $5.0 million which will expire between 2014 to 2028.

The company recorded a valuation allowance as of December 31, 2013 and 2012 due to uncertainties related to the ability to utilize some of the deferred income tax assets, primarily consisting of certain U.S. state NOLs and income tax credits, and international NOLs, before they expire. The valuation allowance is based on estimates of taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. The realization of net deferred income tax assets recorded as of December 31, 2013 is primarily dependent upon the ability to generate future taxable income in certain U.S. states and international jurisdictions.

Deferred income taxes have not been provided on the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and the respective tax bases of the Company’s foreign subsidiaries, based on the determination that such differences are essentially permanent in duration in that the earnings of the subsidiaries are expected to be indefinitely reinvested in foreign operations. As of December 31, 2013, the cumulative undistributed earnings of these subsidiaries approximated $138,531,000. If these earnings were not considered indefinitely reinvested, deferred income taxes would have been recorded after the consideration of foreign tax credits. At this time, it is not practicable to estimate the amount of additional income taxes that might be payable on those earnings, if distributed.

The Company adopted the provisions of FASB ASC Section 740-10-25 (formerly FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”) on January 1, 2007. Unrecognized tax benefits in the amount of$257,000 and $146,000 for 2012 and 2013, respectively, are included in other noncurrent liabilities on the balance sheet. The unrecognized tax benefits, if recognized, would favorably impact our effective tax rate in a future period. We do not expect our unrecognized tax benefits disclosed above to change significantly over the next 12 months.

	December 31,
	2013			2012
Balance as of beginning of year	$	257,000		$	235,000
Additions for tax positions related to the current year	56,000			—
Additions for tax positions related to prior years	27,000			22,000
Reduction due to lapse of statute of limitations	(194,000		)	—
Balance as of end of year	$	146,000		$	257,000

The Company's policy is to include interest and penalty expense related to income taxes as interest and other expense, respectively. As of December 31, 2013, no interest or penalties has been accrued. The Company’s open tax years for its federal and state income tax returns are for the tax years ended 2009 through 2013. The Company's open tax years for its foreign income tax returns are for the tax years ended 2009 through 2013.

On January 2, 2013, the American Taxpayer Relief Act of 2012 (Act) was enacted. The Act provided tax relief for businesses by reinstating certain tax benefits retroactively to January 1, 2012. There are several provisions of the Act that impacted the Company, most notably the extension of the Research and Development credit through 2013. Income tax accounting rules require tax law changes to be recognized in the period of enactment; as such, the additional Research and Development Credit in 2013 tax provision that related to the 2012 tax year was approximately $450,000. Currently, the Research and Development credit has not been extended for 2014.

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Commitments and Contingencies (Schedule of Future Commitments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]
Operating Leases, 2014	$ 1,507
Capital Leases, 2014	115
Operating Leases, 2015	927
Capital Leases, 2015	8
Operating Leases, 2016	515
Capital Leases, 2016	0
Operating Leases, 2017	287
Capital Leases, 2017	0
Operating Leases, 2018	110
Capital Leases, 2018	0
Operating Leases, Thereafter	0
Capital Leases, Thereafter	0
Operating Leases, Total minimum lease payments	3,346
Capital Leases, Total minimum lease payments	123
Less amount representing interest	3
Present value of net minimum lease payments	120
Less current portion	112
Long-term portion	$ 8

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Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Net sales:
Net sales:	$ 676,836	$ 628,402	$ 603,593
Cost of sales	518,326	484,890	468,508
Gross profit	158,510	143,512	135,085
Selling, general and administrative expenses	107,773	97,507	92,347
Gain on bargain purchase	0	0	(8,616)
Goodwill impairment	0	656	1,898
Income from operations	50,737	45,349	49,456
Interest expense	(1,161)	(1,620)	(2,422)
Interest income	186	234	247
Other income (expense), net	1,626	(517)	848
Income before income taxes	51,388	43,446	48,129
Provision for income taxes	15,294	14,543	15,442
Net income	36,094	28,903	32,687
Net income per common share:
Basic (in dollars per share)	$ 3.00	$ 2.43	$ 2.76
Diluted (in dollars per share)	$ 2.96	$ 2.40	$ 2.73
Average common shares:
Basic (in shares)	12,050,000	11,899,000	11,848,000
Diluted (in shares)	12,212,000	12,058,000	11,966,000
North American Industrial
Net sales:
Net sales:	296,617	263,353	229,594
Income from operations	25,743	19,313	24,649
North American Agricultural
Net sales:
Net sales:	215,340	200,467	203,993
Income from operations	17,880	18,319	16,644
European
Net sales:
Net sales:	164,879	164,582	170,006
Income from operations	$ 7,114	$ 7,717	$ 8,163

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Inventories

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Inventories valued at LIFO represented 55% and 56% of total inventory for the years ended December 31, 2013 and 2012, respectively. The excess of current costs over LIFO-valued inventories was $9,483,000 and $8,975,000 on December 31, 2013 and December 31, 2012, respectively. (The $508,000 increase in LIFO reserve during 2013 came from reductions in inventory levels within U.S. operations. The impact of the application of the LIFO method on the Statement of Income for the years ended December 31, 2013, was a decrease to cost of sales of $508,000, and an decrease in 2012 of $484,000 and an increase in 2011 of $1,805,000.) Inventories consisted of the following on a cost basis, net of reserves:

	December 31,
(in thousands)	2013		2012
Finished goods and parts	$	84,548	$	93,095
Work in process	9,906		7,922
Raw materials	14,650		7,741
	$	109,104	$	108,758

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Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2013

Receivables [Abstract]

Valuation and Qualifying Accounts

VALUATION AND QUALIFYING ACCOUNTS

Valuation and qualifying accounts included the following:

(in thousands)	Balance Beginning of Year		Net Charged to Costs and Expenses		Translations, Reclassifications and Acquisitions				Net Write-Offs or Discounts Taken			Balance End of Year
2013
Allowance for doubtful accounts	$	3,077	$	31		$	62		$	(432	)	$	2,738
Reserve for sales discounts	15,005		76,184			—			(74,465		)	16,724
Reserve for inventory obsolescence	9,099		2,586			(157		)	(2,932		)	8,596
Reserve for warranty	5,007		6,410			80			(6,503		)	4,994
2012
Allowance for doubtful accounts	$	3,215	$	253		$	113		$	(504	)	$	3,077
Reserve for sales discounts	14,567		65,481			(16		)	(65,027		)	15,005
Reserve for inventory obsolescence	7,630		2,998			79			(1,608		)	9,099
Reserve for warranty	5,083		6,646			82			(6,804		)	5,007
2011
Allowance for doubtful accounts	$	2,852	$	995		$	(65	)	$	(567	)	$	3,215
Reserve for sales discounts	11,903		62,935			9			(60,280		)	14,567
Reserve for inventory obsolescence	7,506		3,403			(123		)	(3,156		)	7,630
Reserve for warranty	5,554		6,070			17			(6,558		)	5,083

Allowance for Doubtful Accounts

The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations, the Company records a specific reserve to reduce the amounts recorded to what it believes will be collected. For all other customers, it recognizes reserves for bad debt based on historical experience of bad debts as a percent of revenues for each business unit, adjusted for relative improvements or deteriorations in the aging and changes in current economic conditions.

The Company evaluates all receivables that are over 60 days old and will reserve specifically on a 90-day basis. The Company has a secured or insured interest on most of its wholegoods that each customer purchases. This allows the Company, in times of a difficult economy when the customer is unable to pay or has filed for bankruptcy, to repossess its inventory. This also allows Alamo Group to maintain only a reserve over its cost, which usually represents the margin on the original sales price.

The allowance for doubtful accounts balance was $2,738,000 on December 31, 2013, and $3,077,000 on December 31, 2012. The decrease was mainly from the Company’s Industrial Division.

Sales Discounts

On December 31, 2013, the Company had $16,724,000 in reserves for sales discounts compared to $15,005,000 on December 31, 2012 on product shipped to our customers under various promotional programs. The increase was due primarily to increased sales volume of the Company’s agricultural products during the 2013 pre-season, which runs during the third and fourth quarters of each year with orders shipped through the second quarter of 2014. The Company reviews the reserve quarterly based on analysis made on each program outstanding at the time.

The Company bases its reserves on historical data relating to discounts taken by the customer under each program. Historically, between 85% and 95% of the Company’s customers who qualify for each program actually take the discount that is available.

Inventories – Obsolete and Slow Moving

The Company had a reserve of $8,596,000 on December 31, 2013 and $9,099,000 on December 31, 2012 to cover obsolete and slow moving inventory. The decrease in the reserve was mainly from the Industrial Division and to a lesser extent the Company's Agricultural Division. The obsolete and slow moving inventory policy states that the reserve is to be calculated as follows: 1) no inventory usage over a three-year period is deemed obsolete and reserved at 100 percent; and 2) slow moving inventory with little usage requires a 100 percent reserve on items that have a quantity greater than a three-year supply. There are exceptions to the obsolete and slow moving classifications if approved by an officer of the Company, based on specific identification of an item or items that are deemed to be either included or excluded from this classification. In cases where there is no historical data, management makes a judgment based on a specific review of the inventory in question to determine what reserves, if any, are appropriate. New products or parts are generally excluded from the reserve policy until a three-year history has been established.

Warranty

The Company’s warranty policy is generally to provide its customers warranty for up to one year on all wholegood units and 90 days on parts though some components can have warranty for longer terms.

Warranty reserve, as a percentage of sales, is generally calculated by looking at the current twelve months’ expenses and prorating that amount based on twelve months’ sales with a ninety-day to six-month lag period. The Company’s historical experience is that an end-user takes approximately 90 days to six months from the receipt of the unit to file a warranty claim. A warranty reserve is established for each different marketing group. Reserve balances are evaluated on a quarterly basis and adjustments made when required.

The current liability warranty reserve balance was $4,994,000 on December 31, 2013 and $5,007,000 on December 31, 2012.

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International Operations and Geographic Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

International Operations and Geographic Information

SEGMENT REPORTING

The Company reports three business segments: North American Industrial, North American Agricultural and European. The Company’s sales are principally within the United States, United Kingdom, France, Canada and Australia. The Company sells its products primarily through a network of independent dealers and distributors to governmental end-users, related independent contractors, as well as to the agricultural and commercial turf markets.

The Company has included a summary of the financial information by reporting segment. The following table presents the revenues, income from operations (loss), goodwill and total identifiable assets by reporting segment for the years ended December 31, 2013, 2012 and 2011:

	December 31,
(in thousands)	2013		2012		2011
Net Revenue
North American Industrial	$	296,617	$	263,353	$	229,594
North American Agricultural	215,340		200,467		203,993
European	164,879		164,582		170,006
Consolidated	$	676,836	$	628,402	$	603,593
Income from Operations
North American Industrial	$	25,743	$	19,313	$	24,649
North American Agricultural	17,880		18,319		16,644
European	7,114		7,717		8,163
Consolidated	$	50,737	$	45,349	$	49,456
Goodwill
North American Industrial	$	13,176	$	13,418	$	13,316
North American Agricultural	—		—		—
European	18,897		18,230		18,435
Consolidated	$	32,073	$	31,648	$	31,751
Total Identifiable Assets
North American Industrial	$	161,080	$	153,234	$	144,763
North American Agricultural	123,352		118,829		121,320
European	154,044		132,276		115,582
Consolidated	$	438,476	$	404,339	$	381,665

INTERNATIONAL OPERATIONS AND GEOGRAPHIC INFORMATION

Following is selected financial information on the Company’s international operations which include Europe, Canada and Australia:

	December 31,
(in thousands)	2013		2012		2011
Net sales	$	236,839	$	227,568	$	216,201
Income from operations	14,822		14,470		19,362
Income before income taxes	16,241		13,731		20,051
Identifiable assets	$	205,317	$	179,263	$	155,188

Following is other selected geographic financial information on the Company’s operations:

	December 31,
(in thousands)	2013		2012		2011
Geographic net sales:
United States	$	444,151	$	401,415	$	381,390
United Kingdom	36,892		40,734		39,967
France	97,958		92,964		101,124
Canada	45,045		36,190		26,029
Australia	11,517		10,225		14,171
Other	41,273		46,874		40,912
Total net sales	$	676,836	$	628,402	$	603,593
Geographic location of long-lived assets:
United States	$	42,053	$	46,749	$	52,262
United Kingdom	19,718		13,809		13,511
France	25,751		25,166		26,746
Canada	12,562		11,719		12,221
Australia	768		190		158
Total long-lived assets	$	100,852	$	97,633	$	104,898

Net sales are attributed to countries based on the location of customers.

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Common Stock

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Common Stock

COMMON STOCK

The Company was authorized by its Board of Directors in 1997 to repurchase up to 1,000,000 shares of the Company’s common stock to be funded through working capital and credit facility borrowings. No shares were repurchased in 2012 or 2013. The authorization to repurchase up to 1,000,000 shares remains available less 42,600 shares, previously purchased.

Subsequent to December 31, 2013, the Company declared and paid a dividend of $0.07 per share.

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Accrued Liabilities

12 Months Ended

Dec. 31, 2013

Payables and Accruals [Abstract]

Accrued Liabilities

ACCRUED LIABILITIES

Accrued liabilities consist of the following balances:

	December 31,
(in thousands)	2013		2012
Salaries, wages and bonuses	$	15,509	$	12,433
Warranty	4,994		5,007
State taxes	5,217		4,922
Other	7,762		9,239
	$	33,482	$	31,601

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Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Deferred income tax assets:
Inventory basis difference	$ 1,576	$ 1,475
Accounts receivable reserve	201	299
Stock based compensation	904	614
Pension liability	1,604	3,595
Employee benefit accrual	601	459
Product liability and warranty reserves	1,417	1,120
Expenses not deductible for tax purposes	1,064	487
Foreign net operating loss	2,954	1,608
State net operating loss	76	82
Other	34	3
Total deferred income tax assets	10,431	9,742
Less: Valuation allowance	(711)	(825)
Net deferred income tax assets	9,720	8,917
Deferred income tax liabilities:
Inventory basis differences	0	(253)
Depreciation	(3,068)	(2,867)
Intangible assets	(1,277)	(1,011)
Deferred revenue	(66)	(135)
Expenses not deductible for tax purposes	(461)	(777)
Total deferred income tax liabilities	(4,872)	(5,043)
Net deferred income tax assets	$ 4,848	$ 3,874

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Property Plant and Equipment

12 Months Ended

Dec. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	December 31,
(in thousands)	2013			2012			Useful Lives
Land	$	8,708		$	8,576
Buildings and improvements	62,169			59,309			10-20 yrs.
Machinery and equipment	65,451			57,320			3-15 yrs.
Office furniture and equipment	6,705			5,984			3-7 yrs.
Computer software	10,557			10,602			2-7 yrs.
Transportation equipment	4,786			4,663			3 yrs.
	158,376			146,454
Accumulated depreciation	(96,472		)	(89,653		)
	$	61,904		$	56,801

Property, plant and equipment on December 31, 2013 and December 31, 2012 include capital leases in the amount of $7,246,000 and $6,944,000, respectively, which are included in the listings above. Accumulated depreciation relating to the capital leases on December 31, 2013 and 2012 was $4,749,000 and $4,132,000, respectively. Amortization related to the capital lease is included in depreciation expense.

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Goodwill

12 Months Ended

Dec. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

GOODWILL

The changes in the carrying amount of goodwill for the twelve months ended December 31,2011, 2012 and 2013 are as follows:

(in thousands)
Balance at December 31, 2010	$	34,073
Translation adjustment	(424		)
Goodwill impairment	(1,898		)
Balance at December 31, 2011	$	31,751
Translation adjustment	553
Goodwill impairment	$	(656	)
Balance at December 31, 2012	$	31,648
Translation adjustment	425
Goodwill impairment	—
Balance at December 31, 2013	$	32,073

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Long-Term Debt

12 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Long-Term Debt

LONG-TERM DEBT

The components of long-term debt are as follows:

	December 31,
(in thousands)	2013		2012
Bank revolving credit facility	$	—	$	—
Capital lease obligations	120		394
Other notes payable	308		312
Total debt	428		706
Less current maturities	420		588
Total long-term debt	$	8	$	118

The Company maintains a revolving credit facility with certain lenders under its Amended and Restated Revolving Credit Agreement. The aggregate commitments from lenders under such revolving credit facility total$100,000,000 and, subject to certain conditions, the Company has the option to request an increase in aggregate commitments of up to an additional $50,000,000. The revolving credit agreement requires us to maintain various financial covenants including a minimum EBIT to interest expense ratio, a minimum leverage ratio and a minimum asset coverage ratio. The agreement also contains various covenants relating to limitations on indebtedness, limitations on investments and acquisitions, limitations on sale of properties and limitations on liens and capital expenditures. The revolving credit agreement also contains other customary covenants, representations and events of defaults. As of December 31, 2013, the Company was in compliance with the covenants under the revolving credit facility. The termination date of the revolving credit facility is March 28, 2016. As of December 31, 2013, no amounts were outstanding under the revolving credit facility. On December 31, 2013, $722,000 of the revolver capacity was committed to irrevocable standby letters of credit issued in the ordinary course of business as required by vendors’ contracts resulting in $99,278,000 in available borrowings. As of December 31, 2013, the Company is in compliance with the terms and conditions of its credit facilities.

The aggregate maturities of long-term debt, as of December 31, 2013, are as follows: $420,000 in 2014; $8,000 in 2015; and zero thereafter.

The fair value of the Company’s debt is based on secondary market indicators. Since the Company’s debt is not quoted, estimates are based on each obligation’s characteristics, including remaining maturities, interest rate, credit rating, collateral, amortization schedule and liquidity. The carrying amount approximates fair value.

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Stock Options (Schedule of Qualified Stock Option Activity) (Details) (Qualified Stock Options, USD $)	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Qualified Stock Options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding at beginning of year	330,730		377,480		360,130
Granted	49,000		61,000		35,000
Exercised	(81,880)		(99,650)		(15,650)
Canceled	(5,500)		(8,100)		(2,000)
Options outstanding at end of year	292,350		330,730		377,480
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning of year, Exercise Price, in dollars per share	$ 21.82	[1]	$ 19.27	[1]	$ 18.29	[1]
Granted, Exercise Price, in dollars per share	$ 42.70	[1]	$ 32.76	[1]	$ 26.45	[1]
Exercised, Exercise Price, in dollars per share	$ 16.77	[1]	$ 19.26	[1]	$ 12.03	[1]
Cancelled, Exercise Price, in dollars per share	$ 24.24	[1]	$ 17.20	[1]	$ 24.69	[1]
Outstanding at end of year, Exercise Price, in dollars per share	$ 26.68	[1]	$ 21.82	[1]	$ 19.27	[1]
Options exercisable at end of year	154,950		192,830		243,180
Exercisable at end of year, Exercise Price, in dollars per share	$ 21.57	[1]	$ 19.48	[1]	$ 19.32	[1]
Options available for grant at end of year	66,100		109,600		162,500

[1] Weighted Averages

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Stock Options (Schedule of Non-Qualified Stock Options Activity) (Details) (Non Qualified Options, USD $)	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012		Dec. 31, 2011
Non Qualified Options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding at beginning of year	89,700		112,800		102,400
Granted	25,000		0		30,000
Exercised	0		(23,100)		(14,600)
Canceled	0		0		(5,000)
Options outstanding at end of year	114,700		89,700		112,800
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning of year, Exercise Price, in dollars per share	$ 19.91	[1]	$ 18.62	[1]	$ 15.62	[1]
Granted, Exercise Price, in dollars per share	$ 42.70	[1]	$ 0.00	[1]	$ 26.45	[1]
Exercised, Exercise Price, in dollars per share	$ 0.00	[1]	$ 13.62	[1]	$ 11.45	[1]
Cancelled, Exercise Price, in dollars per share	$ 0.00	[1]	$ 0.00	[1]	$ 25.18	[1]
Outstanding at end of year, Exercise Price, in dollars per share	$ 24.87	[1]	$ 19.91	[1]	$ 18.62	[1]
Options exercisable at end of year	57,900		38,100		37,400
Exercisable at end of year, Exercise Price, in dollars per share	$ 19.89	[1]	$ 21.91	[1]	$ 19.57	[1]
Options available for grant at end of year	293,526		322,750		32,500

[1] Weighted Averages

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Stock Options (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (years)	1 year
Qualified Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding	292,350	330,730	377,480	360,130
Granted	49,000	61,000	35,000
Weighted average grant date fair value of options granted	$ 20.56	$ 14.76	$ 12.50
Total unrecognized compensation cost related to non-vested share-based compensation arrangements	$ 1,322
Period cost is expected to be recognized (years)	5 years
Exercise of stock options, shares	81,880	99,650	15,650
Non Qualified Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding	114,700	89,700	112,800	102,400
Granted	25,000	0	30,000
Award vesting period (years)	1 year
Weighted average grant date fair value of options granted	$ 20.56		$ 12.50
Total unrecognized compensation cost related to non-vested share-based compensation arrangements	213
Period cost is expected to be recognized (years)	5 years
Exercise of stock options, shares	0	23,100	14,600
Proceeds from stock options exercised	0	315	167
Tax deductions from the exercise of stock options	0	284	178
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage of award	25.00%
Total unrecognized compensation cost related to non-vested share-based compensation arrangements	$ 90
Period cost is expected to be recognized (years)	4 years
Weighted average remaining contractual life (years)	2 years 1 month 2 days	2 years 7 months 24 days	3 years 5 months 23 days
1994 Incentive Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage of award	20.00%
Options outstanding	3,000
2005 Incentive Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage of award	20.00%
Granted	49,000,000	61,000,000	35,000,000
2005 Incentive Stock Option Plan | Qualified Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for options to be issued	500,000
2009 Equity Incentive Plan | Non Qualified Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting percentage of award	20.00%
Shares of common stock reserved for options to be issued	400,000

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2013

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities consist of the following balances:

	December 31,
(in thousands)	2013		2012
Salaries, wages and bonuses	$	15,509	$	12,433
Warranty	4,994		5,007
State taxes	5,217		4,922
Other	7,762		9,239
	$	33,482	$	31,601

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Property Plant and Equipment (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Abstract]
Capital leases	$ 7,246	$ 6,944
Accumulated depreciation related to capital leases	$ (4,749)	$ (4,132)

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Retirement Benefit Plans

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Retirement Benefit Plans

RETIREMENT BENEFIT PLANS

Defined Benefit Plans

In connection with the February 3, 2006 purchase of all the net assets of the Gradall excavator business, the Company assumed sponsorship of two Gradall non-contributory defined benefit pension plans, both of which are frozen with respect to both future benefit accruals and future new entrants.

The Gradall Company Hourly Employees’ Pension Plan covers approximately 330 former employees and 133 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were covered by a collective bargaining agreement and (iii) first participated in the plan before April 6, 1997. An amendment ceasing all future benefit accruals was effective April 6, 1997.

The Gradall Company Employees’ Retirement Plan covers approximately 239 former employees and 87 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were not covered by a collective bargaining agreement and (iii) first participated in the plan before December 31, 2004. An amendment ceasing future benefit accruals for certain participants was effective December 31, 2004. A second amendment discontinued all future benefit accruals for all participants effective April 24, 2006.

The following tables set forth the change in plan assets, change in projected benefit obligation, rate assumptions and components of net periodic benefit cost as of December 31 with respect to these plans. The measurement dates of the assets and liabilities of both plans were December 31 of the respective years presented.

	Year Ended December 31, 2013
(in thousands)	Hourly   Employees’ Pension Plan				Employees’ Retirement Plan				Total
Change in projected benefit obligation
Benefit obligation at beginning of year		$	10,786			$	20,923		$	31,709
Service cost		11				5			16
Interest cost		371				760			1,131
Liability actuarial (gain)/loss		(1,060		)		(2,620		)	(3,680		)
Benefits paid		(631		)		(733		)	(1,364		)
Benefit obligation at end of year		9,477				18,335			27,812
Change in fair value of plan assets
Fair value of plan assets at beginning of year		7,690				14,148			21,838
Return on plan assets		1,136				2,090			3,226
Employer contributions		678				896			1,574
Benefits paid		(631		)		(733		)	(1,364		)
Fair value of plan assets at end of year		8,873				16,401			25,274
Underfunded status – December 31, 2012		$	(604	)		$	(1,934	)	$	(2,538	)
Accumulated benefit obligation – December 31, 2013		$	9,477			$	18,335		$	27,812

	Year Ended December 31, 2012
(in thousands)	Hourly   Employees’ Pension Plan				Employees’ Retirement Plan				Total
Change in projected benefit obligation
Benefit obligation at beginning of year		$	10,454			$	19,238		$	29,692
Service cost		10				4			14
Interest cost		411				788			1,199
Liability actuarial (gain)/loss		549				1,619			2,168
Benefits paid		(638		)		(726		)	(1,364		)
Benefit obligation at end of year		10,786				20,923			31,709
Change in fair value of plan assets
Fair value of plan assets at beginning of year		6,663				12,237			18,900
Return on plan assets		937				1,722			2,659
Employer contributions		728				915			1,643
Benefits paid		(638		)		(726		)	(1,364		)
Fair value of plan assets at end of year		7,690				14,148			21,838
Underfunded status – December 31, 2011		$	(3,096	)		$	(6,775	)	$	(9,871	)
Accumulated benefit obligation – December 31, 2012		$	10,786			$	20,923		$	31,709

The Company recognizes the overfunded or underfunded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of defined benefit postretirement plans as an asset or liability in its statement of financial position and recognizes changes in the funded status in the year in which the changes occur. The Company measures the funded status of a plan as of the date of its year-end statement of financial position.

The underfunded status of the plans of $2,538,000 and $9,871,000 as of December 31, 2013 and 2012, respectively, is recognized in the accompanying consolidated balance sheets as long-term accrued pension liability because plan assets are less than the value of benefit obligations expected to be paid.

The accumulated benefit obligation for our pension plans represents the actuarial present value of benefits based on employee service and compensation as of a certain date and does not include an assumption about future compensation levels.

In determining the projected benefit obligation and the net pension cost, we used the following significant weighted-average assumptions:

Assumptions used to determine benefit obligations at December 31:

	Hourly Employees’ Pension Plan		Employees’ Retirement Plan
	2013	2012	2013	2012
Discount rate	4.60%	3.55%	4.75%	3.70%
Composite rate of compensation increase	N/A	N/A	N/A	N/A

Assumptions used to determine net periodic benefit cost for the years ended December 31:

	Hourly Employees’ Pension Plan		Employees’ Retirement Plan
	2013	2012	2013	2012
Discount rate	3.55%	4.06%	3.70%	4.18%
Long-term rate of return on plan assets	7.25%	7.75%	7.25%	7.75%
Composite rate of compensation increase	N/A	N/A	N/A	N/A

The Company employs a building block approach in determining the expected long-term rate on return on plan assets. Historical markets are studied and long-term historical relationships between equities and fixed income are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term market assumptions are determined. The long-term portfolio return is established via a building block approach with proper consideration of diversification and rebalancing. Peer data and historical returns are reviewed to check for reasonability and appropriateness.

The following tables present the components of net periodic benefit cost (gains are denoted with parentheses and losses are not):

	Year Ended December 31, 2013
(in thousands)	Hourly Employees’ Pension Plan				Employees’ Retirement Plan				Total
Service cost		$	11			$	5		$	16
Interest cost		371				760			1,131
Expected return on plan assets		(549		)		(1,018		)	(1,567		)
Amortization of prior service cost		—				—			—
Amortization of net (gain)/loss		285				418			703
Net periodic benefit cost		$	118			$	165		$	283

	Year Ended December 31, 2012
(in thousands)	Hourly Employees’ Pension Plan				Employees’ Retirement Plan				Total
Service cost		$	10			$	4		$	14
Interest cost		411				788			1,199
Expected return on plan assets		(520		)		(951		)	(1,471		)
Amortization of prior service cost		—				—			—
Amortization of net (gain)/loss		280				379			659
Net periodic benefit cost		$	181			$	220		$	401

 The Company estimates that $132,000 of unrecognized actuarial expense will be amortized from accumulated other comprehensive income into net periodic benefit costs during 2014.

The Company employs a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, and small and large capitalizations. Other assets such as real estate, private equity, and hedge funds are used judiciously to enhance long-term returns while improving portfolio diversification. Derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset/liability studies.

The pension plans' weighted-average asset allocations as a percentage of plan assets at December 31 are as follows:

	Hourly Employees’ Pension Plan		Employees’ Retirement Plan
	2013	2012	2013	2012
Equity securities	55%	55%	55%	55%
Debt securities	38%	38%	38%	38%
Short-term investments	2%	2%	2%	2%
Other	5%	5%	5%	5%
Total	100%	100%	100%	100%

As of December 31, 2013, we used the following valuation techniques to measure fair value for assets. There were no changes to these methodologies during 2013: Level 1 - Assets were valued using the closing price reported in the active market in which the individual security was traded. Level 2 - Assets were valued using quoted prices in markets that are not active, broker dealer quotations, net asset value of shares held by the plans, and other methods by which all significant input were observable at the measurement date. Level 3 - Assets were valued using valuation reports from the respective institutions at the measurement date. The following table presents the hierarchy levels for our postretirement benefit plan investments as of December 31:

(in thousands)	December 31, 2013			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Mutual Funds:
Small Cap		$	—		$	—		$	—	$	—
Mid Cap		1,577			1,577
Large Cap		6,826			6,826
International		2,531			2,531
Common/Collective:
Wells Fargo Liability Driven Solution		3,521						3,521
Wells Fargo International Equity Index Fund		1,286						1,286
Wells Fargo Thornburg International		1,273						1,273
Wells Fargo Large Cap Growth Index Fund		1,423						1,423
Wells Fargo Large Cap Value Index Fund		1,427						1,427
Wells Fargo Multi-Manager Small Cap		1,683						1,683
Wells Fargo Russell 2000 Index Fund		841						841
Wells Fargo S&P Mid Cap Index Fund		950						950
T Rowe Price Equity Income		1,424						1,424
Cash & Short-term Investments		512			512
Total		$	25,274		$	11,446		$	13,828	$	—

(in thousands)	December 31, 2012			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Mutual Funds:
Small Cap		$	—		$	—		$	—	$	—
Mid Cap		1,376			1,376
Large Cap		7,126			7,126
International		2,201			2,201
Common/Collective:
Wells Fargo Liability Driven Solution Fund		3,074			—			3,074		—
Wells Fargo International Equity Index Fund		1,097						1,097
Wells Fargo Thornburg International		1,103						1,103
Wells Fargo Large Cap Growth Index Fund		1,216						1,216
Wells Fargo Large Cap Value Index Fund		1,210						1,210
Wells Fargo Multi-Manager Small Cap		1,481						1,481
Wells Fargo Russell 2000 Index Fund		708						708
Wells Fargo S&P Mid Cap Index Fund		825						825
Cash & Short-term Investments		421			421
Total		$	21,838		$	11,124		$	10,714	$	—

Our interests in the common collective trust investments are managed by one custodian. Consistent with our investment policy, the custodian has invested the assets across a widely diversified portfolio of U.S. and international equity and fixed income securities. Fair values of each security within the collective trust as of December 31, 2013 were obtained from the custodian and are based on quoted market prices of individual investments; however, since the fund itself does not have immediate liquidity or a quoted market price, these assets are considered Level 2.

The common collective funds noted in the above table have estimated fair value using the net asset value per share of investments. Investments can be redeemed immediately at the current net asset value per share based on the fair value of the underlying assets. Redemption frequency is daily. The categories contain investments in equity securities of smaller growing companies, medium-sized U.S. companies, large value-oriented and growth-oriented companies and foreign companies traded on international markets.

Expected benefit payments are estimated using the same assumptions used in determining our benefit obligation as of December 31, 2013. The following table illustrates the estimated pension benefit payments which reflect expected future service, as appropriate, that are projected to be paid:

(in thousands)	Hourly Employees’ Pension Plan			Employees’ Retirement Plan			Total
2014		$	643		$	862	$	1,505
2015		634			896		1,530
2016		635			932		1,567
2017		644			1,021		1,665
2018		651			1,112		1,763
Years 2019 through 2023		$	3,231		$	6,096	$	9,327

Supplemental Retirement Plan

The Board of Directors of the Company adopted the Alamo Group Inc. Supplemental Executive Retirement Plan (the “SERP”), effective as of January 3, 2011.  The SERP will benefit certain key management or other highly compensated employees of the Company and/or certain subsidiaries who are selected by the Compensation Committee and approved by the Board to participate.

The SERP is intended to provide a benefit from the Company upon retirement, death or disability, or a change in control of the Company.  Accordingly, the SERP obligates the Company to pay to a participant a Retirement Benefit (as defined in the SERP) upon the occurrence of certain payment events to the extent a participant has a vested right thereto.  A participant’s right to his or her Retirement Benefit becomes vested in the Company’s contributions upon 10 years of Credited Service (as defined in the SERP) or a change in control of the Company.  The Retirement Benefit is based on 20% of the final three-year average salary of each participant on or after his or her normal retirement age (65 years of age).  In the event of the participant’s death or a change in control, the participant’s vested retirement benefit will be paid in a lump sum to the participant or his or her estate, as applicable, within 90 days after the participant’s death or a change in control, as applicable.  In the event the participant is entitled to a benefit from the SERP due to disability, retirement or other termination of employment, the benefit will be paid in monthly installments over a period of fifteen years.

The Company records amounts relating to the SERP based on calculations that incorporate various actuarial and other assumptions, including discount rates, rate of compensation increases, retirement dates and life expectancies.  The net periodic costs are recognized as employees render the services necessary to earn the SERP benefits.

In connection with the initiation of the SERP, the Company had an unfunded long-term liability of $1,964,301, a deferred tax asset of $746,000 and $1,218,301 in accumulated other comprehensive income.  The $1,964,301 includes prior service cost which will be amortized over the average remaining service periods of the employees.  The prior service cost is included as a component of net periodic pension cost. 

The change in the Projected Benefit Obligation (PBO) as of December 31, 2013 and 2012, is shown below in thousands:

	Year Ended December 31,
(in thousands)	2013			2012
Benefit obligation at January 1,	$	3,057		$	2,584
Service cost	114			101
Interest cost	102			104
Liability actuarial (gain)/loss	(252		)	268
Plan Amendments	—			—
Benefit obligation at December 31,	$	3,021		$	3,057

The components of net periodic pension expense were as follows in thousands:

	Year Ended December 31,
(in thousands)	2013		2012
Service Cost	$	114	$	101
Interest Cost	102		104
Amortization of Prior Service Cost	327		287
Net Periodic Benefit Cost	$	543	$	492

The Company estimates that $270,000 of unrecognized actuarial expense will be amortized from accumulated other comprehensive income into net periodic benefit costs during 2014.

In determining the projected benefit obligation and the net pension cost, we used the following significant weighted-average assumptions:

Assumptions used to determine benefit obligations at December 31:

	2013	2012
Discount rate	4.60%	3.37%
Composite rate of compensation increase	3.00%	3.00%

Assumptions used to determine net periodic benefit cost for the years ended December 31:

	2013	2012
Discount rate	3.37%	4.04%
Composite rate of compensation increase	3.00%	3.00%
Long-term rate of return on plan assets	N/A	N/A

Future estimated benefits expected to be paid from the plan over the next ten years as follows in thousands:

2014	$	44
2015	51
2016	101
2017	140
2018	241
Years 2019 through 2023	$	1,305

Defined Contribution Plans

The Company has three defined contribution plans, The Gradall Salaried Employees’ Savings and Investment Plan (“Salary Plan”), The Gradall Hourly Employees’ Savings and Investment Plan (“Hourly Plan”) and The International Association of Machinist and Aerospace Workers Retirement Plan (“IAM Plan”). The Company contributed $422,000 and $388,000 to the IAM Plan for the plan years ended December 31, 2013 and 2012, respectively. The Company converted the Salary Plan into its 401(k) retirement and savings plan and put the Hourly Plan into a separate 401(k) retirement and savings plan.

The Company provides a defined contribution 401(k) retirement and savings plan for eligible U.S. employees. Company matching contributions are based on a percentage of employee contributions. Company contributions to the plan during 2013, 2012 and 2011 were $1,331,000, $1,678,000, and $992,000, respectively. A U.S. subsidiary of the Company had an Hourly Employee Pension Plan of Trust covering collective bargaining which was terminated on December 31, 2006. As of January 1, 2006 the employees were added to the existing 401(k) retirement and salary plan.

Three of the Company’s international subsidiaries also participate in a defined contribution and savings plan covering eligible employees. The Company’s international subsidiaries contribute between 3% and 10% of the participant’s salary up to a specific limit. Total contributions made to the above plans were $697,000, $696,000, and $676,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

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Subsequent Events

12 Months Ended

Dec. 31, 2013

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

On February 24, 2014 the Company announced that it has entered into an agreement to acquire the operating units of Specialized Industries, LP. This includes the businesses of Super Products LLC, Wausau-Everest LP and Howard P. Fairfield LLC. Super Products is a manufacturer of vacuum trucks and related equipment, parts and service, which is complementary to Alamo’s VacAll operation. Wausau-Everest is a manufacturer of snow removal equipment which is complementary to Alamo’s Tenco and Henke operations. And, Howard P. Fairfield is a dealer/distribution operation primarily in the New England area. Together the three operations had net sales of approximately $139 million in the fiscal year ending December 31, 2013. Total consideration for the purchase is approximately $186 million, subject to certain adjustments. The purchase is anticipated to close within 45 days and is subject to receiving regulatory approval and completion of other pre-closing requirements.

In anticipation of this acquisition, the Company is expanding its revolving credit facility and increasing its line of credit from $100 million to $250 million to meet the ongoing needs of the combined entities.

The Company has entered into a contract to sell the SMC plant for $900,000 and anticipates a gain on the sale of the facility which is expected to close in the second quarter of 2014.

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Inventories (Schedule of Inventory, Current) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Inventory Disclosure [Abstract]
Finished goods and parts	$ 84,548	$ 93,095
Work in process	9,906	7,922
Raw materials	14,650	7,741
Inventory, Net	$ 109,104	$ 108,758

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule

As of December 31, 2013, future minimum lease payments under these non-cancelable leases and the present value of the net minimum lease payments for the capitalized leases are:

(in thousands)	Operating Leases		Capitalized Leases
2014	$	1,507	$	115
2015	927		8
2016	515		—
2017	287		—
2018	110		—
Thereafter	—		—
Total minimum lease payments	$	3,346	$	123
Less amount representing interest			3
Present value of net minimum lease payments			$	120
Less current portion			112
Long-term portion			$	8

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income
Balance at Dec. 31, 2010	$ 253,260	$ 1,187	$ 84,377	$ (426)	$ 166,589	$ 1,533
Balance (shares) at Dec. 31, 2010		11,830,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	32,687				32,687
Translation adjustment	(2,788)					(2,788)
Unrealized derivative gain, net of taxes	144					144
Net actuarial gain arising during period net of taxes	(4,512)					(4,512)
Tax effect of non-qualified stock options	63		63
Stock-based compensation	986		986
Exercise of stock options	281	3	278
Exercise of stock options, shares		30,000
Dividends paid	(2,845)				(2,845)
Balance at Dec. 31, 2011	277,276	1,190	85,704	(426)	196,431	(5,623)
Balance (shares) at Dec. 31, 2011		11,860,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	28,903				28,903
Translation adjustment	4,445					4,445
Unrealized derivative gain, net of taxes	0
Net actuarial gain arising during period net of taxes	(453)					(453)
Tax effect of non-qualified stock options	(102)		(102)
Stock-based compensation	940		940
Exercise of stock options	2,131	13	2,118
Exercise of stock options, shares		126,000
Dividends paid	(2,854)				(2,854)
Balance at Dec. 31, 2012	310,286	1,203	88,660	(426)	222,480	(1,631)
Balance (shares) at Dec. 31, 2012		11,986,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	36,094				36,094
Translation adjustment	479					479
Unrealized derivative gain, net of taxes	0
Net actuarial gain arising during period net of taxes	4,190					4,190
Tax effect of non-qualified stock options	0
Stock-based compensation	1,501		1,501
Exercise of stock options	1,286	8	1,278
Exercise of stock options, shares		85,000
Dividends paid	(3,371)				(3,371)
Balance at Dec. 31, 2013	$ 350,465	$ 1,211	$ 91,439	$ (426)	$ 255,203	$ 3,038
Balance (shares) at Dec. 31, 2013		12,071,000

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Earnings Per Share

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

The following table sets forth the reconciliation from basic to diluted average common shares and the calculations of net income per common share. Net income for basic and diluted calculations does not differ.

(in thousands, except per share amounts)	2013		2012		2011
Net income	$	36,094	$	28,903	$	32,687
Average common shares:
Basic (weighted-average outstanding shares)	12,050		11,899		11,848
Dilutive potential common shares from stock options	162		159		118
Diluted (weighted-average outstanding shares)	12,212		12,058		11,966
Basic earnings per share	$	3.00	$	2.43	$	2.76
Diluted earnings per share	$	2.96	$	2.40	$	2.73

Stock options totaling 3,831 shares in 2013, 38,954 shares in 2012, and 78,337 shares in 2011 were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive.

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Income Taxes (Schedule of Components of Income Tax Expense (Benefit)) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Current:
Domestic	$ 10,605	$ 9,273	$ 7,771
Foreign	3,200	4,919	5,682
State	2,366	756	1,139
Provision for current income tax expense (benefit)	16,171	14,948	14,592
Deferred:
Domestic	(1,074)	(192)	397
Foreign	249	(363)	331
State	(52)	150	122
Provision for deferred income tax expense (benefit)	(877)	(405)	850
Total income taxes	$ 15,294	$ 14,543	$ 15,442

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Quarterly Financial Information (Unaudited) (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended			3 Months Ended
	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2013 Patent Infringement
Effect of Fourth Quarter Events [Line Items]
Charge relating to various litigation matters	$ 2,400,000				$ 1,800,000
Goodwill impairment	656,000	0	656,000	1,898,000
Reversal of environmental reserve	$ 1,200,000

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Retirement Benefit Plans (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Estimate of amount of unrecognized actuarial expense	$ 132,000
Other	34,000	3,000
Accumulated other comprehensive income	3,038,000	(1,631,000)
Net periodic pension expense, rate of compensation increase	3.00%	3.00%
Number of defined contribution plans	3
United States
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Annual contribution amount	1,331,000	1,678,000	992,000
Foreign
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Annual contribution amount	697,000	696,000	676,000
Supplemental Employee Retirement Plans, Defined Benefit
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Estimate of amount of unrecognized actuarial expense	270,000
SERP credited service period	10 years
Percentage of final 3 year average salary in which retirement benefit is based (percentage)	20.00%
Number of final years in which the Retirement Benefit is based	3 years
Retirement age	65 years
Period of time that vested retirement benefit will be paid after death or change in control	90 days
Years of monthly installments associated with SERP disability	15 years
SERP unfunded long-term liability	1,964,301
Other	746,000
Accumulated other comprehensive income	1,218,301
Prior service cost that will be amortized over the remaining service periods	1,964,301
Net periodic pension expense, discount rate	3.37%	4.04%
Hourly Employees’ Pension Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Former employees	330
Current employees	133
Employees’ Retirement Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Former employees	239
Current employees	87
IAM Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Annual contribution amount	$ 422,000	$ 388,000
Minimum | Foreign
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Employer contribution percentage	3.00%
Maximum | Foreign
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Employer contribution percentage	10.00%

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Alamo Group Inc. and its subsidiaries (the “Company” or “Alamo Group”), all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

 The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Judgments related to asset impairment and certain reserves are particularly subject to change. Actual results could differ from those estimates.

Foreign Currency

Foreign Currency

The Company translates the assets and liabilities of foreign-owned subsidiaries at rates in effect at the end of the year. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive income within the statement of stockholders’ equity.

The Company enters into foreign currency forward contracts to hedge its exposure to certain foreign currency transactions. The Company does not hold or issue financial instruments for trading purposes. Changes in the market value of the foreign currency instruments are recognized in the financial statements upon settlement of the hedged transaction.

Cash Equivalents

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Concentration of Credit Risk

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. The credit risk is limited because of the large numbers and types of customers and their geographic dispersion.

Inventories

Inventories

Inventories of U.S. operating subsidiaries are stated at the lower of cost (last-in, first-out method) (“LIFO”) or market, and the Company’s international subsidiaries’ inventories are stated at the lower of cost (first-in, first-out) (“FIFO”) or market.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant, and equipment are stated on the basis of cost. Major renewals and betterments are charged to the property accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed to the current period. Depreciation is provided at amounts calculated to amortize the cost of the assets over their estimated useful economic lives using the straight-line method.

Goodwill

Goodwill

Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. We perform our annual goodwill impairment test as of October 1 and monitor for interim triggering events on an ongoing basis. Goodwill is reviewed for impairment utilizing a qualitative assessment or a two-step process. We have an option to make a qualitative assessment of a reporting unit's goodwill for impairment. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. For reporting units where we perform the two-step process, the first step requires us to compare the fair value of each reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is higher than the fair value, there is an indication that an impairment may exist and the second step is required. In step two, the implied fair value of goodwill is calculated as the excess of the fair value of a reporting unit over the fair values assigned to its assets and liabilities. If the implied fair value of goodwill is less than the carrying value of the reporting unit's goodwill, the difference is recognized as an impairment loss.

The Company estimates the fair value of its reporting units using a discounted cash flow analysis. This analysis requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The cash flows are estimated over a significant future period of time, which makes those estimates and assumptions subject to an even higher degree of uncertainty. The Company also utilizes market valuation models and other financial ratios, which require the Company to make certain assumptions and estimates regarding the applicability of those models to its assets and businesses. As of December 31, 2013, goodwill was $32,073,000, which represents 7% of total assets.

The Company recognized no goodwill impairment in 2013. The Company recognized goodwill impairment at one of its French operations, Faucheux, of $656,000 in 2012 and two of its French operations, SMA and Rousseau, of $1,898,000 in 2011. The primary reason for the goodwill impairment in 2012 and 2011 was the general economic downturn that continues to affect the Company's European operations. This caused the Company to revise its expectations about future revenue, which is a significant factor in the discounted cash flow analysis used to estimate the fair value of the Company's reporting units. During the 2013 impairment analysis review, we performed a sensitivity analysis for goodwill impairment with respect to each of our reporting units and determined that a hypothetical 15% decline in the fair value of each reporting unit as of December 31, 2013 would not result in an impairment of goodwill for any of the reporting units. During the 2012 impairment analysis review, it was noted that even though the Schwarze and Rivard reporting units' fair value was above carrying value, it was not materially different. On December 31, 2013, there was approximately $6.9 million and $12.3 million of goodwill related to the Schwarze and Rivard reporting units, respectively. These reporting units would be most likely affected by changes in the Company’s assumptions and estimates. The calculation of fair value could increase or decrease depending on changes in the inputs and assumptions used, such as changes in the reporting unit’s future growth rates, discount rates, etc.

Management believes that the estimated valuations it arrived at are reasonable and consistent with what other marketplace participants would use in valuing the Company's components.  However, management cannot give any assurance that these market values will not change in the future.  For example, if discount rates demanded by the market increase, this could lead to reduced valuations under the income approach.  If the Company's projections are not achieved in the future, this could lead management to reassess their assumptions and lead to reduced valuations under the income approach.  If the market price of the Company's stock decreases, this could cause the Company to reassess the reasonableness of the implied control premium, which might cause management to assume a higher discount rate under the income approach which could lead to reduced valuations.  If future similar transactions exhibit lower multiples than those observed in the past, this could lead to reduced valuations under the similar transactions approach.  And finally, if there is a general decline in the stock market and particularly in those companies selected as comparable to the Company's components, this could lead to reduced valuations under the public company market multiple approach.  The Company's annual impairment test is performed during the fourth quarter of each fiscal year.  Given the current market conditions and continued economic uncertainty, the fair value of the Company's components could deteriorate which could result in the need to record impairment charges in future periods.  The Company also monitors potential triggering events including changes in the business climate in which it operates, attrition of key personnel, volatility in the capital markets, the Company's market capitalization compared to its book value, the Company's recent operating performance, and the Company's financial projections.  The occurrence of one or more triggering events could require additional impairment testing, which could result in future impairment charges.  In particular, since the Schwarze and Rivard reporting units' carrying values are not materially different from fair value, any changes to the Company's assumptions could lead to an indicated impairment in step one, requiring the Company to proceed to step two and potentially record an impairment charge.  

See Note 6 to the Consolidated Financial Statements for more information regarding goodwill.

Intangible Assets

Intangible Assets    

The Company's intangible assets with indefinite useful lives not subject to amortization consists of trade names. The net book value of these trade names was $5,500,000 as of December 31, 2013 and 2012 . This consisted of the Gradall trade name valued at $3,600,000 and the Bush Hog trade name valued at $1,900,000.

The Company tests its indefinite-lived intangible assets for impairment on an annual basis at year-end, or more frequently if an event occurs or circumstances change that indicate that the fair value of an indefinite-lived intangible asset could be below its carrying amount. The impairment test consists of comparing the fair value of the indefinite-lived intangible asset, determined using the relief from royalty method, with its carrying amount. An impairment loss would be recognized for the carrying amount in excess of its fair value.

Identifiable intangible assets are recorded at estimated cost. Definite-lived intangible assets are amortized over their estimated useful lives.

Pensions

Pensions

In connection with the February 3, 2006 purchase of all the net assets of the Gradall excavator business, the Company assumed sponsorship of twoGradall non-contributory defined benefit pension plans, both of which were frozen with respect to both future benefit accruals and future new entrants.

The Gradall Company Hourly Employees’ Pension Plan covers approximately 330 former employees and 133 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were covered by a collective bargaining agreement and (iii) first participated in the plan before April 6, 1997. An amendment ceasing all future benefit accruals was effective April 6, 1997.

The Gradall Company Employees’ Retirement Plan covers approximately 239 former employees and 87 current employees who (i) were formerly employed by JLG Industries, Inc., (ii) were not covered by a collective bargaining agreement, and (iii) first participated in the plan before December 31, 2004. An amendment ceasing future benefit accruals for certain participants was effective December 31, 2004. A second amendment discontinued all future benefit accruals for all participants effective April 24, 2006.

The Company recognizes the funded status of the defined benefit pension plans as a liability in its statement of financial position and recognizes any changes in that funded status in the year in which the changes occur through other comprehensive income.

Related Party Transactions

Related Party Transactions

There were no reportable relationships or related party transactions for the years ended December 31, 2013 and 2012. In1999, the Company approved a supplemental retirement benefit for Donald J. Douglass which is paid on a quarterly basis over a period of fourteen and one-half years that began in the year 2000.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when each of the following four criteria are met: 1) a contract or sales arrangement exists; 2) products have been shipped per agreed terms and title has been transferred or services have been rendered; 3) the prices of the products or services are fixed or determinable; and 4) collectability is reasonably assured. Pre-season sales orders are solicited in the fall in advance of the dealer’s sales season in the spring and summer. Pre-season sales orders are shipped beginning in the fall and continuing through the spring and represent an opportunity for the Company’s factories to level their production/shipping volumes through the winter months. These pre-season shipments carry descending discounts in conjunction with delayed payment terms of up to six months from the dealer’s requested delivery date. Revenue from sales is recorded net of a provision for discounts that are anticipated to be earned and deducted at time of payment by the customer. These approximated discounts represent an average of historical amounts taken and are adjusted as program terms are changed. The reserves for discounts are reviewed and adjusted quarterly. From time to time, revenue is recognized under a bill and hold arrangement. Revenue recognized under bill and hold arrangements for 2013, 2012, and 2011 was immaterial.

Accounting for Internal Use Software

Accounting for Internal Use Software

The Company capitalizes certain costs associated with the development and installation of internal use software. Internal use software costs are expensed or capitalized depending on whether they are incurred in the preliminary project stage, application development stage or the post-implementation stage. Amounts capitalized are amortized over the estimated useful lives of the software.

Shipping and Handling Costs

Shipping and Handling Costs

The Company’s policy is to include shipping and handling costs in costs of goods sold.

Advertising

Advertising

We charge advertising costs to expense as incurred. Advertising and marketing expense related to operations for fiscal years 2013, 2012 and 2011 was approximately $6,646,000, $6,353,000 and $6,441,000, respectively. Advertising and marketing expenses are included in Selling, General and Administrative expenses (“SG&A”).

Research and Development

Research and Development

Product development and engineering costs charged to SG&A amounted to $7,164,000, $5,686,000, and $6,017,000 for the years ended December 31, 2013, 2012 and 2011, respectively.

Legal Costs

Legal Costs

The Company’s policy is to accrue for legal costs expected to be incurred in connection with loss contingencies.

Federal Income Taxes

Federal Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial reporting basis and tax basis of assets and liabilities, and are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon projections of future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these deductible differences.

We do not provide for a U.S. income tax liability on undistributed earnings of our foreign subsidiaries. The earnings of non-U.S. subsidiaries, which reflect full provision for non-U.S. income taxes, are currently indefinitely reinvested in non-U.S. operations.

Stock-based Compensation

Stock-Based Compensation

The Company has granted options to purchase its common stock to certain employees and directors of the Company and its affiliates under various stock option plans at no less than the fair market value of the underlying stock on the date of grant.  These options are granted for a term not exceeding ten years and are forfeited in the event the employee or director terminates his or her employment or relationship with the Company or one of its affiliates other than by retirement or death.  These options generally vest over five years.  All option plans contain anti-dilutive provisions that permit an adjustment of the number of shares of the Company’s common stock represented by each option for any change in capitalization.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying values of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate fair value because of the short-term nature of these items. The carrying value of our debt approximates the fair value as of December 31, 2013 and 2012.

Inventories - Obsolete and Slow Moving

The obsolete and slow moving inventory policy states that the reserve is to be calculated as follows: 1) no inventory usage over a three-year period is deemed obsolete and reserved at 100 percent; and 2) slow moving inventory with little usage requires a 100 percent reserve on items that have a quantity greater than a three-year supply. There are exceptions to the obsolete and slow moving classifications if approved by an officer of the Company, based on specific identification of an item or items that are deemed to be either included or excluded from this classification. In cases where there is no historical data, management makes a judgment based on a specific review of the inventory in question to determine what reserves, if any, are appropriate. New products or parts are generally excluded from the reserve policy until a three-year history has been established.

Warranty

The Company’s warranty policy is generally to provide its customers warranty for up to one year on all wholegood units and 90 days on parts though some components can have warranty for longer terms.

Warranty reserve, as a percentage of sales, is generally calculated by looking at the current twelve months’ expenses and prorating that amount based on twelve months’ sales with a ninety-day to six-month lag period. The Company’s historical experience is that an end-user takes approximately 90 days to six months from the receipt of the unit to file a warranty claim. A warranty reserve is established for each different marketing group. Reserve balances are evaluated on a quarterly basis and adjustments made when required.

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Retirement Benefit Plans (Schedule of Fair Value of Plan Assets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 25,274	$ 21,838
Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	11,446	11,124
Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	13,828	10,714
Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Small Cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Small Cap | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Small Cap | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Small Cap | Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Mid Cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,577	1,376
Mid Cap | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,577	1,376
Large Cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	6,826	7,126
Large Cap | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	6,826	7,126
International
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	2,531	2,201
International | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	2,531	2,201
Wells Fargo Liability Driven Solution
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	3,521	3,074
Wells Fargo Liability Driven Solution | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		0
Wells Fargo Liability Driven Solution | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	3,521	3,074
Wells Fargo Liability Driven Solution | Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets		0
Wells Fargo International Equity Index Fund
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,286	1,097
Wells Fargo International Equity Index Fund | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,286	1,097
Wells Fargo Thornburg International
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,273	1,103
Wells Fargo Thornburg International | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,273	1,103
Wells Fargo Large Cap Growth Index Fund
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,423	1,216
Wells Fargo Large Cap Growth Index Fund | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,423	1,216
Wells Fargo Large Cap Value Index Fund
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,427	1,210
Wells Fargo Large Cap Value Index Fund | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,427	1,210
Wells Fargo Multi-Manager Small Cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,683	1,481
Wells Fargo Multi-Manager Small Cap | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,683	1,481
Wells Fargo Russell 2000 Index Fund
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	841	708
Wells Fargo Russell 2000 Index Fund | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	841	708
Wells Fargo S&P Mid Cap Index Fund
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	950	825
Wells Fargo S&P Mid Cap Index Fund | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	950	825
T Rowe Price Equity Income
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,424
T Rowe Price Equity Income | Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,424
Cash & Short-term Investments
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	512	421
Cash & Short-term Investments | Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 512	$ 421

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Retirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2013

Defined Benefit Plan Disclosure [Line Items]

Schedule of Defined Benefit Plans Disclosures

The following tables set forth the change in plan assets, change in projected benefit obligation, rate assumptions and components of net periodic benefit cost as of December 31 with respect to these plans. The measurement dates of the assets and liabilities of both plans were December 31 of the respective years presented.

	Year Ended December 31, 2013
(in thousands)	Hourly   Employees’ Pension Plan				Employees’ Retirement Plan				Total
Change in projected benefit obligation
Benefit obligation at beginning of year		$	10,786			$	20,923		$	31,709
Service cost		11				5			16
Interest cost		371				760			1,131
Liability actuarial (gain)/loss		(1,060		)		(2,620		)	(3,680		)
Benefits paid		(631		)		(733		)	(1,364		)
Benefit obligation at end of year		9,477				18,335			27,812
Change in fair value of plan assets
Fair value of plan assets at beginning of year		7,690				14,148			21,838
Return on plan assets		1,136				2,090			3,226
Employer contributions		678				896			1,574
Benefits paid		(631		)		(733		)	(1,364		)
Fair value of plan assets at end of year		8,873				16,401			25,274
Underfunded status – December 31, 2012		$	(604	)		$	(1,934	)	$	(2,538	)
Accumulated benefit obligation – December 31, 2013		$	9,477			$	18,335		$	27,812

	Year Ended December 31, 2012
(in thousands)	Hourly   Employees’ Pension Plan				Employees’ Retirement Plan				Total
Change in projected benefit obligation
Benefit obligation at beginning of year		$	10,454			$	19,238		$	29,692
Service cost		10				4			14
Interest cost		411				788			1,199
Liability actuarial (gain)/loss		549				1,619			2,168
Benefits paid		(638		)		(726		)	(1,364		)
Benefit obligation at end of year		10,786				20,923			31,709
Change in fair value of plan assets
Fair value of plan assets at beginning of year		6,663				12,237			18,900
Return on plan assets		937				1,722			2,659
Employer contributions		728				915			1,643
Benefits paid		(638		)		(726		)	(1,364		)
Fair value of plan assets at end of year		7,690				14,148			21,838
Underfunded status – December 31, 2011		$	(3,096	)		$	(6,775	)	$	(9,871	)
Accumulated benefit obligation – December 31, 2012		$	10,786			$	20,923		$	31,709

Schedule of Assumptions Used

Assumptions used to determine benefit obligations at December 31:

	Hourly Employees’ Pension Plan		Employees’ Retirement Plan
	2013	2012	2013	2012
Discount rate	4.60%	3.55%	4.75%	3.70%
Composite rate of compensation increase	N/A	N/A	N/A	N/A

Assumptions used to determine net periodic benefit cost for the years ended December 31:

	Hourly Employees’ Pension Plan		Employees’ Retirement Plan
	2013	2012	2013	2012
Discount rate	3.55%	4.06%	3.70%	4.18%
Long-term rate of return on plan assets	7.25%	7.75%	7.25%	7.75%
Composite rate of compensation increase	N/A	N/A	N/A	N/A

Schedule of Net Benefit Costs

The following tables present the components of net periodic benefit cost (gains are denoted with parentheses and losses are not):

	Year Ended December 31, 2013
(in thousands)	Hourly Employees’ Pension Plan				Employees’ Retirement Plan				Total
Service cost		$	11			$	5		$	16
Interest cost		371				760			1,131
Expected return on plan assets		(549		)		(1,018		)	(1,567		)
Amortization of prior service cost		—				—			—
Amortization of net (gain)/loss		285				418			703
Net periodic benefit cost		$	118			$	165		$	283

	Year Ended December 31, 2012
(in thousands)	Hourly Employees’ Pension Plan				Employees’ Retirement Plan				Total
Service cost		$	10			$	4		$	14
Interest cost		411				788			1,199
Expected return on plan assets		(520		)		(951		)	(1,471		)
Amortization of prior service cost		—				—			—
Amortization of net (gain)/loss		280				379			659
Net periodic benefit cost		$	181			$	220		$	401

Schedule of Allocation of Plan Assets

The pension plans' weighted-average asset allocations as a percentage of plan assets at December 31 are as follows:

	Hourly Employees’ Pension Plan		Employees’ Retirement Plan
	2013	2012	2013	2012
Equity securities	55%	55%	55%	55%
Debt securities	38%	38%	38%	38%
Short-term investments	2%	2%	2%	2%
Other	5%	5%	5%	5%
Total	100%	100%	100%	100%

Fair Value, Assets Measured on Recurring Basis

The following table presents the hierarchy levels for our postretirement benefit plan investments as of December 31:

(in thousands)	December 31, 2013			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Mutual Funds:
Small Cap		$	—		$	—		$	—	$	—
Mid Cap		1,577			1,577
Large Cap		6,826			6,826
International		2,531			2,531
Common/Collective:
Wells Fargo Liability Driven Solution		3,521						3,521
Wells Fargo International Equity Index Fund		1,286						1,286
Wells Fargo Thornburg International		1,273						1,273
Wells Fargo Large Cap Growth Index Fund		1,423						1,423
Wells Fargo Large Cap Value Index Fund		1,427						1,427
Wells Fargo Multi-Manager Small Cap		1,683						1,683
Wells Fargo Russell 2000 Index Fund		841						841
Wells Fargo S&P Mid Cap Index Fund		950						950
T Rowe Price Equity Income		1,424						1,424
Cash & Short-term Investments		512			512
Total		$	25,274		$	11,446		$	13,828	$	—

(in thousands)	December 31, 2012			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Mutual Funds:
Small Cap		$	—		$	—		$	—	$	—
Mid Cap		1,376			1,376
Large Cap		7,126			7,126
International		2,201			2,201
Common/Collective:
Wells Fargo Liability Driven Solution Fund		3,074			—			3,074		—
Wells Fargo International Equity Index Fund		1,097						1,097
Wells Fargo Thornburg International		1,103						1,103
Wells Fargo Large Cap Growth Index Fund		1,216						1,216
Wells Fargo Large Cap Value Index Fund		1,210						1,210
Wells Fargo Multi-Manager Small Cap		1,481						1,481
Wells Fargo Russell 2000 Index Fund		708						708
Wells Fargo S&P Mid Cap Index Fund		825						825
Cash & Short-term Investments		421			421
Total		$	21,838		$	11,124		$	10,714	$	—

Schedule of Expected Benefit Payments

The following table illustrates the estimated pension benefit payments which reflect expected future service, as appropriate, that are projected to be paid:

(in thousands)	Hourly Employees’ Pension Plan			Employees’ Retirement Plan			Total
2014		$	643		$	862	$	1,505
2015		634			896		1,530
2016		635			932		1,567
2017		644			1,021		1,665
2018		651			1,112		1,763
Years 2019 through 2023		$	3,231		$	6,096	$	9,327

Supplemental Employee Retirement Plans, Defined Benefit

Defined Benefit Plan Disclosure [Line Items]

Schedule of Assumptions Used

Assumptions used to determine benefit obligations at December 31:

	2013	2012
Discount rate	4.60%	3.37%
Composite rate of compensation increase	3.00%	3.00%

Assumptions used to determine net periodic benefit cost for the years ended December 31:

	2013	2012
Discount rate	3.37%	4.04%
Composite rate of compensation increase	3.00%	3.00%
Long-term rate of return on plan assets	N/A	N/A

Schedule of Net Benefit Costs

The components of net periodic pension expense were as follows in thousands:

	Year Ended December 31,
(in thousands)	2013		2012
Service Cost	$	114	$	101
Interest Cost	102		104
Amortization of Prior Service Cost	327		287
Net Periodic Benefit Cost	$	543	$	492

Schedule of Expected Benefit Payments

Future estimated benefits expected to be paid from the plan over the next ten years as follows in thousands:

2014	$	44
2015	51
2016	101
2017	140
2018	241
Years 2019 through 2023	$	1,305

Schedule of Defined Benefit Plans Disclosures

The change in the Projected Benefit Obligation (PBO) as of December 31, 2013 and 2012, is shown below in thousands:

	Year Ended December 31,
(in thousands)	2013			2012
Benefit obligation at January 1,	$	3,057		$	2,584
Service cost	114			101
Interest cost	102			104
Liability actuarial (gain)/loss	(252		)	268
Plan Amendments	—			—
Benefit obligation at December 31,	$	3,021		$	3,057

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Stock Options

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options

STOCK OPTIONS

Incentive Options

On April 28, 1994, the stockholders approved the 1994 Incentive Stock Option Plan (“1994 ISO Plan”) for key employees. Each option becomes vested and exercisable for up to 20% of the total optioned shares each year after grant. Under the terms of this plan, the exercise price of the shares subject to each option granted would not be less than the fair market value of the common stock at the date the option is granted. There are 3,000 shares outstanding under this option plan. No further option grants can be made under this plan.

On May 3, 2005, the stockholders of the Company approved the 2005 Incentive Stock Option Plan (“2005 ISO Plan”) and the Company reserved 500,000 shares of common stock for options to be issued under the 2005 ISO Plan . During the years ended December 31, 2013, 2012 and 2011, options to purchase 49,000 shares, 61,000 shares and 35,000 shares, respectively, were granted under this plan. Each option becomes vested and exercisable for up to 20% of the total optioned shares one year following the grant of the option and for an additional 20% of the total optioned shares after each succeeding year until the option is fully exercisable at the end of the fifth year.

Following is a summary of activity in the Incentive Stock Option Plans for the periods indicated:

	2013				2012				2011
	Shares		Exercise    Price*		Shares		Exercise    Price*		Shares		Exercise    Price*
Options outstanding at beginning of year	330,730		$	21.82	377,480		$	19.27	360,130		$	18.29
Granted	49,000		42.70		61,000		32.76		35,000		26.45
Exercised	(81,880	)	16.77		(99,650	)	19.26		(15,650	)	12.03
Canceled	(5,500	)	24.24		(8,100	)	17.20		(2,000	)	24.69
Options outstanding at end of year	292,350		26.68		330,730		21.82		377,480		19.27
Options exercisable at end of year	154,950		$	21.57	192,830		$	19.48	243,180		$	19.32
Options available for grant at end of year	66,100				109,600				162,500

*Weighted Averages

Options outstanding and exercisable at December 31, 2013 were as follows:

Qualified Stock Options	Options Outstanding				Options Exercisable
	Shares	Remaining Contractual Life (yrs)*	Exercise          Price*		Shares	Exercise      Price*
Range of Exercise Price
$11.45 - $17.85	54,550	5.07	$	11.80	38,350	$	11.95
$19.79 - $32.76	188,800	5.77	$	26.83	116,600	$	24.73
$42.70 - $42.70	49,000	9.35	$	42.70	—	$	—
Total	292,350				154,950

*Weighted Averages

The weighted-average grant-date fair values of options granted during 2013, 2012, and 2011 were $20.56, $14.76 and $12.50, respectively. As of December 31, 2013, there was $1,322,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a period of five years.

Non-Qualified Options

On May 7, 2009, the stockholders of the Company approved the 2009 Equity Incentive Plan and the Company reserved 400,000 shares of common stock for this plan. Options become vested and exercisable for up to 20% of the total optioned shares one year following the grant of the option and for an additional 20% of the total optioned shares after each succeeding year until the option is fully exercisable at the end of the fifth year.

Following is a summary of activity in the Non-Qualified Stock Option Plans for the periods indicated:

	2013			2012				2011
	Shares	Exercise    Price*		Shares		Exercise    Price*		Shares		Exercise    Price*
Options outstanding at beginning of year	89,700	$	19.91	112,800		$	18.62	102,400		$	15.62
Granted	25,000	42.70		—		—		30,000		26.45
Exercised	—	—		(23,100	)	13.62		(14,600	)	11.45
Cancelled	—	—		—		—		(5,000	)	25.18
Options outstanding at end of year	114,700	24.87		89,700		19.91		112,800		18.62
Options exercisable at end of year	57,900	$	19.89	38,100		$	21.91	37,400		$	19.57
Options available for grant at end of year	293,526			322,750				32,500

*Weighted Averages

Options outstanding and exercisable as of December 31, 2013 were as follows:

Non-Qualified Stock Options	Options Outstanding				Options Exercisable
	Shares	Remaining    Contractual    Life(yrs)*	Exercise           Price*		Shares	Exercise      Price*
Range of Exercise Price
$11.45 - $17.85	37,200	5.36	$	11.45	23,400	$	11.45
$19.79 - $32.76	52,500	5.61	25.90		34,500	25.61
$42.70 - $42.70	25,000	9.35	$	42.70	—	$	—
Total	114,700				57,900

*Weighted Averages

The weighted-average grant-date fair values of options granted during 2013 and 2011 were $20.56 and $12.50, respectively. There were no options granted in 2012. As of December 31, 2013, there was $213,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a period of five years.

During 2013, 2012 and 2011, 0, 23,100, and 14,600 non-qualified options were exercised, respectively, were exercised, $0, $315,000, and $167,000 of cash receipts were received, respectively, and tax deductions of $0, $284,000, and $178,000 were realized, respectively, for the tax deductions from option exercises.

Restricted Stock Units

Following is a summary of activity in the Restricted Stock Units for the periods indicated:

	2013				2012				2011
	Shares		Exercise    Price*		Shares		Exercise    Price*		Shares		Exercise    Price*
Options outstanding at beginning of year	11,375		$	24.24	19,750		$	22.96	9,000		$	15.86
Granted	4,224		42.70		—		—		13,500		26.08
Exercised	(4,875	)	22.07		(6,125	)	21.13		(2,750	)	15.06
Cancelled	—		—		(2,250	)	21.45		—		—
Options outstanding at end of year	10,724		32.49		11,375		24.24		19,750		22.96

Restricted stock units vest 25% after one year following the award date and for an additional 25% of total awarded shares each succeeding year until fully vested. The weighted-average remaining contractual life in years for 2013, 2012, and 2011 were 2.09, 2.65 and 3.48, respectively. As of December 31, 2013, there was $90,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a period of four years.