10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2015

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

ACT OF 1934

FOR THE

TRANSITION PERIOD FROM ____ TO ____



Commission file number 0-21220


ALAMO GROUP INC.
(Exact name of registrant as specified in its charter)

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

1627 East Walnut, Seguin, Texas 78155

(Address of principal executive offices)

830-379-1480

(Registrant’s telephone number, including area code)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF 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 REGISTRANT IS A LARGE ACCELERATED FILER, AN ACCELERATED FILER, OR A NON-ACCELERATED FILER. SEE DEFINITION OF “ACCELERATED FILER AND LARGE ACCELERATED FILER” IN EXCHANGE ACT RULE 12B-2. LARGE ACCELERATED FILER [ ] ACCELERATED FILER [X] NON-ACCELERATED FILER [ ]

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT). YES [ ] NO [X]

AT OCTOBER 30, 2015, 11,424,172 SHARES OF COMMON STOCK, $.10 PAR VALUE, OF THE REGISTRANT WERE OUTSTANDING.

Alamo Group Inc. and Subsidiaries

INDEX



PART I.	FINANCIAL INFORMATION		PAGE

Item 1.	Interim Condensed Consolidated Financial Statements (Unaudited)

	Interim Condensed Consolidated Balance Sheets		3
		September 30, 2015 and December 31, 2014

	Interim Condensed Consolidated Statements of Income		4
		Three and Nine Months Ended September 30, 2015 and September 30, 2014

	Interim Condensed Consolidated Statements of Comprehensive Income		5
		Three and Nine Months Ended September 30, 2015 and September 30, 2014

	Interim Condensed Consolidated Statement of Stockholders' Equity		6
		Nine Months Ended September 30, 2015

	Interim Condensed Consolidated Statements of Cash Flows		7
		Nine Months Ended September 30, 2015 and September 30, 2014

	Notes to Interim Condensed Consolidated Financial Statements		8

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3	Quantitative and Qualitative Disclosures About Market Risks		28

Item 4	Controls and Procedures		29

PART II.	OTHER INFORMATION		30

Item 1.	None
Item 2.	None
Item 3.	None
Item 4.	None
Item 5.	Other Information
Item 6.	Exhibits and Reports on Form 8-K

	SIGNATURES		31

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Balance Sheets

(Unaudited)



(in thousands, except share amounts)	September 30, 2015				December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents		$	42,657			$	39,533
Accounts receivable, net		175,940				175,008
Inventories, net		174,423				166,088
Deferred income taxes		6,171				4,712
Prepaid expenses		5,016				4,415
Income tax receivable		—				3,546
Total current assets		404,207				393,302

Rental equipment, net		42,214				33,631

Property, plant and equipment		172,908				171,667
Less: Accumulated depreciation		(105,791		)		(100,497		)
		67,117				71,170

Goodwill		76,082				75,691
Intangible assets, net		53,908				56,984
Deferred income taxes		107				642
Other assets		1,287				1,466

Total assets		$	644,922			$	632,886

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable		$	60,952			$	47,741
Income taxes payable		1,131				52
Accrued liabilities		37,413				41,002
Current maturities of long-term debt and capital lease obligations		473				551
Deferred income tax		302				21
Total current liabilities		100,271				89,367

Long-term debt and capital lease obligations, net of current maturities		175,005				190,024
Deferred pension liability		4,337				5,714
Other long-term liabilities		6,084				5,656
Deferred income taxes		5,125				4,455

Stockholders’ equity:
Common stock, $.10 par value, 20,000,000 shares authorized; 11,391,556 and 11,306,650 outstanding at September 30, 2015 and December 31, 2014, respectively		1,139				1,130
Additional paid-in-capital		96,610				93,849
Treasury stock, at cost; 42,600 shares at September 30, 2015 and December 31, 2014		(426		)		(426		)
Retained earnings		288,582				259,476
Accumulated other comprehensive loss, net		(31,805		)		(16,359		)
Total stockholders’ equity		354,100				337,670

Total liabilities and stockholders’ equity		$	644,922			$	632,886

See accompanying notes.

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Income

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2015			2014			2015			2014

Net sales:
Industrial	$	127,385		$	126,356		$	362,818		$	309,543
Agricultural	58,919			58,872			160,357			163,315
European	45,310			49,555			131,971			142,286
Total net sales	231,614			234,783			655,146			615,144
Cost of sales	174,105			179,343			501,435			474,288
Gross profit	57,509			55,440			153,711			140,856

Selling, general and administrative expenses	33,939			33,914			101,578			93,903
Income from operations	23,570			21,526			52,133			46,953

Interest expense	(1,671		)	(1,497		)	(5,142		)	(2,780		)
Interest income	27			41			120			137
Other income, net	895			421			2,243			1,048
Income before income taxes	22,821			20,491			49,354			45,358
Provision for income taxes	8,065			7,124			17,529			15,558
Net Income	$	14,756		$	13,367		$	31,825		$	29,800

Net income per common share:
Basic	$	1.30		$	1.11		$	2.81		$	2.47
Diluted	$	1.28		$	1.10		$	2.77		$	2.43
Average common shares:
Basic	11,380			12,050			11,337			12,077
Diluted	11,496			12,206			11,477			12,251

Dividends declared	$	0.08		$	0.07		$	0.24		$	0.21

See accompanying notes.

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



			Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)			2015			2014			2015			2014
Net Income			$	14,756		$	13,367		$	31,825		$	29,800
Other comprehensive loss (before tax effect):
	Foreign currency translation adjustment		(8,190		)	(11,154		)	(16,012		)	(8,549		)
	Post Retirement adjustments:
		Net gains arising during the period	183			93			566			262
		Other comprehensive loss	(8,007		)	(11,061		)	(15,446		)	(8,287		)
Comprehensive Income			$	6,749		$	2,306		$	16,379		$	21,513

See accompanying notes.

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)



	Common Stock			Additional Paid-in Capital			Treasury Stock				Retained Earnings				Accumulated Other Comprehensive Loss				Total Stock- holders’ Equity
(in thousands)	Shares	Amount		Additional Paid-in Capital			Treasury Stock				Retained Earnings				Accumulated Other Comprehensive Loss				Total Stock- holders’ Equity
Balance at December 31, 2014	11,264	$	1,130		$	93,849		$	(426	)		$	259,476			$	(16,359	)	$	337,670
Net income	—	—			—			—				31,825				—			31,825
Translation adjustment	—	—			—			—				—				(16,012		)	(16,012		)
Net actuarial gain arising during period	—	—			—			—				—				566			566
Stock-based compensation	—	—			762			—				—				—			762
Exercise of stock options	85	9			1,999			—				—				—			2,008
Dividends paid ($.24 per share)	—	—			—			—				(2,719		)		—			(2,719		)
Balance at September 30, 2015	11,349	$	1,139		$	96,610		$	(426	)		$	288,582			$	(31,805	)	$	354,100

See accompanying notes.

Alamo Group Inc. and Subsidiaries

Interim Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended September 30,
(in thousands)	2015			2014
Operating Activities
Net income	$	31,825		$	29,800
Adjustment to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts	628			304
Depreciation	14,196			7,764
Amortization of intangibles	2,339			676
Amortization of debt issuance costs	159			130
Stock-based compensation expense	762			1,801
Excess tax benefits from stock-based payment arrangements	(80		)	(437		)
Provision for deferred income tax benefit	8			(2,808		)
Gain on sale of property, plant and equipment	(113		)	(936		)
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	(5,721		)	(13,141		)
Inventories	(12,935		)	(28,423		)
Rental equipment	(14,427		)	—
Prepaid expenses and other assets	(2,257		)	2,752
Trade accounts payable and accrued liabilities	12,318			24,307
Income taxes payable	4,989			3,637
Other long-term liabilities	(473		)	(1,016		)
Net cash provided by operating activities	31,218			24,410

Investing Activities
Acquisitions, net of cash acquired	(3,465		)	(196,363		)
Purchase of property, plant and equipment	(7,030		)	(6,689		)
Proceeds from sale of property, plant and equipment	197			1,064
Net cash used in investing activities	(10,298		)	(201,988		)

Financing Activities
Borrowings on bank revolving credit facility	62,000			248,000
Repayments on bank revolving credit facility	(77,000		)	(58,000		)
Principal payments on long-term debt and capital leases	(28		)	(434		)
Proceeds from issuance of debt	—			780
Debt issuance cost	—			(818		)
Dividends paid	(2,719		)	(2,540		)
Proceeds from sale of common stock	2,008			427
Excess tax benefits from stock-based payment arrangements	80			437
Treasury stock repurchased	—			(34,204		)
Net cash (used in) provided by financing activities	(15,659		)	153,648

Effect of exchange rate changes on cash and cash equivalents	(2,137		)	(1,386		)
Net change in cash and cash equivalents	3,124			(25,316		)
Cash and cash equivalents at beginning of the period	39,533			63,960
Cash and cash equivalents at end of the period	$	42,657		$	38,644

Cash paid during the period for:
Interest	$	5,075		$	1,859
Income taxes	14,691			14,242

See accompanying notes.

Alamo Group Inc. and Subsidiaries

Notes to Interim Condensed Consolidated Financial Statements - (Unaudited)

September 30, 2015

1. Basis of Financial Statement Presentation

The accompanying unaudited interim condensed consolidated financial statements of Alamo Group Inc. and its subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

Certain reclassifications have been made to previously reported financial statements to conform to the current presentation. The accompanying statement of income reflects the correction of a misclassification of freight revenue for the periods. Freight allowance given to customers was previously recorded as a reduction of cost of sales and has been reclassified to increase net sales and cost of sales in accordance with ASC 605-45-45-20. The reclassification of net sales and cost of sales for the three and nine months ended September 30, 2014 resulted in an increase of approximately $1,608,000 and $4,366,000, respectively, with no impact on reported net income.

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 SEC filings and public disclosure covering each calendar year, though the public disclosure provision has been challenged in court. We have determined that we are subject to the rules and are evaluating our supply chain. We have previously filed all required reporting for calendar years 2013 and 2014, and are currently in the process of updating our supplier inquiries in order to meet the 2015 reporting requirement, which is due by May 31, 2016.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (Topic 606), which supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The amendments in the ASU must be applied using either the retrospective or cumulative effect transition method and are effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. In April 2015, the FASB voted to propose a delay in the effective date of this ASU for reporting periods beginning after December 15, 2017, with early adoption permitted as of the original effective date. As a result, the proposed new effective date for the Company will be January 1, 2018. This update could impact the timing and amounts of revenue recognized. We are evaluating the effects, if any, that adoption of this guidance will have on our consolidated financial statements and have not yet selected a transition approach to implement the standard.

In January 2015, the FASB issued Accounting Standards Update No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”). ASU 2015-01 eliminates the concept of extraordinary items from GAAP but retains the presentation and disclosure guidance for items that are unusual in nature or occur infrequently and expands the guidance to include items that are both unusual in nature and infrequently occurring. ASU 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. A reporting entity may apply ASU 2015-01 prospectively. A reporting entity may also apply ASU 2015-01

retrospectively to all periods presented in the financial statements. The adoption of ASU 2015-01 is not expected to have a material effect on our consolidated financial statements.

In April 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” as part of its simplification initiative. The ASU changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. In August 2015, the FASB issued an update to these changes based on an announcement of the staff of the SEC. This change provides an exception to the April 2015 FASB changes allowing debt issuance costs related to line-of-credit arrangements to continue to be presented as an asset regardless of whether there are any outstanding borrowings under such arrangement. These provisions are to be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The adoption of the changes will not materially affect our financial position or results of our operations; however certain debt issuance costs will be reported in the balance sheet as a direct deduction of long-term debt and capital lease obligations, net of current maturities.

In July 2015, the FASB has issued Accounting Standards Update (ASU) No. 2015-11, “Simplifying the Measurement of Inventory,” as part of its simplification initiative. The ASU amends existing guidance for measuring inventories. This amendment will require the Company to measure inventories recorded using the first-in, first-out method at the lower of cost and net realizable value. This amendment does not change the methodology for measuring inventories recorded using the last-in, first-out method. This amendment will be effective prospectively for the Company on January 1, 2017, with early adoption permitted. We are evaluating the effect this guidance will have on our consolidated financial statements and have not yet selected a transition approach to implement the standard.

In September 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments from Acquisitions” to simplify the accounting for adjustments made to provisional amounts recognized in a business combination. Adjustments that are identified during the measurement period are now required to be recorded in the reporting period in which the adjustment amounts are determined, rather than retrospectively. The Company adopted this amendment in the third quarter of 2015. The adoption did not have a material impact on our consolidated financial statements.

2. Accounting Policies

During the third quarter of 2015, the Company changed its annual goodwill and intangible assets impairment testing date from December 31 to October 1. Management considers this accounting change preferable because it allows the Company additional time to complete the annual goodwill test. This change does not accelerate, delay, avoid, or cause an impairment charge, nor does this change result in adjustments to previously issued financial statements. There have been no other changes or additions to our significant accounting policies described in Note 1 to the Consolidated Financial Statements in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

3. Acquisitions and Investments

On March 9, 2015, the Company acquired Herder Implementos e Maquinas Agricolas Ltda. ("Herder") on a debt free basis for a total consideration of approximately $4.0 million subject to certain post-closing adjustments. This acquisition is being accounted for in accordance with ASC Topic 805. Accordingly, the total purchase price has been allocated on a preliminary basis to assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. These allocations reflect provisional estimates that were available at the time and are subject to change during the measurement period as valuations are finalized. The primary reason for the Herder acquisition was to establish a presence in South America which is a major global agricultural market; therefore, Herder will be reported as part of the Company's Agricultural Division. The revenue and earnings of Herder from the date of acquisition to September 30, 2015 were not material to the Company’s consolidated results of operations. In addition, assuming the acquisition had occurred as of January 1, 2014, the results of operations of Herder would not have had a material pro forma effect on the Company’s revenues, earnings or earnings per share for the periods ended September 30, 2015 and 2014.

Other Acquisitions

On May 13, 2014, the Company acquired all of the operating units of Specialized Industries LP, a portfolio company of ELB Capital Management, LLC. The purchase included the businesses of Super Products LLC, Wausau-Everest LP and Howard P. Fairfield LLC as well as several related entities ("Specialized"), including all brand names and related product names and trademarks (the "Acquisition") pursuant to the terms of the Membership Interests and Partnership Interests Purchase Agreement dated February 24, 2014 (the “Agreement”). The purchase price consideration was approximately $193 million, on a debt-free basis.

As disclosed in Note 10 of this form 10-Q, the Company amended its revolving credit facility on May 12, 2014, to finance the acquisition.

During the second quarter of 2015, the Company completed its valuation of the acquired assets and liabilities. In connection with preparing information needed for the associated tax returns, the Company identified an error in the pre-acquisition financial statements of Specialized Industries. In particular, a previously unrecognized deferred tax liability approximating $3.3 million related to intangible assets was identified. This resulted in an adjustment to the preliminary purchase price allocation disclosed in Note 2 of the Notes to Consolidated Financial Statements included in our annual report on Form 10-K for the year ended December 31, 2014. The Company adjusted the purchase price allocation associated with the Specialized acquisition to record the $3.3 million deferred tax liability with an associated increase in goodwill. Pursuant to ASC 805-10-25-17, this adjustment has been reflected as of the acquisition date, and accordingly, the recorded amounts for deferred income tax liabilities and goodwill in the December 31, 2014 financial statements included herein have been adjusted to reflect the revised amounts. The final amounts assigned to the assets acquired and liabilities assumed in the Specialized acquisition were recognized at their acquisition-date fair values and are as follows (in thousands):



Cash	2,025
Accounts receivable	16,290
Inventory	47,500
Prepaid expenses	3,223
Rental equipment	28,446
Property, plant & equipment	13,214
Intangible assets	53,900
Other assets	675
Deferred income tax	(6,023	)
Other liabilities assumed	(10,962	)

Net assets assumed	148,288

Goodwill	44,611
Acquisition Price	192,899

4. Accounts Receivable

Accounts receivable is shown net of the allowance for doubtful accounts of $3,297,000 and $2,853,000 at September 30, 2015 and December 31, 2014, respectively.

5. Inventories

Inventories valued at LIFO cost represented 45% and 37% of total inventory at September 30, 2015 and December 31, 2014, respectively. The excess of current cost over LIFO valued inventories was approximately $10,230,000 at September 30, 2015 and December 31, 2014. An actual valuation of inventory under the LIFO method is made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO must necessarily be based, to some extent, on management's estimates at each quarter end. Net inventories consist of the following:



(in thousands)	September 30, 2015			December 31, 2014

Finished goods		$	134,597		$	112,197
Work in process		15,833			18,635
Raw materials		23,993			35,256
		$	174,423		$	166,088

Inventory obsolescence reserves were $8,050,000 at September 30, 2015 and $7,601,000 at December 31, 2014. The increase in reserve for obsolescence resulted from the Company's quarterly review in the normal course of business.

6. Rental Equipment

Rental equipment is shown net of accumulated depreciation of $7,363,000 and $3,435,000 at September 30, 2015 and December 31, 2014, respectively. The Company recognized depreciation expense of $2,018,000 and $717,000 for the three month ending September 30, 2015 and September 30, 2014, respectively and $5,683,000 and $1,361,000 for the nine months ending September 30, 2015 and September 30, 2014, respectively.

7. Fair Value Measurements

ASC Subtopic 820-10 defines fair value 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. 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

Additional details on fair value measurements are included in Note 11 to the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

The carrying values of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses, approximate their fair value because of the short-term nature of these items. The carrying value of our debt approximates the fair value as of September 30, 2015 and December 31, 2014, as the floating rates on our outstanding balances approximate current market rates. This conclusion was made based on Level 2 inputs.

8. Goodwill

The following is the summary of changes to the Company's Goodwill for the nine months ended September 30, 2015:



(in thousands)
Balance at December 31, 2014	$	75,691
Goodwill acquired	2,999
Translation adjustments	(2,608		)
Balance at September 30, 2015	$	76,082

9. Definite and Indefinite Lived Intangible Assets

The following is a summary of the Company's definite and indefinite lived intangible assets net of the accumulated amortization:



(in thousands)	Estimated Useful Lives	September 30, 2015			December 31, 2014
Definite:
Trade names and trademarks	25 years		$	21,925		22,104
Customer and dealer relationships	14 years		28,858			29,404
Patents and drawings	12 years		1,909			1,968
Total at cost			52,692			53,476
Less accumulated amortization			4,284			1,992
Total net			48,408			51,484
Indefinite:
Trade names and trademarks			5,500			5,500
Total Intangible Assets			$	53,908		$	56,984

The Company recognized amortization expense of $776,000 and $622,000 for the three months ending September 30, 2015 and 2014, respectively and $2,339,000 and $676,000 for the nine months ended September 30, 2015 and 2014, respectively.

10. Debt

Effective May 12, 2014, the Company amended its revolving credit facility and increased its line of credit from $100 million to $250 million to accommodate the acquisition of Specialized and meet the ongoing needs of the combined entities.

The Company maintains a revolving credit facility with certain lenders under its Amended and Restated Revolving Credit Agreement ("the agreement"). The aggregate commitments from lenders under such revolving credit facility is $250,000,000 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 the agreement requires the Company to maintain various financial covenants including a minimum earnings before interest and tax to interest expense ratio, a maximum 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 agreement also contains other customary covenants, representations and events of defaults. The termination date of the agreement is May 12, 2019. As of September 30, 2015, $175,000,000 was outstanding under the agreement. As of September 30, 2015, $1,763,000 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 $73,237,000 in available borrowings. As of September 30, 2015, the Company was in compliance with the covenants under the agreement.



(in thousands)	September 30, 2015			December 31, 2014
Current Maturities:
Capital lease obligations		$	26		$	35
Other notes payable		447			516
		473			551
Long-term debt:
Bank revolving credit facility		175,000			190,000
Capital lease obligations		5			24
		175,005			190,024
Total debt		$	175,478		$	190,575

11. Common Stock and Dividends

Dividends declared and paid on a per share basis were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014

Dividends declared	$	0.08	$	0.07	$	0.24	$	0.21
Dividends paid	$	0.08	$	0.07	$	0.24	$	0.21

On October 1, 2015, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.08 per share, which was paid on October 29, 2015, to shareholders of record at the close of business on October 15, 2015.

12. Stock-Based Compensation

The Company has granted options to purchase its common stock and or stock grants 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’s stock-based compensation expense was $296,000 and $141,000 for the three months ended September 30, 2015 and 2014, respectively and $762,000 and $1,801,000 for the nine months ended September 30, 2015 and 2014, respectively. The decrease of stock-based compensation expense in 2015 as compared to 2014 is primarily related to the accelerated vesting of awards to retirement eligible recipients that occurred in 2014.

Qualified Options

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



For nine months ended September 30, 2015
	Shares
Outstanding at beginning of year	301,800
Granted	29,500
Exercised	(74,675	)
Canceled	(1,500	)
Outstanding at September 30, 2015	255,125
Exercisable at September 30, 2015	144,025
Available for grant at September 30, 2015	370,500

Non-qualified Options

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



For nine months ended September 30, 2015
	Shares
Outstanding at beginning of year	132,100
Granted	—
Exercised	(4,800	)
Canceled	—
Outstanding at September 30, 2015	127,300
Exercisable at September 30, 2015	83,100
Available for grant at September 30, 2015	232,522

Restricted Stock

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



For nine months ended September 30, 2015
	Shares
Outstanding at beginning of year	12,043
Granted	26,004
Vested	(5,431	)
Forfeited or Canceled	—
Outstanding at September 30, 2015	32,616

13. 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 do not differ.



	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share)	2015		2014		2015		2014
Net Income	$	14,756	$	13,367	$	31,825	$	29,800
Average Common Shares:
Basic (weighted-average outstanding shares)	11,380		12,050		11,337		12,077
Dilutive potential common shares from stock options	116		156		140		174
Diluted (weighted-average outstanding shares)	11,496		12,206		11,477		12,251

Basic earnings per share	$	1.30	$	1.11	$	2.81	$	2.47
Diluted earnings per share	$	1.28	$	1.10	$	2.77	$	2.43

Stock options totaling 51,909 shares for the nine months ended September 30, 2015 were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive.

The main difference between diluted common shares for the periods ending September 30, 2015 and September 30, 2014 are the shares the Company retired in September 2014 relating to the stock repurchase of 849,690 shares.

14. Segment Reporting

At September 30, 2015 the following includes a summary of the unaudited financial information by reporting segment:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2015		2014		2015		2014
Net Sales
Industrial	$	127,385	$	126,356	$	362,818	$	309,543
Agricultural	58,919		58,872		160,357		163,315
European	45,310		49,555		131,971		142,286
Consolidated	$	231,614	$	234,783	$	655,146	$	615,144

Income from Operations
Industrial	$	11,741	$	12,201	$	31,178	$	28,629
Agricultural	7,778		4,594		12,292		9,384
European	4,051		4,731		8,663		8,940
Consolidated	$	23,570	$	21,526	$	52,133	$	46,953



(in thousands)	September 30, 2015		December 31, 2014
Goodwill
Industrial	$	56,498	$	57,320
Agricultural	2,963		695
European	16,621		17,676
Consolidated	$	76,082	$	75,691

Total Identifiable Assets
Industrial	$	385,522	$	367,096
Agricultural	109,325		113,286
European	150,075		152,504
Consolidated	$	644,922	$	632,886

The 2014 and 2015 acquisitions are reflected in the above segment reporting. Business units of Specialized are in the Industrial segment, Fieldquip and Herder are in the Agricultural segment and Kellands is in the European segment.

15. 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 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.

16. Contingent Matters

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. The remediation process has been completed. On August 6, 2015, Bush Hog received a letter of concurrence from the Alabama Department of Environmental Management concluding that Bush Hog had successfully remediated the property and that the site was eligible for liability protection under the Land Recycling and Economic Redevelopment Act for contamination discovered and addressed under Bush Hog’s voluntary cleanup plan.

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. Deere & Company has appealed and requested a new trial. A hearing on the appeal was held on October 8, 2015 and all parties attended. A final ruling on the appeal is expected in 2016.

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.

17. Retirement Benefit Plans

Defined Benefit Plan

In connection with the February 3, 2006 purchase of all the net assets of the Gradall excavator business, Alamo Group Inc. assumed sponsorship of two Gradall 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 332 former employees and 119 current employees who (i) were formerly employed by the former parent of Gradall, (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 241 former employees and 80 current employees who (i) were formerly employed by the former parent of Gradall, (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 present the components of net periodic benefit cost (gains are denoted with parentheses and losses are not):



	Nine Months Ended September 30, 2015
(in thousands)	Hourly Employees’ Pension Plan				Employees’ Retirement Plan				Total
Service cost		$	6			$	3		$	9
Interest cost		303				651			954
Expected return on plan assets		(495		)		(921		)	(1,416		)
Amortization of prior service cost		—				—			—
Amortization of net loss		186				300			486
Net periodic benefit cost		$	—			$	33		$	33



	Nine Months Ended September 30, 2014
(in thousands)	Hourly Employees’ Pension Plan				Employees’ Retirement Plan				Total
Service cost		$	6			$	3		$	9
Interest cost		315				639			954
Expected return on plan assets		(477		)		(885		)	(1,362		)
Amortization of prior service cost		—				—			—
Amortization of net loss		54				45			99
Net periodic benefit income		$	(102	)		$	(198	)	$	(300	)

The Company amortizes annual pension expense evenly over four quarters. Pension expense was $11,000 for the three months ended September 30, 2015 and pension income for the three months ended September 30, 2014 was $100,000. Pension expense for the nine months ended September 30, 2015 was $33,000 and pension income for the nine month ending September 30, 2014 was $300,000. The Company is not required to contribute to the pension plans for the 2015 plan year but may do so.

Supplemental Retirement Plan

The Board of Directors ("Board") 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 of Directors 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 ten 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.

In May of 2015, the Board amended the SERP to allow the Board to modify the retirement benefit percentage either higher or lower than 20%. As of September 30, 2015, the current retirement benefit for the participants is 20%.

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.

The net period expense for the three months ended September 30, 2015 and 2014 was $150,000 and $140,000, respectively and $450,000 and $420,000 for the nine months ended September 30, 2015 and 2014, respectively.

18. Income Taxes

The Company is subject to U.S. federal income tax and various state, local, and international income taxes in numerous jurisdictions. Our domestic and international tax liabilities are subject to the allocation of revenue and expenses in different jurisdictions and the timing of recognizing revenue and expenses. Additionally, the amount of income taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we file.

The Company currently files income tax returns in the U.S., Canada, UK, France, Brazil and Australia in which we have entities, and are periodically audited by federal, state, and international tax authorities. These audits can involve complex matters that may require an extended period of time for resolution. There are no income tax examinations currently in process.

Although the outcome of future tax audits is uncertain, in management’s opinion, adequate provisions for income taxes have been made. If actual outcomes differ materially from these estimates, they could have a material impact on our financial condition and results of operations. Differences between actual results and assumptions, or changes in assumptions in future periods are recorded in the period they become known. To the extent additional information becomes available prior to resolution; such accruals are adjusted to reflect probable outcomes. Our effective tax rate is impacted by earnings being realized in countries which have lower statutory rates.

19. Subsequent Events

None

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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



	Three Months Ended September 30,				Nine Months Ended September 30,
As a Percent of Net Sales	2015		2014		2015		2014

Industrial	55.0	%	53.8	%	55.4	%	50.3	%
Agricultural	25.4	%	25.1	%	24.5	%	26.6	%
European	19.6	%	21.1	%	20.1	%	23.1	%
Total sales, net	100.0	%	100.0	%	100.0	%	100.0	%



	Three Months Ended September 30,				Nine Months Ended September 30,
Cost Trends and Profit Margin, as Percentages of Net Sales	2015		2014		2015		2014

Gross margin	24.8	%	23.6	%	23.5	%	22.9	%
Income from operations	10.2	%	9.2	%	8.0	%	7.6	%
Income before income taxes	9.9	%	8.7	%	7.5	%	7.4	%
Net income	6.4	%	5.7	%	4.9	%	4.8	%

Overview

This report contains forward-looking statements that are based on Alamo Group’s current expectations. Actual results in future periods may differ materially from those expressed or implied because of a number of risks and uncertainties which are discussed below and in the Forward-Looking Information section.

For the first nine months of 2015, the Company's net income was up approximately 6.8% when compared to the same period in 2014. This was primarily related to the acquisition of the Specialized business units and to a lesser extent the acquisitions of Kellands and Fieldquip, all of which occurred during 2014. Similar to the first nine months of 2014, adverse weather conditions affected both our internal operations and markets early in the year along with soft market conditions in the Agricultural Division. Also negatively affecting both our sales and profits was the effect of the currency translation rates on our non-U.S. results. Alamo's Industrial Division saw a 2.1% decrease in sales versus 2014 excluding the acquisition of the Specialized business units. Agricultural sales excluding the acquisition of Fieldquip and Herder were down compared to the first nine months of 2014 by 3.1%. European sales for the first nine months of 2015 were down in U.S. dollars compared to the same period in 2014, but up in local currency by 6.0%. Consolidated operating income was up 4.2% in the first nine months of 2015 excluding the impact of the acquisitions. The Company's backlog was $175 million at the end of the first nine months of 2015, which was up 8.2% versus the backlog of $162 million at the end of the first nine months of 2014, which should benefit sales through the rest of the year. The increase in the backlog came from the Company's Industrial Division.

The Company believes that its markets for the remainder of 2015 will be steady but they could be negatively affected by a variety of factors such as a continued weakness in the overall economy, sovereign debt issues, credit availability, changes in currency exchange rates, increased levels of government regulations; changes in farm incomes due to commodity prices or governmental aid programs; adverse situations that could affect our customers such as animal disease epidemics, weather conditions such as droughts, floods, snowstorms, etc.; budget constraints or revenue shortfalls in governmental entities and changes in our customers' buying habits due to lack of confidence in the economic outlook.

Results of Operations

Three Months Ended September 30, 2015 vs. Three Months Ended September 30, 2014

Net sales for the third quarter of 2015 were $231,614,000, a decrease of $3,169,000, or 1.4% compared to $234,783,000 for the third quarter of 2014. The decrease was mainly from currency translation which negatively impacted our sales. In the Industrial Division, sweepers and to a lesser extent, vacuum trucks and mowing equipment all had increased sales compared to the third quarter of 2014, however sales of excavators and snow removal equipment were down due to soft market conditions. Excluding the acquisition of Herder, sales in the Agricultural Division were down slightly during the quarter due to softness in the agricultural market and low commodity prices. European sales were down 8.6% in U.S. dollars as currency translation rates negatively affected the sales of UK and European products.

Net Industrial sales increased during the third quarter by $1,029,000 or 0.8% to $127,385,000 for 2015 compared to $126,356,000 during the same period in 2014. The increase came from improved sales of sweepers, vacuum trucks and mowing equipment, partially offset by declines in excavators and snow removal equipment.

Net Agricultural sales were $58,919,000 in 2015 compared to $58,872,000 for the same period in 2014, an increase of $47,000 or 0.1%. The acquisition of Herder contributed $583,000 in sales during the third quarter of 2015. Low commodity prices continued to negatively affect farm income which limited farmers' ability to purchase new equipment.

Net European Sales for the third quarter of 2015 were $45,310,000, a decrease of $4,245,000 or 8.6% compared to $49,555,000 during the third quarter of 2014. The decrease was mainly the result of changes in currency translation rates which had a negative impact during the quarter. Sales in local currency were slightly up compared to the same time last year. Sales in France were down compared to the third quarter of 2014 as the French market remains weak. UK sales were up in local currency as demand for mowing equipment products improved.

Gross profit for the third quarter of 2015 was $57,509,000 (24.8% of net sales) compared to $55,440,000 (23.6% of net sales) during the same period in 2014, an increase of $2,069,000. The increase in margin dollars was due to continuous improvement in production efficiencies and lower material costs. Negatively impacting the gross margin and margin percent during both the third quarter of 2015 and 2014 were $209,000 and $1,139,000, respectively, in higher cost of goods sold related to the step-up in fair value of inventory in the Specialized business units.

Selling, general and administrative expenses (“SG&A”) were $33,939,000 (14.7% of net sales) during the third quarter of 2015 compared to $33,914,000 (14.4% of net sales) during the same period of 2014, an increase of $25,000. The increase in SG&A expenses in 2015 was mainly from costs relating to computer system conversions in the amount of $341,000. Also included in the SG&A expenses for the Specialized business units were $776,000 in 2015 and $622,000 in 2014 of amortization expenses related to the valuation of the intangible assets.

Interest expense was $1,671,000 for the third quarter of 2015 compared to $1,497,000 during the same period in 2014, an increase of $174,000. The increase in 2015 came from increased borrowings due to net increase investment in rental equipment and to a lesser extent the repurchase of the 849,690 shares of common stock which occurred late in the third quarter of 2014.

Other income (expense), net was $895,000 of income for the third quarter of 2015 compared to $421,000 of income during the same period in 2014. The income in 2015 and 2014 were primarily the result of changes in exchange rates.

Provision for income taxes was $8,065,000 (35.3%) in the third quarter of 2015 compared to $7,124,000 (34.8%) during the same period in 2014. The increased tax rate in 2015 reflects the acquisition of the Specialized business units which are located in jurisdictions subject to tax rates above the Company's average.

The Company’s net income after tax was $14,756,000 or $1.28 per share on a diluted basis for the third quarter of 2015 compared to $13,367,000 or $1.10 per share on a diluted basis for the third quarter of 2014. The increase of $1,389,000 resulted from the factors described above.

Nine Months Ended September 30, 2015 vs. Nine Months Ended September 30, 2014

Net sales for the first nine months of 2015 were $655,146,000, an increase of $40,002,000 or 6.5% compared to $615,144,000 for the first nine months of 2014. The increase was primarily from the Specialized business units and other acquisitions, which contributed $83,036,000 of sales in 2015 compared to $18,976,000 in 2014. In the Company's Industrial Division excavators, sweepers, and snow removal products were up in the first nine months of 2015 compared to the first nine months of 2014, however sales of mowing equipment and vacuum trucks were down due to adverse weather conditions early in the year and soft markets in non-governmental sector. Agricultural Division sales were down 1.8% for the first nine months of 2015 due to a weak agricultural market compared to the same time in 2014. Sales in the European Division were down 7.2% in U.S. dollars as sales of UK and European products were negatively affected by currency translation rates.

Net Industrial sales increased during the first nine months by $53,275,000 or 17.2% to $362,818,000 for 2015 compared to $309,543,000 during the same period in 2014. The increase came primarily from the acquisition of the Specialized business units which contributed $78,425,000 of sales in 2015 compared to $18,976,000 in 2014. Also, favorably affecting sales were increases from sweeper, excavator, and snow removal equipment product lines. Negatively affecting sales were lower volume of mowing equipment and vacuum trucks.

Net Agricultural sales were $160,357,000 in 2015 compared to $163,315,000 for the same period in 2014, a decrease of $2,958,000 or 1.8%. The decrease in sales for the first nine months of 2015 compared to the first nine months of 2014 was from lower commodity prices and reduced farm income that resulted in softer market conditions in the agricultural market. Also affecting this Division were the prolonged winter weather conditions during the first quarter of 2015. Sales from Herder which was acquired in March 2015, contributed $1,358,000 for the first nine months of 2015.

Net European sales for the first nine months of 2015 were $131,971,000, a decrease of $10,315,000 or 7.2% compared to $142,286,000 during the same period of 2014. The decrease in 2015 was primarily due to the negative effect on sales from currency translation rates. In local currency sales were up for the first nine months of 2015 compared to the same time last year. The European Division continued to be faced with challenging market conditions particularly in France as agricultural markets were constrained by Europe's overall economic uncertainty.

Gross profit for the first nine months of 2015 was $153,711,000 (23.5% of net sales) compared to $140,856,000 (22.9% of net sales) during the same period in 2014, an increase of $12,855,000. The increase in margin dollars was mainly due to the acquisitions of the Specialized business units, Kellands and Fieldquip in the amount of $13,625,000. Negatively affecting both the gross margin and margin percent during the first nine months of 2015 and 2014 respectively, were $2,740,000 and $1,139,000 in higher cost of goods sold related to the step-up in fair value of inventory in the Specialized business units.

Selling, general and administrative expenses (“SG&A”) were $101,578,000 (15.5% of net sales) during the first nine months of 2015 compared to $93,903,000 (15.3% of net sales) during the same period of 2014, an increase of $7,675,000. The increase in SG&A for the first nine months of 2015 was primarily from the acquisitions of the Specialized business units, Kellands and Fieldquip in the amount of $10,386,000. Included in the SG&A expenses for the Specialized business units were $2,339,000 in 2015 and $676,000 in 2014 of amortization expenses related to the valuation of the intangible assets.

Interest expense was $5,142,000 for the first nine months of 2015 compared to $2,780,000 during the same period in 2014, a increase of $2,362,000. The increase in 2015 came from increased borrowings due to the acquisition of the Specialized units and to a lesser extent the repurchase of 849,690 shares of common stock which occurred late in the third quarter of 2014.

Other income (expense), net was $2,243,000 of income during the first nine months of 2015 compared to $1,048,000 of income in the first nine months of 2014. The income in 2015 and 2014 were primarily the result of

changes in exchange rates. The income in 2014 also included a gain on the sale of a manufacturing facility in the amount of $795,000.

Provision for income taxes was $17,529,000 (35.5%) in the first nine months of 2015 compared to $15,558,000 (34.3%) during the same period in 2014. The increased tax rate in the first nine months of 2015 reflects the acquisition of the Specialized business units which are located in jurisdictions subject to tax rates above the Company's average.

The Company's net income after tax was $31,825,000 or $2.77 per share on a diluted basis for the first nine months of 2015 compared to $29,800,000 or $2.43 per share on a diluted basis for the first nine months of 2014. The increase of $2,025,000 resulted from the factors described above.

Liquidity and Capital Resources

In addition to normal operating expenses, the Company has ongoing cash requirements which are necessary to operate the Company’s business, including inventory purchases and capital expenditures. The Company’s inventory and accounts payable levels typically build in the first half of the year and 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 fall preseason sales programs and out of season sales, particularly in our Agricultural Division. Preseason sales, primarily in the Agricultural Division, help level the Company’s production during the off season.

As of September 30, 2015, the Company had working capital of $303,936,000 which represents an increase of $1,000 from working capital of $303,935,000 of December 31, 2014.

Capital expenditures were $7,030,000 for the first nine months of 2015, compared to $6,689,000 during the first nine months of 2014. The Company expects to fund future 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 purchased in 2015 pursuant to this authorization. The authorization to repurchase up to 1,000,000 shares was revoked by the Board of Directors on August 6, 2015.

Net cash (used in) provided by financing activities was $(15,659,000) and $153,648,000 during the nine month period ending September 30, 2015 and September 30, 2014, respectively. The Company had $175,000,000 borrowed from its revolving credit facility at September 30, 2015 compared to $190,000,000 borrowings at September 30, 2014. The net cash provided by financing activities in 2014 was from increased borrowings under our bank credit facility due to the acquisition of the Specialized business units and the repurchase of the 849,690 shares of common stock in September of 2014.

The Company had $39,572,000 in cash and cash equivalents held by its foreign subsidiaries as of September 30, 2015. The majority of these funds are at our UK and Canadian subsidiaries 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.

Effective May 12, 2014, the Company amended its revolving credit facility and increased its line of credit from $100 million to $250 million to accommodate the acquisition of the Specialized business units and meet the ongoing needs of the combined entities.

The Company maintains a revolving credit facility with certain lenders under its Amended and Restated Revolving Credit Agreement ("the agreement"). The aggregate commitments from lenders under such revolving credit facility is $250,000,000 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 the agreement requires the Company to maintain various financial covenants including a minimum earnings before interest and tax to interest expense ratio, a maximum 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 agreement also contains other customary covenants, representations and events of defaults. The termination date of the agreement is May 12, 2019. As of September 30, 2015, $175,000,000 was outstanding under the agreement. On September 30, 2015, $1,763,000 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 $73,237,000 in available borrowings. As of September 30, 2015, the Company was in compliance with the covenants under the agreement.

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, the challenges affecting the banking industry and credit markets in general could potentially cause changes to credit availability, which creates a level of uncertainty.

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 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 in the Company's 2014 10-K and Note 2 of these interim condensed consolidated financial statements.

Business Combinations

In the last ten years, we have acquired 13 businesses. The purchase prices of acquired businesses have been allocated to the tangible and intangible assets acquired and liabilities assumed, based upon their estimated fair value at the date of purchase. The difference between the purchase price and the fair value of the net assets acquired is recorded as goodwill.

Most of the businesses we have acquired did not have a significant amount of intangible assets. However, with the 2014 acquisition of the Specialized business units, we acquired a significant amount of intangible assets. We identified the following intangible assets in the acquisition: trade name and trademarks, customer and dealer relationships, and patents, technology and drawings. In valuing certain acquired intangible assets, we used both excess earnings and relief from royalty methodologies, which are forms of discounted cash flow analysis. Tangible assets are typically valued using a replacement or reproduction cost approach, considering factors such as current prices of the same or similar equipment, the age of the equipment, and economic obsolescence. In making other

assumptions on valuation and useful lives, we considered the unique nature of the acquisition and we utilized a third-party valuation firm to assist us in the valuation of the acquired intangibles and the resulting allocation of purchase price for the acquisition. As of September 30, 2015, we had $48,408,000 in intangible assets (net of accumulated amortization) and $44,023,000 in goodwill directly attributable to the Specialized acquisition.

Allowance for Doubtful Accounts

The Company evaluates its ability to collect 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, it 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 agings and changes in current economic conditions.

The Company evaluates all aged receivables that are over 60 days old and reserves specifically on a 90-day basis. The Company’s U.S. operations have Uniform Commercial Code (“UCC”) filings on practically all wholegoods each dealer purchases. This allows the Company in times of a difficult economy when the customer is unable to pay or has filed for bankruptcy (usually Chapter 11), to repossess the customer’s inventory. This also allows Alamo Group to maintain a reserve over its cost which usually represents the margin on the original sales price.

The allowance for doubtful accounts was $3,297,000 at September 30, 2015 and $2,853,000 at December 31, 2014. The increase came from additional reserves required in the Company's U.S. operations.

Sales Discounts

At September 30, 2015 the Company had $13,337,000 in reserves for sales discounts compared to $15,999,000 at December 31, 2014 on products shipped to our customers under various promotional programs. The decrease was primarily due to additional discounts taken on the Company's agricultural products during the pre-season, which runs from August to December of each year and orders are shipped through the second quarter of 2015. 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 – Obsolescence and Slow Moving

The Company had $8,050,000 at September 30, 2015 and $7,601,000 at December 31, 2014 in reserve to cover obsolete and slow moving inventory. The increase in reserve for obsolescence resulted from the Company's review during its normal course of business. The policy regarding obsolete and slow moving inventory states that the reserve is to be calculated on a basis of: 1) no inventory usage over a three year period and inventory with quantity on hand 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 made, on a quarterly basis. The Company relies on historical information to support its reserve. Once the inventory is written down, the Company does not adjust the reserve balance until the inventory is sold.

Warranty

The Company’s warranty policy is generally to provide its customers warranty for up to one year on all equipment and 90 days for parts.

Warranty reserve, as a percent of sales, is calculated by taking the current twelve months of expenses and prorating that based on twelve months of sales with a 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 are made when required.

The current liability warranty reserve balance was $5,313,000 at September 30, 2015 and $5,913,000 at December 31, 2014. The decrease was mainly from the Company's Industrial Division.

Product Liability

At September 30, 2015 the Company had accrued $261,000 in reserves for product liability cases compared to $240,000 at December 31, 2014. The Company accrues primarily on a case by case basis and adjusts the balance quarterly.

The S.I.R. (Self Insurance Retention) for all U.S. products is $100,000 per claim or less. The Company also carries product liability coverage in Europe, Canada, Brazil and Australia which contain substantially lower S.I.R.’s or deductibles.

Goodwill and Intangible Assets

We test goodwill and intangible assets 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. During the third quarter of 2015, the Company changed its annual goodwill and intangible assets impairment testing date from December 31 to October 1. Management considers this accounting change preferable because it allows the Company additional time to complete the annual goodwill test. This change does not accelerate, delay, avoid, or cause an impairment charge, nor does this change result in adjustments to previously issued financial statements. We perform our annual goodwill and intangible assets impairment test 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 and intangible assets 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 and intangible assets. If the fair value of the reporting unit exceeds its carrying value, the goodwill and intangible assets are 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 and intangible assets are 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 and intangible assets are 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 September 30, 2015, the Company had $76,082,000 of goodwill, which represents 12% of total assets and $53,908,000 of intangible assets which represents 8% of total assets.

The Company recognized no goodwill or intangible asset impairment in 2015, 2014 or 2013. During the 2014 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, 2014 would not result in an impairment of goodwill for any of the reporting units.

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.

Forward-Looking Information

Part I of this Quarterly Report on Form 10Q and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II of this Quarterly 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.

Statements that are not historical are forward-looking. When used by or on behalf of the Company, the words “estimate,” “believe,” “intend” and similar expressions generally identify forward-looking statements made by or on behalf of the Company.

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 it serves. Particular risks and uncertainties facing the Company include changes in market conditions; a strong U.S. dollar; increased competition; decreases in the prices of agricultural commodities, which could affect our customers' income levels; budget constraints or income shortfalls which could affect the purchases of our type of equipment by governmental customers; credit availability for both the Company and its customers, adverse weather conditions such as droughts, floods, snowstorms, etc. which can affect buying patterns of the Company’s customers and related contractors; the price and availability of critical raw materials, particularly steel and steel products; energy cost; increased cost of new governmental regulations which effect corporations; the potential effects on the buying habits of our customers due to animal disease outbreaks such as mad cow and other epidemics; the Company’s ability to develop and manufacture new and existing products profitably; market acceptance of new and existing products; the Company’s ability to maintain good relations with its employees; the Company's ability to successfully complete acquisitions and operate acquired businesses or assets; and the ability to hire and retain quality employees.

In addition, the Company is subject to risks and uncertainties facing the industry in general, including changes in business and political conditions and the economy in general in both domestic and international markets; weather conditions affecting demand; slower growth in the Company’s markets; financial market changes including increases in interest rates and fluctuations in foreign exchange rates; actions of competitors; the inability of the Company’s suppliers, customers, creditors, public utility providers and financial service organizations to deliver or provide their products or services to the Company; seasonal factors in the Company’s industry; litigation; government actions including budget levels, regulations and legislation, primarily relating to the environment, commerce, infrastructure spending, health and safety; and availability of materials.

The Company wishes to caution readers not to place undue reliance on any forward-looking statements 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, as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning the Company and its businesses, including factors that could potentially materially affect the Company’s 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

The Company is exposed to various markets risks. Market risks are the potential losses 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 primarily manufactures its products in the U.S., U.K., France, Canada and Australia. The Company sells its products primarily in the functional currency within the markets where the products are produced, but certain sales from the Company's U.K. and Canadian operations are denominated in other foreign 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.

To mitigate the short-term affect of changes in currency exchange rates on the Company’s functional currency-based sales, the Company’s U.K. subsidiaries regularly enter into foreign exchange forward contracts to hedge approximately 90% of its future net foreign currency collections over a period of six months. As of September 30, 2015, the Company had $3,049,000 outstanding in forward exchange contracts related to accounts receivable. A 15% fluctuation in exchange rates for these currencies would change the fair value of these contracts by approximately $457,000. 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.

Exposure to Exchange Rates

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 total foreign currency translation adjustment for the current quarter decreased stockholders’ equity by $8,190,000.

The Company’s earnings are affected by fluctuations in the value of the U.S. dollar as compared to foreign currencies, predominately in European countries, as a result of the sales of its products in international markets. Forward currency contracts are used to hedge against the earnings effects of such fluctuations. 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 result in a decrease in gross profit of $4,120,000 for the nine month period ending September 30, 2015. Comparatively, 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 $4,448,000 for the nine month period ended September 30, 2014. 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 include 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.

Interest Rate Risk

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 current level of borrowings at variable rates and a two percentage point change in the third quarter 2015 average interest rate under these borrowings, the Company’s interest expense would have changed by approximately $875,000. In the event of an adverse change in interest rates, management could take actions to mitigate its exposure. However, due to the uncertainty of the actions that would be taken and their possible effects this analysis assumes no such actions. 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.

Item 4. 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 defined in Rule 13A-15(e) under the Securities Exchange Act of 1933). Based upon the evaluation, the President and Chief Executive Officer, Executive Vice President and Chief Financial Officer (Principal Financial Officer) and Vice-President, Corporate Controller, (Principal Accounting Officer) concluded that the Company’s design and operation of these disclosure controls and procedures were effective at the end of the period covered by this report.

Changes in internal control over financial reporting

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1 - Legal Proceedings

For a description of legal proceedings, see Note 16 Contingent Matters to our condensed consolidated financial statements.

Item 1A - Risk Factors

There have not been any material changes from the risk factors previously disclosed in our annual report on Form 10-K for the year ended December 31, 2014.

Item 2 - None

Item 3 - None

Item 4 - None

Item 5. - Other Information

(a) Reports on Form 8-K

None

(b) Other Information

None

Item 6. - Exhibits

(a) Exhibits



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.DEF	—	XBRL Taxonomy Extension Definition Linkbase Document	Filed Herewith
101.LAB	—	XBRL Taxonomy Extension Label Linkbase Document	Filed Herewith
101.PRE	—	XBRL Taxonomy Extension Presentation Linkbase Document	Filed Herewith

Alamo Group Inc. and Subsidiaries

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



November 6, 2015	Alamo Group Inc.
	(Registrant)

	/s/ Ronald A. Robinson
	Ronald A. Robinson
	President & Chief 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)

Acquisition and Investments (Narrative) (Details) - USD ($) $ in Millions			3 Months Ended
	Mar. 09, 2015	May. 13, 2014	Jun. 30, 2015
Herder
Business Acquisition [Line Items]
Total consideration for the purchase	$ 4.0
Specialized Industries LP
Business Acquisition [Line Items]
Total consideration for the purchase		$ 193.0
Purchase price allocation adjustment for unrecognized deferred tax liability related to intangible assets			$ 3.3
Increase in goodwill, adjustment to purchase price allocation			$ 3.3

Earnings Per Share (Calculation of Basic and Diluted EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share [Abstract]
Net income		$ 14,756	$ 13,367	$ 31,825	$ 29,800
Average Common Shares:
Basic (weighted-average outstanding shares)		11,380,000	12,050,000	11,337,000	12,077,000
Dilutive potential common shares from stock options, shares		116,000	156,000	140,000	174,000
Diluted (weighted-average outstanding shares)		11,496,000	12,206,000	11,477,000	12,251,000
Basic earnings per share (in dollars per share)		$ 1.30	$ 1.11	$ 2.81	$ 2.47
Diluted earnings per share (in dollars per share)		$ 1.28	$ 1.10	$ 2.77	$ 2.43
Stock options excluded from diluted earnings per share calculation because the effect would be anti-dilutive				51,909
Treasury Stock, Shares, Retired	849,690

Retirement Benefit Plans (Narrative) (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Jun. 30, 2015	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) Employee	Sep. 30, 2014 USD ($)	Feb. 03, 2006 Defined_Benefit_Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Number of non-contributory defined benefit pension plans \| Defined_Benefit_Plan						2
Pension expense \| $		$ 11	$ (100)	$ 33	$ (300)
Supplemental Employee Retirement Plans, Defined Benefit
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Pension expense \| $		$ 150	$ 140	$ 450	420
Requisite service period				10 years
Percentage of final 3 year average salary in which retirement benefit is based (percentage)				20.00%
Term of final average salary used to determine retirement benefit				3 years
Retirement age				65 years
Period after death or change in control benefit will be paid				90 days
Maximum contractual term				15 years
Retirement benefit percentage	20.00%
Gradall Company Hourly Employees Pension Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Former employees covered by pension plan				332
Current employees covered in the Gradall Company Hourly Employees' Pension Plan who were formerly employed by former parent (Employees)				119
Pension expense \| $				$ 0	(102)
Gradall Company Hourly Employees Retirement Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Former employees covered by pension plan				241
Current employees covered in the Gradall Company Hourly Employees' Pension Plan who were formerly employed by former parent (Employees)				80
Pension expense \| $				$ 33	$ (198)

Stock-Based Compensation (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Option term			10 years
Award vesting period			5 years
Stock-based compensation expense	$ 296	$ 141	$ 762	$ 1,801

Inventories (Narrative) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Percentage of LIFO inventory	45.00%	37.00%
Excess of current costs over stated LIFO value	$ 10,230	$ 10,230
Inventory obsolescence reserves	$ 8,050	$ 7,601


1.	I have reviewed this quarterly report on Form 10-Q 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 quarterly 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 quarterly 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


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


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



Date:	November 6, 2015	/s/ Ronald A. Robinson
		Ronald A. Robinson
		President & Chief Executive Officer


1.	The Form 10-Q 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 Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Debt (Schedule of Long Term Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Current Maturities:	$ 473	$ 551
Long-term debt:	175,005	190,024
Total debt	175,478	190,575
Capital lease obligations
Debt Instrument [Line Items]
Current Maturities:	26	35
Long-term debt:	5	24
Other notes payable
Debt Instrument [Line Items]
Current Maturities:	447	516
Bank revolving credit facility \| Amended and Restated Revolving Credit Agreement
Debt Instrument [Line Items]
Long-term debt:	175,000	$ 190,000
Total debt	$ 175,000

Segment Reporting (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Segment Reporting (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Segment Reporting Information [Line Items]
Net Sales	$ 231,614	$ 234,783	$ 655,146	$ 615,144
Income from Operations	23,570	21,526	52,133	46,953
Goodwill	76,082		76,082		$ 75,691
Total Identifiable Assets	644,922		644,922		632,886
Industrial
Segment Reporting Information [Line Items]
Net Sales	127,385	126,356	362,818	309,543
Income from Operations	11,741	12,201	31,178	28,629
Goodwill	56,498		56,498		57,320
Total Identifiable Assets	385,522		385,522		367,096
Agricultural
Segment Reporting Information [Line Items]
Net Sales	58,919	58,872	160,357	163,315
Income from Operations	7,778	4,594	12,292	9,384
Goodwill	2,963		2,963		695
Total Identifiable Assets	109,325		109,325		113,286
European
Segment Reporting Information [Line Items]
Net Sales	45,310	49,555	131,971	142,286
Income from Operations	4,051	$ 4,731	8,663	$ 8,940
Goodwill	16,621		16,621		17,676
Total Identifiable Assets	$ 150,075		$ 150,075		$ 152,504

Stock-Based Compensation (Schedule of Non-Qualified Stock Options Activity) (Details) - Non Qualified Options	9 Months Ended
	Sep. 30, 2015 shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of year	132,100
Granted	0
Exercised	(4,800)
Canceled	0
Outstanding at September 30, 2015	127,300
Exercisable at September 30, 2015	83,100
Available for grant at September 30, 2015	232,522

Debt (Narrative) (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014	May. 13, 2014	May. 12, 2014
Debt Instrument [Line Items]
Total debt	$ 175,478,000	$ 190,575,000
Amended and Restated Revolving Credit Agreement \| Bank revolving credit facility
Debt Instrument [Line Items]
Aggregate commitments	250,000,000
Maximum amount of additional aggregate commitments (Up to $50,000,000)	50,000,000
Total debt	175,000,000
Available borrowings	73,237,000
Amended and Restated Revolving Credit Agreement \| Standby Letters of Credit \| Bank revolving credit facility
Debt Instrument [Line Items]
Amount of capacity	$ 1,763,000
Amended and Restated Revolving Credit Agreement \| Specialized Industries LP \| Revolving Credit Facility
Debt Instrument [Line Items]
Amount of line of credit			$ 250,000,000	$ 100,000,000

Basis of Financial Statement Presentation	9 Months Ended
Basis of Financial Statement Presentation	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Financial Statement Presentation	Basis of Financial Statement Presentation The accompanying unaudited interim condensed consolidated financial statements of Alamo Group Inc. and its subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014. Certain reclassifications have been made to previously reported financial statements to conform to the current presentation. The accompanying statement of income reflects the correction of a misclassification of freight revenue for the periods. Freight allowance given to customers was previously recorded as a reduction of cost of sales and has been reclassified to increase net sales and cost of sales in accordance with ASC 605-45-45-20. The reclassification of net sales and cost of sales for the three and nine months ended September 30, 2014 resulted in an increase of approximately $1,608,000 and $4,366,000, respectively, with no impact on reported net income. 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 SEC filings and public disclosure covering each calendar year, though the public disclosure provision has been challenged in court. We have determined that we are subject to the rules and are evaluating our supply chain. We have previously filed all required reporting for calendar years 2013 and 2014, and are currently in the process of updating our supplier inquiries in order to meet the 2015 reporting requirement, which is due by May 31, 2016. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” (Topic 606), which supersedes the revenue recognition requirements in ASC Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The amendments in the ASU must be applied using either the retrospective or cumulative effect transition method and are effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. In April 2015, the FASB voted to propose a delay in the effective date of this ASU for reporting periods beginning after December 15, 2017, with early adoption permitted as of the original effective date. As a result, the proposed new effective date for the Company will be January 1, 2018. This update could impact the timing and amounts of revenue recognized. We are evaluating the effects, if any, that adoption of this guidance will have on our consolidated financial statements and have not yet selected a transition approach to implement the standard. In January 2015, the FASB issued Accounting Standards Update No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”). ASU 2015-01 eliminates the concept of extraordinary items from GAAP but retains the presentation and disclosure guidance for items that are unusual in nature or occur infrequently and expands the guidance to include items that are both unusual in nature and infrequently occurring. ASU 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. A reporting entity may apply ASU 2015-01 prospectively. A reporting entity may also apply ASU 2015-01 retrospectively to all periods presented in the financial statements. The adoption of ASU 2015-01 is not expected to have a material effect on our consolidated financial statements. In April 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” as part of its simplification initiative. The ASU changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. In August 2015, the FASB issued an update to these changes based on an announcement of the staff of the SEC. This change provides an exception to the April 2015 FASB changes allowing debt issuance costs related to line-of-credit arrangements to continue to be presented as an asset regardless of whether there are any outstanding borrowings under such arrangement. These provisions are to be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The adoption of the changes will not materially affect our financial position or results of our operations; however certain debt issuance costs will be reported in the balance sheet as a direct deduction of long-term debt and capital lease obligations, net of current maturities. In July 2015, the FASB has issued Accounting Standards Update (ASU) No. 2015-11, “Simplifying the Measurement of Inventory,” as part of its simplification initiative. The ASU amends existing guidance for measuring inventories. This amendment will require the Company to measure inventories recorded using the first-in, first-out method at the lower of cost and net realizable value. This amendment does not change the methodology for measuring inventories recorded using the last-in, first-out method. This amendment will be effective prospectively for the Company on January 1, 2017, with early adoption permitted. We are evaluating the effect this guidance will have on our consolidated financial statements and have not yet selected a transition approach to implement the standard. In September 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments from Acquisitions” to simplify the accounting for adjustments made to provisional amounts recognized in a business combination. Adjustments that are identified during the measurement period are now required to be recorded in the reporting period in which the adjustment amounts are determined, rather than retrospectively. The Company adopted this amendment in the third quarter of 2015. The adoption did not have a material impact on our consolidated financial statements.

Inventories (Schedule of Inventory, Current) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Finished goods	$ 134,597	$ 112,197
Work in process	15,833	18,635
Raw materials	23,993	35,256
Inventory, Net	$ 174,423	$ 166,088

Contingent Matters (Narrative) (Details) $ in Thousands	12 Months Ended
Contingent Matters (Narrative) (Details) $ in Thousands	Dec. 31, 2013 USD ($)
Deere and Company v Bush Hog LLC and Great Plains Manufacturing Inc
Loss Contingencies [Line Items]
Legal fees expensed	$ 2,100

Rental Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Rental Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Accumulated depreciation	$ (105,791)		$ (105,791)		$ (100,497)
Depreciation			14,196	$ 7,764
Rental Equipment
Property, Plant and Equipment [Line Items]
Accumulated depreciation	(7,363)		(7,363)		$ (3,435)
Depreciation	$ 2,018	$ 717	$ 5,683	$ 1,361

Interim Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Operating Activities
Net income	$ 31,825	$ 29,800
Adjustment to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts	628	304
Depreciation	14,196	7,764
Amortization of intangibles	2,339	676
Amortization of debt issuance costs	159	130
Stock-based compensation expense	762	1,801
Excess tax benefits from stock-based payment arrangements	(80)	(437)
Provision for deferred income tax benefit	8	(2,808)
Gain on sale of property, plant and equipment	(113)	(936)
Changes in operating assets and liabilities, net of amounts acquired:
Accounts receivable	(5,721)	(13,141)
Inventories	(12,935)	(28,423)
Rental equipment	(14,427)	0
Prepaid expenses and other assets	(2,257)	2,752
Trade accounts payable and accrued liabilities	12,318	24,307
Income taxes payable	4,989	3,637
Other long-term liabilities	(473)	(1,016)
Net cash provided by operating activities	31,218	24,410
Investing Activities
Acquisitions, net of cash acquired	(3,465)	(196,363)
Purchase of property, plant and equipment	(7,030)	(6,689)
Proceeds from sale of property, plant and equipment	197	1,064
Net cash used in investing activities	(10,298)	(201,988)
Financing Activities
Borrowings on bank revolving credit facility	62,000	248,000
Repayments on bank revolving credit facility	(77,000)	(58,000)
Principal payments on long-term debt and capital leases	(28)	(434)
Proceeds from issuance of debt	0	780
Debt issuance cost	0	(818)
Dividends paid	(2,719)	(2,540)
Proceeds from sale of common stock	2,008	427
Excess tax benefits from stock-based payment arrangements	80	437
Treasury stock repurchased	0	(34,204)
Net cash (used in) provided by financing activities	(15,659)	153,648
Effect of exchange rate changes on cash and cash equivalents	(2,137)	(1,386)
Net change in cash and cash equivalents	3,124	(25,316)
Cash and cash equivalents at beginning of the period	39,533	63,960
Cash and cash equivalents at end of the period	42,657	38,644
Cash paid during the period for:
Interest	5,075	1,859
Income taxes	$ 14,691	$ 14,242

Acquisitions and Investments (Schedule of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	May. 13, 2014
Business Acquisition [Line Items]
Goodwill	$ 76,082	$ 75,691
Specialized Industries LP
Business Acquisition [Line Items]
Cash			$ 2,025
Accounts receivable			16,290
Inventory			47,500
Prepaid expenses			3,223
Rental equipment			28,446
Property, plant & equipment			13,214
Intangible assets			53,900
Other assets			675
Deferred income tax			(6,023)
Other liabilities assumed			(10,962)
Net assets assumed			148,288
Goodwill			44,611
Acquisition Price			$ 192,899

Interim Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 42,657	$ 39,533
Accounts receivable, net	175,940	175,008
Inventories, net	174,423	166,088
Deferred income taxes	6,171	4,712
Prepaid expenses	5,016	4,415
Income tax receivable	0	3,546
Total current assets	404,207	393,302
Rental equipment, net	42,214	33,631
Property, plant and equipment	172,908	171,667
Less: Accumulated depreciation	(105,791)	(100,497)
Property, plant and equipment, net	67,117	71,170
Goodwill	76,082	75,691
Intangible assets, net	53,908	56,984
Deferred income taxes	107	642
Other assets	1,287	1,466
Total assets	644,922	632,886
Current liabilities:
Trade accounts payable	60,952	47,741
Income taxes payable	1,131	52
Accrued liabilities	37,413	41,002
Current maturities of long-term debt and capital lease obligations	473	551
Deferred income tax	302	21
Total current liabilities	100,271	89,367
Long-term debt and capital lease obligations, net of current maturities	175,005	190,024
Deferred pension liability	4,337	5,714
Other long-term liabilities	6,084	5,656
Deferred income taxes	5,125	4,455
Stockholders’ equity:
Common stock, $.10 par value, 20,000,000 shares authorized; 11,391,556 and 11,306,650 outstanding at September 30, 2015 and December 31, 2014, respectively	1,139	1,130
Additional paid-in-capital	96,610	93,849
Treasury stock, at cost; 42,600 shares at September 30, 2015 and December 31, 2014	(426)	(426)
Retained earnings	288,582	259,476
Accumulated other comprehensive loss, net	(31,805)	(16,359)
Total stockholders’ equity	354,100	337,670
Total liabilities and stockholders’ equity	$ 644,922	$ 632,886

Goodwill (Details) $ in Thousands	9 Months Ended
Goodwill (Details) $ in Thousands	Sep. 30, 2015 USD ($)
Goodwill [Roll Forward]
Balance at December 31, 2014	$ 75,691
Goodwill acquired	2,999
Translation adjustments	(2,608)
Balance at September 30, 2015	$ 76,082

Interim Condensed Consolidated Statements of Stockholders' Equity - 9 months ended Sep. 30, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Loss
Balance at Dec. 31, 2014	$ 337,670	$ 1,130	$ 93,849	$ (426)	$ 259,476	$ (16,359)
Balance (shares) at Dec. 31, 2014		11,264
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	31,825	$ 0	0	0	31,825	0
Translation adjustment	(16,012)	0	0	0	0	(16,012)
Net actuarial gain arising during period	566	0	0	0	0	566
Stock-based compensation	762	0	762	0	0	0
Exercise of stock options	2,008	$ 9	1,999	0	0	0
Exercise of stock options (shares)		85
Dividends paid ($.24 per share)	(2,719)	$ 0	0	0	(2,719)	0
Balance at Sep. 30, 2015	$ 354,100	$ 1,139	$ 96,610	$ (426)	$ 288,582	$ (31,805)
Balance (shares) at Sep. 30, 2015		11,349

Contingent Matters	9 Months Ended
Contingent Matters	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Contingent Matters	Contingent Matters 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. The remediation process has been completed. On August 6, 2015, Bush Hog received a letter of concurrence from the Alabama Department of Environmental Management concluding that Bush Hog had successfully remediated the property and that the site was eligible for liability protection under the Land Recycling and Economic Redevelopment Act for contamination discovered and addressed under Bush Hog’s voluntary cleanup plan. 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. Deere & Company has appealed and requested a new trial. A hearing on the appeal was held on October 8, 2015 and all parties attended. A final ruling on the appeal is expected in 2016. 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.

Interim Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Stockholders' Equity:
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	11,391,556	11,306,650
Common stock, shares outstanding	11,391,556	11,306,650
Treasury stock, shares	42,600	42,600

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2015	Oct. 30, 2015
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-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		11,424,172

Accounts Receivable	9 Months Ended
Accounts Receivable	Sep. 30, 2015
Receivables [Abstract]
Accounts Receivable	Accounts Receivable Accounts receivable is shown net of the allowance for doubtful accounts of $3,297,000 and $2,853,000 at September 30, 2015 and December 31, 2014, respectively.