8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: October 22, 2009 (Date of earliest event reported):

ALAMO GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware	0-21220	74-1621248
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1627 East Walnut

Seguin, Texas 78155

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (830) 379-1480

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets

This Form 8-K/A amends the current report on Form 8-K of Alamo Group Inc., filed on October 22, 2009, regarding the acquisition of substantially all the assets and assumed certain liabilities of Bush Hog.  The sole purpose of this amendment is to provide the financial statements and pro forma information required by Item 9.01, which were excluded from the original filing in reliance on paragraph (a)(4) of Item 9.01 of Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(a)	Financial Statements of Business Acquired.
	1.	Bush Hog’s audited balance sheet as of December 31, 2008 and 2007, and audited statements of operations for each of the three years in the period ended December 31, 2008 are attached hereto as Exhibit 99.1.
	2.	Bush Hog’s unaudited condensed financial statements as of June 30, 2009 and December 31, 2008 and for the six months ended June 30, 2009 and 2008 are attached hereto as Exhibit 99.2.
(b)	Pro Forma Financial Information.
	1.	The required pro forma financial information for the twelve months ended December 31, 2008, and for the six months ended June 30, 2009, is attached hereto as Exhibit 99.3.

 

2

(d) Exhibits.

Exhibit No.	Description
23.1	Consent of PricewaterhouseCoopers LLP, Independent Accountants
99.1	Audited financial statements of Bush Hog, LLC as of December 31, 2008 and 2007 and for each of the three years in the period ended December 31, 2008
99.2	Unaudited condensed financial statements as of June 30, 2009 and December 31, 2008 and for the six months ended June 30, 2009 and 2008
99.3	Unaudited pro forma financial information for the twelve months ended December 31, 2008, and for the six months ended June 30, 2009

 

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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 hereunto duly authorized.

	Alamo Group Inc.
Date: January 20, 2010	By:	/s/    Robert H. George
		Robert H. George
		Vice President - Administration

 

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EXHIBIT INDEX

Exhibit No.	Description
23.1	Consent of PricewaterhouseCoopers LLP, Independent Accountants
99.1	Audited financial statements of Bush Hog LLC as of December 31, 2008 and 2007 and for each of the three years in the period ended December 31, 2008
99.2	Unaudited condensed financial statements as of June 30, 2009 and December 31, 2008 and for the six months ended June 30, 2009 and 2008
99.3	Unaudited pro forma financial information for the twelve months ended December 31, 2008, and for the six months ended June 30, 2009

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EX-23.1

 

Exhibit 23.1

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-91804, 333-88454 and 333-143216) of Alamo Group Inc. of our report dated July 8, 2009, except for certain information in Notes 1 and 13, as to which the date is October 22, 2009 relating to the financial statements of Bush Hog, LLC, which appears in this Current Report on Form 8‑K/A of Alamo Group Inc. dated January 20, 2010.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

January 20, 2010

EX-99.1

Exhibit 99.1

Bush Hog, LLC

Index

	Page(s)
Report of Independent Auditors	1
Financial Statements
Balance Sheets as of December 31, 2008 and 2007	2
Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006	3
Statements of Changes in Members’ Capital for the Years Ended December 31, 2008, 2007 and 2006	4
Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006	5
Notes to Financial Statements	6-13

Report of Independent Auditors

To the Members of

Bush Hog, LLC:

In our opinion, the accompanying balance sheets and the related statements of operations, changes in members’ capital, and cash flows, present fairly, in all material respects, the financial position of Bush Hog, LLC (a Delaware Limited Liability Company) at December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.  We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 /s/

PricewaterhouseCoopers LLP

Chicago, Illinois

July 8, 2009, except for certain information

in Notes 1 and 13, as to which the date is

October 22, 2009

1

Bush Hog, LLC
Balance Sheets
December 31, 2008 and 2007

(in thousands of dollars)				2008		2007
Assets
Current assets
	Cash and cash equivalents			$	617	$	1,127
	Receivables
		Trade, less allowance for uncollectible accounts of
		$931 and $698 in 2008 and 2007, respectively		66,482		72,239
		Other		5,050		2,037
	Inventories			34,432		34,579
	Prepaid expenses			376		652
			Total current assets	106,957		110,634
Property, plant and equipment, net				28,348		30,385
			Total assets	$	135,305	$	141,019
Liabilities and Members' Capital
Current liabilities
	Related party demand line of credit			$	36,125	$	52,475
	Book overdraft			-		1,425
	Current portion of related party debt			2,010		2,010
	Current portion of capital lease obligations - equipment			137		86
	Accounts payable			16,438		16,771
	Accrued expenses			9,469		9,106
	Restructuring reserves			12,519		-
	Accrued product liability claims			5,013		-
			Total current liabilities	81,711		81,873
Long-term liabilities
	Related party debt, net of current portion			8,040		10,050
	Capital lease obligations - equipment, net of current portion			158		186
	Insurance reserves			9,188		8,605
	Other long-term liabilities			40		62
			Total long-term liabilities	17,426		18,903
			Total liabilities	99,137		100,776
Members' capital				36,168		40,243
			Total liabilities and members' capital	$	135,305	$	141,019

The accompanying notes are an integral part of these financial statements.

2

Bush Hog, LLC
Statements of Operations
Years Ended December 31, 2008, 2007 and 2006

(in thousands of dollars)		2008		2007		2006
Net sales		$	160,095	$	169,588	$	169,242
Cost of sales		175,539		165,620		157,435
	Gross (loss) profit	(15,444)		3,968		11,807
Operating expenses
Selling expenses		14,713		14,053		13,687
General and administrative expenses		12,486		11,150		10,441
Restructuring costs		19,261		-		1,764
(Gain) on sale of property and equipment		(1)		(703)		(317)
	Total operating expenses	46,459		24,500		25,575
	Loss from operations	(61,903)		(20,532)		(13,768)
Other income (expense)
Interest income		252		262		269
Interest expense		(2,475)		(4,966)		(4,248)
Other, net		51		65		70
	Total other expense	(2,172)		(4,639)		(3,909)
Net loss		$	(64,075)	$	(25,171)	$	(17,677)

The accompanying notes are an integral part of these financial statements.

3

Bush Hog, LLC
Statements of Changes in Member's Capital
Years Ended December 31, 2008, 2007 and 2006

(in thousands of dollars)
Balance, December 31, 2005	$	83,091
Net loss	(17,677)
Balance, December 31, 2006	65,414
Net loss	(25,171)
Balance, December 31, 2007	40,243
Members' contribution	60,000
Net loss	(64,075)
Balance, December 31, 2008	$	36,168

The accompanying notes are an integral part of these financial statements.

4

Bush Hog, LLC
Statements of Cash Flows
Years Ended December 31, 2008, 2007 and 2006

(in thousands of dollars)				2008		2007		2006
Cash flows from operating activities
Net loss				$	(64,075)	$	(25,171)	$	(17,677)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities
	Depreciation and amortization			6,921		6,006		6,991
	(Gain) on sale of property and equipment			(1)		(703)		(317)
	Impairment of long-lived assets			2,330		-		1,764
	Changes in operating assets and liabilities
		(Increase) decrease in receivables		2,744		7,413		1,103
		(Increase) decrease in inventories		147		9,425		(2,760)
		(Increase) decrease in prepaid expenses		276		(32)		196
		Increase (decrease) in accounts payable		(333)		382		4,370
		Increase (decrease) in book overdraft		(1,425)		1,425		(311)
		Increase (decrease) in accrued expenses and other
		long-term liabilities		5,937		1,271		(1,412)
		Increase (decrease) in restructuring reserves		12,519		-		-
			Net cash provided by (used in) operating activities	(34,960)		16		(8,053)
Cash flows from investing activities
Purchases of property and equipment				(7,101)		(6,370)		(5,979)
Proceeds from sales of property and equipment				1		1,095		332
			Net cash used in investing activities	(7,100)		(5,275)		(5,647)
Cash flows from financing activities
(Payments) borrowings on related party demand line of credit, net				(16,350)		7,100		16,225
Payments on related party debt				(2,010)		(2,010)		(2,010)
Payments on capital lease obligations, equipment				(90)		(81)		(278)
Members' contribution				60,000		-		-
			Net cash provided by financing activities	41,550		5,009		13,937
Net increase (decrease) in cash and cash equivalents				(510)		(250)		237
Cash and cash equivalents
Beginning of year				1,127		1,377		1,140
End of year				$	617	$	1,127	$	1,377
Supplemental disclosure of cash flow information
Cash paid for interest				$	2,475	$	4,966	$	4,248
Supplemental disclosure of noncash activities
Capital lease equipment acquired				114		-		-
Noncash acquisition of property and equipment				-		1,060		-

The accompanying notes are an integral part of these financial statements.

5

Bush Hog, LLC

Notes to Financial Statements

1.         Description of Business

Bush Hog, LLC (the “Company”), a Delaware limited liability company, was organized on March 7, 2000, and commenced operations on that date.  Bush Hog Investors, LLC (“Investors”) and Henry Crown and Company, d/b/a CC Industries, Inc. (“CCI”) own 80.1% and 19.9% of the Company, respectively.  CCI is the Manager of the Company.  The Company is engaged in the manufacturing and distribution of farm implements and machinery including rotary cutters, tractor-mounted loaders, zero-turn mowers, finishing mowers, backhoes and utility vehicles.  The Company has a diverse customer base located primarily in the United States and Canada.

During January 2009, financial advisors were retained to explore options related to the possible sale of the Company.  As discussed in Note 13, Subsequent Events, two separate transactions were concluded resulting in the sale of substantially all of the Company.

2.         Summary of Significant Accounting Policies

Cash and Cash Equivalents

For purposes of reporting cash and cash equivalents, the Company considers all highly liquid investments having original maturities of three months or less to be cash equivalents.  Included for the periods ended December 31, 2008 and 2007, is a $1.0 million certificate of deposit related to bank processing of automated clearing house (ACH) debits for direct deposit payrolls.

Other Receivables

Included in other receivables for the period ended December 31, 2007 is an advance to a supplier for inventory purchases.

Inventories

Inventories are stated at lower of cost or market.  The Company's inventories are determined on the last-in, first-out ("LIFO") method.

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Expenditures for the maintenance and repair of property, plant and equipment are charged to expense as incurred.  Expenditures for major replacement or betterment are capitalized.  Capital lease equipment is recorded at the present value of the minimum lease obligation.

Depreciation of the original cost of plant and equipment is charged to expense over the estimated useful lives of such assets using the straight-line method.  Estimated useful lives are 15 to 39 years for buildings and improvements and 3 to 12 years for machinery and equipment.  Equipment under capital leases is depreciated over the lesser of the lease term or the life of the asset.

Long-Lived Assets

Long-lived assets consist of property, plant and equipment.  The Company continually evaluates whether circumstances have occurred that indicate the remaining estimated useful life of its long-lived assets may warrant revision or that the remaining balance of such assets may not be recoverable.  When factors indicate that such assets should be evaluated for possible impairment, the Company uses an estimate of the undiscounted cash flows over the remaining life of the asset in measuring whether the asset is recoverable.

6

Bush Hog, LLC

Notes to Financial Statements

In the event impairment exists, an impairment charge would be recorded as the amount by which the carrying value of the asset or asset group exceeds the fair value.  During 2008, the Company performed an impairment test for the Alabama and Tennessee asset groups and determined no impairment was necessary (except as discussed in Note 12) as the fair value determined by reference to estimated selling values of similar assets in similar condition were in excess of the carrying value of the asset groups.

Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (“SFAS 157”), which provides a framework for measuring fair value under accounting standards generally accepted in the United States.  In February, 2008, the Financial Accounting Standards Board (FASB) deferred the effective date of SFAS 157 for non–financial assets and liabilities until fiscal years beginning after November 15, 2008 (January 1, 2009 for the Company).  The remaining provisions of SFAS 157 are effective for fiscal years beginning after November 15, 2007 (January 1, 2008 for the Company).  There was no impact to the financial statements as a result of adoption.

The Company also adopted SFAS No. 159, the Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”) on January 1, 2008.  SFAS 159 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-for-contract basis.  The Company elected not to adopt the fair value option for financial instruments on the adoption date.

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair value because of the short-term maturities of these instruments.  All Company borrowings are currently with related parties and the terms of which make it impracticable to estimate the fair value.

Research and Development

Costs associated with research and development are expensed as incurred and amounted to $4.9 million, $5.9 million and $4.9 million for the years ended December 31, 2008, 2007 and 2006, respectively, and are included in cost of sales.

Insurance Liabilities

The Company is insured through commercial policies which are shared by Henry Crown and Company affiliated businesses and name Bush Hog as an insured.  These policies are managed by CCI’s Risk Management Department.  Commercial general liability, products liability and business automobile liability are provided under deductible programs.  Workers’ compensation is self-insured for the Alabama location while the Tennessee location is insured under a CCI deductible policy.  Catastrophic liability insurance is purchased in excess of CCI’s primary coverage.  Provisions for workers’ compensation and products liability losses under the CCI insurance program are recorded by the Company, based upon an actuarial estimate of the ultimate liability for claims incurred, provided by CCI’s insurance vendor.

Product Warranties

The Company provides customers with warranties for various periods primarily covering defects in material and workmanship.  The Company has established an accrual for anticipated future warranty costs based upon historical claim experience, forecasted retail sales, the level of paid dealer inventories and known warranty issues. 

7

Bush Hog, LLC

Notes to Financial Statements

Income Taxes

The Company is a limited liability company, whereby income of the Company is allocated to its members for inclusion in their respective tax returns.  Accordingly, no liability or provision for Federal income taxes and deferred income taxes attributable to the Company’s operations are included in the accompanying financial statements.  However, the Company is subject to various state and local taxes arising from operations.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions.  These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.  In addition, they affect the reported amounts of expenses during the reporting period.  These estimates and assumptions include judgments as to customer allowances, net realizable value of inventory, asset impairments, insurance liabilities, contract termination costs and product warranties.  Actual results could differ from these estimates and assumptions.

Revenue Recognition and Receivables

Sales are recognized upon delivery of product.  Provisions for discounts to customers and returns and other adjustments are recorded as a reduction of sales at the time sales are recorded.  Consistent with industry practices, the Company offers preseason early-order programs whereby customers may order and take delivery of products prior to the spring and summer selling season.  Products sold under preseason programs are shipped beginning in the late summer, carry various cash discounts in conjunction with delayed payment terms, and have no right of return.  Revenue on sales is recorded net of anticipated discounts. 

With the exception of receivables associated with service parts, such receivables are generally not collected until the earlier of the date dealer sells the related piece of equipment to a retail customer or the receivable due date occurs.  The Company generally maintains a security interest in the equipment related to such dealer receivables to minimize the risk of loss.  The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses which, when incurred, have been within the range of management expectations.  These allowances are established based upon current and historical information and aging of the accounts.  Provisions for sales incentives and other sales-related expenses are recorded at the time of the sale.

Shipping and handling fees received are classified as revenue in the statements of operations.  Costs related to shipping and handling are included in cost of sales.

Concentration of Credit Risk

Concentration of credit risk is limited to trade accounts receivable and is subject to the financial conditions of certain major customers.  The Company maintains a security interest in equipment sold to the majority of its customers.  The Company also conducts periodic inventory audits and reviews of its customers’ financial condition to minimize collection risks on trade accounts receivable.

Reclassifications

Certain accounts in 2006 have been reclassified to be consistent with the 2008 and 2007 presentation.

8

Bush Hog, LLC

Notes to Financial Statements

3.         Inventories

Inventories as of December 31 are as follows:

(in thousands of dollars)		2008		2007
Raw materials		$	15,113	$	14,230
Work in process		3,379		4,203
Finished goods		30,323		23,827
	FIFO inventories	48,815		42,260
LIFO reserves		(14,383)		(7,681)
	LIFO inventories	$	34,432	$	34,579

During 2008, 2007 and 2006, inventory quantities were reduced.  These reductions resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of current year purchases, the effect of which decreased cost of sales and reduced the net loss by approximately $430 thousand, $240 thousand, and $49 thousand in 2008, 2007 and 2006, respectively.

4.         Property, Plant and Equipment

Property, plant and equipment as of December 31 are as follows:

(in thousands of dollars)		2008		2007
Land and improvements		$	2,514	$	2,193
Building and improvements		14,729		13,330
Machinery, equipment and furniture		52,907		43,876
Transportation equipment		3,865		3,963
Capital lease equipment		588		474
Construction in progress		513		8,501
	Property, plant and equipment	75,116		72,337
Less:  Accumulated depreciation		46,768		41,952
	Property, plant and equipment, net	$	28,348	$	30,385

The capital lease equipment is primarily truck tractors utilized for delivering customer purchases and backhauling certain supplies.

In December 2006, the Company’s Board of Advisors authorized an $11.2 million project to reorganize manufacturing operations at the Alabama facilities.  As a result, the year-end 2006 carrying values of certain buildings were no longer recoverable from future cash flows and their book value exceeded their fair value, which was determined based on a comparable sale.  The Company recorded a noncash impairment charge of approximately $1.8 million to adjust the carrying value of these long-lived assets to fair value.  The project began in early 2007 and was completed during 2008.  See Note 12 for discussion on 2008 impairment related to restructuring costs.

9

Bush Hog, LLC

Notes to Financial Statements

5.          Retirement Benefits

The Company’s eligible employees participate in a defined contribution plan.  The plan includes a 401(k) plan with a Company match.  Additionally, for all participants active during the plan year, whether or not they contributed to the plan, a supplemental contribution is made by the Company equal to 3% of compensation.  Finally, a special additional contribution is made for a grandfathered group of active participants who are salaried employees that attained age 40 with 10 years of service by December 31, 2000 and who were employed on the last day of the plan year.  Certain key management personnel are provided other supplemental benefits through nonqualified plans.  The Company’s contributions approximated $2.1 million, $2.2 million and $2.4 million in 2008, 2007 and 2006, respectively.

6.         Product Warranties

Liabilities for product warranties included in accrued expenses as of December 31 are as follows:

(in thousands of dollars)		2008		2007
Beginning balance		$	1,106	$	1,184
Accruals for warranties - current		1,215		1,500
Settlements made during the period		(868)		(1,578)
	Ending balance	$	1,453	$	1,106

7.         Related Party Line of Credit

During 2008 and 2007, the Company maintained a $40 million and $60 million, respectively, demand line of credit with a related party with interest payable at LIBOR plus 235 basis points (4.26% at December 31, 2008).  Maximum borrowings in 2008 under the demand line of credit were $59.3 million.  At December 31, 2008, $36.1 million was borrowed against the line.  In February 2009, the Investors and CCI made an additional capital contribution of $45.4 million.  Borrowings under the line at that date, $36.9 million, were repaid and the line of credit was terminated.  In July 2009, the Company entered into a new line of credit agreement with a related party that expires in August 2010.  Availability under the new line is $25 million and interest is payable at the Thirty Day LIBOR Rate plus 235 basis points.

8.         Related Party Debt

The Company is a party to a thirteen-year lease with The Industrial Development Board of Washington County, Tennessee (the “Board”) for the construction of a new manufacturing facility in Jonesborough, Tennessee. 

Under the terms of the agreement, the Board funded the cost of the facility through the issuance of revenue bonds up to a maximum of $25 million.  The bonds have been purchased by a related party and a total of $20.1 million was funded.  The lease agreement further provides for lease payments to be made directly to the bondholders.  Accordingly, the obligation has been recorded as related party debt on the balance sheet. 

10

Bush Hog, LLC

Notes to Financial Statements

The Company makes quarterly interest payments based on a variable rate and makes principal payments in December which will continue through the maturity date of 2013.  The interest rate in 2008 ranged from 5.00% to 7.13% based on the LIBOR rate plus a predetermined spread.  The interest rate at December 31, 2008 is 6.06%

At December 31, 2008, future maturities of related party debt obligations are as follows:

(in thousands of dollars)
Year ending December 31,
2009		$	2,010
2010		2,010
2011		2,010
2012		2,010
2013		2,010
	Total	$	10,050

9.          Leases

Operating

The Company leased trailers and warehouse space during 2008 and has leases for office equipment.  Rent expense was $498 thousand, $606 thousand and $692 thousand for the years ended December 31, 2008, 2007 and 2006, respectively.

Capital

For capital lease equipment, the following are the minimum lease payments that will be made in each of the years indicated based on the capital leases in effect as of December 31, 2008:

(in thousands of dollars)
Year ending December 31,
2009		$	147
2010		160
	Total minimum lease payments	307
Amount representing interest		12
Present value of minimum lease payments		$	295

Accumulated amortization related to assets under capital leases was $305 thousand and $218 thousand for the years ended December 31, 2008 and 2007, respectively.

11

Bush Hog, LLC

Notes to Financial Statements

10.       Contingencies

The Company is a party to various legal proceedings and potential claims that arise in the ordinary course of business.  In the opinion of the Company’s management, the amount of any ultimate liability will not have a material adverse effect on the Company’s financial position or results of its operations.

The Company’s policy is to record estimated product liability claims and insurance receivables for claims in excess of their deductible, in accordance with Financial Accounting Standards Board Interpretation No. 39.  Historically these claims estimates have not been significant.  As of December 31, 2008, the Company accrued approximately $5 million for such claims and recorded an insurance receivable for the same amount, which is included in other receivables in the accompanying 2008 balance sheet.  Subsequent to year end the Company settled one of the outstanding claims for $4.1 million.  The total amount of the settlement, net of the deductible was paid by the insurance carrier in June 2009.

11.       Related Party Transactions

CCI

The Company pays a management fee of $1.3 million annually to CCI in connection with its role as manager of the Company.  In addition, the Company reimburses CCI for expenditures incurred on behalf of the Company.  The management fee is included in general and administrative expenses.  Included in accounts payable was $313 thousand due to CCI at December 31, 2008 and 2007.

Line of Credit

The Company maintained a line of credit totaling $40.0 million and $60 million with a related party as of December 31, 2008 and 2007, respectively.  Interest paid to the related party for 2008, 2007 and 2006 was $1.7 million, $3.9 million and $3.0 million, respectively.

Debt

The Company has debt totaling $10.1 million and $12.1 million with a related party as of December 31, 2008 and 2007, respectively.  Interest paid to the related party for 2008, 2007 and 2006 was $0.7 million, $1.1 million and $1.2 million, respectively.

Equipment

The Company leases truck tractors from a related party.  Lease payments totaled $88 thousand, $206 thousand and $203 thousand for 2008, 2007 and 2006, respectively.  In addition, the Company purchased trailer equipment totaling $45 thousand and $63 thousand in 2007 and 2006, respectively.

12.       Restructuring Costs

In 2008, the Company recorded restructuring costs of approximately $19.3 million.  The details of these 2008 restructuring actions are listed in the chart below:

Workforce Reductions

In 2008, the Company determined the need to reduce employment levels at both the Alabama and Tennessee locations and as a result recorded a restructuring charge of approximately $3.0 million for severance costs.

12

Bush Hog, LLC

Notes to Financial Statements

Utility Vehicle Product Line Discontinuance

In 2008, the Company approved a plan to discontinue the utility vehicle product line and recorded restructuring costs of approximately $16.3 million.  Included in the restructuring costs are $2.4 million in contract-related termination costs with a supplier, $9.1 million for an unfavorable purchase commitment and $4.8 million of asset impairments associated with machinery, equipment, tooling, software and inventory writedowns.

				Asset		Contract
				Impairments		Termination
	Severance		and Inventory			and Other
(in thousands of dollars)	Costs			Writedowns		Exit Costs		Total
Restructuring costs	$	2,952		$	4,834	$	11,475	$	19,261
Amounts utilized	(305)			(4,834)		(420)		(5,559)
Restructuring balances December 31, 2008	$	2,647		$	-	$	11,055	$	13,702

The restructuring reserves are expected to be utilized in the next twelve months, of which $1.2 million is included in accounts receivable and $12.5 million in restructuring reserves in the accompanying balance sheets.

13.       Subsequent Events

On June 5, 2009, the Company entered into an agreement with a third party to sell certain equipment and inventory related to the loader product line for $2.2 million, which approximates book value.  This transaction closed on August 17, 2009.  Concurrently, the Company entered into a sub-lease agreement with this same third party for the Company's Tennessee facility and paint-line equipment located in Tennessee.  The Company and this third party also entered into a separate loader supply agreement.

On  October 22, 2009, a publicly traded third party acquired the majority of the remaining assets and certain liabilities of the Company in exchange for 1.7 million shares of its common stock.

13

EX-99.2

Exhibit 99.2

Bush Hog, LLC

Index

	Page(s)
Condensed Financial Statements
Unaudited Balance Sheets as of June 30, 2009 and December 31, 2008	1
Unaudited Statements of Operations for the Six Months Ended June 30, 2009 and 2008	2
Unaudited Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008	3
Notes to Condensed Financial Statements	4

Bush Hog, LLC
Balance Sheets
June 30, 2009 and December 31, 2008

					Unaudited		Unaudited
(in thousands of dollars)				2009		2008
Assets
Current assets
	Cash and cash equivalents			$	12,150	$	617
	Receivables
		Trade, less allowance for uncollectible accounts of
		$4,186 and $931 in 2009 and 2008, respectively		68,619		66,482
		Other		-		5,050
	Inventories			20,478		34,432
	Prepaid expenses			998		376
			Total current assets	102,245		106,957
Property, plant and equipment, net				22,891		28,348
			Total assets	$	125,136	$	135,305
Liabilities and Members' Capital
Current liabilities
	Related party demand line of credit			$	-	$	36,125
	Book overdraft			1,678		-
	Current portion of related party debt			2,010		2,010
	Current portion of capital lease obligations - equipment			202		137
	Accounts payable			18,245		16,438
	Accrued expenses			4,859		9,469
	Restructuring reserves			5,583		12,519
	Accrued product liability claims			1,500		5,013
			Total current liabilities	34,077		81,711
Long-term liabilities
	Related party debt, net of current portion			8,040		8,040
	Capital lease obligations - equipment, net of current portion			24		158
	Insurance reserves			9,144		9,188
	Other long-term liabilities			40		40
			Total long-term liabilities	17,248		17,426
			Total liabilities	51,325		99,137
Members' capital				73,811		36,168
			Total liabilities and members' capital	$	125,136	$	135,305

 The accompanying notes are an integral part of these unaudited condensed financial statements.

1

Bush Hog, LLC
Statements of Operations
Six Months Ended June 30, 2009 and 2008

		Unaudited		Unaudited
(in thousands of dollars)		2009		2008
Net sales		$	56,211	$	93,717
Cost of sales		51,935		94,948
	Gross (loss) profit	4,276		(1,231)
Operating expenses
Selling expenses		4,349		8,152
General and administrative expenses		7,736		6,581
	Total operating expenses	12,085		14,733
	Loss from operations	(7,809)		(15,964)
Other income (expense)
Interest income		346		107
Interest expense		(305)		(1,377)
Other, net		10		29
	Total other income (expense)	51		(1,241)
Net loss		$	(7,758)	$	(17,205)

The accompanying notes are an integral part of these unaudited condensed financial statements.

2

Bush Hog, LLC
Statements of Cash Flows
Six Months Ended June 30, 2009 and 2008

					Unaudited		Unaudited
(in thousands of dollars)				2009		2008
Cash flows from operating activities
Net loss				$	(7,758)	$	(17,205)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities
	Depreciation			2,609		3,670
	Impairment of long-lived assets			2,645		-
	Changes in operating assets and liabilities
		(Increase) decrease in receivables		(2,137)		(23,558)
		(Increase) decrease in other receivables		5,050		2,037
		(Increase) decrease in inventories		13,954		(1,689)
		(Increase) decrease in prepaid expenses		(622)		(173)
		Increase (decrease) in accounts payable		1,807		4,174
		Increase (decrease) in book overdraft		1,678		1,578
		Increase (decrease) in accrued expenses and other
		long-term liabilities		(8,167)		2,322
		Increase (decrease) in restructuring reserves		(6,936)		-
			Net cash provided by (used in) operating activities	2,123		(28,844)
Cash flows from investing activities
Disposals (purchases) of property and equipment				204		(4,789)
			Net cash used in investing activities	204		(4,789)
Cash flows from financing activities
(Payments) borrowings on related party demand line of credit, net				(36,125)		(26,325)
Payments on capital lease obligations, equipment				(69)		(37)
Members' contribution				45,400		60,000
			Net cash provided by financing activities	9,206		33,638
Net increase (decrease) in cash and cash equivalents				11,533		5
Cash and cash equivalents
Beginning of period				617		1,127
End of period				$	12,150	$	1,132
Supplemental disclosure of cash flow information
Cash paid for interest				$	306	$	1,377

 The accompanying notes are an integral part of these unaudited condensed financial statements.

 

3

Bush Hog, LLC.

Notes to Condensed Financial Statements - (Unaudited)

June 30, 2009

1.  Basis of Financial Statement Presentation

The accompanying unaudited condensed financial statements of Bush Hog, LLC. (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to 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, 2009.  For further information, refer to the financial statements and footnotes thereto included in the Company’s audited financial statements for the year ended December 31, 2008 (as a part of Exhibit 99.1).

2.  Inventories

Inventories are valued using the last-in first-out (LIFO) method.  Net inventories consist of the following:

(in thousands)		June 30, 2009		December 31, 2008
Finished goods	$	13,777	$	15,113
Work in process		4,242		3,379
Raw materials		11,342		30,323
FIFO inventories	$	29,361	$	48,815
LIFO reserves		(8,883)		(14,383)
LIFO inventories	$	20,478	$	34,432

An actual valuation of inventory under the LIFO method can be 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 on management's estimates. Based on the decrease in inventory quantities management believes that the LIFO reserve should be $8.9 million.

3.  Property, Plant and Equipment Impairment

The Company performed an impairment test for the Alabama and Tennessee asset groups and determined an impairment charge of $ 2.6 million was necessary at June 30, 2009.  The impairment was mostly related to the Alabama property and equipment which indicated the fair value was less than the carrying value of the asset group.

4.  Fair Value Measurements

Effective January 1, 2008, the Company adopted Accounting Standards Codification Subtopic 820-10 (ASC 820) formerly SFAS No. 157, Fair Value Measurements (“SFAS 157”), which provides a framework for measuring fair value under accounting standards generally accepted in the United States.  In February, 2008, the Financial Accounting Standards Board (FASB) deferred the effective date of ASC 820 for non–financial assets and liabilities until fiscal years beginning after November 15, 2008 (January 1, 2009 for the Company).  The remaining provisions of ASC 820 are effective for fiscal years beginning after November 15, 2007 (January 1, 2008 for the Company).  There was no impact to the financial statements as a result of adoption.

4

The Company also adopted Accounting Standards Codification Topic 825 (ASC 825) formerly SFAS No. 159, the Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”) on January 1, 2008.  ASC 825 allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on a contract-for-contract basis.  The Company elected not to adopt the fair value option for financial instruments on the adoption date.

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair value because of the short-term maturities of these instruments.  All Company borrowings are currently with related parties and the terms of which make it impracticable to estimate the fair value.

5.  Contingent Matters

The Company is a party to various legal proceedings and potential claims that arise in the ordinary course of business.  In the opinion of the Company’s management, the amount of any ultimate liability will not have a material adverse effect on the Company’s financial position or results of its operations.

The Company’s policy is to record estimated product liability claims and insurance receivables for claims in excess of their deductible, in accordance with Accounting Standards Codification Topic 210-20 (ASC 210) Financial Accounting Standards Board Interpretation No. 39.  Historically these claims estimates have not been significant.  As of December 31, 2008, the Company accrued approximately $5 million for such claims and recorded an insurance receivable for the same amount, which is included in other receivables in the accompanying 2008 balance sheet.  The Company settled the outstanding claims net of deductible paid by the insurance carrier in June 2009.

6.  Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162.  U.S. GAAP will no longer be issued in the form of an “accounting standard,” but rather as an update to the applicable “topic” or “subtopic” within the codification. As such, accounting guidance will be classified as either “authoritative” or “non-authoritative” based on its inclusion or exclusion from the codification.  The codification will be the single source of authoritative U.S. accounting and reporting standards, except for rules and interpretive releases of the SEC under authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants.  The codification of U.S. GAAP became effective for the quarter ending after September 30, 2009.  We do not expect this statement to have a material impact on the financial statements.

In May 2009, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 165, “Subsequent Events” (“SFAS No. 165”).  SFAS No. 165 was subsequently codified in the FASB Accounting Standards Codification Topic 855 (“ASC 855”).  ASC 855 establishes principles and standards related to the accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued.  ASC 855 requires an entity to recognize, in the financial statements, subsequent events that provide additional information regarding conditions that existed at the balance sheet date.  In accordance with this standard, which was effective beginning with the quarter ended June 30, 2009, management has evaluated subsequent events for accounting and disclosure through the date of this filing which is January 19, 2010.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations”, (“SFAS 141R”), which replaces SFAS 141.  SFAS 141R has subsequently been codified in the FASB Accounting Standards Codification Topic 805 (“ASC 805”).  ASC 805 requires most assets acquired and liabilities assumed in a business combination, contingent consideration, and certain acquired contingencies to be measured at their fair values as of the date of acquisition.  The new standard also requires that acquisition-related costs and restructuring costs be recognized separately from the business combination.  The new standard became effective for the Company on January 1, 2009.

5

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Non-controlling Interest in Consolidated Financial Statements”, (“SFAS 160”).  SFAS 160 has subsequently been codified in the FASB Accounting Standards Codification Topic 810 (“ASC 810”).  The new standard amends previous accounting literature to establish new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary.  The new standard is effective for the Company this fiscal year. 

The Financial Accounting Standards Board’s Emerging Issues Task Force has issued new accounting guidance for revenue arrangements with multiple deliverables.  Under current accounting guidance, one of the requirements for recognition of revenue for a delivered item under a multiple element arrangement is that there must be objective and verifiable evidence of the standalone selling price of the undelivered item.  The new guidance eliminates that requirement and requires an entity to estimate the selling price of each element in the arrangement.  The result will likely be that more arrangements will be separated into multiple elements of accounting than was the case previously.

The new guidance is effective for the Company as of January 1, 2011, and will be applied prospectively to new arrangements entered into beginning on that date.  Early adoption is permitted as of the beginning of a fiscal year.  If the new guidance is adopted early in other than the first period of the fiscal year, the guidance must be adopted retrospectively to the beginning of the fiscal year of adoption.  Retrospective application to prior years is allowed, but not required.  In the initial year of application, certain qualitative and quantitative disclosures about the impact of the adoption are required.  The Company has not yet determined the impact of adoption.

In March 2008 the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures About Derivative Instruments and Hedging Activities (“SFAS 161”) expanding the disclosure requirements to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for and (iii) how derivative instruments and related hedged items affect an entity's financial position, results of operations and cash flows.  SFAS 161 has subsequently been codified in the FASB Accounting Standards Codification Topic 815 (“ASC 815”).  To meet those objectives, Statement 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. The Company adopted SFAS 161 on January 1, 2009 and it has no impact on the Company's condensed financial statements.

In June 2009, the FASB issued SFAS 167, Amendments to FASB Interpretation No. 46(R), which is to be included in ASC Topic 810, consolidation. This guidance amends FASB Interpretation No. 46(revised December 2003) to address the elimination of the concept of a qualifying special purpose entity. SFAS 167 also replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, SFAS 167 provides more timely and useful information about an enterprise’s involvement with a variable interest entity. SFAS 167 will become effective in the first quarter of 2010. We are currently evaluating the impact of this standard on the financial statements.

7.  Related Party Line of Credit

The Company maintained a $60 million demand line of credit with a related party with interest payable at LIBOR plus a predetermined spread. During February 2008, the line was increased to $70 million. In March 2008, Bush Hog Investors, LLC (“Investors”) and Henry Crown and Company, d/b/a CC Industries, Inc. (“CCI”) made a capital contribution of $60 million. Borrowings under the line at that date totaled $67.9 million, of which, $60 million were repaid and the demand line of credit was reduced to $40 million. During 2008 and 2009, maximum borrowings under the $40 million demand line of credit totaled $36.1 million and $37.4 million, respectively. In February 2009, the Investors and CCI made an additional capital contribution of $45.4 million.  Borrowings under the line at that date, $36.9 million, were repaid and the line of credit was terminated.  In July 2009, the Company entered into a new line of credit agreement with a related party that expires in August 2010.  Availability under the new line is $25 million and interest is payable at the Thirty Day LIBOR Rate plus 235 basis points.

6

8.  Related Party Debt

The Company is a party to a thirteen-year lease with The Industrial Development Board of Washington County, Tennessee (the “Board”) for the construction of a new manufacturing facility in Jonesborough , Tennessee. 

Under the terms of the agreement, the Board funded the cost of the facility through the issuance of revenue bonds up to a maximum of $25 million.  The bonds have been purchased by a related party and a total of $20.1 million was funded.  The lease agreement further provides for lease payments to be made directly to the bondholders.  Accordingly, the obligation has been recorded as related party debt on the balance sheet. 

The Company makes quarterly interest payments based on a variable rate and makes principal payments in December which will continue through the maturity date of 2013.  The interest rate in 2009 ranged from 3.57 % to 3.78 % based on the LIBOR rate plus a predetermined spread.  The interest rate at June 30, 2009 is 3.57 %.

9.  Related Party Transactions

CCI

The Company pays a management fee of $1.3 million annually to CCI in connection with its role as manager of the Company.  In addition, the Company reimburses CCI for expenditures incurred on behalf of the Company.  The management fee is included in general and administrative expenses.  Included in accounts payable was $1.0 million and $0.6 million due to CCI at June 30, 2009 and December 31, 2008 respectively.

Line of Credit

The Company maintained a line of credit totaling $40.0 million with a related party as of December 31, 2008 and June 30, 2008.  Interest paid to the related party for the six months ended June 30, 2009 and 2008 was $0.1 million and $1.0 million, respectively.

Debt

The Company has debt totaling $10.1 million with a related party as of June 30, 2009 and December 31, 2008, respectively.  Interest paid to the related party for the six months ended June 30, 2009 and 2008 was $0.2 million and $0.4 million, respectively.

Equipment

The Company leases truck tractors from a related party.  Lease payments totaled $45 thousand for the six months ended of June 30, 2009 and 2008. 

10.  Restructuring Costs

In the fourth quarter of 2008, the Company recorded restructuring costs of approximately $19.3 million.  The details of these 2008 restructuring actions are listed in the chart below.

Workforce Reductions

The Company determined the need to reduce employment levels at both the Alabama and Tennessee locations and as a result recorded a restructuring charge of approximately $3.0 million for severance costs.

Utility Vehicle Product Line Discontinuance

The Company approved a plan to discontinue the utility vehicle product line and recorded restructuring costs of approximately $16.3 million.  Included in the restructuring costs were $2.4 million in contract-related termination costs with a supplier, $9.1 million for an unfavorable purchase commitment and $4.8 million of asset impairments associated with machinery, equipment, tooling, software and inventory write-downs.

7

$6.9 million in restructuring reserves was used during the six months ended June 30, 2009.  The balance of $6.8 million as of June 30, 2009 is expected to be utilized in the next twelve months, of which $1.2 million is included in accounts receivable and $5.6 million in restructuring reserves in the accompanying balance sheets.

(in thousands)		Severance Costs		Contract Termination and Other Exit Costs	Total
Restructuring balances December 31, 2008	$	2,647	$	11,055	$	13,702
Amount utilized in 2009		(1,344)		(5,592)		(6,936)
Restructuring balances June 30, 2009	$	1,303		5,463	$	6,766

11.  Subsequent Events

On October 22, 2009, a publicly traded third party acquired the majority of the remaining assets and certain liabilities of the Company in exchange for 1.7 million shares of its common stock.

8

EX-99.3

Exhibit 99.3

ALAMO GROUP INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On October 22, 2009, Alamo Group Inc., a Delaware corporation, (“Alamo Group”) acquired the majority of the assets and assumed certain liabilities of Bush Hog, LLC a Delaware limited liability company (“Bush Hog”).  The purchase included substantially all of the ongoing business of Bush Hog, including the Bush Hog brand name and all related product names and trademarks (the “Acquisition”) pursuant to the terms of an Asset Purchase Agreement dated September 4, 2009 (the “Agreement”).  The Agreement was made and entered into by and among Alamo Group, Alamo Acquisition, Inc., Bush Hog and CC Industries, Inc.  The purchase price consideration was 1.7 million unregistered shares of Alamo Group common stock which represented approximately 14.5% of the outstanding stock of Alamo Group.  The closing price on October 22, 2009 was $16.09 per share.

Effective October 22, 2009, Alamo Acquisition, Inc. changed its corporate name to Bush Hog, Inc. 

At the time of completion of the Acquisition, Alamo Group and Bush Hog had the same fiscal year ends.  Accordingly, the following unaudited pro forma condensed consolidated balance sheet is based upon Alamo Group’s and Bush Hog’s historical unaudited balance sheets as of June 30, 2009, giving effect to the Acquisition of Bush Hog by Alamo Group on October 22, 2009, as if it had been completed on June 30, 2009.  The following unaudited pro forma condensed consolidated statement of operations for the fiscal year ended December 31, 2008 combines Alamo Group’s historical audited consolidated statement of operations with Bush Hog’s historical audited statement of operations giving effect to the Acquisition as if it had occurred on January 1, 2008.  The following unaudited pro forma condensed consolidated statement of operations for the six months ended June 30,2009, combine the historical consolidated statements of operations of Alamo Group for the six months ended June 30, 2009, and Bush Hog for the six months ended June 30, 2009 giving effect to the Acquisition as if it had occurred on January 1, 2008.  The historical financial statements of Bush Hog have been adjusted to reflect certain reclassifications to conform to Alamo Group’s financial statement presentation.

The unaudited pro forma condensed consolidated financial statements have been developed from and should be read in conjunction with Alamo Groups’ historical consolidated financial statements and accompanying notes contained in Alamo Group’s Annual Report on Form 10-K for its fiscal year ended December 31, 2008 filed on March 11,2009 and Quarterly Report on Form 10-Q for its quarter ended June 30, 2009 filed on August 10, 2009 and Bush Hog’s historical audited financial statements and accompanying notes for its fiscal year ended December 31, 2008 and the unaudited historical condensed financial statements as of and for the six months ended June 30, 2009, which are included in Exhibit 99.1 and 99.2, respectively.

These unaudited pro forma condensed consolidated financial statements are prepared by management for informational purposes only in accordance with Article 11 of Regulation S-X and are not necessarily indicative of future results or of actual results that would have been achieved had the Acquisition been consummated as of the dates presented, and should not be taken as representative of future consolidated results of operations or financial position of Alamo Group.  The unaudited pro forma condensed consolidated financial statements do not reflect any operating efficiencies and/or cost savings that Alamo Group may achieve, or any additional expenses that it may incur, with respect to the consolidated companies. Because the selected unaudited pro forma condensed consolidated financial information is based on Bush Hog’s operating results during the period when Bush Hog was not under the control, influence or management of Alamo Group, the information presented may not be indicative of the results for the year ended December 31, 2008 and for the six months ended June 30, 2009, that would have actually occurred had the Acquisition been consummated as of January 1, 2008, nor is it indicative of our future financial or operating results of the consolidated entity.

The Acquisition has been accounted for in accordance with ASC Topic 805 Business Combinations (“ASC Topic 805”).  Accordingly, the total purchase price has been allocated on a preliminary basis to assets acquired and net liabilities assumed in connection with the Acquisition based on their estimated fair values as of the completion of the Acquisition.  These allocations reflect various preliminary estimates that were available at the time of the preparation of this Current Report on Form 8-K/A, and are subject to change during the purchase price allocation period (generally one year from the acquisition date) as valuations are finalized.

Substantially all the assets of Bush Hog were purchased by Alamo Group other than certain assets unrelated to the ongoing business pursuant to the terms of the Agreement.  Certain pro forma adjustments have been included in the unaudited pro forma condensed consolidated financial statements to exclude those assets and liabilities that were not purchased by Alamo Group.

ALAMO GROUP INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2009 (in thousands)

	Historical
	Alamo Group Inc.			Bush Hog,LLC
	June 30, 2009			June 30, 2009			Pro forma Adjustments			Pro forma Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	6,074		$	12,150		$	(13,209)	(a),(d)	$	5,015
Accounts receivable, net		124,733			68,619			(34,310)	(b)		159,042
Inventories, net		125,114			20,478			43	(e)		145,635
Deferred income taxes		2,646			—			(2,646)	(c)		—
Prepaid expenses		3,108			998			—			4,106
Total current assets		261,675			102,245			(50,122)			313,798
Property and equipment, net		60,362			22,891			(8,486)	(a)		74,767
Goodwill		48,696			—			—			48,696
Intangible assets		3,942			—			1,900	(f)		5,842
Deferred income taxes		2,463			—			—			2,463
Assets held for sale		426			—			—			426
Other assets		1,309			—			—			1,309
Total assets	$	378,873		$	125,136		$	(56,708)		$	447,301
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	45,308		$	19,923		$	(6,140)	(a)	$	59,091
Income taxes payable		1,971			—			—			1,971
Deferred income taxes		—			—			930			930
Accrued liabilities		28,755			11,942			(7,922)	(a)		32,775
Related party debt		—			2,010			(2,010)	(a)		—
Current maturities of long-term debt		3,913			202			—			4,115
Total current liabilities		79,947			34,077			(15,142)			98,882
Long-term debt, net of current maturities		91,257			24			(24)	(a)		91,257
Pension liability		8,651			—			—			8,651
Related party debt		—			8,040			(8,040)	(a)		—
Other long-term liabilities		4,422			9,184			(9,184)	(a)		4,422
Deferred income taxes		940			—			6,196	(c)		6,901
Total liabilities		185,217			51,325			(26,194)			210,348
Stockholders’ equity
Common stock		1,005			—			170	(g)		1,175
Additional paid-in capital		56,724			—			27,183	(g)		83,907
Members Equity		—			236,521			(236,521)	(h)		—
Treasury stock at cost		(426	)		—			—			(426)
Retained earnings (deficit)		135,405			(162,710	)		178,654	(h),(i),(d)		151,349
Accumulated other comprehensive income		948			—			—			948
Total stockholders’ equity		193,656			73,811			(30,514)			236,953
Total liabilities and stockholders’ equity	$	378,873		$	125,136		$	(56,708)		$	447,301

The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.

ALAMO GROUP INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2009 (in thousands, except per share data)

	Historical
	Alamo Group Inc.		Bush Hog, LLC
	June 30, 2009		June 30, 2009			Pro forma Adjustments			Pro forma Consolidated
Net Sales	$	223,386	$	56,211	$	(2,704)	(j)	$	276,893
Cost of sales		177,330		51,935		(1,377)	(j),(n)		227,888
Gross profit		46,056		4,276		(1,327)			49,005
Operating expenses
Selling, general, and administrative		37,495		12,085		(429)	(j),(n)		49,151
Total operating expenses		37,495		12,085		(429)			49,151
Income (loss) from operations		8,561		(7,809)		(898)			(146)
Interest expense		(2,243)		(305)		(1,463)	(l)		(4,011)
Interest income		322		346		—			668
Other income (expense), net		(4)		10		—			6
Income (loss) from continuing operations		6,636		(7,758)		(2,361)			(3,483)
Income tax provision (benefit)		2,101		—		(3,845)	(m)		(1,744)
Net income (loss)	$	4,535	$	(7,758)	$	1,484		$	(1,739)
Net income (loss) per share-Basic	$	0.46						$	(0.15)
Net income  (loss) per share-Diluted	$	0.45						$	(0.15)
Shares used in per share calculation-Basic		9,958							11,658
Shares used in per share calculation-Diluted		9,975							11,658

The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.

ALAMO GROUP INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2008 (in thousands, except per share data)

	Historical
	Alamo Group Inc				Bush Hog, LLC
	December 31 2008				December 31, 2008				Pro forma Adjustments				Pro forma Consolidated
Net Sales	$	557,135		$		160,095		$		(8,818)	(j)	$	708,412
Cost of sales		447,721				175,538				(16,913)	(j),(n)		606,346
Gross profit		109,414				(15,443	)			8,095			102,066
Operating expenses
Selling, general, and administrative		83,059				27,199				(2,567)	(j),(n)		107,691
Restructuring expense and other, net		5,010				19,261				(19,261)	(k)		5,010
Total operating expenses		88,069				46,460				(21,828)			112,701
Income (loss) from operations		21,345				(61,903	)			29,923			(10,635)
Interest expense		(7,450	)			(2,475	)			(961)	(l)		(10,886)
Interest income		1,818				252				—			2,070
Other income (expense), net		1,513				51				—			1,564
Income (loss) from continuing operations		17,226				(64,075	)			28,962			(17,887)
Income tax provision (benefit)		6,227				—				(13,343)	(m)		(7,116)
Net income ( loss)	$	10,999		$		(64,075	)	$		42,305		$	(10,771)
Net income ( loss) per share-Basic	$	1.12										$	(0.93)
Net income ( loss) per share-Diluted	$	1.11										$	(0.93)
Shares used in per share calculation-Basic		9,847											11,547
Shares used in per share calculation-Diluted		9,950											11,547

The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements.

ALAMO GROUP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Pro Forma Presentation

The unaudited pro forma condensed consolidated financial information was prepared based on the historical financial statements of Alamo Group and Bush Hog.  Certain reclassifications have been made to conform Bush Hog’s historical results to Alamo Group’s presentation.

The Acquisition has been accounted for in accordance with ASC Topic 805, which Alamo Group adopted on January 1, 2009 and uses the fair value concepts defined in ASC Topic 820, Fair Value Measurements.  ASC Topic 805 requires, among other things, that most assets acquired and liabilities assumed in an acquisition be recognized at their fair values as of the acquisition date and requires that fair value be measured based on the principles in ASC Topic 820.  ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC Topic 820 also requires that a fair value measurement reflects the assumptions market participants would use in pricing an asset or liability based on the best information available.

Many of these fair value measurements can be highly subjective and it is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Under the acquisition method of accounting, the assets acquired and liabilities assumed were recorded as of the completion of the merger, primarily at their respective fair values and added to those of Alamo Group.

Under ASC Topic 805, acquisition-related transaction costs (i.e., advisory, legal, valuation, and other professional fees) are not included as a component of consideration transferred, but are accounted for as expenses in the periods in which the costs are incurred.  Total acquisition-related transaction costs expected to be incurred by Alamo Group during the year ended December 31, 2009 are estimated to be approximately $1.1 million and are reflected in the balance sheets of these unaudited pro forma condensed consolidated financial statements.

2. Accounting Policies

Alamo Group reviewed both Alamo Group and Bush Hog’s accounting policies and did not identify any significant differences.  As a result, the unaudited pro forma condensed consolidated financial statements do not assume any differences in accounting policies.

3. Estimate of Assets Acquired and Liabilities Assumed

We have made a preliminary purchase price allocation of the acquired assets and liabilities at their respective fair values in accordance with ASC Topic 805. In accordance with ASC Topic 805, any excess of fair value of acquired net assets over the acquisition consideration results in a gain on bargain purchase. Prior to recording a gain, the acquiring entity must reassess whether all acquired assets and assumed liabilities have been identified and recognized and perform re-measurements to verify that the consideration paid, assets acquired, and liabilities assumed have been properly valued. The Company has not completed these re-measurements because the fair value estimates in these pro-forma financials are only preliminary. The final gain on bargain purchase and allocation thereof may change significantly from these estimates.

The accounting for fair value of the net assets acquired was approximately $51.2 million, which exceeds the preliminary estimated purchase price of $27.4 million.  Accordingly, the Company will recognize the excess of the fair value of the net assets over the purchase price of approximately $23.8 million as a gain in the Company’s statement of operations at December 31, 2009.  The following is a preliminary estimate of the assets acquired and the liabilities assumed, reconciled to the gain on Acquisition (in thousands):

Accounts receivable, net	$	22,416
Inventory		21,875
Prepaid expenses		395
Property, plant & equipment		12,852
Other liabilities assumed		(8,280	)
Net assets assumed		49,258
Intangible assets, net
Bush Hog trade name (i)		1,900
Total assets assumed		51,158
Less: Preliminary estimated fair value of 1.7 million unregistered shares		27,353
Gain on Acquisition	$	23,805

(i) The intangible asset relates to the appraised value of the Bush Hog name at closing and has an indefinite life.

4. Pro Forma Adjustments

The pro forma adjustments included in the unaudited pro forma condensed consolidated financial statements are as follows ($ in thousands):

(a) To reflect Bush Hog’s assets and liabilities that were excluded from the Acquisition (i.e., assets and liabilities unrelated to the ongoing business).

	Balanceas of June 30, 2009
Cash and cash equivalents	$	12,150
Property, plant & equipment		8,486
Accounts payable		(6,140	)
Accrued liabilities		(7,922	)
Related party debt		(2,010	)
Deferred pension liabilities		(24	)
Related party debt long-term		(8,040	)
Other long term liabilities		(9,184	)
Net liabilities not assumed	$	(12,684	)

(b)	To record 50% ($ 34,310) of the accounts receivable due to seller upon future collections.
(c)	To record deferred taxes.
(d)	To record $1,059 acquisition costs.
(e)	To adjust acquired inventory to preliminary estimated fair value of $ 20,521.  Adjustments were made for the elimination of the existing LIFO reserve $ 8,883, to write-down of inventory to estimated fair value ($ 1,268) and to write-down for slow moving and non-compatible inventory ($ 7,572).
(f)	To record the preliminary estimated fair value of the intangible asset relating to the Bush Hog name.
(g)	To record the issuance of the 1.7 million shares of unregistered Alamo Group stock at preliminary estimated fair value on the date of the closing.
(h)	To reflect the following adjustments to stockholders’ equity.

The elimination of Members’ equity		$	236,521
The elimination of Bush Hog’s historical Accumulated Retained earnings (deficit)	(162,710)
Total		$	73,811

(i)	To record bargain purchase price gain.
(j)	To exclude UTV product line not acquired at acquisition.
(k)	To exclude asset write-downs and other restructuring costs related to product line not acquired at acquisition.
(l)	Reflects the increase in interest expense fees resulting from the amended loan facility in conjunction with the amendment of our existing credit facility to allow for the Bush Hog acquisition.

	For the Six Months Ended June 30, 2009		For the Year Ended December 31, 2008
Increase related to interest expense on the amended agreement	$	1,275	$	586
Pro forma amortization of deferred financing fees		188		375
Pro forma total interest expense	$	1,463	$	961

We assumed a 6.6% interest rate on the amended and restated credit facility for calculating the pro forma interest expense. As of June 30, 2009, a change of 1% in the interest rate would result in an approximate change in the interest expense of $ 950 for the year ended December 31, 2008. The deferred financing fees are amortized using the effective interest method over the period until the facility matures.

(m)	Reflects the tax effects of the pro-forma adjustments.
(n)	The following records the difference in depreciation of the preliminary fair value and the historical amount of property and equipment.

	For the Six Months Ended June 30, 2009		For the Year Ended December 31, 2008
Cost of sales	$	73	$	147
Selling, general and administrative		9		18
Decrease in depreciation expense due to fair value adjustments	$	82	$	165

5. Earnings per Share

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed consolidated statement of operations are based upon the weighted-average number of Alamo Group common shares outstanding including the 1.7 million unregistered shares.