<SEC-DOCUMENT>0000897077-12-000027.txt : 20120925
<SEC-HEADER>0000897077-12-000027.hdr.sgml : 20120925
<ACCEPTANCE-DATETIME>20120813130346
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000897077-12-000027
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20120813

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ALAMO GROUP INC
		CENTRAL INDEX KEY:			0000897077
		STANDARD INDUSTRIAL CLASSIFICATION:	FARM MACHINERY & EQUIPMENT [3523]
		IRS NUMBER:				741621248
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		1627 E WALNUT
		CITY:			SEGUIN
		STATE:			TX
		ZIP:			78155
		BUSINESS PHONE:		8303791480

	MAIL ADDRESS:	
		STREET 1:		P.O. BOX 549
		STREET 2:		1627 EAST WALNUT
		CITY:			SEGUIN
		STATE:			TX
		ZIP:			78155
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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		<title>2012 SEC Comment Letter Response (1)</title>
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<a name="sa230881a76c74926a76e1423995bfa45"></a><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">August 13, 2012</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Mr. Martin James</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Senior Assistant Chief Accountant</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Division of Corporation Finance</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Securities and Exchange Commission</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">100 F Street, N.E.</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Washington, DC  20459-0306</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">RE:</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:Arial;font-size:11pt;">Alamo Group Inc.</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:10pt;"></font><font style="font-family:Arial;font-size:11pt;">Form 10-K for the year ended December 31, 2011</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:10pt;"></font><font style="font-family:Arial;font-size:11pt;">Filed March 12, 2012</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:10pt;"></font><font style="font-family:Arial;font-size:11pt;">File No. 001-13854</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Dear Mr. James,</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">We have received your letter, dated July 31, 2012, to Dan E. Malone, Executive Vice President &amp; Chief Financial Officer of Alamo Group Inc. (&#8220;Alamo&#8221; or the &#8220;Company&#8221;), requesting information concerning comments you had on the above referenced filings.  I have listed each question below followed by a response that has been bolded for your convenience.  </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">We appreciate the opportunity to provide information and to clarify any items that may be unclear.  We hope these answers will be sufficient in helping understand our disclosures.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:28px;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;font-style:italic;">Form 10-K for the fiscal Year Ended December 31, 2011</font></div><div style="line-height:120%;text-align:left;padding-left:28px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Item </font><font style="font-family:Arial;font-size:11pt;text-decoration:underline;">7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Page 25</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:72px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">1.</font><font style="font-family:inherit;font-size:10pt;"></font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">We note that fiscal year 2011 revenues increased significantly and your discussion indicates that this was primarily related to volume increases. However, you disclose that gross margins for 2010 were supported by higher margins on sales. In future filings, please quantify each material factor, i.e. such as price changes and/or volume changes by type of product that led to the increase in revenues during the period. For further guidance, please refer to Item 303 and the related instructions in Regulations S-K as well as SEC Interpretive Release No. 33-8350. </font></div></td></tr></table><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;font-weight:bold;">We acknowledge the Staff's comments and will continue to make certain our MD&amp;A discussions reflect material trends and new developments in future filings.  We would like to note that we have considered Item 303 and related instructions in Regulations S-K as well as SEC Interpretive Release No. 33-8350 in our historical filings.  These considerations have included providing a number of analysis to explain trends in revenue, operating expenses and results of operations.    </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br><hr style="page-break-after:always"><a name="s7530A078B1409BEB9C0320E56C5674FF"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Mr. Martin James</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Securities and Exchange Commission</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">August 13, 2012</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Page </font><font style="font-family:inherit;">2</font></div></div><br><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;font-weight:bold;">The majority of the gross margin increase in 2010 came from the acquisition of Bush Hog (about 91% of the increase).  The increased revenue from the Company's replacement parts business supported the higher margin increase.  </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">2.  In future filings please discuss the specific reasons for the impairment of goodwill recorded in fiscal 2011 and clarify how you determined the amount. </font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;font-weight:bold;">In future filings, we will disclose the specific reasons for impairment of goodwill recorded in fiscal 2011 and will clarify how the amount was determined.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;text-decoration:underline;">Liquidity and Capital Resources, page 27 </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">3. We note your disclosure on page 61 that unremitted earnings of your non-U.S. subsidiaries and affiliates of $116 million are permanently reinvested, and no deferred tax liability has been recorded in connection with these unremitted earnings. To the extent such amounts could be considered material to an understanding of your liquidity and capital resources, please revise your future filings to disclose the amounts of cash, cash equivalents and investment amounts held by your foreign subsidiaries that would not be available for use in the United States without incurring U.S federal and state income tax consequences. Please further provide a discussion of any known trends, demands or uncertainties as a result of this policy that are reasonably likely to have a material effect on the business as a whole or that may be relevant to your financial flexibility. Refer to Item 303(a) (1) of Regulation S-K, SEC Release 33-8350, and Financial Reporting Codification Section 501.03.a. </font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;font-weight:bold;">Our foreign operations are a significant portion of our overall business, and it is our primary intent to maintain continuing operations at these foreign subsidiaries as they will continue to require ongoing investments.  We will revise our future filings to disclose the amounts of cash, cash equivalents and investment amounts held by our foreign subsidiaries that would not be available for use in the United States without incurring U.S. federal and state income tax consequences.  In addition, in our future filings, we will provide a discussion of any known trends, demands or uncertainties as a result of our policy that are reasonably likely to have a material effect on the business as a whole or to our financial flexibility.</font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;text-decoration:underline;">Financial Statements </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;text-decoration:underline;">Note 1. Stock-Based Compensation, page 52 </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">4. We note that you are using the minimum value method to estimate the value of certain awards. This method is not appropriate for a public entity as indicated under FASB ASC 718-10-55-35 through 41 as well as 718-10-55-51 through 58 (previously Appendix B of SFAS 123R). Please tell us why you continue to amortize these awards using the minimum value method and how you determined that this is appropriate. </font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;font-weight:bold;">The Company no longer uses the minimum value method.</font><font style="font-family:Arial;font-size:11pt;">&#32;&#32;</font><font style="font-family:Arial;font-size:11pt;font-weight:bold;">We will update this disclosure in future filings.</font><font style="font-family:Arial;font-size:11pt;">&#32;</font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br><hr style="page-break-after:always"><a name="s7530A078B1409BEB9C0320E56C5674FF"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Mr. Martin James</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Securities and Exchange Commission</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">August 13, 2012</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Page </font><font style="font-family:inherit;">3</font></div></div><br><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;text-decoration:underline;">Inventories - Obsolete and Slow Moving, page 55 </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">5. We note your disclosure indicates that you calculate a &#8220;reserve&#8221; to cover obsolete and slow moving inventory. Please confirm that when you write-down inventory to the lower-of-cost-or-market you create a new cost basis for the related items and that those items cannot be marked up subsequently based on changes in underlying facts and circumstances. </font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;font-weight:bold;">The Company calculates an obsolete and slow moving inventory reserve for each component part it has in its system, writing down inventory to its lower-of-cost-or-market effectively creating a new cost basis for each part.  The Company does not allow component parts to be written up after they have been written down.</font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">6. We also note that new products are generally excluded from your reserve policy until a three year history has been established. Please tell us how you review these items in inventory to ensure inventory is appropriately at the lower of cost or market.</font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;font-weight:bold;">The Company is able to monitor new parts in the computer system based on a creation date for each part.  Any item with a creation date of less than three years is monitored to ensure that its cost is reflected at lower-of-cost-or-market. </font><font style="font-family:Arial;font-size:11pt;">&#32;</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">We confirm that Alamo Group Inc. is responsible for the adequacy and accuracy of the disclosures in our filings; that staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and that Alamo Group Inc. may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.&#160; </font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">We hope these responses will provide you with the information you need.  Please call me if you need any further information at (830) 372-9620.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Sincerely,</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;text-decoration:underline;">/S/Richard J. Wehrle</font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Richard J. Wehrle</font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Vice President and Controller</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">cc:</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:Arial;font-size:11pt;">Mr. Ronald A. Robinson, President and CEO of Alamo Group Inc.</font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:11pt;"><font style="font-family:Arial;font-size:11pt;">Mr. Dan E. Malone, Executive Vice President and Chief Financial Officer of Alamo Group Inc.</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:12pt;"><font style="font-family:inherit;font-size:10pt;"></font><font style="font-family:Arial;font-size:11pt;">Ms. Helen W. Cornell, Chairperson of the Au</font><font style="font-family:Arial;font-size:12pt;">dit Committee of Alamo Group Inc.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br>	</body>
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