ALAMO GROUP INC - 10-Q Quarterly Report

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[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

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

1502 East Walnut, Seguin, Texas 78155
(Address of principal executive offices)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by section 13 or 15(d) of Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.
Yes X No ___

At August 1, 2002, 9,713,959 shares of common stock, $.10 par value, of the Registrant were outstanding.

		June 30, 2002 (Unaudited)			December 31, 2001 (Audited)
ASSETS
Current assets:
Cash and cash equivalents ................................................	$	6,030	$	4,186
Accounts receivable .........................................................		68,673		57,768
Inventories .......................................................................		68,643		64,044
Deferred income taxes ......................................................		4,351		4,307
Prepaid expenses .............................................................		1,442		1,773

Total current assets ......................................................		149,139		132,078

Property, plant and equipment ............................................		69,714		66,779
Less: Accumulated depreciation ...................................		(40,891)		(37,961)

		28,823		28,818

Goodwill ............................................................................		18,976		18,470
Assets held for sale ............................................................		1,595		1,595
Other assets .......................................................................		4,409		4,960


Total assets ................................................................	$	202,942	$	185,921


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable ....................................................		18,143		12,860
Income taxes payable .......................................................		721		161
Accrued liabilities .............................................................		10,466		9,326
Current maturities of long-term debt ..................................		2,459		3,013

Total current liabilities ...................................................		31,789		25,360

Long-term debt, net of current maturities .............................		39,946		36,315
Deferred income taxes ........................................................		2,440		2,433


Stockholders' equity:
Common stock, $.10 par value, 20,000,000 shares authorized; 9,754,509 and 9,753,409 issued and outstanding at June 30, 2002 and December 31, 2001, respectively ............................		975		975
Additional paid-in capital .........................................................		51,291		51,282
Treasury stock, at cost; 42,600 shares at June 30, 2002 And December 31, 2001, respectively .....................................		(426)		(426)
Retained earnings ....................................................................		78,562		74,493
Accumulated other comprehensive income ...............................		(1,635)		(4,511)

Total stockholders' equity ..............................................		128,767		121,813


Total liabilities and stockholders' equity ..........................	$	202,942	$	185,921

	Three Months Ended				Six Months Ended
		June 30, 2002		June 30, 2001		June 30, 2002		June 30, 2001

Net sales:
North American
Agricultural.......................................	$	29,363	$	24,611	$	58,479	$	47,664
Industrial..........................................		28,331		32,121		53,835		56,105
European..............................................		11,826		10,034		21,983		19,827

Total net sales...........................................		69,520		66,766		134,297		123,596

Cost of sales ............................................		54,105		50,561		104,521		93,000

Gross profit..............................................		15,415		16,205		29,776		30,596

Selling, general and administrative expense.		10,808		9,862		20,767		19,535

Income from operations........................		4,607		6,343		9,009		11,061

Interest expense........................................		(745)		(1,012)		(1,433)		(1,812)
Interest income.........................................		128		160		253		306
Other income (expense), net......................		55		(85)		64		(15)

Income before income taxes..................		4,045		5,406		7,893		9,540

Provision for income taxes........................		1,320		1,930		2,659		3,171

Net income..........................................	$	2,725	$	3,476	$	5,234	$	6,369


Net income per common share:
Basic.....................................................	$	0.28	$	0.36	$	0.54	$	0.66

Diluted..................................................	$	0.28	$	0.36	$	0.54	$	0.65

Average common shares:
Basic.....................................................		9,711		9,704		9,711		9,704

Diluted...................................................		9,809		9,788		9,801		9,790


Dividends declared....................................	$	0.06	$	0.06	$	0.12	$	0.12

		Six Months Ended
			June 30, 2002		June 30, 2001
Operating Activities
Net income ..................................................................	$		5,234	$	6,369
Adjustment to reconcile net income to net cash provided (used) by operating activities:
Provision for doubtful accounts ...........................			208		1,300
Depreciation ......................................................			2,681		2,338
Amortization ......................................................			84		968
Provision for deferred income tax benefit.............			(42)		408
(Gain) loss on sale of property, plant & equipment			(44)		(1,426)
Changes in operating assets and liabilities:
Accounts receivable ..........................................			(10,129)		(20,401)
Inventories ........................................................			2,315		(6,087)
Prepaid expenses and other assets .....................			1,304		979
Trade accounts payable and accrued liabilities ....			5,637		1,986
Income taxes payable ........................................			488		2,064

Net cash provided by operating activities			7,736		(11,502)

Investing Activities
Acquisitions, net of cash acquired.................................			(6,627)		-
Purchase of property, plant and equipment ..................			(1,671)		(3,589)
Proceeds from sale of property, plant and equipment ...			80		2,084
Sale of long-term investment.........................................			-		-

Net cash (used) by investing activities...........................			(8,218)		(1,505)

Financing Activities
Net change in bank revolving credit facility ..................			3,800		15,200
Principal payments on long-term debt and capital leases.			(849)		140
Dividends paid ...........................................................			(1,165)		(1,165)
Proceeds from sale of common stock .........................			10		194

Net cash provided (used) by financing activities...........			1,796		14,369

Effect of exchange rate changes on cash .....................			530		(122)

Net change in cash and cash equivalents ....................			1,844		1,240
Cash and cash equivalents at beginning of the period ..			4,186		2,929

Cash and cash equivalents at end of the period ...........	$		6,030	$	4,169


Cash paid during the period for:
Interest .............................................................	$		1,183	$	1,460
Income taxes ....................................................	$		2,340	$	1,036

The accompanying unaudited interim condensed consolidated financial statements of Alamo Group Inc. and its subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles 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, 2002. The balance sheet at December 31, 2001, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2001.

Accounts Receivable is shown less allowance for doubtful accounts of $1,385,000 and $1,266,000 at June 30, 2002 and December 31, 2001, respectively.

Inventories valued at LIFO cost represented 65% and 63% of total inventory at June 30, 2002 and December 31, 2001 respectively. The excess of current costs over LIFO valued inventories were $4,505,000 at June 30, 2002 and 4,755,000 at December 31, 2001. Inventory obsolescence reserves were $3,677,000 at June 30, 2002 and $3,857,000 at December 31, 2001. Net inventories consist of the following (in thousands):

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.

Alamo Group Inc. and Subsidiaries
Notes to Interim Condensed Consolidated Financial Statements - (Unaudited)
June 30, 2002 - (Continued)

The following table sets forth the reconciliation from basic to diluted average common shares and the calculations of net income per common share. Net income for basic and diluted calculations do not differ. (In thousands, except per share).

	Three Months Ended				Six Months Ended
	June 30, 2002		June 30, 2001		June 30, 2002		June 30, 2001

Net Income .........................................	$	2,725	$	3,476	$	5,234	$	6,369

Average Common Shares:
BASIC (weighted-average outstanding shares)		9,711		9,704		9,711		9,704

Dilutive potential common shares from stock options and warrants ..............................		98		84		90		86

Di

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

		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Interim Condensed Consolidated Financial Statements (Unaudited)

	Interim Condensed Consolidated Balance Sheets - June 30, 2002 and December 31, 2001(Audited)	3

	Interim Condensed Consolidated Statements of Income - Three months and Six months ended June 30, 2002 and June 30, 2001	4

	Interim Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 2002 and June 30, 2001	5

	Notes to Interim Condensed Consolidated Financial Statements


Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures about Market Risks	16


PART II.	OTHER INFORMATION

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

SIGNATURES

		June 30, 2002		December 31, 2001

Finished goods ......................................	$	50,974	$	41,947
Work in process ...................................		10,697		13,844
Raw materials .......................................		6,972		8,253

	$	68,643	$	64,044

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