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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________
TO ______________
COMMISSION FILE NUMBER 0-6354
AMERICAN VANGUARD CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-2588080
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
4695 MacArthur Court, Newport Beach, California 92660
- ----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(949) 260-1200
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.10 Par Value -- 2,870,274 shares
outstanding as of August 8, 2001.
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AMERICAN VANGUARD CORPORATION
INDEX
PART I - FINANCIAL INFORMATION Page Number
-----------
Item 1.
Financial Statements.
Consolidated Statements of Operations
for the three and six months ended
June 30, 2001 and 2000 1
Consolidated Balance Sheets
as of June 30, 2001 and
December 31, 2000 2
Consolidated Statements of Cash Flows
for the six months ended
June 30, 2001 and 2000 4
Notes to Consolidated Financial
Statements 6
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Item 3.
Quantitative and Qualitative Disclosure
About Market Risk 12
PART II - OTHER INFORMATION 13
SIGNATURE PAGE 14
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three months For the six months
ended June 30 ended June 30
------------------------------ ------------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Net sales $ 19,908,900 $ 17,803,800 $ 34,772,200 $ 29,589,600
Cost of sales 10,661,200 9,017,100 19,723,600 15,300,600
------------ ------------ ------------ ------------
Gross profit 9,247,700 8,786,700 15,048,600 14,289,000
Settlement income (88,100) -- (296,400) --
Gain on sale of emission credits -- -- (465,500)
Operating expenses 7,481,100 7,166,200 12,492,400 12,131,300
------------ ------------ ------------ ------------
Operating income 1,854,700 1,620,500 3,318,100 2,157,700
Interest expense 492,500 473,200 962,000 881,900
Interest income (2,500) (1,200) (4,800) (2,300)
------------ ------------ ------------ ------------
Income before income
tax expense 1,364,700 1,148,500 2,360,900 1,278,100
Income tax expense 545,800 459,300 944,300 511,200
------------ ------------ ------------ ------------
Net income $ 818,900 $ 689,200 $ 1,416,600 $ 766,900
============ ============ ============ ============
Earnings per common share $ .29 $ .23 $ .49 $ .26
============ ============ ============ ============
Earnings per common share -
assuming dilution $ .28 $ .23 $ .48 $ .25
============ ============ ============ ============
Weighted average shares
outstanding (note 4) 2,867,753 2,968,390 2,868,834 2,969,546
============ ============ ============ ============
Weighted average shares
outstanding - assuming
dilution (notes 4 & 5) 2,946,099 3,019,484 2,945,267 3,016,740
============ ============ ============ ============
See notes to consolidated financial statements.
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AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, Dec. 31,
ASSETS (NOTE 8) 2001 2000
----------- -----------
(Unaudited) (Note)
Current assets:
Cash $ 1,332,600 $ 361,000
Receivables:
Trade 15,585,200 21,323,400
Other 165,100 1,526,300
----------- -----------
15,750,300 22,849,700
----------- -----------
Inventories (note 2) 24,954,800 21,202,800
Prepaid expenses 828,300 764,200
Deferred tax asset 568,800 568,800
----------- -----------
Total current assets 43,434,800 45,746,500
Property, plant and
equipment, net (note 3) 10,436,200 9,012,800
Land held for development 210,800 210,800
Intangible assets 10,218,900 10,657,100
Other assets 422,200 463,700
----------- -----------
$64,722,900 $66,090,900
=========== ===========
(Continued)
See notes to consolidated financial statements.
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AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, Dec. 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 2001 2000
----------- -----------
(Unaudited) (Note)
Current liabilities:
Current installments of
long-term debt $ 3,384,900 $ 3,575,400
Accounts payable 3,018,200 6,913,600
Accrued expenses and other payables 5,971,800 4,985,300
Income taxes payable 84,900 1,149,500
----------- -----------
Total current liabilities 12,459,800 16,623,800
Note payable to bank (note 6) 18,500,000 15,800,000
Long-term debt, excluding
current installments 2,226,600 2,847,300
Other long-term liabilities 118,000 117,700
Deferred income taxes 1,414,500 1,414,500
----------- -----------
Total liabilities 34,718,900 36,803,300
----------- -----------
Stockholders' Equity:
Preferred stock, $.10 par value per
share; Authorized 400,000 shares;
none issued -- --
Common stock, $.10 par value per share,
authorized 10,000,000 shares; issued
and outstanding 3,115,856 shares at June
30, 2001 and 2,827,039 shares at
December 31, 2000 (note 4) 311,500 282,700
Additional paid-in capital (note 4) 9,288,600 5,906,600
Retained earnings (note 4) 22,120,500 24,354,600
----------- -----------
31,720,600 30,543,900
Less treasury stock at cost, 245,582
shares at June 30, 2001 and 183,285
shares at December 31, 2000 1,716,600 1,256,300
----------- -----------
Total stockholders' equity 30,004,000 29,287,600
----------- -----------
$64,722,900 $66,090,900
=========== ===========
Note: The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date.
See notes to consolidated financial statements.
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AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
Increase (decrease) in cash 2001 2000
----------- -----------
Cash flows from operating activities:
Net income $ 1,416,600 $ 766,900
Adjustments to reconcile net
income to net cash used in
operating activities:
Depreciation and amortization 1,037,400 1,578,400
Changes in assets and liabilities
associated with operations:
Decrease in receivables 7,099,400 2,554,800
Increase in inventories (3,752,000) (4,385,200)
Increase in prepaid
expenses (64,100) (27,600)
Increase (decrease) in
accounts payable (3,895,400) 1,532,600
Decrease in other payables
and accrued expenses (77,800) (1,605,300)
----------- -----------
Net cash provided by
operating activities 1,764,100 414,600
----------- -----------
Cash flows from investing activities:
Capital expenditures (1,993,400) (250,900)
Net decrease in other
noncurrent assets 12,300 21,200
----------- -----------
Net cash used in
investing activities (1,981,100) (229,700)
----------- -----------
(Continued)
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AMERICAN VANGUARD CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
Increase (decrease) in cash 2001 2000
----------- -----------
Cash flows from financing activities:
Net additions under
lines of credit agreement $ 2,700,000 $ 1,700,000
Reductions in long-term debt (811,200) (1,121,800)
Exercise of Stock Options 47,500 31,400
Payment of cash dividends (287,400) (319,700)
Purchase of treasury stock (460,300) (71,500)
----------- -----------
Net cash provided by
financing activities 1,188,600 218,400
----------- -----------
Increase (decrease) in cash 971,600 403,300
Cash at beginning of year 361,000 550,200
----------- -----------
Cash as of June 30 $ 1,332,600 $ 953,500
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCIAL ACTIVITIES:
During the six months ended June 30, 2000, the Company completed the acquisition
of two established product lines from two large chemical manufacturers. In
connection with these acquisitions, the Company recorded intangible assets in
the amount of $1,450,000 in consideration of its debt obligation in the same
amount.
See notes to consolidated financial statements.
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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying unaudited consolidated financial statements 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 Regulation 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 three and six-month periods ended June 30, 2001 are not necessarily
indicative of the results that may be expected for the year ending December
31, 2001. 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, 2000.
2. Inventories - The components of inventories consist of the following:
June 30, 2001 December 31, 2000
------------- -----------------
Finished products $21,157,100 $17,358,300
Raw materials 3,797,700 3,844,500
----------- -----------
$24,954,800 $21,202,800
=========== ===========
3. Property, plant and equipment at June 30, 2001 and December 31, 2000
consists of the following:
June 30, December 31,
2001 2000
----------- -----------
Land $ 2,441,400 $ 2,441,400
Buildings and improvements 4,728,200 4,952,000
Machinery and equipment 24,298,900 23,938,100
Office furniture and fixtures 2,654,700 2,599,800
Automotive equipment 136,900 136,900
Construction in progress 2,085,600 284,100
----------- -----------
36,345,700 34,352,300
Less accumulated depreciation 25,909,500 25,339,500
----------- -----------
$10,436,200 $ 9,012,800
=========== ===========
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AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. On March 20, 2001, the Company announced that the Board of Directors
declared a cash dividend of $.11 per share as well as a 10% stock dividend.
Both dividends were distributed on April 13, 2001 to stockholders of record
at the close of business on March 30, 2001. The cash dividend was paid on
the number of shares outstanding prior to the stock dividend. Stockholders
entitled to fractional shares resulting from the stock dividend received
cash in lieu of such fractional shares based on $11.89 per share, the
closing price of the Company's stock on March 30, 2001. The Company
distributed 282,867 shares of Common Stock in connection with the Common
Stock dividend. As a result Common Stock was increased by $28,300,
additional paid-in capital was increased by $3,335,000, and retained
earnings was decreased by $3,363,300. All stock related data in the
consolidated financial statements reflect the stock dividend for all
periods presented.
5. Earnings Per Share ("EPS")- Basic EPS is computed as net income divided by
the weighted average number of shares of common stock outstanding during
the period. Diluted EPS reflects potential dilution that could occur if
securities or other contracts, which, for the Company, consists of options
to purchase shares of the Company's common stock, are exercised.
6. On April 4, 2001, the Company's bank amended its fully-secured long-term
line of credit agreement. The credit availability was temporarily increased
from $24,000,000 to $30,000,000 for the period April 4, 2001 through August
1, 2001. On August 1, 2001 the credit availability was automatically
reduced back to $24,000,000. The expiration date of the credit agreement
was also extended to July 1, 2002. (See note 8.)
7. During the six months ended June 30, 2001, the Company purchased 40,072
shares of its Common Stock at an average sales price of $11.49 per share
for a total of $460,300. These purchases were in accordance with the
Company's buyback program which was announced on November 2, 2000.
8. Substantially all of the Company's assets not otherwise specifically
pledged as collateral on existing loans and capital leases, are pledged as
collateral under the Company's credit agreement with a bank. As referenced
in note 1, for further
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information, refer to the consolidated financial statements and footnotes
thereto (specifically note 3) included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2000.
9. Reclassification - Certain items have been reclassified in the prior period
consolidated financial statements to conform with the June 30, 2001,
presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The Company, from time-to-time, may discuss forward-looking statements including
assumptions concerning the Company's operations, future results and prospects.
These forward-looking statements are based on current expectations and are
subject to a number of risks, uncertainties and other factors. In connection
with the Private Securities Litigation Reform Act of 1995, the Company provides
the following cautionary statements identifying important factors which, among
other things, could cause the actual results and events to differ materially
from those set forth in or implied by the forward- looking statements and
related assumptions contained in the entire Report. Such factors include, but
are not limited to: product demand and market acceptance risks; the effect of
economic conditions; weather conditions; changes in regulatory policy; the
impact of competitive products and pricing; changes in foreign exchange rates;
product development and commercialization difficulties; capacity and supply
constraints or difficulties; availability of capital resources general business
regulations, including taxes and other risks as detailed from time-to-time in
the Company's reports and filings filed with the U.S. Securities and Exchange
Commission.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30:
The Company reported net income of $818,900 or $.28 per share (assuming
dilution) in the second quarter ended June 30, 2001 as compared to $689,200 or
$.23 per share for the same period in 2000. The $818,900 of net income for 2001
includes after tax income of $52,900 or $.02 per diluted share, related to
settlement income.
(Refer to disclosure below.)
Net sales increased by 12% or $2,105,100 to $19,908,900 for the quarter ended
June 30, 2001 from $17,803,800 for the same period in 2000. The increase in
sales levels was a result of increased sales of the Company's herbicide and
fungicide product lines.
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The gross profit margin for the quarter ended June 30, 2001 declined to 46% from
49% for the same period in 2000. The lower margin was due to the changes in the
sales mix of the Company's products.
Operating expenses, which are net of other income, increased to $7,481,100 for
the quarter ended June 30, 2001 as compared to $7,166,200 for the same period in
2000. The differences in operating expenses by specific departmental costs are
as follows:
o Selling expenses increased by $588,300 to $3,822,000 for the quarter ended
June 30, 2001 from $3,233,700 for the same period in 2000. This increase
was due primarily to increases in variable selling expenses that relate to
the sales mix of the Company's products and increases in payroll and
payroll related costs.
o General and administrative expenses remained virtually unchanged with a
modest decrease of $25,300 to $1,363,600 for the quarter ended June 30,
2001 from $1,388,900 for the same period in 2000.
o Research and product development costs and regulatory registration expenses
declined by $284,900 to $983,300 for the quarter ended June 30, 2001 as
compared to $1,268,200 for the same period in 2000. The decrease was due
primarily to a decline in costs incurred to generate scientific data
related to the registration and possible new uses of the Company's products
as well as a decline in payroll and payroll related items.
o Freight, delivery, storage and warehousing costs increased $36,800 to
$1,312,200 for the quarter ended June 30, 2001 as compared to $1,275,400
for the same period in 2000 due to the increased sales levels.
Interest costs were $492,500 during the quarter ended June 30, 2001 as compared
to $473,200 for same period in 2000. The Company's average overall debt for the
quarter ended June 30, 2001 was $27,869,000 as compared to $24,249,000 for the
same period in 2000. The higher debt levels accounted for the higher interest
costs.
Weather patterns can have an impact on the Company's operations. Weather
conditions influence pest population by impacting gestation cycles for
particular pests and the effectiveness of some of the Company's products, among
other factors. The end user of some of the Company's products may, because of
weather patterns, delay or intermittently disrupt field work during the planting
season which may result in a reduction of the use of some of the Company's
products.
Because of elements inherent to the Company's business, such as differing and
unpredictable weather patterns, crop growing cycles, changes in product mix of
sales, ordering patterns that may vary in timing, and promotional/early order
programs, measuring the Company's
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performance on a quarterly basis, (gross profit margins on a quarterly basis may
vary significantly) even when such comparisons are favorable, is not as
meaningful an indicator as full-year comparisons. The primary reason is that the
use cycles do not necessarily coincide with financial reporting cycles. Because
of the Company's cost structure, the combination of variable revenue streams,
and changing product mixes, results in varying quarterly levels of
profitability.
SIX MONTHS ENDED JUNE 30:
The Company reported net income of $1,416,600 or $.48 per share (assuming
dilution) for the six months ended June 30, 2001 as compared to $766,900 or $.25
per share for the same period in 2000. The $1,416,600 of net income for 2001
includes after tax income of $457,200 or $.16 per diluted share, related to the
gain on the sale of emission credits and settlement income. (Refer to disclosure
below.)
Net sales increased by 18% or $5,182,600 to $34,772,200 for the six months ended
June 30, 2001 from $29,589,600 for the same period in 2000. The increase in
sales levels was a result of increased sales of the Company's herbicide and
fungicide product lines.
The gross profit margin for the quarter ended June 30, 2001 declined to 43% from
48% for the same period in 2000. The lower margin was due to the changes in the
sales mix of the Company's products.
Operating expenses, which are net of other income, increased to $12,492,400 for
the six months ended June 30, 2001 as compared to $12,131,300 for the same
period in 2000. The differences in operating expenses by specific departmental
costs are as follows:
o Selling expenses increased by $646,700 to $5,460,500 for the six months
ended June 30, 2001 from $4,813,800 for the same period in 2000. This
increase was due primarily to increases in variable selling expenses that
relate to the sales mix of the Company's products and increases in payroll
and payroll related costs.
o General and administrative expenses reflected a modest increase of $74,200
to $2,827,000 for the six months ended June 30, 2001 from $2,752,800 for
the same period in 2000. Higher outside professional fees, payroll and
payroll related costs accounted for the increase.
o Research and product development costs and regulatory registration expenses
declined by $460,400 to $1,867,700 for the six months ended June 30, 2001
as compared to $2,328,100 for the same period in 2000. The decrease was due
to a decline in costs incurred to generate scientific data related to the
registration and possible new uses of the Company's products as well as a
decline in payroll and payroll related items.
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o Freight, delivery, storage and warehousing costs increased $100,600 to
$2,337,200 for the six months ended June 30, 2001 as compared to $2,236,600
for the same period in 2000 due to the increased sales levels.
Interest costs were $962,000 during the six months ended June 30, 2001 as
compared to $881,900 for same period in 2000. The Company's average overall debt
for the six months ended June 30, 2001 was $26,709,000 as compared to
$22,379,000 for the first six months of 2000. The higher debt levels accounted
for the higher interest costs.
In 1986, the Company constructed an incinerator to destroy a waste gas that had
been previously discharged to the atmosphere pursuant to an air permit. By
reducing this emission, the Company was entitled to transfer a portion of its
emission credits to others. The Company recognized in the six months ended June
30, 2001, a net gain before taxes of $465,500 as a result of the sale of a
portion of its credits.
The Company settled negotiations with an insurance carrier related to the
recovery of certain costs pertaining to the completed remediation work of a
railroad siding which resulted in a net gain before taxes of $208,300 for the
six months ended June 30, 2001. The Company also settled a dispute over data
compensation which resulted in a net gain before taxes of $88,100 for the three
and six months ended June 30, 2001.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities provided $1,764,100 of cash during the six months ended
June 30, 2001. Net income of $1,416,600, noncash depreciation and amortization
of $1,037,400 and a decline in receivables of $7,099,400 provided $9,553,400 of
cash for operations. Increases in inventories and prepaid expenses of $3,752,000
and $64,100, respectively, along with a decline of trade accounts payable,
accrued expenses and other payables of $3,973,200, used $7,789,300 of cash for
operating activities.
The Company used $1,981,100 in investing activities during the six months ended
June 30, 2001. It invested $1,993,400 in capital expenditures while other
noncurrent assets declined by $12,300.
Financing activities provided $1,188,600 for the first six months of 2001. The
Company's net borrowings under its fully-secured revolving line of credit
increased by $2,700,000. The Company made payments on its long-term debt of
$811,200, purchased 40,072 shares of treasury stock for $460,300, paid $287,400
in cash dividends and received $47,500 in payment for the exercise of stock
options.
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On May 24, 2001, the Company announced that Amvac Chemical Corporation, a
wholly-owned subsidiary of the Company, completed the acquisition of a
manufacturing facility from E.I. Du Pont de Nemours and Company ("DuPont"). The
facility, termed the "C-Unit" is one of three such units located on DuPont's
five hundred and ten acre complex in Axis, Alabama and the C-Unit acquisition
consisted of a long-term ground lease of twenty-five acres and the purchase of
all improvements thereon. The C-Unit is a multipurpose plant designed primarily
to manufacture pyrethroids and organophosphates, including Fortress(R), a corn
soil insecticide that the Company purchased from DuPont in 2000. The acquisition
of the C-Unit significantly increased the Company's capacity while also
providing flexibility and geographic diversity. Management believes, as the
Company looks to acquire additional product lines, the C-Unit will allow the
Company to produce compounds that could not be manufactured at the Company's Los
Angeles (Commerce, California) facility and will further complement the
Company's toll manufacturing capabilities. The Company will begin the
commissioning phase of the C-Unit during the third quarter of 2001 and it is
anticipated that this phase will be completed sometime during the first six
months of 2002. The Company intends to focus its efforts, in addition to
acquiring new product lines and expanding the use of its current products, on
discussions with companies that in this time of consolidation in the Company's
industry, may be interested in utilizing the Company's toll manufacturing
capabilities in the C-Unit.
In April 2001, the Company's bank amended its fully-secured long-term line of
credit agreement. The credit availability was temporarily increased from
$24,000,000 to $30,000,000 for the period April 4, 2001 through August 1, 2001.
On August 1, 2001 the credit limit was automatically amended to $24,000,000. The
expiration date of the credit agreement was also extended to July 1, 2002. The
Company is presently in discussions with its bank to restructure its current
debt which will include the expansion of its credit availability.
Management continues to believe, to finance its planned manufacturing capacity
(the C-Unit), to continue to improve its working capital position, and maintain
flexibility in financing interim needs, it is prudent to explore alternate
sources of financing.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board finalized FASB Statements
No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and Other
Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase method
of accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the Company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.
SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142.
The Company's previous business combinations were accounted for using the
purchase method. As of June 30, 2001, the net carrying amount of goodwill and
other intangible assets is $10,218,900. Amortization expense during the
six-month period ended June 30, 2001 was $438,200. Currently, the Company is
assessing but has not yet determined how the adoption of SFAS 141 and SFAS 142
will impact its financial position and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There are no material changes from the disclosures in the Company's Form 10-K
filed with the U.S. Securities and Exchange Commission for the year ended
December 31, 2000.
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PART II. OTHER INFORMATION
The Company was not required to report any matters or changes for any items of
Part II except as disclosed below.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders was held on June 22, 2001 and there were two
matters voted on at the meeting.
1. Elections of directors: The seven nominees listed below were elected to
serve on the Board of Directors for the ensuing year. The vote tabulation
with respect to each nominee follows:
Votes Votes Cast Against
Director Cast For or Withheld
-------- -------- ------------------
Herbert A. Kraft 2,701,906 11,327
Glenn A. Wintemute 2,701,906 11,327
Eric G. Wintemute 2,701,906 11,327
James A. Barry 2,701,906 11,327
John B. Miles 2,701,906 11,327
Jay R. Harris 2,701,906 11,327
Carl R. Soderlind 2,701,906 11,327
2. A proposal by management relating to approval of the American Vanguard
Corporation Employee Stock Purchase Plan was submitted to a vote of
stockholders. The Board recommended a vote for the proposal. A total of
2,667,951 votes were cast in favor of this proposal, a total of 35,553
votes were cast against it and 9,729 votes were counted as abstentions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K
Date of the Report: June 5, 2001
Description: On June 5, 2001, American Vanguard Corporation
issued a press release announcing that Amvac Chemical
Corporation, a wholly-owned subsidiary of American Vanguard
Corporation, completed the acquisition of a manufacturing
facility from E. I. DuPont de Nemours and Company.
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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 thereunto duly authorized.
AMERICAN VANGUARD CORPORATION
Dated: August 10, 2001 By: /s/ Eric G. Wintemute
-------------------------
Eric G. Wintemute
President, Chief
Executive Officer
and Director
Dated: August 10, 2001 By: /s/ J. A. Barry
-------------------------
J. A. Barry
Senior Vice
President, Chief
Financial Officer,
Secretary/Treasurer
and Director
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