<PAGE> 1
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 MARCH 31, 1995
[ ] 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)
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<S> <C>
DELAWARE 95-2588080
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
4100 East Washington Boulevard, Los Angeles, California 90023
- - - - ------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
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(213) 264-3910
----------------------------------------------------
(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 -- 2,319,371 shares as of March 31, 1995
<PAGE> 2
AMERICAN VANGUARD CORPORATION
INDEX
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<CAPTION>
PART I - FINANCIAL INFORMATION Page Number
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Item 1.
Financial Statements:
Consolidated Statements of Operations
for the three months ended
March 31, 1995 and 1994 1
Consolidated Balance Sheets
as of March 31, 1995, and
December 31, 1994 2
Consolidated Statements of Cash Flows
for the three months ended
March 31, 1995 and 1994 4
Notes to Consolidated Financial
Statements 6
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II - OTHER INFORMATION 11
SIGNATURE PAGE 12
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<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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<CAPTION>
For the three months
ended March 31
--------------------
1995 1994
---- ----
<S> <C> <C>
Net sales $10,134,300 $7,726,100
Cost of sales 6,302,500 4,614,600
----------- ----------
Gross profit 3,831,800 3,111,500
Operating expenses 3,718,100 2,942,000
----------- ----------
Operating income 113,700 169,500
Interest expense (244,300) (268,300)
Interest income 1,700 1,800
----------- ----------
Loss before income tax (128,900) (97,000)
Income tax benefit 51,400 39,000
----------- ----------
Net loss $ (77,500) $ (58,000)
=========== ==========
Net loss per common share $ (.03) $ (.02)
=========== ==========
Weighted average number
of shares outstanding 2,323,665 2,323,618
=========== ==========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
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<CAPTION>
March 31, Dec. 31,
1995 1994
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(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 511,800 $ 317,700
Receivables:
Trade 13,069,100 12,722,400
Legal settlement 2,270,000 2,270,000
Other 136,600 488,200
----------- -----------
15,475,700 15,480,600
----------- -----------
Inventories 6,706,900 7,217,900
Prepaid expenses 772,600 929,700
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Total current assets 23,467,000 23,945,900
Property, plant and
equipment, net 14,583,100 15,024,100
Land held for development 210,800 210,800
Cost in excess of assets
acquired, net 467,200 475,500
Deferred charges, net 853,500 1,001,100
Other assets 238,500 271,300
----------- -----------
$39,820,100 $40,928,700
=========== ===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 5
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
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<CAPTION>
March 31, Dec. 31,
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Current liabilities:
Notes payable to bank $ 9,600,000 $ 8,000,000
Current installments of
long-term debt 1,184,200 1,205,300
Accounts payable 2,415,400 2,891,600
Accrued expenses 3,380,000 3,092,200
Income taxes payable 31,000 672,500
Legal settlements payable 2,600,900 3,411,600
----------- -----------
Total current liabilities 19,211,500 19,273,200
Long-term debt, excluding
current installments 2,816,900 3,695,300
Deferred income taxes 2,817,300 2,817,300
----------- -----------
Total liabilities 24,845,700 25,785,800
----------- -----------
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 2,331,371
shares 233,100 233,100
Additional paid-in
capital 1,688,200 1,688,200
Retained earnings 13,144,100 13,221,600
----------- -----------
15,065,400 15,142,900
Treasury stock at cost
(12,000 shares) (91,000) -
----------- -----------
Total stockholders' equity 14,974,400 15,142,900
----------- -----------
$39,820,100 $40,928,700
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
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<CAPTION>
Increase (decrease) in cash 1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net loss $ (77,500) $ (58,000)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation and amortization 907,300 869,600
Changes in assets and liabilities
associated with operations:
Decrease in receivables 4,900 2,915,200
Decrease (increase) in
inventories 511,000 (1,006,900)
Decrease in prepaid
expenses 157,100 29,300
Increase (decrease) in
accounts payable (476,200) 282,100
Decrease in other payables
and accrued expenses (1,164,400) (2,111,500)
----------- -----------
Net cash provided by
(used in) operating
activities (137,800) 919,800
----------- -----------
Cash flows from investing activities:
Capital expenditures (81,600) (299,500)
Increase in deferred charges (200,500) (28,400)
Net decrease in other
noncurrent assets 4,500 3,100
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Net cash used in
investing activities (277,600) (324,800)
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</TABLE>
(Continued)
4
<PAGE> 7
AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
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<CAPTION>
1995 1994
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<S> <C> <C>
Cash flows from financing activities:
Net additions (repayments) under
line of credit agreement $ 1,600,000 $ (700,000)
Increase in notes payable - other - 592,000
Principal payments on long-term debt (899,500) (306,300)
Acquisition of treasury stock (91,000) -
----------- -----------
Net cash provided by
(used in) financing
activities 609,500 (414,300)
----------- -----------
Net increase in cash 194,100 180,700
Cash at beginning of year 317,700 290,800
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Cash at end of period $ 511,800 $ 471,500
=========== ===========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 8
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 months ended March 31, 1995, are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1995. 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, 1994.
2. Inventories - The components of inventories consist of the
following:
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<CAPTION>
March 31, 1995 December 31, 1994
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<S> <C> <C>
Finished Products $5,285,500 $5,544,100
Raw Materials 1,421,400 1,673,800
---------- ----------
$6,706,900 $7,217,900
========== ==========
</TABLE>
3. Property, plant and equipment at March 31, 1995 and December 31, 1994,
consists of the following:
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<CAPTION>
March 31, December 31,
1995 1994
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<S> <C> <C>
Land $ 2,319,800 $ 2,319,800
Buildings and improvements 3,509,700 3,487,500
Machinery and equipment 19,883,700 19,873,600
Office furniture and fixtures 839,800 819,800
Automotive equipment 105,000 103,600
Construction in progress 401,500 388,700
----------- -----------
27,059,500 26,993,000
Less accumulated depreciation 12,476,400 11,968,900
----------- -----------
$14,583,100 $15,024,100
=========== ===========
</TABLE>
6
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. Earnings Per Share - Earnings per share is computed by dividing net
income by the weighted average number of shares outstanding during the
respective period.
5. Reclassification - Certain items have been reclassified in the prior
period consolidated financial statements to conform with the March 31,
1995, presentation.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales increased $2,408,200 or 31% to $10,134,300 for the quarter ended
March 31, 1995, from $7,726,100 for the same period in 1994, reflecting an
increase in the sales of the Bidrin(R), Naled, and PCNB product lines which
served to more than offset a decrease in sales of Phosdrin(R) and Metam Sodium.
Operating income decreased to $113,700 for the three months ended March 31,
1995, from operating income of $169,500 in the comparable period of 1994. The
Company reported a net loss of $77,500 or $.03 per share for the quarter ended
March 31, 1995, as compared to a net loss of $58,000 or $.02 per share for the
same period in 1994.
Gross profits improved to $3,831,800 for the three months ended March 31, 1995,
from $3,111,500 for the same period in 1994, however, gross profit margins
decreased to 38% for the three months ended March 31, 1995, as compared to 40%
for the three months ended March 31, 1994. The decline in gross profit margins
was due to changes in the sales mix in the first quarter of 1995 compared to
the first quarter of 1994. A contributing factor to the decline in gross
profit margins was a reduction in Phosdrin(R) sales of approximately
$2,034,000 to $366,000 for the first quarter of 1995, as compared to $2,400,000
for the same period in 1994. The Company, in agreements reached with the
Environmental Protection Agency ("EPA"), agreed to phaseout the domestic
distribution, sale and use of Phosdrin(R). (Refer to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.)
Operating expenses increased by $776,100 to $3,718,100 for the quarter ended
March 31, 1995, as compared to $2,942,000 for the same period in 1994. The
primary reason for the increase in operating expenses was due to an increase in
selling expenses, research and development expenses, delivery costs and the
costs related to the Company's new European office.
Selling expenses increased by approximately $406,000 which reflects an increase
in variable selling expenses, particularly royalties and rebates on the sale of
certain of the Company's products.
Research and development costs, which include costs incurred to generate
scientific data and other activities performed in the department, increased by
$217,000. Costs incurred to generate scientific data related to the
registration of the Company's products accounted for the increase in these
expenses.
8
<PAGE> 11
In order to build the Company's presence in the European chemical market, the
Company opened an office in the United Kingdom in August 1994. This new office
accounted for approximately $71,000 in operating expenses in the first quarter
of 1995.
Another factor contributing to increased operating costs in the first quarter
of 1995 was increased shipping costs as a result of the increase in sales.
Shipping costs increased approximately $78,000 in the first quarter of 1995
over the same period in 1994.
Interest costs were $244,300 during the three months ended March 31, 1995, as
compared to $268,300 for the same period in 1994. The average level of
short-term borrowing was approximately $8,517,800 for the first quarter of
1995, as compared to $7,060,000 for the same period in 1994. The average level
of long-term debt was $4,154,800 for the quarter ended March 31, 1995 as
compared to $5,530,100 for the first quarter of 1994. Although effective
interest rates on short-term borrowings were higher in the first quarter of
1995, as compared to the first quarter of 1994, interest in the first quarter
of 1994 included interest on short-term borrowings related to the acquisition
of Bidrin(R) from Du Pont that were not included in the determination of the
average level of short-term borrowing mentioned above. As a result, interest
expense for the first quarter of 1995 is slightly less than for the first
quarter of 1994.
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, and ordering patterns that may vary in timing, measuring the Company's
performance on a quarterly basis, (gross profit margins on a quarterly basis
may vary significantly) even when such comparisons are favorable, is not as
good an indicator as full-year comparisons. It is not unusual for the Company
to experience significant variations in quarterly revenues and quarterly
product mix.
It should be pointed out that historically, the Company's first quarter results
contribute a smaller percentage of annual revenues than subsequent quarters.
Because most of the Company's cost structure is fixed, at least in the
short-term, this combination of variable revenue streams, changing product
mixes, and a fixed cost structure, results in varying quarterly levels of
profitability.
9
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $4,255,500 as of March 31, 1995, reflecting a $417,200
decrease from the $4,672,700 as of December 31, 1994. Receivables only
decreased by $4,900 as of March 31, 1995, as compared to December 31, 1994.
Inventories decreased $511,000 during the first quarter of 1995. The Company
reduced its accounts payable and accrued expenses by $1,640,600 for the quarter
ended March 31, 1995, as compared to December 31, 1994.
The Company's $10,500,000 fully secured line of credit was scheduled to mature
on April 30, 1995. The Company's primary lender has amended the agreement to
extend the maturity date to May 31, 1995. The Company expects the line of
credit to be renewed. The Company had $900,000 in availability under this
secured line of credit as of March 31, 1995. The Company made principal
payments on its long-term debt and capital leases of $899,500 during the
quarter ended March 31, 1995.
Management believes current financial resources (working capital and short-term
borrowing arrangements) and anticipated funds from operations will be adequate
to meet financial needs in 1995. Management also believes, to continue to
improve its working capital position and maintain flexibility in financing
interim needs, it is prudent to explore alternate sources of financing.
10
<PAGE> 13
PART II. OTHER INFORMATION
The Company was not required to report any matters or changes for any items of
Part II.
ITEM 6. Exhibits and Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three months ended
March 31, 1995.
11
<PAGE> 14
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
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<S> <C>
Dated: May 12, 1995 By: /s/ J. A. Barry
----------------------------
J. A. Barry
Vice President
Chief Financial Officer
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12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 511,800
<SECURITIES> 0
<RECEIVABLES> 15,475,700
<ALLOWANCES> 0
<INVENTORY> 6,706,900
<CURRENT-ASSETS> 23,467,000
<PP&E> 27,059,500
<DEPRECIATION> 12,476,400
<TOTAL-ASSETS> 39,820,100
<CURRENT-LIABILITIES> 19,211,500
<BONDS> 13,601,100
<COMMON> 233,100
0
0
<OTHER-SE> 14,741,300
<TOTAL-LIABILITY-AND-EQUITY> 39,820,100
<SALES> 10,134,300
<TOTAL-REVENUES> 10,134,300
<CGS> 6,302,500
<TOTAL-COSTS> 6,302,500
<OTHER-EXPENSES> 3,718,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 242,600
<INCOME-PRETAX> (128,900)
<INCOME-TAX> (51,400)
<INCOME-CONTINUING> (77,500)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77,500)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
