SEC Comment Letter for AMERICAN VANGUARD CORP (AVD) (CIK 0000005981) (AVD) — Jul 2, 2010
AMERICAN VANGUARD CORP (AVD) (CIK 0000005981)
Date: July 2, 2010 · CIK: 0000005981 · Accession: 0000000000-10-037401
AI Filing Summary & Sentiment
Reasoning
Letter
July 2, 2010
Eric G. Wintemute President and CEO American Vanguard Corporation 4695 MacArthur Court Newport Beach, CA 92660 Re: American Vanguard Corporation Form 10-K Filed March 10, 2010 Schedule 14A Filed April 27, 2010 File No. 01-13795 Dear Mr. Wintemute: We have reviewed your filings and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within 10 business days by confirming that you will revise your document in future filings and providing an y requested information. If you do not believe our comments apply to your facts and circumst ances, please tell us why in your response.
After reviewing the information you provide in response to these comments, we may have additional comments. Form 10-K For the Year Ended December 31, 2009
Management’s Discussion and Analysis of Fina ncial Condition and Results of Operation, page
Results of Operations
1. We note that certain program payments to cust omers are classified as a reduction of sales revenues and other payments are classified as operating expenses and note a discussion on page 23 regarding changes in the portion that is classified as an operating expense. There is no discussion regarding the impact such programs have had on sales revenues. Please revise to provide a discussion descri bing the impact that volume or other key performance indicator driven payments, or ot her program costs, have had on revenue.
Eric G. Wintemute American Vanguard Corporation July 2, 2010 Page 2
2. We note that tolling activities lowered gross profit in 2009 and the first qu arter of 2010. Please provide a discussion explaining the na ture of these activities and quantify the impact they have on gross profit. Critical Accounting Policies, page 31
3. This section should include the identificati on of the accounting estimates reflected in your financial statements that require assumptions on uncertain items and whose changes could materially impact the company’s financ ial condition or changes in operations. In this regard, we note the recent $13.5 million char ge recorded to adjust inventory values. As estimates for inventory obsolescence a nd valuation require assumptions that are uncertain, please revise to disclose the methodology and assumptions underlying these estimates and the impact of any changes in the estimates. Accrued Program Costs
4. We note that each quarter you estimate the current liability associated with accrued program costs due to distributors and retaile rs at the end of a growing season. Please expand to explain what is meant by “manag ement applies experience and market place knowledge” to more fully explain the a ssumptions and methodology underlying these estimates and the impact of any changes in such estimates.
Note 6: Major Customers and Export Sales, page 63
5. Please revise to disclose revenues from cust omers for each group of similar products or product lines (such as cosmetic, pharmaceutical, nut ritional, etc. or herb icide, insecticide, etc.) in accordance with ASC 280-10-50-40.
Form 10-Q for the Quarterly Period Ended March 31, 2010
Consolidated Balance Sheets
6. We note that accrued program costs decreased significantly from December 31, 2009 to March 31, 2010. Please tell us why this liability decreased and, if such a decrease continues for the quarter ended June 30th, please revise your next filing to discuss.
Definitive Proxy Statement on Schedule 14A
Common Stock Ownership of Certai n Beneficial Owners, page 12
7. In the table on page 13, we note that you reference footnote 7 for Carl R. Soderlind’s beneficial ownership. Footnote 7, however, describes John B. M ile’s beneficial holdings.
Eric G. Wintemute American Vanguard Corporation July 2, 2010 Page 3
If you have omitted material information regarding Mr. Soderlind’s common stock ownership, please revise in future filings. Compensation and Discussion Analysis, page 14
8. We note your disclosure on pages 15 and 16 that you benchmark your ten most highly paid executives against pub lic companies having annual revenues of between $225 million and $400 million and that you benchmark similarly situated companies as to the prevalence of equity awards and total compensation among senior executives. Please confirm that in future filings you will id entify the companies to which you benchmark and disclose the degree to which the comp ensation committee considers such companies comparable to you. Refer to Item 402(b)(2)(xiv) of Regulation S-K. Grants of Plan Based Awards, page 22
9. We note that column l of your table on pa ges 22 and 23 shows the full grant date fair value of restricted stock grants made base d on the closing price of your common stock as of the date of grant and that you disclose th at the closing price was $11.73 per share. We also note that Mr. Thorley’s grant date was two months and one day prior to the other named executive officers. Please confirm that the closing price on both grant dates was $11.73 per share.
We urge all persons who are responsible for th e accuracy and adequacy of the disclosure in the filing to be certain that the filing include s the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules requir e. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In responding to our comments, please provi de a written statement from the company acknowledging that: • the company is responsible for the adequacy and accuracy of the disclo sure in the filing;
• 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
• the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federa l securities laws of the United States.
You may contact Theresa Me ssinese at 202-551-3307 if you ha ve questions regarding comments on the financial statements and relate d matters or Sonia Be dnarowski at 202-551-3666
Eric G. Wintemute American Vanguard Corporation July 2, 2010 Page 4
for questions regarding comments on the proxy statement. Please contact me at 202-551-3380 with any other questions. Sincerely, Lyn Shenk Branch Chief
Show Raw Text
July 2, 2010
Eric G. Wintemute President and CEO American Vanguard Corporation 4695 MacArthur Court Newport Beach, CA 92660
Re: American Vanguard Corporation Form 10-K
Filed March 10, 2010 Schedule 14A Filed April 27, 2010 File No. 01-13795
Dear Mr. Wintemute:
We have reviewed your filings and have the following comments. In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.
Please respond to this letter within 10 business days by confirming that you will revise
your document in future filings and providing an y requested information. If you do not believe
our comments apply to your facts and circumst ances, please tell us why in your response.
After reviewing the information you provide in response to these comments, we may
have additional comments.
Form 10-K For the Year Ended December 31, 2009
Management’s Discussion and Analysis of Fina ncial Condition and Results of Operation, page
21
Results of Operations
1. We note that certain program payments to cust omers are classified as a reduction of sales
revenues and other payments are classified as operating expenses and note a discussion
on page 23 regarding changes in the portion that is classified as an operating expense.
There is no discussion regarding the impact such programs have had on sales revenues.
Please revise to provide a discussion descri bing the impact that volume or other key
performance indicator driven payments, or ot her program costs, have had on revenue.
Eric G. Wintemute American Vanguard Corporation
July 2, 2010 Page 2
2. We note that tolling activities lowered gross profit in 2009 and the first qu arter of 2010.
Please provide a discussion explaining the na ture of these activities and quantify the
impact they have on gross profit.
Critical Accounting Policies, page 31
3. This section should include the identificati on of the accounting estimates reflected in
your financial statements that require assumptions on uncertain items and whose changes could materially impact the company’s financ ial condition or changes in operations. In
this regard, we note the recent $13.5 million char ge recorded to adjust inventory values.
As estimates for inventory obsolescence a nd valuation require assumptions that are
uncertain, please revise to disclose the methodology and assumptions underlying these
estimates and the impact of any changes in the estimates.
Accrued Program Costs
4. We note that each quarter you estimate the current liability associated with accrued
program costs due to distributors and retaile rs at the end of a growing season. Please
expand to explain what is meant by “manag ement applies experience and market place
knowledge” to more fully explain the a ssumptions and methodology underlying these
estimates and the impact of any changes in such estimates.
Note 6: Major Customers and Export Sales, page 63
5. Please revise to disclose revenues from cust omers for each group of similar products or
product lines (such as cosmetic, pharmaceutical, nut ritional, etc. or herb icide, insecticide,
etc.) in accordance with ASC 280-10-50-40.
Form 10-Q for the Quarterly Period Ended March 31, 2010
Consolidated Balance Sheets
6. We note that accrued program costs decreased significantly from December 31, 2009 to
March 31, 2010. Please tell us why this liability decreased and, if such a decrease
continues for the quarter ended June 30th, please revise your next filing to discuss.
Definitive Proxy Statement on Schedule 14A
Common Stock Ownership of Certai n Beneficial Owners, page 12
7. In the table on page 13, we note that you reference footnote 7 for Carl R. Soderlind’s beneficial ownership. Footnote 7, however, describes John B. M ile’s beneficial holdings.
Eric G. Wintemute American Vanguard Corporation
July 2, 2010 Page 3
If you have omitted material information regarding Mr. Soderlind’s common stock
ownership, please revise in future filings.
Compensation and Discussion Analysis, page 14
8. We note your disclosure on pages 15 and 16 that you benchmark your ten most highly
paid executives against pub lic companies having annual revenues of between $225
million and $400 million and that you benchmark similarly situated companies as to the prevalence of equity awards and total compensation among senior executives. Please confirm that in future filings you will id entify the companies to which you benchmark
and disclose the degree to which the comp ensation committee considers such companies
comparable to you. Refer to Item 402(b)(2)(xiv) of Regulation S-K.
Grants of Plan Based Awards, page 22
9. We note that column l of your table on pa ges 22 and 23 shows the full grant date fair
value of restricted stock grants made base d on the closing price of your common stock as
of the date of grant and that you disclose th at the closing price was $11.73 per share. We
also note that Mr. Thorley’s grant date was two months and one day prior to the other
named executive officers. Please confirm that the closing price on both grant dates was
$11.73 per share.
We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e. Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.
In responding to our comments, please provi de a written statement from the company
acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclo sure in the filing;
• 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
• the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of the United States.
You may contact Theresa Me ssinese at 202-551-3307 if you ha ve questions regarding
comments on the financial statements and relate d matters or Sonia Be dnarowski at 202-551-3666
Eric G. Wintemute American Vanguard Corporation July 2, 2010 Page 4
for questions regarding comments on the proxy statement. Please contact me at 202-551-3380
with any other questions.
Sincerely,
Lyn Shenk
Branch Chief