UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009MARCH 31, 2010

FOR THE TRANSITION PERIOD FROM                     TO                     

Commission file number 001-13795

AMERICAN VANGUARD CORPORATION

(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. Yesx No¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes¨ No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

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—27,151,01927,333,530 shares as of November 4, 2009.May 3, 2010.

AMERICAN VANGUARD CORPORATION

INDEX

PART I. FINANCIAL INFORMATION

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)data)

(Unaudited)

See notes to consolidated financial statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)thousands, except share data)

ASSETS (note 7)

(Continued)

See notes to consolidated financial statements.statements

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)thousands, except share data)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Note: The balance sheet at December 31, 20082009 has been derived from the audited financial statements at that date.

See notes to consolidated financial statements.statements

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

(Dollars inIn thousands, except per share data)

For The Three Months Ended March 31, 2009, June 30, 2009 and September 30, 2009, 2010

(Unaudited)

See notes to consolidated financial statements

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For The NineThree Months Ended September 30,March 31, 2010 and 2009 and 2008

(Unaudited)

Supplemental schedule of non-cash investing and financial activities:

During the nine months ended September 30, 2008, the Company completed the purchase of certain assets which totaled $2,350, of which $600 was paid in cash in the period. During the nine months ended September 30, 2009, the Company paid $550 associated with scheduled payments against transactions referenced in the period to September 30, 2008. There are no additional comparable purchases for the period to September 30, 2009.

See notes to consolidated financial statements.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Numbers inIn thousands, except for Note 11)share data)

(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 nine months ended September 30, 2009March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.2010. 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, 2008.2009.

2. Property, plant and equipment at September 30, 2009March 31, 2010 and December 31, 20082009 consists of the following:

3. Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. The components of inventories consist of the following:

4. Based on similar economic and operational characteristics, the Company’s business is aggregated into twoone reportable segments, Crop and Non-crop.segment. Selective enterprise information is as follows:

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(In thousands, except share data)

5. On September 14, 2009, the Company announced thatMarch 4, 2010, the Board of Directors declared a cash dividend of $0.01 per share. The dividend was distributed on October 9, 2009,April 16, 2010 to stockholders of record at the close of business on September 25, 2009.April 2, 2010. Cash dividends paid October 9, 2009April 16, 2010 totaled approximately $270.$271.

On March 9, 2009, the Company announced that the Board of Directors declared a cash dividend of $0.05 per share. The dividend was distributed on April 15, 2009, to stockholders of record at the close of business on March 31, 2009. Cash dividends paid April 15, 2009 totaled approximately $1,341.

On September 15, 2008, the Company announced that the Board of Directors declared a cash dividend of $0.03 per share. The dividend was distributed on October 10, 2008, to stockholders of record at the close of business on September 26, 2008. Cash dividends paid October 2, 2008 totaled approximately $804.

On March 10, 2008, the Board of Directors declared a cash dividend of $0.05 per share. The dividend was distributed on April 15, 2008, to stockholders of record at the close of business on March 31, 2008. Cash dividends paid April 15, 2008 totaled approximately $1,323.

6. Financial Accounting StandardStandards Board (“FASB”) Accounting StandardStandards Codification (“ASC”) FASB ASC 260 [Statement of Financial Accounting StandardsStandard (“SFAS”) No. 128], “Earnings Per Share”Share (“EPS”) requires dual presentation of basic EPS and diluted EPS on the face of all income statements. 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.

The components of basic and diluted earnings per share were as follows:

7. Substantially all of the Company’s assets are pledged as collateral with its banks.

The Company has various different loans in place that together constitute the short-term and long-term loan balances shown in the balance sheet at September 30, 2009March 31, 2010 and December 31, 2008.2009. These are summarized in the following table:

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

The Company has four key covenants to its senior, secured credit facility with its banking syndicate. The covenants are as follows: (1) the Company must maintain its borrowings below a certain consolidated funded debt ratio, (2) the Company has amust limit on its annual spending on the acquisition of fixed asset capital additions,

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(In thousands, except share data)

(3) the Company must maintain a certain consolidated fixed charge coverage ratio, and (4) the Company must maintain a certain modified current ratio which compares the on hand value of receivables plus inventory with the level of its working capital revolver debt. As of September 30, 2009March 31, 2010 the Company met all covenants in that credit facility¹.

At March 31, 2010, based on its performance against the covenants listed above.above, the Company had the capacity to increase its’ borrowings by up to $55,576 under the credit facility agreement.

For further information, refer to the consolidated financial statements and footnotes thereto (specifically note 2) included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.2009.

8. Foreign Exchange Price and Interest Rates—The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are foreign exchange price risk and interest rate risk. Forward contracts are entered into to manage the price risk associated with forecasting purchases of raw materials used in the Company’s manufacturing process. Interest rate swaps are entered into to manage interest rate risk associated with the Company’s fixed-rate borrowings.

FASB ASC 815 [SFAS No. 133] “Accounting for Derivative Instruments and Hedging Activities”, requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the statement of financial position. In accordance with FASB ASC 815, the Company designates foreign exchange forward contracts as cash flow hedges of forecasted purchases of materials and interest rate swaps as fair value hedges of variable-rate borrowings.

Cash Flow Hedges—For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and classified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains or losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

As of December 31, 2008, the Company had a foreign exchange contract to purchase 5,784 Euro. The fair value of the contract as of December 31, 2008 was $713. As of December 31, 2008, the Company recorded unrealized losses in other comprehensive income of $539. The Company reclassified from other comprehensive income to interest expense $174 due to ineffectiveness as of December 31, 2008. The Company settled the contracts in March 2009 and recognized a loss of $62 in interest expense at that time. The Company does not have any outstanding contracts as of September 30, 2009.

Fair Value Hedges—For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings.

As of September 30, 2009 and December 31, 2008, the Company has two perfectly effective interest rate swap contracts. The fair value at September 30, 2009 and December 31, 2008 was $1,363 and $1,981, respectively and is recorded in accounts payable. The total notional amount of the Company’s receive-variable/pay-fixed interest rate swaps is $26,575. As of September 30, 2009, there was a gain of $618 and at December 31, 2008, there was a loss of $1,981 in other comprehensive income.

9. Reclassification—Certain items may have been reclassified (if appropriate), in the prior period consolidated financial statements to conform with the September 30, 2009March 31, 2010 presentation.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

10.9. Total comprehensive income includes, in addition to net income, changes in equity that are excluded from the consolidated statements of operations and are recorded directly into a separate section of stockholders’ equity on the consolidated balance sheets.

Comprehensive income and its components consist of the following:

11.10. Stock Based Compensation Expense—The Company accounts for stock-based awards to employees and directors in accordance with FASB ASC 718 [FASB[SFAS No. 123 (revised 2004)], “Share-Based Payment,” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including shares of common stock granted for services, employee stock options, and employee stock purchases related to the Employee Stock Purchase Plan (“employee stock purchases”) based on estimated fair values.

Stock Options—During the ninethree months ended September 30, 2008,March 31, 2010, the Company granted a 10-yearamended an option to anextend the expiration date for a terminated employee to acquire 6,779 shares of common stock at an exercise price of $14.75. The option vests one-third on the first anniversary of the grant and one-third on each anniversary thereafter (three equal installments). The option was valued using the Black-Scholes option-pricing model at $7.11 per share. Assumptions used to value the option were: expected term of 5 years, expected volatility of 50%, expected annual dividends of 0.5%, and a risk-free interest rate of 2.45%. No options were granted during the nine months ended September 30, 2009.

During the nine months ended September 30, 2009, employees and non-executive directors exercised options to acquire 60,000purchase 72,000 shares of common stock. Cash received upon exercise was $213,000 or $3.55 per share. AtThe award would have expired 3 months after termination. The Company extended the timeexpiration date to one year and recognized an award-based compensation expense of exercise, total intrinsic value of$8 for the options exercised was approximately $326,000 (or $5.44 per share).modification.

During the ninethree months ended September 30, 2008, employees and non-executive directors exercised options to acquire 350,507 shares of common stock. Cash received upon exercise was $868,277 or $2.48 per share. At the time of exercise, total intrinsic value of the options exercised was approximately $4,169,000 (or $11.90 per share).

There were options to acquire 48,400 shares that were forfeited during the nine months ended September 30, 2009, which had an average exercise price of $14.45. The shares were vested when terminated.

There were options to acquire 9,400 shares that were forfeited during the nine months ended September 30, 2008, which had an average exercise price of $14.74. The shares were vested when terminated.

During the nine months ended September 30, 2008March 31, 2010 and 2009, the Company recognized stock-based compensation expense, excluding expense related to modifications, related to stock options of $86,000 and $12,000, respectively.$4 each quarter.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(In thousands, except share data)

As of September 30, 2009,March 31,2010, the Company had approximately $23,000$15 of unamortized stock-based compensation expenses related to unvested stock options outstanding. This amount will be recognized over the weighted-average period of 1.40.9 years. This projected expense will change if any stock options are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures.

Restricted Shares—During the ninethree months ended September 30,March 31, 2009, the Company granted employees a total of 101,188 shares of common stock. The shares will cliff vest after three years of service. The shares were valued at $11.75 per share (or $1,189,022$1,189 in total), which was the publicly traded share price as of the date of grant, and the Company is recognizing the corresponding expense over the required service period of three years.

During the ninethree months ended September 30, 2008, the Company granted employees a total of 126,525 shares of common stock of which 2,450 were forfeited in the period. The shares vest 100% on the third anniversary of the date of grant. TheMarch 31, 2010, no restricted shares were valued at $12.19 per share, which was the publicly traded share price as of the date of grant. The Company valued the shares at $1,542,340 and is recognizing compensation expense over the three-year service period.

During the nine months ended September 30, 2009, the Company granted non-executive board members a total of 33,845 shares of common stock. The shares were immediately vested on the date of grant. The shares were valued at $10.34 per share, which was the publicly traded share price as of the date of grant, and the Company is recognizing a corresponding expense of $350,000 over the service period, which is the non-executive board member’s term of office.

During the nine months ended September 30, 2008, the Company granted non-executive board members a total of 23,580 shares of common stock. The shares were immediately vested on the date of grant. The shares were valued at $12.72 per share, which was the publicly traded share price as of the date of grant, and the Company is recognizing a corresponding expense of $300,000 over the service period, which is the non-executive board member’s term of office.granted.

There were 14,42614,994 restricted shares of common stock that were forfeited during the ninethree months ended September 30, 2009, which had an average exercise price of $14.74.March 31, 2010. The shares were not vested when terminated.

During the ninethree months ended September 30, 2008March 31, 2010 and 2009, the Company recognized stock-based compensation expense related to restricted shares of $242,000$102 and $644,000,$204, respectively.

As of September 30, 2009,March 31, 2010, the Company had approximately $1,854,000$1,313 of unamortized stock-based compensation expenses related to unvested restricted shares. This amount will be recognized over the weighted-average period of 1.91.6 years. This projected expense will change if any restricted shares are granted or cancelled prior to the respective reporting periods or if there are any changes required to be made for estimated forfeitures.

12.11. Legal Proceedings—Summarized below are litigation matters in which there has been material activity or developments since the filing of the Company’s Form 10-Q10-K for the period ended June 30,December 31, 2009.

A. DBCP Cases

Introductory Notes. A number of suits have been filed against AMVAC, alleging injury from exposure to the agricultural chemical 1,2-dibromo-3-chloropropane1, 2-dibromo-3-chloropropane (“DBCP”). DBCP was manufactured by several chemical companies, including Dow Chemical Company, Shell Oil Company and AMVAC and was approved by the U.S. EPA to control nematodes. DBCP was also applied on banana farms in Latin America. The U.S. EPA suspended

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

registrations of DBCP in October 1979, except for use on pineapples in Hawaii. The EPA suspension was partially based on 1977 studies by other manufacturers that indicated a link between male sterility and exposure to DBCP among their factory production workers producing the product.

Nicaraguan Cases. Thus far there There are approximately 100 lawsuits, foreign and domestic, filed by former banana workers in which AMVAC has been named as a party. Fifteen of these suits have been filed in the United States (with prayers for unspecified damages) and the remainder have been filed in Nicaragua. Three of these domestic suits were brought by citizens of Nicaragua while the other domestic suits have been brought by citizens of other countries. These claims are all in various stages and allege injury from exposure to DBCP, including claims for sterility. All but two of the suits filed in Nicaragua are unserved. All but one of the suits in NicaraguaThere have been filed pursuant to Special Law 364, an October 2000 Nicaraguan statute that contains substantive and procedural provisions that Nicaragua’s Attorney General previously expressed as unconstitutional. Each of the Nicaraguan plaintiffs claims $1 millionno material developments in compensatory damages and $5 million in punitive damages. In allany of these cases, AMVAC is a joint defendant with Dow Chemical and Dole Food Company, Inc. Inactions since the two cases pending before Nicaraguan courts in which AMVAC has been served, the court has denied AMVAC’s objection to jurisdiction, which is being appealed.

On October 20, 2009, in a case captionedOsorio v. Dole Food Company, the U. S. District Court for the Southern Districtfiling of Florida entered an order in which it refused to recognize a $97 million judgment that had been rendered by a trial court in Chinandega, Nicaragua in favor of 150 plaintiffs against Dow and Dole under Special Law 364 for alleged exposure to DBCP. In reaching its decision inOsorio, the court found that it was improper to recognize the Nicaraguan court’s judgment under the Florida Recognition Act because Nicaraguan courts lacked jurisdiction over the defendants; Special Law 364 is fatally unfair and discriminatory and fails to provide defendants with a minimum level of due process; the irrefutable presumption of causation under Special Law 364 violates public policy; and the Nicaraguan judgment was rendered under a system which does not provide impartial tribunals. In light of both the decision inOsorio and the Los Angeles Superior Court’s finding of pervasive fraud inMejia andRivera as described in the Company’s Form 10-Q for the period ended March 31, 2009, AMVAC believes that its exposure to liability in Nicaragua cases is significantly diminished. Accordingly, the Company believes that a loss in these matters is neither probable nor reasonably estimable and has not incurred a loss contingency therefor.

Ivory Coast Cases. On October 6, 2006, AMVAC was served with seven suits filed in the Los Angeles County Superior Court and one suit in the United States District Court in Los Angeles that include a total of 668 residents of the Ivory Coast as plaintiffs. Each plaintiff claims bodily injuries from exposure to DBCP while residing or working on banana or pineapple plantations in that country from the 1970s to the present. The suits name AMVAC, Dow Chemical, Shell Oil Company, and Dole Food as defendants. All these suits also seek punitive damages, and the action filed in federal court alleged a claim under the Alien Tort Claims Act, alleging that the sale and use of DBCP amounted to genocide in the Ivory Coast. As more fully described in the Company’s Form 10-K for the period ended December 31, 2008, defendants have successfully obtained the dismissal of these federal claims. In the seven state court actions, plaintiffs’ counsel petitioned the court to withdraw from representing plaintiffs. On September 28, 2009, the court granted the motion of plaintiffs’ counsel and ordered that unless the plaintiffs either appear in person before the court or appoint new counsel by October 30, 2009, the court intended to dismiss the actions without prejudice. In light of the fact that plaintiffs failed either to appoint new counsel or to appear personally, the court dismissed these actions without prejudice on October 30, 2009.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

B. Other Matters

On July 19, 2006, AMVAC’s registered agent was served with a putative class action complaint entitledLatrice McLendon, et al. v. Philip Service Corporation etc. et al (including AMVAC), which was filed in the SuperiorArchem/Thames Chelsea State Court of Fulton County, State of Georgia No. 2006CN119863 and subsequently removed to the United States District Court for the Northern District of Georgia No. 1:06-CV-1770-CAP, in which a class of Georgia plaintiffs sought damages, including punitive damages, in an unspecified amount for personal injuries and diminution in property value allegedly arising from the airborne release of propyl mercaptan and ethoprop from a waste treatment facility operated by PSC Recovery Services (“PSC”) in Fairburn, Georgia. Plaintiffs, residents living in the vicinity of the PSC plant, alleged trespass, nuisance and negligence on behalf of defendants in handling, storing and treating waste which was generated by AMVAC’s Axis, Alabama facility. The parties engaged in mediation on September 19, 2007 before a neutral mediator. Working in conjunction with their insurance carriers at the mediation, defendants AMVAC and PSC agreed to settle the matter with a settlement class of approximately 2,000 households for payment of cash consideration of $4 million, which amount shall be divided evenly between co-defendants and paid by their respective insurance carriers. The cost of claims administration, class notice, plaintiffs’ attorneys’ fees, and class relief was to be paid out of the $4 million settlement fund. On June 2, 2009 the court entered an order giving its final approval of the class settlement and dismissing with prejudice the lawsuit. The effective date of that final approval was July 3, 2009 pursuant to the terms of the settlement agreement. The Company has issued claim payments to settlement class members who submitted timely valid claim forms as per the settlement agreement. We expect the claims administration process to be completed within the next 30 days.

On June 3, 2008 an action styledJohn B. Abernathy, Jr. and Delores Abernathy v. Philip Services Corporation etc. et al. [including AMVAC Chemical Corporation]Superfund Claim., Civ. No. 2008-EV-004787J, was filed in the State Court of Fulton County, State of Georgia. Plaintiffs asserted personal injury (including kidney failure) and property damage claims based on the same alleged airborne chemical release from the same PSC facility at issue in theMcLendonlitigation. Plaintiffs sought compensatory and punitive damages in unspecified amounts and asserted causes of action for negligence, negligence per se, trespass, and nuisance. The Company did not believe that the claims had any merit. The parties held a mediation on July 30, 2009 and, within a few weeks after that mediation, AMVAC reached agreement with plaintiffs on the terms of a settlement under which AMVAC ultimately paid plaintiffs a fraction of the costs of defense through funds from the Company’s insurance carrier. On October 20, 2009, Plaintiffs dismissed AMVAC from the case with prejudice.

On July 20, 2009, the Texas Commission on Environmental Quality (TCEQ) issued an administrative order (the “Order”) under which it identified parties that are potentially responsible for solid waste and/or hazardous substances at the ArChem/Thames Chelsea State

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(In thousands, except share data)

Superfund Site (the “Site”). In that order, AMVAC was identified as one of 50 potentially responsible parties (PRP’s) relating to TCEQ removal actions that were conducted at the Site in 1992 and 1993. The total cost of such removal actions for which that group of PRP’s could be liable is approximately $775. AMVAC’s involvement in this matter purportedly arises from the single shipment of an intermediate compound sent to the Site for further synthesis in the late 1980’s. Amvac has joined a group of PRP’s which has challenged the Order by way of filing a petition with the District Court of Travis County, Texas in a matter captionedAkzo Nobel etc. et al. v. Texas Commission on Environmental Quality, Cause No. D-1-6N-09-002820. Petitioners have challenged the Order on several grounds, including failure to provide PRP’s with an evidentiary hearing and the fact that petitioners should not be liable as arrangers under CERCLA, as they sent useful product—not waste—to the Site. Petitioners filed a motion for declaratory relief, seeking dismissal of the action under both U.S. Supreme Court precedent (BNSF v. U.S.) and Texas Supreme Court precedent (R.R. Street & Co., Inc. v. Pilgrim Enterprises, Inc.); on April 14, 2010, the court denied the motion, reasoning that it was premature and that the issue was better suited to a motion for summary judgment. At this stage in the proceedings, the Company believes that a loss is remotely possible and that such loss could be reasonably estimated at between $15 and $30; the Company has not set up a loss contingency therefor.

Shenkel v. Western Exterminator.On or about September 25, 2009,May 30, 2008, an action styledentitledJoseph K. WilsonKurt Shenkel and Carol Ann Shenkel v. Gemchem, Inc. etc.Western Exterminator Company, et al, Civ. No. 02-CV-2009-901876.00,. [including AMVAC Chemical Corporation] was filed with the Superior Court of the State of California, Central District as Case No. BC391795, in which plaintiff Kurt Shenkel, who worked as a landscaper and gardener in Southern California between 1967 and 2007, alleges that he suffered personal injury—specifically, Parkinson’s disease—from toxins in the Civil Courtseveral dozen herbicides and pesticides (including AMVAC’s Vapam) distributed and sold by the 29 co-defendants during plaintiff’s work history. Plaintiff alleges negligence, strict liability, breach of Mobile, Alabamaimplied warranty and loss of consortium by defendants for which he seeks compensatory and punitive damages in unspecified amounts. Defendants have filed numerous demurrers and motions to dismiss with the court, which, in turn, has stayed consideration of such motions for the time being. In March 2010, AMVAC brought a former employee who seeks

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIESmotion for summary judgment and subsequently AMVAC and plaintiffs agreed in principle to settle this matter for cash consideration in the amount of $10.

Notes to Consolidated Financial Statements, Continued

compensation and medical expenses arising from physical injuries that he allegedly sustained when he tripped and fell at AMVAC’s facility in Axis, Alabama. The Company does not believe that the claims have any merit and intends to defend the matter vigorously. At this stage, the Company does not believe that a loss is either probable or reasonably estimable and has not set up a loss contingency therefor.

IBAMA Citation.On or about October 5, 2009, IBAMA (the BrasilianBrazilian equivalent of the EPA) served the Company’s subsidiary, Amvac do Brasil, with a Notice of Violation alleging that two lots of Granutox 150 (formulated product having phorate as the active ingredient) stored at BASF S.A. (AMVAC’s exclusive distributor in Brasil)Brazil) and FMC Quimica do Brasil Ltda. (which formulates end-use product in that country) were not in compliance with the end-use registration on file with IBAMA. Specifically, IBAMA alleged that the color of the lots (gray) was inconsistent with the description in IBAMA’s files (pink). IBAMA also indicated an intention to assess a fine of approximately $285 against Amvac do Brasil. The Company intends to challenge the citation, among other reasons, on the ground that the change in color has to do with the removal of a coloring component and that such removal poses no environmental or toxicity risk. At this stage, the Company believes that a loss in the amount of between $35 and $70 is probable and has set up a loss contingency in the amount of $70.

13.12. Recently Issued Accounting GuidanceGuidance—In March 2010, FASB issued Accounting Standards Update (“ASU”) 2010-11. The objective of the standards is to clarify the intended breadth of the embedded credit derivative scope exception in paragraphs 815-15-15-8 through 15-9 of the FASB Accounting Standards Codification. Entities that are affected by this standard are those that enter into contracts containing an embedded credit derivative feature related to the transfer of credit risk that is not only in the form of subordination of one financial instrument to another. Although the Company has a derivative instrument, it is not an embedded credit derivative. The standard is effective for all reporting periods after November 15, 2009. The Company will monitor its hedging activities and apply this guidance when appropriate.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(In thousands, except share data)

In February 2010, FASB issued ASU 2010-09, an amendment of FASB ASC 855 [SFAS 165]“Subsequent Events”—. The objective of the standard is to provide reporting entities with principles and requirements related to subsequent events. The objective of the standard is to clarify when a Company must disclose details of a subsequent event. The standard clarifies that SEC filers are still required to evaluate subsequent events through the date its financial statements are issued, however, SEC filers are no longer required to disclose in the financial statements that it has done so or the date through which subsequent events have been evaluated. The standard is effective upon issuance for filings after February 24, 2010. The Company has adopted the standard in the current quarter.

In October 2009, FASB updated the Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force. The objective of this Update is to address the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Subtopic 605-25, Revenue Recognition-Multiple Element Arrangements, establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue-generating activities. The amendments in this Update will affect accounting and reporting for all vendors that enter into multiple-deliverable arrangements with their customers. This update will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company will monitor its sales activities in the future that may be affected by this update.

In September 2009, the Financial Accounting Standards Board (“FASB”)FASB updated FASB ASC 820 [FAS[SFAS 157], “Fair Value Measurements and Disclosures: Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”. This guidance pertains to investments that do not have readily determinable fair values as defined in the Master Glossary of the FASB Accounting Standards Codification (those investments are not listed on national exchanges or over-the-counter markets such as the National Association of Securities Dealers Automated Quotation System). Examples of these investees (also referred to as alternate investments) may include hedge funds, private equity funds, real estate funds, venture capital funds, offshore fund vehicles, and funds of funds. This particular update does not apply to the Company as the Company does not have any alternate investments such as offshore fund vehicles, real estate funds and others as defined by this Accounting Standards Update (“ASU”).ASU. We will continue to monitor the Company’s activities in the future that might be affected by this update.

In June 2009,13. Subsequent events—On or about April 6, 2010, the FASB issued FASB ASC 105 [FAS 168] “Pest Management Regulatory Agency (“PMRA”) notified the Company of its intention to cancel the Canadian registration for the compound, pentachloronitrobenzene in that country, citing the Company’s failure to provide certain manufacturing data to the agency in a timely fashion. The FASB Accounting Standards Codification andCompany is working with PMRA to avoid a cancellation warning notification by, among other things, providing the Hierarchy of Generally Accepted Accounting Principles”. This new statement identifies the source of accounting principles and the framework for selecting principles usedrequired data promptly. If a cancellation were to be imposed in the preparation of financial statements for nongovernmental entities that are presented in conformitynear term, the Company might be required to contact potentially affected customer to determine appropriate actions with US GAAP. The pronouncement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company has reviewed the details of the statement and concluded that changes in codification structure will have no effect on the financial reporting of the Company. The Company adopted the pronouncement for the quarter ended September 30, 2009 and the 10-Q filing reflected the citations under the codification.

In May 2009, FASB issued FASB ASC 855 [FAS 165] “Subsequent Events”. The objective of the statement isrespect to provide reporting entities with principles and requirements related to subsequent events. The objective of the standard is to clarify when a Company must disclose details of a subsequent event. Equally, the standard makes clear circumstances when details of a subsequent event need not be includedproduct in the Company’s public filings. The Company’s disclosure committee has revieweddistribution channel at that time. PMRA’s action was uncharacteristically sudden, and, at this point, the requirements of the standard and notes itCompany is effective for all interim and annual financial statements dated September 30, 2009. The Company has updated subsequent events through November 6, 2009.

On April 9, 2009, the FASB issued FASB ASC 820 [FAS 157-4], “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and IdentifyingTransactions that are not Orderly”. This is additional clarification and advice on FASB ASC 820 which was

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Noteswithout sufficient information to Consolidated Financial Statements, Continued

issued in September 2006. The Company operates in the Chemical Industry. As such an important factor in our business relates to the ownership or usage rights related to intellectual property (Intangible Assets). At each quarter end we assess the fair value of our holdings. This FSP takes effect for reporting periods ending on or after January 15, 2009. We have assessed our assets and liabilities and do not believe that any fall into the scope of this statements. We will continue to regularly assess our portfolio and will make the necessary adjustments and disclosures when we conclude that onea loss is either probable or more of our assets fall within the scope of this statement.

On April 9, 2009, FASB issued FASB ASC 825 [FAS 107-1]. This position paper amends FASB ASC 825 “Disclosures about Fair Value of Financial Instruments”. At the same time the FASB issued FASB ASC 270 [APB 28-1], which amends APB Opinion No. 28 “Interim Financial Reporting”. Both of these position papers are focused on increasing disclosures related to the fair value of financial instruments for interim reporting periods of publicly traded companies. In the 10-Q for the third quarter of 2008, American Vanguard increased its disclosure related to such Financial Instrumentsreasonably estimable and continued that depth of disclosure in its 10-K statement for the year ended December 31, 2008. We will continue to fully disclose full details of the fair value of our financial instruments in our future published summarized financial information.

On October 10, 2008, FASB issued FASB ASC 820 [FSP FAS 157-3]. This position paper seeks to clarify the application of FASB ASC 820, “Fair Value Measurements”, inaccordingly has not set up a market that is not active and provides illustrative examples for determining fair value of a financial asset when the market for that financial asset is not active. This statement is effective on issuance or October 10, 2008. Currently, the Company has no financial assets where there is little or no market activity at the measurement date. Accordingly, we believe that this FSP has no applicability for the Company as of September 30, 2009. We will reconsider the applicability of this statement should our business circumstances change.

On September 12, 2008, FASB issued FASB ASC 815 [FSP FAS 133-1]. This ASC seeks to clarify the application of FASB ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, to require disclosures by sellers of credit derivatives, including embedded credit derivatives. Furthermore, the FSP amends FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”, requiring additional disclosures related to payment/risk. Finally, this FSP clarifies the effective date of FASB ASC 815 [FAS 161], “Disclosure about Derivative Instruments and Hedging Activities”. Effective for reporting periods (annual or interim) ending after November 15, 2008. We have reviewed the position paper and find that; for FASB ASC 815, we conclude that we do not participate in the market selling any derivatives, for FASB ASC 952 [FASB No 45], we have no guarantees related to the debts of others and with regard to the effective date of FASB ASC 815, this statement confirmed our existing understanding. We will reconsider the applicability of this statement should our business circumstances change.

In March 2008, FASB issued FASB ASC 815,Disclosures about Derivative Instruments and Hedging Activities(“SFAS 161”). The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under FASB ASC 815Accounting for Derivative Instruments and Hedging Activities(“SFAS No. 133”); and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. The Company has reviewed the standard and believes its current reporting meets the requirements of the standard.

AMERICAN VANGUARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

In December 2007, FASB issued FASB ASC 805 [“SFAS No. 141 (Revised)”]Business Combinations. The provisions of this statement are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning after December 15, 2008. Earlier application is not permitted. FASB ASC 805 replaces SFAS 141 and provides new guidance for valuing assets and liabilities acquired in a business combination. We adopted FASB ASC 805 in fiscal year beginning January 1, 2009.loss contingency.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Numbers in thousands)

FORWARD-LOOKING STATEMENTS/RISK FACTORS:

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 (the “SEC”). It is not possible to foresee or identify all such factors. For more detailed information, refer to Item 7, Management’s Discussion1A., Risk factors and Analysis of Financial ConditionItem 7A., Quantitative and Results of Operation,Qualitative Disclosures about Market Risk, Factors, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.2009.

RESULTS OF OPERATIONS

Quarter Ended September 30:March 31:

Our overall sales performance has improved compared to the second quarter of the year. However, overallOverall financial performance (including net sales and net income) for the quarter ended September 30, 2009March 31, 2010 is downimproved as compared to the same period of the prior year.in 2009. Our net sales for the period are down 2%up approximately 5% to $66,371$46,712, compared to $44,637 for the same periodfirst quarter of 2008.2009. Net sales for our crop business are up 9%,essentially flat while net sales for non-crop products are up approximately 26%. Net sales of many of our non-crop segment are down 37% as compared tocrop-related product lines were up (as indicated in the same period of last year.

Whilediscussion below), however, these gains were offset by significantly lower net sales on tolling contracts as a result of timing (sales will come through in second quarter of 2010). A more detailed discussion of general market conditions and sales performance by category of products appears below.

For much of 2009, we believe that our distribution customers and growers followed a conservative approach toward procurement, reducing their inventories and ordering products closer to time of use. As a result, inventories of many products in the aggregate were basically flatchannel of distribution have tended to come down, leaving room for re-stocking in 2010. In addition, credit restrictions on growers, which are believed to have been tight during much of 2009, appear to have begun to relax. Further, certain crops into which the quarter as comparedCompany has significant product sales—namely, cotton and peanuts appear to be increasing in planted acres, while weather in the same period last year,Midwest is permitting corn and other crops to be planted well ahead of the 2009 schedule.

Net sales performance of our largest selling product line, soil fumigants, were up nearly 11% in the first quarter. This increase arose largely from the fact that an early frost in late 2009 had prevented many growers from applying the products before winter had set in; this suppressed fourth quarter 2009 sales. With the ensuing thaw in 2010, these growers were able to treat their fields in the first quarter. Net sales of our insecticide product lines varied. Our granular soil insecticides continued to perform well compared to last year. However, sales of insecticide products were down sharply due to reduced demand for our (Dibrom) mosquito adulticide, sales of which were down byrose strongly, approximately 70% compared to the same period of 2008, due to low insect pressure and a lack of precipitation29% in the South and Southwest. By comparison, the thirdfirst quarter of 2008 presented ideal conditions for use of our adulticide, and we enjoyed record sales during that period. Sales of our cotton insecticide, Bidrin and Bidrin XP, were up2010 as compared to the same period in 2008;2009. Among the insecticides, sales of Dibrom, our mosquito adulticide, increased strongly over the same period in 2009; however, the increase was due largely to timing of customer orders. In addition, our cotton insecticides performed well in light of the fact that cotton acres continue athave risen year-over-year.

Our corn soil insecticides as a group posted a gain in net sales of about 19% for the low levels presentperiod. Among these products, Counter led the pack with net sales rising nearly 70% over the comparable period last year; these results arose largely from increased support for Counter as a treatment for nematodes in corn and a more effective positioning of the product in distribution. Sales of Force were also strong, reflecting growers’ preference for purchasing the product closer to growing the season. Net sales of our herbicide products were down slightly, about 5%, for the quarter. However, with corn planting ahead of last year confirming market recognition thatand lean inventory levels in the distribution channel, we have a superior product offering.recorded an increase of approximately 35% in net sales of our post-emergent corn herbicide, Impact. These gains were offset by reduced sales of Dacthal, which arose in part from regulatory pressure in Europe.

Net sales of our Orthene (acephate)fungicide product line were flat compared to first quarter of 2009, while our plant growth regulator, NAA, and Discipline (bifenthrin) products tendedslug/snail bait, Metaldehyde, generated net sales increases during the period. NAA continues to be downenjoy solid support in the facemarketplace, while Metaldehyde sales benefitted from the ample rainfall within the western states over the course of heavy competition and large inventory in the distribution channel. Further, as discussed below, the gross marginswinter. Net sales of our insecticide product lines declinedforeign subsidiaries were up approximately 22% over the comparable quarter in 2008 due in part to the fact thatquarter; however, we were

focused on selling higher cost inventory items as partare seeing heavy pricing pressure for some of our inventory reduction initiative. Our herbicides, including our post-emergent corn herbicide, Impact, sold wellproduct lines in those regions. In addition, sales performance benefitted by the quarter, despite a challenging market in corn, including late planting due to rain and a just-in-time buying pattern among customers. Herbicide sales gained some ground on sales not realized earlier in the year. Our plant growth regulators had another good quarter with sales continuing strongly aheadCompany’s collection of the comparable quarter last year; however, some of that performance appears to be timing; during 2008, sales of thisdata compensation for its acephate product line occurred primarily in the second quarter, while in 2009, they occurred in the third quarter.

Sales by our foreign subsidiaries continue to grow strongly in comparison to the prior year, with particularly strong growth in Costa Rica. However, our overall international sales were down 20% compared to the same period of 2008. This mainly relates to a drop in global sales of approximately 35% of our fungicide, PCNB; this decline arose from the fact that distribution in one international region had purchased a two year supply of that product in the third quarter of 2008 and did not purchase any product in the same quarter of 2009. Similarly, we had a relatively large one time transaction in Africa in 2008 which did not repeat this year. As noted above, our key Central American markets performed well despite continued tight control on credit affecting some demand.line.

Cost of sales for the quarter ended September 30, 2009, ended at $45,007March 31, 2010, was $27,788 or 68%about 59% of sales compared to $38,850$26,081 or 57%about 58% of sales for the same period of 2008. When looking solely at our selling activities,2009. Gross margins for the sales mixquarter were down slightly (to 41% from 42%) for the comparable period. This drop was a result of our products generatedcontinued efforts to very tightly control inventory levels and as a gross profit percentage performance below theresult, incurred a higher level achievedof under-absorption of factory costs in the same period of 2008. There were a few significant factors driving this result. As part of our initiative to reduce inventory and in the face of intense, short-term competitive pressure, we have sold certain products internationally at lower prices in order to retain our market share. Furthermore, in order to drive down inventory we have made decisions to hold back on manufacturing output, accepting the short-term burden of under-absorbed overheads. Furthermore, we continue to make intense efforts to focus on selling certain line items in inventory. These actions together have yielded a significant drop in inventory value but have also had a negative impact on margins. As a result, gross profitquarter ended the period at $21,364 or 32% of sales for the period ended September 30, 2009,March 31, 2010 as compared to $28,786 or 43% of sales for the same period of 2008.quarter last year. These inventory controls have helped to reduce the inventory level by $38,190 (or 34%) as compared to the same quarter last year.

It should be noted that, when making comparisons with other companies’ financial statements, the Company reports distribution costs in operating expenses and not as part of cost of sales.

Operating expenses are down 4% at $17,470decreased by $1,395 to $15,168 for the three months ending September 30, 2009ended March 31, 2010 as compared to last year’s expense of $18,111.the same period in 2009. The differences in operating expenses by department are as follows:

Interest costs net of capitalized interest, were $813$751 in the first three months ended September 30, 2009of 2010 as compared to $1,035$865 in the same period of 2008.2009. Interest costs are summarized in the following table:

Average Indebtedness and Interest expense

The Company’s average overall debt for the three months ended September 30, 2009March 31, 2010 was $96,395$67,182 as compared to $81,139$94,461 for the same period in 2008. The Company made $1,027 in scheduled payments of its term debt in both periods. Revolver debt reduced by $14,500 during the three months to September 2009 as compared to a reduction of $5,000 during the same period of 2008. Our cash positionended March 31, 2009. The increase in the quarter included the benefit from an early pay optionrevolver debt is normal at this time of year but is much reduced as parta result of our distributor programs. Our overall performance continues to be favorably impacted by movement in the LIBOR rate during the period to September 30, 2009 as compared to the same period of 2008.intense focus on inventory and accounts receivable levels. As can be seen from the table above, our effective interest rate during the period was 3.3%4.5% as compared to 5.1%3.7% for 2008.

2009. The Company’s income tax expense was $984 as compared to $3,611 for the same period of 2008. The Company’s effective tax rate was decreased to 32% mainly due to its financial performance year to date and the recent submission of amended returns to claim additional state tax credits. As previously reported, we are currently undergoing an audit with the IRS for the 2007 tax year, however, no adjustments have been made to date. Furthermore, based on its analysis, the Company determined that FASB ASC 740 [FIN 48] does not have a material impact on its financial position as of September 30, 2009. Accordingly, there were no adjustments to the balance sheet during this period. The Company does not anticipate any material changes to its recognized tax benefits over the next 12 months asincrease is partly a result of applying ASC 740.the change in interest rate levels following the first amendment to the Company’s senior credit facility agreement which was finalized in the later part of the quarter.

The Company reported net income of $2,097 or $0.08 per diluted shareIncome tax expense has increased by $749 to end at $1,178 for the three months ended September 30, 2009. This compared to net income of $6,029 or $0.22 per diluted share for the comparable period of 2008. This decline is driven by several factors: the significant reduction in sales in the quarter of our Dibrom mosquito products and PCNB fungicide products, the drive to reduce inventory reflecting change in demand pattern from our key customers driving factory cost under-absorption and decisions made to sell internationally at low margins in response to specific competitive situations.

Nine Months Ended September 30