SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995
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Commission File Number 1-1031
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RONSON CORPORATION
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(Exact name of Registrant as specified in its charter)
New Jersey 22-0743290
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Corporate Park III-Campus Drive, P.O. Box 6707, Somerset, NJ 08875
------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(908) 469-8300
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(Registrant's telephone number, including area code)
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 [ ]
As of June 30, 1995, there were 1,712,887 shares of the Registrant's common
stock outstanding.
<PAGE>
RONSON CORPORATION
FORM 10-Q INDEX
PART I - FINANCIAL INFORMATION:
CONSOLIDATED BALANCE SHEETS:
JUNE 30, 1995 AND DECEMBER 31, 1994
CONSOLIDATED STATEMENTS OF EARNINGS:
QUARTER ENDED JUNE 30, 1995 AND 1994
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
CONSOLIDATED STATEMENTS OF CASH FLOWS:
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
PART II - OTHER INFORMATION:
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------
(in thousands of dollars)
June 30, December 31,
1995 1994
-------- --------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash ................................................. $ 227 $ 186
Accounts receivable - net ............................ 1,988 1,697
Inventories:
Finished goods ..................................... 5,545 4,650
Work in process .................................... 127 76
Raw materials ...................................... 674 772
-------- --------
6,346 5,498
Other current assets ................................. 608 690
Current assets of discontinued operations ............ 207 97
-------- --------
TOTAL CURRENT ASSETS ........................... 9,376 8,168
-------- --------
Property, plant and equipment, at cost:
Land ............................................... 19 19
Buildings and improvements ......................... 3,442 3,360
Machinery and equipment ............................ 2,972 2,902
Construction in progress ........................... 14 5
-------- --------
6,447 6,286
Less accumulated depreciation and amortization ....... 4,221 4,049
-------- --------
2,226 2,237
Intangible pension assets ............................ 432 463
Other assets ......................................... 865 588
Other assets of discontinued operations .............. 431 431
-------- --------
$ 13,330 $ 11,887
======== ========
See notes to consolidated financial statements.
<PAGE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
----------------------------------------------------
(in thousands of dollars)
June 30, December 31,
1995 1994
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt ...................................... $ 4,646 $ 2,750
Current portion of long-term debt .................... 183 553
Current portion of lease obligations ................. 44 58
Current portion of pension obligations ............... 1,415 1,913
Accounts payable ..................................... 1,422 1,693
Accrued expenses ..................................... 1,857 2,044
Current liabilities of discontinued operations ....... 386 584
-------- --------
TOTAL CURRENT LIABILITIES ...................... 9,953 9,595
-------- --------
Long-term debt ....................................... 540 --
Pension obligations .................................. 254 559
Other long-term liabilities .......................... 396 461
Long-term liabilities of discontinued operations ..... 97 101
STOCKHOLDERS' EQUITY:
Preferred stock ...................................... 9 9
Common stock ......................................... 1,775 1,768
Additional paid-in capital ........................... 30,329 30,329
Accumulated deficit .................................. (26,884) (27,721)
Unrecognized net loss on pension plans ............... (1,518) (1,595)
Cumulative foreign currency translation adjustment ... (28) (26)
-------- --------
3,683 2,764
Less cost of treasury shares ......................... 1,593 1,593
-------- --------
2,090 1,171
-------- --------
$ 13,330 $ 11,887
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
------------------------------------------------------------
(in thousands of dollars except per share data) (unaudited)
Quarter Ended
June 30,
----------------------
1995 1994
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<S> <C> <C>
NET SALES ........................................ $ 8,304 $ 6,553
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Cost and expenses:
Cost of sales .................................. 5,886 4,493
Selling, shipping and advertising .............. 932 763
General and administrative ..................... 844 795
Depreciation and amortization .................. 85 86
------- -------
7,747 6,137
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EARNINGS FROM OPERATIONS ......................... 557 416
------- -------
Other income (expense):
Interest expense ............................... (120) (73)
Other-net ...................................... 61 (40)
------- -------
(59) (113)
------- -------
EARNINGS BEFORE INCOME TAXES ..................... 498 303
Income tax benefit-net ........................... 112 --
------- -------
NET EARNINGS ..................................... $ 610 $ 303
======= =======
EARNINGS PER COMMON SHARE:
Assuming no dilution ........................... $ 0.33 $ 0.15
======= =======
Assuming full dilution ......................... $ 0.24 $ 0.12
======= =======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
------------------------------------------------------------
(in thousands of dollars except per share data) (unaudited)
Six Months Ended
June 30,
---------------------------
1995 1994
--------- ---------
<S> <C> <C>
NET SALES .................................... $ 14,148 $ 11,942
--------- ---------
Cost and expenses:
Cost of sales .............................. 9,668 8,127
Selling, shipping and advertising .......... 1,790 1,467
General and administrative ................. 1,663 1,533
Depreciation and amortization .............. 172 166
--------- ---------
13,293 11,293
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EARNINGS FROM OPERATIONS ..................... 855 649
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Other income (expense):
Interest expense ........................... (231) (142)
Other-net .................................. 95 (73)
--------- ---------
(136) (215)
--------- ---------
EARNINGS BEFORE INCOME TAXES ................. 719 434
Income tax benefit-net ....................... 118 --
--------- ---------
NET EARNINGS ................................. $ 837 $ 434
========= =========
EARNINGS PER COMMON SHARE:
Assuming no dilution ....................... $ 0.44 $ 0.20
========= =========
Assuming full dilution ..................... $ 0.32 $ 0.17
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------
(in thousands of dollars) (unaudited)
Six Months Ended
June 30,
----------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings ......................................... $ 837 $ 434
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization ..................... 172 166
Gain on sale of property, plant and equipment ..... (6) --
Deferred income tax benefit ....................... (161) --
Increase (decrease) in cash from changes in:
Accounts receivable ............................ (291) (393)
Inventories .................................... (848) (607)
Other current assets ........................... (28) 7
Accounts payable ............................... (302) 310
Accrued expenses ............................... (354) (207)
Net change in pension-related accounts ............ (695) 153
Other ............................................. (42) (19)
--------- ---------
Net cash used in operating activities .......... (1,718) (156)
--------- ---------
Cash Flows from Investing Activities:
Sale of property, plant and equipment ................ 6 --
Capital expenditures ................................. (161) (263)
--------- ---------
Net cash used in investing activities .......... (155) (263)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from short-term debt ........................ 6,098 510
Proceeds from long-term debt ......................... 225 --
Payments of dividends on preferred stock ............. -- (92)
Payments of short-term debt .......................... (4,319) (484)
Payments of long-term debt ........................... (55) (43)
Payments of long-term lease obligations .............. (35) (28)
--------- ---------
Net cash provided by (used in) financing
activities ................................. 1,914 (137)
--------- ---------
Net increase (decrease) in cash ................... 41 (556)
Cash at beginning of period ....................... 186 607
--------- ---------
Cash at end of period ............................. $ 227 $ 51
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 1995 (unaudited)
Note 1: ACCOUNTING POLICIES
Basis of Financial Statement Presentation - The information as of and
for the three-month and six-month periods ended June 30, 1995 and 1994 is
unaudited. In the opinion of management, all adjustments necessary for a fair
presentation of the results of such interim periods have been included.
Per Common Share Data - Earnings per common share, assuming no dilution,
was computed by dividing earnings less cumulative preferred dividends by the
weighted average number of common shares outstanding.
Earnings per common share, assuming full dilution, was computed by
dividing earnings by the weighted average number of common shares outstanding
plus the assumed conversion of the preferred shares to common shares.
The weighted average number of common shares used for these computations
was as follows:
<TABLE>
<CAPTION>
Quarter Ended
June 30,
----------------------------
1995 1994
--------- ---------
<S> <C> <C>
Assuming no dilution ..................... 1,707,698 1,698,765
Assuming full dilution ................... 2,580,965 2,576,177
<CAPTION>
Six Months Ended
June 30,
----------------------------
1995 1994
--------- ---------
<S> <C> <C>
Assuming no dilution ..................... 1,706,803 1,698,767
Assuming full dilution ................... 2,580,070 2,576,179
</TABLE>
Discontinued Operations - On October 6, 1993, the Registrant, Ronson
Corporation (the "Company"), sold the assets and business of Ronson Hydraulic
Units Corporation ("Ronson Hydraulics"). As a result, the operations of Ronson
Hydraulics have been classified as discontinued operations in the accompanying
Consolidated Statements of Earnings and other related operating statement data.
Ronson Metals Corporation ("Ronson Metals") is also being accounted for as a
discontinued operation and, accordingly, its operating results are reported in
this manner in all periods presented in the accompanying Consolidated Statements
of Earnings and other related operating statement data.
This quarterly report should be read in conjunction with the Company's
Annual Report on Form 10-K.
Note 2: SHORT-TERM DEBT
On January 11, 1995, Ronson Consumer Products Corporation ("RCPC")
entered into an agreement with United Jersey Bank ("UJB") for a Revolving Loan
and a Term Loan (refer to Note 3 below). The Revolving Loan provides a line of
credit of up to $2,000,000 to RCPC, which expires on January 11, 1997. The
balance available under the Revolving Loan is determined by the level of
accounts receivable and inventory of RCPC. The loan bears interest at the rate
of 2% above UJB's prime rate (9% at June 30, 1995). The Revolving Loan and Term
Loan are secured by the accounts receivable, inventory and machinery and
equipment of RCPC and a mortgage on the land, buildings and improvements of RCPC
and the guarantees of the Company and Ronson Corporation of Canada, Ltd. The UJB
agreement also has restrictive covenants which, among other things, limit the
transfer of assets between the Company and its subsidiaries. At June 30, 1995,
the amount of the Revolving Loan was $1,209,000.
Note 3: LONG-TERM DEBT
The Term Loan from UJB to RCPC of $213,000 at June 30, 1995 is payable
in monthly installments of $6,250 plus interest through April 1, 1998. The Term
Loan bears interest at the rate of 2% above UJB's prime rate.
On June 26, 1995, Ronson Aviation, Inc. ("Ronson Aviation") and the Bank
of New York, National Community Division ("BONY/NCD") agreed to extend the
mortgage loan, which had been due to be repaid on June 30, 1995, to January 31,
1997. The extended mortgage is now payable in monthly installments of $9,000
plus interest.
Note 4: CONTINGENCIES
On December 30, 1994, the Company agreed to a settlement with the United
States Department of Labor ("DOL") and on February 3, 1995, the Company agreed
to a settlement with an appellate office of the Internal Revenue Service
("IRS"), which was accepted on behalf of the Commissioner of the IRS on March 7,
1995, related to the 1991 contribution by the Company of unencumbered land, not
used in operations, to the Ronson Corporation Retirement Plan ("Retirement
Plan"). The settlements with the DOL and IRS settled all matters arising from
the IRS examination of the information return, Form 5500, of the Retirement Plan
for the years ended June 30, 1991 and June 30, 1992, including the proposed
assessments pertaining to such years. As described more fully below, there
remains an additional contingent liability at June 30, 1995 of approximately
$200,000.
Under the terms of the settlements with the IRS and DOL, the land
contributed in 1991 will remain in the Retirement Plan. A consent judgment with
the DOL in the amount of $855,194 was entered against the Company, with simple
interest at the rate of 4.72% per year, compounded annually, on December 30,
1994. Payment of the judgment amount is stayed, and no collection action will be
taken unless the Company fails to make required payments to an escrow account.
Further, the amount of the judgment will be satisfied in whole, or in part, by
the proceeds from the future sale of the land by the Retirement Plan. At
December 31, 1994, the appraised value of the land is about $675,000, compared
to the amount of the judgment, including interest, of approximately $875,000 at
June 30, 1995, for a net contingent liability of the Company of approximately
$200,000.
The Company is involved in various lawsuits. Management believes that
the outcome of these lawsuits will not have a material adverse effect on the
Company's financial position.
Largely as the result of increased cost of product liability insurance,
the Company has secured substantially smaller amounts of liability insurance
than it had purchased prior to 1987. While the Company has never settled or been
liable for claims for amounts in excess of the reduced level of coverage now
available, the present level of insurance represents a potential exposure for
the Company.
Note 5. STATEMENTS OF CASH FLOWS
Certificates of deposit that have a maturity of three months or more are
not considered cash equivalents for purposes of the accompanying consolidated
statements of cash flows.
Supplemental disclosures of cash flow information (in thousands):
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1995 1994
---- ----
<S> <C> <C>
Cash Payments for:
Interest ............................. $221 $136
Income taxes ......................... -- 93
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Second Quarter 1995 compared to Second Quarter 1994 and
First Half 1995 compared to First Half 1994.
The Registrant, Ronson Corporation (the "Company"), had Net Earnings in
the second quarter of 1995 of $610,000 compared to Net Earnings in the second
quarter of 1994 of $303,000, an increase of 101%. The Company's Net Earnings in
the first half of 1995 increased to $837,000 from $434,000 in the first half of
1994, an increase of 93%.
The Company's Consolidated Net Sales increased to $8,304,000 in the
second quarter of 1995 from $6,553,000 in the second quarter of 1994, an
increase of 27%. The Company's Net Sales increased to $14,148,000 in the first
half of 1995 from $11,942,000 in the first half of 1994, an increase of 18%. Net
Sales of consumer products at Ronson Consumer Products Corporation ("RCPC"),
Woodbridge, New Jersey, and Ronson Corporation of Canada, Ltd., Mississauga,
Ontario, (together "Ronson Consumer Products") increased by 15% in the second
quarter of 1995 as compared to the second quarter of 1994. Net Sales at Ronson
Consumer Products increased by 19% in the first half of 1995 as compared to the
first half of 1994. The increased sales at Ronson Consumer Products in the 1995
periods were primarily due to increased shipments of lighter and accessory
products. Net Sales at Ronson Aviation, Inc. ("Ronson Aviation"), Trenton, New
Jersey, increased by 38% in the second quarter of 1995 compared to the second
quarter of 1994 and increased by 17% in the first half of 1995 as compared to
the first half of 1994. The increases in Net Sales at Ronson Aviation in the
second quarter and first half of 1995 were primarily due to higher aircraft
sales.
Cost of Sales, as a percentage of Net Sales, increased to 71% in the
second quarter of 1995 from 69% in the second quarter of 1994 and was unchanged
at 68% in the first half of 1995 as compared to the first half of 1994. The
increase in the Cost of Sales percentage in the second quarter of 1995 compared
to the second quarter of 1994 was due primarily to significant increases in
aircraft sales in the 1995 quarter. The higher aircraft sales at Ronson
Aviation, while profitable, carry a much higher Cost of Sales percentage.
Selling, Shipping and Advertising Expenses, as a percentage of Net
Sales, were reduced to 11% in the second quarter of 1995 from 12% in the second
quarter of 1994 primarily due to the increase in Net Sales. The Selling,
Shipping and Advertising Expenses, as a percentage of Net Sales, increased to
13% in the first half of 1995 compared to 12% in the first half of 1994
primarily due to sales promotion costs in the first quarter of 1995 at Ronson
Consumer Products related to the introduction of the new RONII refillable butane
lighter on January 1, 1995.
General and Administrative Expenses, as a percentage of Net Sales, were
lower at 10% and 12% in the second quarter and first half of 1995, respectively,
as compared to 12% and 13% in the second quarter and first half of 1994,
respectively, primarily due to the higher Net Sales in the 1995 periods.
Interest Expense increased to $120,000 in the second quarter of 1995
from $73,000 in the second quarter of 1994 and increased to $231,000 in the
first half of 1995 from $142,000 in the first half of 1994. The increases in the
Interest Expense in 1995 were primarily due to the additional short-term debt
from the new line of credit agreement between RCPC and United Jersey Bank
("UJB") in January 1995 and to increased short-term debt financing related to
increased inventory of aircraft at Ronson Aviation.
Other Income (Expense)-Net in the second quarter and first half of 1995
included a gain of approximately $96,000 from insurance proceeds and also
included approximately $38,000 in the first quarter of 1995 of royalty income
related to final settlement of certain overseas trademark rights.
The Income Tax Benefit in the second quarter and first half of 1995
included tax benefits of $135,000 and $161,000, respectively, as the result of
the recognition of deferred tax assets. This tax benefit was partially offset by
provisions for state income taxes of $23,000 and $43,000 in the second quarter
and first half of 1995, respectively.
FINANCIAL CONDITION
The Company's Stockholders' Equity improved to $2,090,000 at June 30,
1995 from $1,171,000 at December 31, 1994. The improvement of $919,000 in 1995
Stockholders' Equity was primarily due to the Net Earnings in the first half of
1995. At June 30, 1995, the Company's working capital deficiency was reduced to
$577,000 as compared to $1,427,000 at December 31, 1994. The decrease in the
deficiency in working capital was primarily due to the Net Earnings of $837,000
in the first half of 1995 which was partially offset by the change in
classification of pension obligations from long-term liabilities to current
liabilities.
On January 11, 1995, RCPC entered into an agreement with UJB for a
Revolving Loan and a Term Loan. The Revolving Loan provides a line of credit up
to $2,000,000 to RCPC based on accounts receivable and inventory. The balance
available under the Revolving Loan is determined by the level of receivables and
inventory. The Term Loan of $225,000 is payable in equal installments of $6,250
plus interest for 36 months and is based on the value of the machinery and
equipment of RCPC. The loans bear interest at the rate of 2% above UJB's prime
rate. The Revolving Loan and Term Loan are secured by the accounts receivable,
inventory, machinery and equipment of RCPC, a mortgage on the land, buildings
and improvements of RCPC and the guarantees of the Company and Ronson
Corporation of Canada, Ltd. The UJB agreement also has restrictive covenants
which, among other things, limit the transfer of assets between the Company and
its subsidiaries. The short-term debt of $332,000 at December 31, 1994 of RCPC
to United Credit Corporation was repaid in full out of the proceeds of the UJB
loans to RCPC. Also out of the proceeds from the financing, the Company
contributed approximately $850,000 to the Ronson Corporation Retirement Plan to
meet substantially all of the required minimum funding of the Ronson Corporation
Retirement Plan for 1995.
On June 26, 1995, the Company, Ronson Aviation and the Bank of New York,
National Community Division ("BONY/NCD") completed an agreement to extend the
due date of the mortgage loan from BONY/NCD to Ronson Aviation to January 31,
1997. The loan had been due to expire on June 30, 1995. Under the agreement, the
mortgage loan is now due to be paid in monthly installments of $9,000 plus
interest with a final payment of $339,000 on January 31, 1997. The agreement
also provides for an extension to December 31, 1995 of the line of credit to
Ronson Aviation for aircraft inventory, limited to those aircraft currently
financed.
The Company has continued to meet its obligations as they have matured
and management believes that the Company will continue to meet its obligations
through internally generated funds from future net earnings and depreciation,
established external financing arrangements, potential additional sources of
financing and existing cash balances.
PART II - OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(10) The Commercial Term Note, Commercial Aircraft Notes, Extension
and Modification Agreement dated June 26, 1995 among The Bank
of New York, (NJ), Ronson Aviation, Inc. and Ronson Corporation
is attached hereto as Exhibit 10.
(11) Statement re computation of per share earnings is attached
hereto as Exhibit 11.
(b) Reports on Form 8-K
None.
<PAGE>
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.
RONSON CORPORATION
Date: August 11, 1995 /s/Louis V. Aronson II
---------------------------------------
Louis V. Aronson II, President
and Chief Executive Officer
(Signing as Duly Authorized
Officer of the Registrant)
Date: August 11, 1995 /s/Daryl K. Holcomb
---------------------------------------
Daryl K. Holcomb
Chief Financial Officer,
Controller and Treasurer
(Signing as Chief Financial
Officer of the Registrant)
EXHIBIT 10
----------
COMMERCIAL TERM NOTE, COMMERCIAL AIRCRAFT NOTES,
EXTENSION AND MODIFICATION AGREEMENT
Agreement made this 26th day of June, 1995, by and among:
The Bank of New York, (NJ), f/k/a National Community Bank of New
Jersey, a Bank organized under the laws of the State of New Jersey having
offices located at 385 Rifle Camp Road, West Paterson, New Jersey (hereinafter
the "Bank"); and
Ronson Aviation, Inc., a corporation organized under the laws of the
State of New Jersey having offices located at Mercer County Airport, Trenton,
New Jersey (sometimes referred to herein as the "Borrower");
Ronson Corporation, a corporation organized under the laws of the State
of New Jersey having offices located at Corporate Park III, Campus Drive,
Somerset, New Jersey (sometimes referred to herein as the "Guarantor");
Recitals
--------
WHEREAS, on or about June 3, 1991 Borrower executed and delivered to Bank a
Commercial Note and a Credit Agreement in the principal amount of Eight Hundred
and Fifty Thousand ($850,000.00) Dollars, (hereinafter the "Commercial Term
Note") plus interest which is payable in accordance with the terms thereof; and
WHEREAS, on or about June 3, 1991 to secure the obligations pursuant to the
Commercial Term Note, Borrower executed and delivered to Bank a Leasehold
Mortgage on the premises consisting of approximately 22 +-acres, plus all
improvements located thereon, in the Township of Ewing, State of New Jersey,
commonly known as the Mercer County Airport (hereinafter the "Leasehold
Premises") more fully described on Schedule A attached hereto. The Leasehold
Mortgage was recorded in the Clerk's Office of Mercer County on June 6, 1991 in
Book 2460 of Mortgages for said County at Page 890, et. seq.; and
WHEREAS, on or about June 3, 1991 to further secure the obligations of the
Commercial Term Note, Borrower executed and delivered to Bank an Assignment of a
certain Commercial Note dated May 23, 1991 by Ronson Corporation in favor of
Borrower in the amount of $850,000.00 plus interest which is payable in
accordance with the terms thereof; and
WHEREAS, on or about June 3, 1991 to further secure the obligations pursuant to
the Commercial Term Note, Borrower executed and delivered to Bank a Security
Agreement covering all of the assets owned of Borrower; and
WHEREAS, Borrower executed and delivered to Bank several Commercial Notes
(hereinafter collectively the "Commercial Aircraft Notes") secured by Purchase
Money Security Interests in certain aircraft as follows:
1. Commercial Note dated October 9, 1992, by the Borrower in favor of the Bank
in the amount of $550,000.00 which is secured, inter alia, by a Purchase
Money Security Interest in a 1983 Beechcraft C-99 Airliner Aircraft, Serial
#U-213,FAA Registration #N 6656 N;
2. Commercial Note dated December 13, 1993, by the Borrower in favor of the Bank
in the amount of $406,388.88 which is secured, inter alia, by a Purchase
Money Security Interest in a 1983 Beechcraft C-99 Airliner Aircraft, Serial
#U-209, FAA Registration #N 6645 K;
3. Commercial Note dated May 8, 1992, by the Borrower in favor of the Bank in
the amount of $40,000.00 which is secured, inter alia, by a Purchase Money
Security Interest in a 1982 Beechcraft C23 Sundowner Aircraft, Serial #
M-2366, FAA Registration # N 6528 N;
4. Commercial Note dated March 9, 1992, by the Borrower in favor of the Bank in
the amount of $31,000.00 which is secured, inter alia, by a Purchase Money
Security Interest in a 1979 Beechcraft C23 Sundowner Aircraft, Serial #
M-2097, FAA Registration # N 790 Y; and
WHEREAS, the Bank on behalf of the Borrower issued a Standby Letter of Credit
Agreement in favor of Ratheon Aircraft Company, formerly Beech Aircraft Company,
as beneficiary in the amount of $35,000.00 which expires on October 31, 1995;
and the Bank on behalf of the Borrower issued a Standby Letter of Credit
Agreement in favor of General Electric Capital Corporation as beneficiary in the
amount of $6,000.00 which expires on December 2, 1995 (hereinafter collectively
the "Standby Letter of Credit Agreements"); and
WHEREAS, the Commercial Term Note, the Commercial Aircraft Notes, and the
Standby Letter of Credit Agreements are hereinafter known as the "Entire
Indebtedness" of Borrower in favor of Bank; and
WHEREAS, on or about February 21, 1990 to secure the Entire Indebtedness the
Borrower executed and delivered to the Bank a Leasehold Mortgage on the
Leasehold Premises described herein and on Schedule A attached, which Leasehold
Mortgage was recorded in the Clerk's Office of Mercer County on March 6, 1990 in
Book 2385 of Mortgages for said County at Page 399, et. seq.; and
WHEREAS, Ronson Corporation executed and delivered to Bank a certain Guarantee
dated March 26, 1993 to secure the Entire Indebtedness of Borrower to Bank; and
WHEREAS, the Borrower has requested to modify the terms of the Commercial Term
Note and the Commercial Aircraft Notes; and
WHEREAS, the Bank is willing to modify the terms and conditions of the
Commercial Term Note and the Commercial Aircraft Notes in accordance with the
terms and conditions contained herein.
NOW THEREFORE, in consideration of the foregoing promises and other good and
valuable consideration, the receipt of which is hereby acknowledged by the
parties, it is agreed as follows:
1. Acknowledgment of Indebtedness.
-------------------------------
Borrower and Guarantor acknowledge that as of June 7, 1995, they are indebted
to the Bank in the sum of $1,220,007.10 consisting of (i) the remaining
outstanding balance due to the Bank with respect to the Commercial Term Note
consisting of unpaid principal of $509,990.08 plus interest of $977.48 and
(ii) the remaining outstanding balance due to the Bank with respect to the
Commercial Aircraft Notes consisting of unpaid principal of $665,048.81 plus
interest of $2,990.73 and (iii) the unfunded liability arising from the
Standby Letter of Credit Agreements of $41,000.00 plus any related fees.
Borrower and Guarantor acknowledge and agree that the Entire Indebtedness is
not subject to any claims, offsets, defenses, counterclaims or right of
setoff of any kind whatsoever.
2. Repayment of the Commercial Term Note.
--------------------------------------
Borrower agrees that commencing on July 1, 1995 and on the first day of each
month thereafter it shall repay the Commercial Term Note in monthly
installments of principal of $9,000.00 per month, plus unpaid and accrued
interest. All amounts owed pursuant to the Commercial Term Note shall be paid
in full by the Borrower to Bank on or before January 31, 1997. Interest on
the Commercial Term Note shall accrue at the rate equal to the Bank's Prime
Rate of interest plus two and one half (2.5%) percent as same may vary from
time to time. For the purpose of this Agreement, the Bank's Prime Rate is
defined to mean the rate of interest announced from time to time by the Bank
as its prime rate, prime lending rate or base rate. This rate of interest is
determined from time to time by the Bank as a means of pricing some loans and
it is neither tied to any external rate of interest or index nor does it
necessarily reflect the lowest rate of interest actually charged by the Bank
to any particular class or category of customers.
3. Repayment of Commercial Aircraft Notes.
---------------------------------------
Borrower agrees that the Commercial Aircraft Notes will continue to be paid
in accordance with the terms and conditions of the Commercial Aircraft Notes.
Notwithstanding the repayment terms of the Commercial Aircraft Notes, the
Commercial Aircraft Notes will mature on December 31, 1995, at which time any
remaining unpaid principal, interest and charges will be due and payable in
full.
4. Standby Letter of Credit Agreements.
------------------------------------
The Standby Letter of Credit Agreements are to be cancelled prior to their
respective maturity dates. The Bank will not extend the Standby Letter of
Credit Agreements beyond their respective maturity dates. Any drawings under
the Standby Letter of Credit Agreements are due and payable in full as of the
date of drawing.
5. Default Provisions.
-------------------
In addition to the existing Default Provisions provided in the documents
evidencing the Entire Indebtedness, the following Default Provisions will
apply:
A. In the event that the Commercial Aircraft Notes are not paid in full on or
prior to December 31, 1995, the Commercial Term Note will be in default
and will be due and payable in full. The Bank may, in its sole and
absolute discretion, despite any such default, providing there are no
other uncured events of default, elect to waive such default under the
Commercial Term Note, providing that the Borrower and Guarantor agree that
commencing on January 1, 1996 and on the first day of each month
thereafter it shall repay the Commercial Term Note in monthly installments
of principal of $11,000.00 per month, plus unpaid and accrued interest as
herein defined. In the event such default is waived, all amounts owed and
pursuant to the Commercial Term Note shall be paid in full by the Borrower
to Bank on or before January 31, 1997.
B. In the event of either a drawing under the Standby Letter of Credit
Agreements by the Beneficiary, or if the Borrower has not caused the
Standby Letter of Credit Agreements to be cancelled by their respective
maturity dates, the Entire Indebtedness will be considered by the Bank to
be in default and due and payable in full immediately.
C. In the event that Ronson Corporation and /or any of its affiliated or
wholly owned subsidiaries, fail to make any and all required payments,
adjustments or contributions to its Retirement Plan, the Entire
Indebtedness will be due and payable in full immediately.
6. Consent and Acknowledgment of Guarantor.
----------------------------------------
Ronson Corporation hereby acknowledges and agrees to the terms of this
Modification Agreement which covers the Entire Indebtedness and agree to be
bound by its terms.
7. No Other Changes.
-----------------
Except as specifically set forth herein or in accordance with any other
documents executed simultaneously herewith, the Commercial Term Note the
Commercial Aircraft Notes, and the Standby Letter of Credit Agreements, and
all documents related thereto, and all other modifications, shall continue in
full force and effect in accordance with their terms and each is hereby
ratified and reaffirmed by the parties hereto.
IN WITNESS WHEREOF the parties have executed the agreement on the date first set
above.
THE BANK OF NEW YORK, N.J.,
f/k/a NATIONAL COMMUNITY BANK
OF NEW JERSEY
Attest:
/s/Jacqueline M. Kuhn By: /s/Douglas E. Selsor
----------------------- --------------------------
Jacqueline M. Kuhn Douglas E. Selsor
Assistant Cashier Vice President
Ronson Aviation, Inc.
Attest:
/s/Alberta D. Gladis By: /s/Louis V. Aronson II
------------------------- --------------------------
Alberta D. Gladis Louis V. Aronson II
Assistant Secretary President
Ronson Corporation
(Guarantor)
Attest:
/s/Alberta D. Gladis By: /s/Louis V. Aronson II
------------------------- --------------------------
Alberta D. Gladis Louis V. Aronson II
Assistant Secretary President & C.E.O.
Exhibit 11
----------
<TABLE>
<CAPTION>
RONSON CORPORATION
CALCULATION OF EARNINGS PER COMMON SHARE
(dollars in thousands, except per common share data) (unaudited)
Quarter Ended
June 30,
--------------------------
1995 1994
---------- ----------
<S> <C> <C>
Assuming No Dilution
--------------------
Net Earnings ................................ $ 610 $ 303
Less Cumulative Preferred Dividends ......... (46) (46)
---------- ----------
Net Earnings Applicable to Common Stock ..... $ 564 $ 257
========== ==========
Weighted average number of common shares
outstanding (1) .......................... 1,707,698 1,698,765
---------- ----------
Net Earnings per Common Share ............... $ 0.33 $ 0.15
========== ==========
Assuming Full Dilution
----------------------
Net Earnings ................................ $ 610 $ 303
========== ==========
Weighted average number of common shares
outstanding (1) .......................... 1,707,698 1,698,765
Additional common shares outstanding
resulting from assumed conversion of
preferred stock to common stock .......... 873,267 877,412
---------- ----------
Total ....................................... 2,580,965 2,576,177
========== ==========
Net Earnings per Common Share ............... $ 0.24 $ 0.12
========== ==========
</TABLE>
(1) The dilution of the outstanding stock options was less than 3% in the second
quarter of 1995 and, therefore, the stock options were not included as
common stock equivalents for that period. The exercise prices of outstanding
stock options exceeded the market prices in the second quarter of 1994 and,
therefore, the stock options were anti- dilutive and not included as common
stock equivalents for the second quarter of 1994.
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION
CALCULATION OF EARNINGS PER COMMON SHARE
(dollars in thousands, except per common share data) (unaudited)
Six Months Ended
June 30,
--------------------------
1995 1994
---------- ----------
<S> <C> <C> <C>
Assuming No Dilution
--------------------
Net Earnings ................................ $ 837 $ 434
Less Cumulative Preferred Dividends ......... (92) (92)
---------- ----------
Net Earnings from Continuing Operations
Applicable to Common Stock ............... $ 745 $ 342
========== ==========
Weighted average number of common shares
outstanding (1) .......................... 1,706,803 1,698,767
---------- ----------
Net Earnings per Common Share ............... $ 0.44 $ 0.20
========== ==========
Assuming Full Dilution
----------------------
Net Earnings ................................ $ 837 $ 434
========== ==========
Weighted average number of common shares
outstanding (1) .......................... 1,706,803 1,698,767
Additional common shares outstanding
resulting from assumed conversion of
preferred stock to common stock .......... 873,267 877,412
---------- ----------
Total ....................................... 2,580,070 2,576,179
========== ==========
Net Earnings per Common Share ............... $ 0.32 $ 0.17
========== ==========
</TABLE>
(1) The dilution of the outstanding stock options was less than 3% in the six
months of 1995 and, therefore, the stock options were not included as common
stock equivalents for that period. The exercise prices of outstanding stock
options exceeded the market prices in the six months of 1994 and, therefore,
the stock options were anti-dilutive and not included as common stock
equivalents for the six months of 1994.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 227
<SECURITIES> 0
<RECEIVABLES> 2,069
<ALLOWANCES> 81
<INVENTORY> 6,346
<CURRENT-ASSETS> 9,376
<PP&E> 6,447
<DEPRECIATION> 4,221
<TOTAL-ASSETS> 13,330
<CURRENT-LIABILITIES> 9,953
<BONDS> 825
<COMMON> 1,175
0
9
<OTHER-SE> 306
<TOTAL-LIABILITY-AND-EQUITY> 13,330
<SALES> 14,148
<TOTAL-REVENUES> 14,148
<CGS> 9,668
<TOTAL-COSTS> 9,668
<OTHER-EXPENSES> 3,625
<LOSS-PROVISION> 8
<INTEREST-EXPENSE> 231
<INCOME-PRETAX> 719
<INCOME-TAX> (118)
<INCOME-CONTINUING> 837
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 837
<EPS-PRIMARY> .44
<EPS-DILUTED> .32
</TABLE>
