SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
---------------
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 March 31, 1996, there were 1,786,387 shares of the registrant's common
stock outstanding.
<PAGE>
RONSON CORPORATION
FORM 10-Q INDEX
PART I - FINANCIAL INFORMATION:
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF EARNINGS
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PART II - OTHER INFORMATION:
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
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<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
----------------------------------------------------
(in thousands of dollars)
March 31, December 31,
1996 1995
-------- --------
(unaudited)
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ASSETS
CURRENT ASSETS:
Cash ................................................. $ 27 $ 64
Accounts receivable - net ............................ 2,034 1,940
Inventories:
Finished goods ..................................... 6,181 5,501
Work in process .................................... 74 177
Raw materials ...................................... 764 700
-------- --------
7,019 6,378
Other current assets ................................. 1,054 970
-------- --------
TOTAL CURRENT ASSETS ........................... 10,134 9,352
-------- --------
Property, plant and equipment, at cost:
Land ............................................... 19 19
Buildings and improvements ......................... 3,478 3,477
Machinery and equipment ............................ 3,039 2,995
Construction in progress ........................... 54 45
-------- --------
6,590 6,536
Less accumulated depreciation and amortization ....... 4,461 4,370
-------- --------
2,129 2,166
Intangible pension assets ............................ 403 419
Other assets ......................................... 823 764
Other assets of discontinued operations .............. 702 702
-------- --------
$ 14,191 $ 13,403
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt ...................................... $ 4,611 $ 4,472
Current portion of long-term debt and leases ......... 569 251
Accounts payable ..................................... 1,964 1,428
Accrued expenses and other current liabilities ....... 1,963 2,030
Current liabilities of discontinued operations ....... 926 993
-------- --------
TOTAL CURRENT LIABILITIES ...................... 10,033 9,174
-------- --------
Long-term debt ....................................... 1,353 1,728
Pension obligations .................................. 282 287
Other long-term liabilities .......................... 161 180
(Continued)
<PAGE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS -- Continued
----------------------------------------------------
(in thousands of dollars)
March 31, December 31,
1996 1995
-------- --------
(unaudited)
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STOCKHOLDERS' EQUITY:
Preferred stock ...................................... 8 8
Common stock ......................................... 1,848 1,821
Additional paid-in capital ........................... 30,344 30,308
Accumulated deficit .................................. (26,848) (27,081)
Unrecognized net loss on pension plans ............... (1,372) (1,403)
Cumulative foreign currency translation adjustment ... (25) (26)
-------- --------
3,955 3,627
Less cost of treasury shares ......................... 1,593 1,593
-------- --------
TOTAL STOCKHOLDERS' EQUITY ..................... 2,362 2,034
-------- --------
$ 14,191 $ 13,403
======== ========
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
------------------------------------------------------------
(in thousands of dollars, except per share data) (unaudited)
Quarter Ended
March 31,
----------------------
1996 1995
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NET SALES ........................................ $ 5,763 $ 5,844
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Cost and expenses:
Cost of sales .................................. 3,718 3,782
Selling, shipping and advertising .............. 812 858
General and administrative ..................... 778 819
Depreciation and amortization .................. 91 87
------- -------
5,399 5,546
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EARNINGS FROM OPERATIONS ......................... 364 298
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Other income (expense):
Interest expense ............................... (182) (111)
Other-net ...................................... (28) 34
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(210) (77)
------- -------
EARNINGS BEFORE INCOME TAXES ..................... 154 221
Income tax benefit-net ........................... 79 6
------- -------
NET EARNINGS ..................................... $ 233 $ 227
======= =======
NET EARNINGS PER COMMON SHARE:
Assuming no dilution ........................... $ 0.11 $ 0.11
======= =======
Assuming full dilution ......................... $ 0.09 $ 0.09
======= =======
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------
(in thousands of dollars) (unaudited)
Quarter Ended
March 31,
----------------
1996 1995
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Cash Flows from Operating Activities:
Net earnings ............................................. $ 233 $ 227
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization ......................... 91 87
Deferred income tax benefit ........................... (112) (26)
Increase (decrease) in cash from changes in:
Accounts receivable ................................ (94) (146)
Inventories ........................................ (641) 539
Other current assets ............................... (34) 131
Accounts payable ................................... 549 (199)
Accrued expenses and other current liabilities ..... (14) (51)
Net change in pension-related accounts ................ (91) (768)
Other ................................................. (8) (55)
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Net cash used in operating activities .............. (121) (261)
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Cash Flows from Investing Activities:
Sale of property, plant and equipment .................... -- 6
Capital expenditures ..................................... (54) (46)
----- -----
Net cash used in investing activities .............. (54) (40)
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Cash Flows from Financing Activities:
Proceeds from short-term debt ............................ 780 860
Proceeds from exercise of stock options .................. 64 --
Payments of short-term debt .............................. (641) (417)
Payments of long-term debt obligations ................... (53) (22)
Payments of long-term lease obligations .................. (12) (26)
----- -----
Net cash provided by financing activities .......... 138 395
----- -----
Net increase (decrease) in cash .......................... (37) 94
Cash at beginning of period .............................. 64 186
----- -----
Cash at end of period .................................... $ 27 $ 280
===== =====
See notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1996 (unaudited)
Note 1: ACCOUNTING POLICIES
Basis of Financial Statement Presentation - The information as of
and for the three months ended March 31, 1996 and 1995 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 - Net earnings per common share, assuming no
dilution, was computed by dividing net earnings less cumulative preferred
dividends by the weighted average number of common shares outstanding.
Net Earnings per common share, assuming full dilution, was computed
by dividing net 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:
Quarter Ended
March 31,
---------------
1996 1995
---- ----
Assuming no dilution 1,767,713 1,705,899
Assuming full dilution 2,609,850 2,579,166
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
In January 1995, Ronson Consumer Products Corporation ("RCPC")
entered into an agreement with United Jersey Bank ("UJB") for a Revolving
Loan and a Term Loan. The Revolving Loan provides a line of credit of up to
$2,000,000 to RCPC, which expires on January 11, 1997, based on accounts
receivable and inventory. The amount of the Revolving Loan outstanding at
March 31, 1996, was $987,000. The balance of the Term Loan was $156,000 at
March 31, 1996, and is to be repaid in monthly installments of $6,250 plus
interest through April 1, 1998. UJB has provided waivers of violations of
certain provisions of the loan agreements as of March 31, 1996 because the
Company and RCPC were in violation of those provisions of the loan
agreements, principally related to transfer of funds by the Company to
Ronson Metals and Ronson Aviation, Inc. ("Ronson Aviation") and to delays in
providing various reports due under the agreements.
<PAGE>
Note 3: LONG-TERM DEBT
In accordance with the terms of the Ronson Aviation mortgage, in the
amount of $429,000 at March 31, 1996, with the Bank of New York, National
Community Division ("BONY/NCD"), the remaining mortgage balance is due to be
paid in January 1997, in the amount of $339,000.
Note 4: CONTINGENCIES
In December 1994, the Company agreed to a settlement with the United
States Department of Labor ("DOL") and in March 1995, the Company agreed to
a settlement with the Internal Revenue Service ("IRS"), 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.
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, 1995, the appraised value of
the land was about $675,000, compared to the amount of the judgment,
including interest, of approximately $906,000 at March 31, 1996, for a net
contingent liability of the Company of approximately $231,000. In connection
with the settlements, the Company has established an escrow account, with
assets of about $49,000 at March 31, 1996. The funds in the escrow account
may be required to be deposited into the Retirement Plan should the proceeds
from the future sale of the North Carolina land by the Retirement Plan be
less than the amount of the judgment, including accrued interest.
On August 31, 1995, the Company received a General Notice Letter
from the United States Environmental Protection Agency ("USEPA"), notifying
the Company that the USEPA considered the Company one of about four thousand
Potentially Responsible Parties ("PRP's") for waste disposed of prior to
1980 at a landfill in Monterey Park, California, which the USEPA designated
as a Superfund site ("Site"). The USEPA identified manifests dated from 1974
through 1979 which allegedly indicate that waste originating at the location
of the Company's former Duarte, California, hydraulic subsidiary was
delivered to the Site. The Company sold the Duarte, California, hydraulic
subsidiary to the Boeing Corporation in 1981.
As a result of successfully challenging the USEPA's original
volumetric allocation, in September 1995, the USEPA reduced the volume of
waste attributed to the Duarte facility, Ronson Hydraulic Units Corporation
("RHUCOR-CA"), and determined the volume to be "de minimis". In addition,
counsel for this matter has informed the Company that factual arguments are
available that could further reduce the amount of waste attributed to the
hydraulic subsidiary, and that arguments also exist that the subsequent
owners of the facility should be required to pay a significant portion, or
possibly all, of the costs the USEPA determines to be due as a result of
RHUCOR-CA's waste having been sent to the Site.
<PAGE>
Although the Company's final contribution amount, if any, is not yet
determinable, in the General Notice Letter, the USEPA offered to partially
settle the matter if the Company paid $212,000, which would have been full
settlement of the Fifth Partial Consent Decree. This offer, however, was
made prior to the USEPA reduction of the volume of waste allocated to
RHUCOR-CA and prior to the USEPA determination that this reduced waste
volume is "de minimis". Because the USEPA has determined that the volume of
waste generated by the facility and sent to the Site is "de minimis", and
because the USEPA has sent a General Notice Letter to another PRP for the
same waste, the Company believes that the cost, if any, will not have a
material effect on the Company's financial position.
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):
Quarter Ended March 31,
-----------------------
1996 1995
---- ----
Cash Payments for:
Interest $175 $105
Income taxes -- --
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First Quarter 1996 Compared to First Quarter 1995
The Registrant, Ronson Corporation ("the Company"), had Net Earnings in
the first quarter of 1996 of $233,000 compared to Net Earnings in the first
quarter of 1995 of $227,000. The Company's Earnings from Operations
increased by 22% in the first quarter of 1996 to $364,000 from $298,000 in
the first quarter of 1995, primarily due to increased sales at Ronson
Consumer Products Corporation ("RCPC"), Woodbridge, New Jersey, and Ronson
Corporation of Canada, Ltd., Mississauga, Ontario, (together "Ronson
Consumer Products").
The Company's consolidated Net Sales were $5,763,000 in the first
quarter of 1996 as compared to $5,844,000 in the first quarter of 1995. Net
Sales of consumer products at Ronson Consumer Products increased by 9% in
the first quarter of 1996 as compared to the first quarter of 1995 primarily
due to increased shipments of lighter and accessory products. Net Sales at
Ronson Aviation, Inc. ("Ronson Aviation"), Trenton, New Jersey, decreased by
21% in the first quarter of 1996 as compared to the first quarter of 1995,
primarily due to lower aircraft sales and to lower sales of general aviation
services as a result of unusually severe winter weather in the first quarter
of 1996.
Cost of Sales, as a percentage of Net Sales, was unchanged at 65% in the
first quarter of 1996 from the first quarter of 1995. A lower consolidated
Cost of Sales percentage due to the Net Sales of Ronson Consumer Products
constituting a greater portion of the consolidated Net Sales of the Company
in the first quarter of 1996 as compared to the first quarter of 1995 was
offset by increased Cost of Sales percentages at Ronson Consumer Products
and Ronson Aviation. The Cost of Sales percentage at Ronson Consumer
Products increased to 52% in the first quarter of 1996 as compared to 50% in
the first quarter of 1995 primarily due to a change in the mix of products.
The Cost of Sales percentage at Ronson Aviation increased to 97% in the
first quarter of 1996 as compared to 92% in the first quarter of 1995
primarily due to lower Net Sales and to weather-related costs.
Interest Expense increased to $182,000 in the first quarter of 1996 from
$111,000 in the first quarter of 1995 primarily due to the additional
long-term debt from the new mortgage loan between RCPC and United Jersey
Bank ("UJB") dated December 1, 1995, and to increased short-term debt at
Ronson Aviation utilized to finance increased aircraft inventory in the
first quarter of 1996.
Other Income (Expense)-Net in the first quarter of 1995 included
approximately $38,000 of royalty income related to final settlement of
certain overseas trademark rights.
<PAGE>
FINANCIAL CONDITION
The Company's Stockholders' Equity improved to $2,362,000 at March 31,
1996 from $2,034,000 at December 31, 1995. The improvement of $328,000 in
1996 Stockholders' Equity is primarily due to the Net Earnings in the first
quarter of 1996. At March 31, 1996, the Company had net working capital of
$101,000 as compared to $178,000 at December 31, 1995. The decrease in net
working capital was primarily due to the change in classification to
short-term liabilities from long-term liabilities of $348,000 of the Ronson
Aviation mortgage loan in the first quarter of 1996 since the final payment
is due in January 1997. This decrease was mostly offset by the first quarter
Net Earnings of $233,000.
The change in cash from changes in inventories was a decrease of
$641,000 in the first quarter of 1996 as compared to an increase of $539,000
in the first quarter of 1995. This change was primarily in increased
aircraft inventory at Ronson Aviation due to lower sales of aircraft in the
first quarter of 1996 as compared to the first quarter of 1995. The change
in cash from changes in accounts payable was an increase of $549,000 in the
first quarter of 1996 as compared to a decrease of $199,000 in the first
quarter of 1995. The decrease in the first quarter of 1995 resulted from
utilizing a portion of the proceeds from the UJB loan to reduce accounts
payable. The increase in the first quarter of 1996 was primarily the result
of the timing of materials purchases to meet sales requirements by Ronson
Consumer Products from its suppliers.
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
None.
(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: May 15, 1996 /s/Louis V. Aronson II
---------------------------------
Louis V. Aronson II, President
and Chief Executive Officer
(Signing as Duly Authorized
Officer of the Registrant)
Date: May 15, 1996 /s/Daryl K. Holcomb
---------------------------------
Daryl K. Holcomb
Chief Financial Officer,
Controller and Treasurer
(Signing as Chief Financial
Officer of the Registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 27
<SECURITIES> 0
<RECEIVABLES> 2,125
<ALLOWANCES> 91
<INVENTORY> 7,019
<CURRENT-ASSETS> 10,134
<PP&E> 6,590
<DEPRECIATION> 4,461
<TOTAL-ASSETS> 14,191
<CURRENT-LIABILITIES> 10,033
<BONDS> 1,951
0
8
<COMMON> 1,848
<OTHER-SE> 506
<TOTAL-LIABILITY-AND-EQUITY> 14,191
<SALES> 5,763
<TOTAL-REVENUES> 5,763
<CGS> 3,718
<TOTAL-COSTS> 3,718
<OTHER-EXPENSES> 1,681
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 182
<INCOME-PRETAX> 154
<INCOME-TAX> (79)
<INCOME-CONTINUING> 233
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 233
<EPS-PRIMARY> .11
<EPS-DILUTED> .09
</TABLE>
