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 March 31, 1997
---------------
Commission File Number 1-1031
------
RONSON CORPORATION
------------------------------------------------------
(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
----------------------------------------------------
(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, 1997, there were 2,860,961 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
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
March 31, December 31,
1997 1996
-------- --------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash ............................................. $ 11 $ 116
Accounts receivable - net ........................ 1,739 1,617
Inventories:
Finished goods ................................. 2,128 2,428
Work in process ................................ 118 160
Raw materials .................................. 531 520
-------- --------
2,777 3,108
Other current assets ............................. 1,106 971
-------- --------
TOTAL CURRENT ASSETS ....................... 5,633 5,812
-------- --------
Property, plant and equipment, at cost:
Land ........................................... 19 19
Buildings and improvements ..................... 3,650 3,638
Machinery and equipment ........................ 5,707 5,678
Construction in progress ....................... 56 55
-------- --------
9,432 9,390
Less accumulated depreciation and amortization ... 5,175 5,056
-------- --------
4,257 4,334
Intangible pension assets ........................ 341 357
Other assets ..................................... 754 775
Other assets of discontinued operations .......... 832 826
-------- --------
$ 11,817 $ 12,104
======== ========
See notes to consolidated financial statements.
<PAGE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
March 31, December 31,
1997 1996
-------- --------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt .................................. $ 1,668 $ 2,084
Current portion of long-term debt and leases ..... 657 706
Accounts payable ................................. 1,780 1,477
Accrued expenses ................................. 1,739 1,911
Current liabilities of discontinued operations ... 1,656 1,753
-------- --------
TOTAL CURRENT LIABILITIES .................. 7,500 7,931
-------- --------
Long-term debt and leases ........................ 2,538 2,602
Pension obligations .............................. 276 268
Other long-term liabilities ...................... 90 93
STOCKHOLDERS' EQUITY:
Preferred stock .................................. 2 8
Common stock ..................................... 2,923 1,864
Additional paid-in capital ....................... 29,292 30,345
Accumulated deficit .............................. (27,758) (27,936)
Unrecognized net loss on pension plans ........... (1,406) (1,441)
Cumulative foreign currency translation adjustment (46) (36)
-------- --------
3,007 2,804
Less cost of treasury shares ..................... 1,594 1,594
-------- --------
TOTAL STOCKHOLDERS' EQUITY ................. 1,413 1,210
-------- --------
$ 11,817 $ 12,104
======== ========
See notes to consolidated financial statements.
</TABLE>
<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
March 31,
----------------------
1997 1996 *
------ ------
<S> <C> <C>
NET SALES ...................................... $5,603 $5,763
------ ------
Cost and expenses:
Cost of sales ................................ 3,489 3,691
Selling, shipping and advertising ............ 913 812
General and administrative ................... 808 778
Depreciation and amortization ................ 119 118
------ ------
5,329 5,399
------ ------
EARNINGS FROM OPERATIONS ....................... 274 364
------ ------
Other expense:
Interest expense ............................. 123 182
Other-net .................................... 12 28
------ ------
135 210
------ ------
EARNINGS BEFORE INCOME TAXES ................... 139 154
Income tax benefits-net ........................ 39 79
------ ------
NET EARNINGS ................................... $ 178 $ 233
====== ======
NET EARNINGS PER COMMON SHARE:
Assuming no dilution ......................... $ 0.06 $ 0.11
====== ======
Assuming full dilution ....................... $ 0.06 $ 0.09
====== ======
See notes to consolidated financial statements.
* Reclassified for comparability.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars) (unaudited)
Quarter Ended
March 31,
-------------------
1997 1996 *
----- -----
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings ......................................... $ 178 $ 233
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization ..................... 119 118
Deferred income tax benefits ...................... (50) (112)
Increase (decrease) in cash from changes in:.......
Accounts receivable ............................ (122) (94)
Inventories .................................... 331 (495)
Other current assets ........................... (113) (34)
Accounts payable ............................... 378 549
Accrued expenses ............................... (169) (14)
Net change in pension-related accounts ............ (116) (91)
Other ............................................. 30 (8)
----- -----
Net cash provided by operating activities ...... 466 52
----- -----
Cash Flows from Investing Activities:
Net cash used in investing activities,
capital expenditures .............................. (42) (227)
----- -----
Cash Flows from Financing Activities:
Proceeds from short-term debt ........................ -- 780
Proceeds from exercise of stock options .............. -- 64
Payments of short-term debt .......................... (416) (660)
Payments of long-term debt ........................... (86) (34)
Payments of long-term lease obligations .............. (27) (12)
----- -----
Net cash provided by (used in)
financing activities ........................ (529) 138
----- -----
Net decrease in cash .............................. (105) (37)
----- -----
Cash at beginning of period ....................... 116 64
----- -----
Cash at end of period ............................. $ 11 $ 27
===== =====
See notes to consolidated financial statements.
* Reclassified for comparability.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 1997 (unaudited)
Note 1: ACCOUNTING POLICIES
Basis of Financial Statement Presentation - The information
as of and for the three months ended March 31, 1997 and 1996 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:
<TABLE>
<CAPTION>
Quarter Ended
March 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Assuming no dilution 2,728,612 1,767,713
Assuming full dilution 3,021,043 2,609,850
</TABLE>
On November 15, 1996, the Company issued an Offer to owners
of its 12% Cumulative Convertible Preferred Stock to exchange their
shares of preferred stock for shares of common stock at the rate of 1.7
shares of common stock for each share of preferred. As of March 31,
1997, the Company had accepted 623,016 shares of preferred stock for
exchange under the Company's Exchange Offer. As a result, at March 31,
1997, the Company had outstanding 214,579 shares of preferred stock and
2,860,961 shares of common stock.
Discontinued Operations - In December 1989, the Company
adopted a plan to discontinue the operations in 1990 of one of its New
Jersey facilities, Ronson Metals Corporation, subsequently renamed
Prometcor, Inc. ("Prometcor"). As a result, the operations of Prometcor
have been classified as discontinued operations 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.
<PAGE>
Note 2: SHORT-TERM DEBT
In January 1995, Ronson Consumer Products Corporation
("RCPC") entered into an agreement with Summit Bank ("Summit"), formerly
United Jersey Bank, for a Revolving Loan and a Term Loan. In March 1997,
RCPC and Summit extended RCPC's Revolving Loan by over three years to
June 30, 2000. The extended agreement also amended certain other terms
of the Revolving Loan agreement. The Revolving Loan of $943,000 at March
31, 1997 provides a line of credit up to $2,500,000 (an increase in 1997
of $500,000 from the prior $2,000,000) to RCPC based on accounts
receivable and inventory. The balance of the Term Loan was $81,000 at
March 31, 1997, and is to be repaid in monthly installments of $6,250
plus interest through April 1, 1998.
At March 31, 1997, Ronson Aviation, Inc. ("Ronson Aviation")
had notes payable consisting of the following: 1) $620,000 due to
Raytheon Aircraft Credit Corp., formerly Beech Acceptance Corporation,
Inc.; and 2) $105,000 due to Greentree Financial Servicing Corporation.
These notes are each collateralized by specific aircraft, and the notes
are to be repaid from the proceeds from the sale of the aircraft.
Note 3: LONG-TERM DEBT
In February 1997, Ronson Aviation and Bank of New
York/National Community Division extended the Ronson Aviation mortgage
to July 31, 1997. The mortgage balance had been due to be paid in
January 1997. The mortgage balance was $321,000 at March 31, 1997.
Note 4: CONTINGENCIES
On August 31, 1995, the Company received a General Notice
Letter from the United States Environmental Protection Agency
("USEPA"),which the Company believes will not have a material effect on
the Company's financial position. The General Notice Letter notified 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, on September 29, 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. 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
<PAGE>
determination that the 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 the Defendant in a product liability lawsuit
pending in the Superior Court of Wilkinson County, Georgia, entitled,
PRINEST G. HAMMOND AND SCARLETT W. HAMMOND, AS PARENTS, GUARDIANS, AND
NEXT FRIENDS OF FABIAN GAYLE HAMMOND, A MINOR, AND PRINEST G. HAMMOND
AND SCARLETT W. HAMMOND, INDIVIDUALLY, V. RONSON CORPORATION, in which
Plaintiffs seek damages for an incident that allegedly occurred in
December 1994, when a spark from an unidentified cigarette lighter
ignited the clothing of Fabian Gayle Hammond after he had allegedly
allowed lighter fluid to leak onto his pants. The case was filed in June
1996. The Plaintiffs seek substantial special damages and punitive
damages. Discovery has not been completed, and, therefore, the Company's
counsel is unable to render an opinion about whether the likelihood of
an unfavorable outcome is either "probable" or "remote". However,
counsel for the Company has advised that substantial defenses exist and
is vigorously defending this litigation. Management believes that the
claim is without merit and a loss, if any, would be well within the
limits of insurance coverage.
The Company is involved in various other lawsuits and
claims. Management believes that the outcome of these lawsuits and
claims 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 smaller amounts of liability
insurance than it had purchased prior to 1987. While the Company has
increased the amounts of coverage purchased in the last three years and
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>
Quarter Ended March 31,
-----------------------
<S> <C> <C>
1997 1996
---- ----
Cash Payments for:
Interest $126 $175
Income taxes -- --
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
First Quarter 1997 Compared to First Quarter 1996
The Registrant, Ronson Corporation ("the Company"), had Net
Earnings in the first quarter of 1997 of $178,000 compared to Net
Earnings in the first quarter of 1996 of $233,000. The Company's
Earnings before Income Taxes were $139,000 in the first quarter of 1997
compared to $154,000 in the first quarter of 1996.
The Company's Consolidated Net Sales were $5,603,000 in the
first quarter of 1997 compared to $5,763,000 in the first quarter of
1996. Net sales of consumer products at Ronson Consumer Products
Corporation, Woodbridge, New Jersey, and Ronson Corporation of Canada,
Ltd., Mississauga, Ontario, (together "Ronson Consumer Products")
decreased by 5% in the first quarter of 1997 as compared to the first
quarter of 1996 primarily due to decreased shipments of lighter
products. Net sales at Ronson Aviation, Inc. ("Ronson Aviation"),
Trenton, New Jersey, increased by 4% in the first quarter of 1997 as
compared to the first quarter of 1996, primarily because lower aircraft
sales were more than offset by increased sales of general aviation
services in the first quarter of 1997.
Cost of Sales, as a percentage of Net Sales, was reduced to 62%
in the first quarter of 1997 from 64% in the first quarter of 1996. The
Cost of Sales percentage at Ronson Consumer Products increased to 53% in
the first quarter of 1997 as compared to 52% in the first quarter of
1996 primarily due to a change in the mix of products sold. The Cost of
Sales percentage at Ronson Aviation decreased to 85% in the first
quarter of 1997 as compared to 97% in the first quarter of 1996
primarily due to increased sales of general aviation services.
Selling, Shipping and Advertising Expenses, as a percentage
of Net Sales, increased to 16% in the first quarter of 1997 from 14% in
the first quarter of 1996 primarily due to increases in costs of selling
and advertising at Ronson Consumer Products.
Interest Expense decreased to $123,000 in the first quarter of
1997 from $182,000 in the first quarter of 1996 primarily due to reduced
short-term debt at Ronson Aviation because of lower aircraft inventory
in the first quarter of 1997.
FINANCIAL CONDITION
The Company's Stockholders' Equity improved to $1,413,000 at
March 31, 1997 from $1,210,000 at December 31, 1996. The improvement of
$203,000 in 1997 Stockholders' Equity was primarily due to the Net
Earnings in the first quarter of 1997. At March 31, 1997, the Company
had a deficiency in working capital of $1,867,000 as compared to
$2,119,000 at December 31, 1996. The increase of $252,000 in working
capital was primarily due to first quarter 1997 Net Earnings of
$178,000.
<PAGE>
The change in cash from changes in inventories was an increase
of $331,000 in the first quarter of 1997 as compared to a decrease of
$495,000 in the first quarter of 1996. This change was primarily due to
decreased aircraft inventory at Ronson Aviation in the first quarter of
1997 and to increased aircraft inventory at Ronson Aviation in the first
quarter of 1996. The reduction in aircraft inventory in the first
quarter of 1997 also resulted in lower short-term debt at March 31, 1997
compared to December 31, 1996.
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.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(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: May 14, 1997 /s/Louis V. Aronson II
----------------------
Louis V. Aronson II, President
and Chief Executive Officer
(Signing as Duly Authorized
Officer of the Registrant)
Date: May 14, 1997 /s/Daryl K. Holcomb
-------------------
Daryl K. Holcomb
Vice President &
Chief Financial Officer,
Controller and Treasurer
(Signing as Chief Financial
Officer of the Registrant)
<TABLE>
<CAPTION>
RONSON CORPORATION Exhibit 11
CALCULATION OF EARNINGS PER COMMON SHARE
(Dollars in thousands, except per common share data) (unaudited)
Quarter Ended
March 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Assuming No Dilution
Net earnings ........................... $ 178 $ 233
Less cumulative preferred dividends .... (11) (44)
----------- -----------
Net earnings applicable to common stock $ 167 $ 189
=========== ===========
Weighted average number of common shares
outstanding (1) ..................... 2,728,612 1,767,713
----------- -----------
Net earnings per common share .......... $ 0.06 $ 0.11
=========== ===========
Assuming Full Dilution
Net earnings ........................... $ 178 $ 233
=========== ===========
Weighted average number of common shares
outstanding (1) ..................... 2,728,612 1,767,713
Additional common shares outstanding
resulting from assumed conversion of
preferred stock to common stock ..... 292,431 842,137
----------- -----------
Total .................................. 3,021,043 2,609,850
=========== ===========
Net earnings per common share .......... $ 0.06 $ 0.09
=========== ===========
(1) The dilution due to the outstanding stock options was less than 3%
in the first quarters of 1997 and 1996 and, therefore, the stock
options were not included as common stock equivalents for those
periods.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 11
<SECURITIES> 0
<RECEIVABLES> 1,810
<ALLOWANCES> (71)
<INVENTORY> 2,777
<CURRENT-ASSETS> 5,633
<PP&E> 9,432
<DEPRECIATION> 5,175
<TOTAL-ASSETS> 11,817
<CURRENT-LIABILITIES> 7,500
<BONDS> 2,538
0
2
<COMMON> 2,923
<OTHER-SE> (1,512)
<TOTAL-LIABILITY-AND-EQUITY> 11,817
<SALES> 5,603
<TOTAL-REVENUES> 5,603
<CGS> 3,489
<TOTAL-COSTS> 3,489
<OTHER-EXPENSES> 1,847
<LOSS-PROVISION> 5
<INTEREST-EXPENSE> 123
<INCOME-PRETAX> 139
<INCOME-TAX> (39)
<INCOME-CONTINUING> 178
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 178
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
