SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______ to ________.
Commission File No. 1-1031
RONSON CORPORATION
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-0743290
(State of incorporation) (IRS Employer Identification No.)
CAMPUS DRIVE, P.O. BOX 6707, SOMERSET, N.J. 08875
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (908) 469-8300
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock par value Nasdaq SmallCap Market
$1.00 per share
12% Cumulative Convertible Nasdaq SmallCap Market
Preferred Stock
No par value
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 [ ]
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.505 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
The aggregate market value of voting stock held by non-affiliates of the
registrant was $5,519,000 as of March 10, 1997.
As of March 10, 1997, there were 2,860,961 shares of the registrant's common
stock outstanding.
<PAGE>
TABLE OF CONTENTS
Part I
Item 1. Business.
2. Properties.
3. Legal Proceedings.
4. Submission of Matters to a Vote of
Security Holders.
Part II
Item 5. Market for the Company's Common Stock
and Related Stockholder Matters.
6. Selected Financial Data.
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
8. Financial Statements and Supplementary Data.
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
Part III
Item 10. Directors and Executive Officers of the
Company.
11. Executive Compensation.
12. Security Ownership of Certain Beneficial
Owners and Management.
13. Certain Relationships and Related Transactions.
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
<PAGE>
PART I
Item 1 - BUSINESS
(a) General development of business.
The Registrant, Ronson Corporation (the "Company"), is a
company incorporated in 1928 engaged principally in the following
businesses:
1. Consumer Products; and
2. Aviation-Fixed Wing Operations and Services and
Helicopter Services.
On October 2, 1995, the Company's common shares were listed
on the Nasdaq SmallCap Market, and on December 1, 1995, the Company's
preferred shares were listed on the Nasdaq SmallCap Market. The
Company's common shares are quoted under the symbol RONC and its
preferred shares are quoted under the symbol RONCP.
On November 15, 1996, the Company issued an offer to
exchange up to 1,423,912 aggregate shares of its common stock for all of
the 837,595 issued and outstanding shares of its 12% Cumulative
Convertible Preferred Stock. For each share of preferred stock
exchanged, the Company has offered to issue 1.7 shares of common stock.
The terms and conditions of the offer are more fully described in the
Offering Circular and the accompanying Letter of Transmittal dated
November 15, 1996 (together the "Exchange Offer") which are incorporated
herein by reference. No shares were accepted in 1996, but through March
10, 1997, 623,016 shares of preferred stock had been tendered and
accepted for exchange and 1,059,127 shares of common stock had been
issued in accordance with the Exchange Offer.
In December 1989, the Company adopted a plan to discontinue
the operations of Ronson Metals Corporation, Newark, New Jersey, one of
the Company's wholly owned subsidiaries. On January 8, 1997, Ronson
Metals Corporation amended its Certificate of Incorporation to change
its corporation name to Prometcor, Inc. ("Prometcor"). Prometcor had
sizable losses in several years prior to 1987 with reduced losses
continuing in 1987 through 1989. In 1990, operations ceased at Prometcor
and Prometcor began complying with the New Jersey Industrial Site
Recovery Act ("ISRA"), formerly ECRA, and all other applicable laws. As
part of the plan to sell the properties of the Prometcor discontinued
operations, Prometcor has also been involved in termination of its
United States Nuclear Regulatory Commission ("NRC") license. Compliance
with ISRA and NRC requirements has continued through 1996 and into 1997.
(See Environmental Matters below and Item 7 - Management's Discussion
and Analysis of Financial Condition and Results of Operations.)
<PAGE>
(b) Financial information about industry segments.
In lieu of the revenue and profit information required
pursuant to Item 101(b) of Regulation S-K as to the Company's lines of
business, the revenue and profit data with respect to the Company's
reportable industry segments is included in Note 13 of the Notes to
Consolidated Financial Statements furnished pursuant to Item 8 below,
which are incorporated herein by reference.
(c) Narrative description of business.
(1) Consumer Products
The Company's consumer packaged products, which are
manufactured in Woodbridge, New Jersey, and distributed in the United
States by the Company's wholly owned subsidiary, Ronson Consumer
Products Corporation ("RCPC"), include Ronsonol lighter fluid,
Multi-Fill butane fuel injectors, flints, wicks for lighters, a
multi-use penetrant spray lubricant product under the tradename
"Multi-Lube", a spot remover under the product tradename "Kleenol", and
a surface protectant under the tradename "GlossTek". In addition, the
Company's consumer packaged products are marketed in Canada through
Ronson Corporation of Canada, Ltd. ("Ronson-Canada"), a wholly owned
subsidiary of the Company. RCPC and Ronson-Canada together comprise
Ronson Consumer Products. The Company also distributes its consumer
products in Mexico. While the Company does not believe that the Company
or this segment is substantially dependent upon any single customer, in
1996, sales to various units of WalMart Stores, Inc. accounted for 14%
of Consolidated Net Sales of the Company and 22% of Net Sales of the
segment.
The consumer products are distributed through
distributors, food brokers, automotive and hardware representatives and
mass merchandisers, drug chains and convenience stores in the United
States and Canada. Ronson Consumer Products is a principal supplier of
packaged flints and lighter fuels in the United States, Canada and
Mexico. These subsidiaries' consumer products face substantial
competition from other nationally distributed products and from numerous
local and private label packaged products. Since Ronson Consumer
Products produces packaged products in accordance with its sales
forecasts, which are frequently reviewed and revised, inventory
accumulation has not been a significant factor, and this segment does
not have a significant order backlog. The sources and availability of
raw materials for this segment's packaged products are not significant
factors.
Ronson Consumer Products also distributes three lighter
products - the "RONII" refillable butane lighter, the Ronson "WINDII"
liquid fuel windproof lighter, and the Ronson "Varaflame Ignitor", used
for lighting fireplaces, barbecues, camping stoves and candles. The
lighter products are marketed in the United States, Canada and Mexico.
<PAGE>
On January 1, 1995, Ronson Consumer Products introduced
a new lighter product, the RONII refillable butane lighter, in both the
United States and Canada. The RONII is a pocket lighter that meets the
new child resistant requirements issued by the Consumer Product Safety
Commission. The RONII is manufactured for the Company in Spain and is
sold through the Company's distribution channels. The RONII is priced
competitively but has strong competition from several other brands of
disposable lighters and unbranded imports from China and other Far
Eastern countries. On January 1, 1997, Ronson Consumer Products
introduced a new lighter product, the WINDII windproof lighter, in the
United States and Canada. The WINDII uses Ronson flints and Ronsonol
lighter fuel and Ronson wicks. The WINDII faces strong competition from
other nationally distributed brands and from unbranded imports.
The WINDII lighter is manufactured in China and the
Varaflame Ignitor is manufactured in Korea, both in accordance with the
design specifications of the Company. The Company has the exclusive
right to market these products in the United States, Canada and Mexico,
and does so through its distribution channels. The Varaflame Ignitor is
refillable with Ronson butane refills and is less expensive than most
other refillable ignitors. The Varaflame Ignitor encounters strong
competition from imported disposable ignitors.
(2) Aviation - Fixed Wing Operations and
Services and Helicopter Services
Ronson Aviation, Inc. ("Ronson Aviation"), a wholly
owned subsidiary of the Company, headquartered at Trenton-Mercer
Airport, Trenton, New Jersey, provides a wide range of general aviation
services to the general public and to government agencies. Services
include air charter, air cargo, cargo handling, avionics, management
aviation services, flight training, new and used aircraft sales,
aircraft repairs, aircraft fueling, storage and office rental. This
subsidiary's facility is located on 18 acres, exclusive of four acres on
which Ronson Aviation has a first right of refusal, and includes a
52,000 square foot hangar/office complex, two aircraft storage units
("T" hangars) and a 48,500 gallon fuel storage complex (refer to Item
2-Properties, (4) Trenton, N.J.). In its passenger and cargo services,
Ronson Aviation operates a total of 10 aircraft, including three
twin-engine airplanes in charter operations and seven single-engine
airplanes in the flight school and rental fleet. Ronson Aviation is an
FAA approved repair station for major and minor airframe and engine
repairs and an avionics repair station for repairs and installations.
Ronson Aviation is an authorized Beech Aircraft and Parts Sales and
Service Center; and a customer service facility for Bell Helicopter
Textron.
At December 31, 1996, Ronson Aviation had orders to
purchase two new aircraft from Beech Aircraft Corporation, both of which
are for resale to be delivered to Ronson Aviation in 1997. The total
sales value of these orders is approximately $1,395,000. These orders
are subject to cancellation by Ronson Aviation.
Ronson Aviation is subject to extensive competition in
its air charter activities, but Ronson Aviation is the only provider of
aviation services to the private, corporate and commercial flying public
at Trenton-Mercer Airport in Trenton, New Jersey.
<PAGE>
ENVIRONMENTAL MATTERS
In the conduct of certain of its manufacturing
operations, the Company is required to comply with various environmental
statutes and regulations concerning the generation, storage and disposal
of hazardous materials. Additionally, under ISRA, operators of
particular facilities classified as industrial establishments are
required to ensure that their property complies with environmental laws,
including implementation of remedial action, if necessary, before
selling or closing a facility. The Company's New Jersey facilities would
be subject to ISRA should a facility be closed or sold.
In December 1989, the Company adopted a plan to
discontinue the operations in 1990 of one of its New Jersey facilities,
Prometcor, and to comply with ISRA (formerly ECRA) and all other
applicable laws. In October 1994, Prometcor entered into a Memorandum of
Agreement with the New Jersey Department of Environmental Protection
("NJDEP") as to its NJDEP related environmental compliance activities
respecting its Newark facility. In November 1994, Prometcor submitted a
Preliminary Assessment, Site Investigation and Remedial Investigation
Report ("PA/SI/RIR") to the NJDEP following extensive testing. The NJDEP
approved Prometcor's PA/SI/RIR in the first quarter of 1995. Prometcor
completed the actions required under the PA/SI/RIR in the third quarter
of 1995, and submitted its Remedial Action WorkPlan/Remedial Action
Report ("RAW/RAR") to the NJDEP. As the result of the continuation of
sampling and evaluation of the results by the Company's environmental
consultants and the NJDEP in the fourth quarter of 1996 and to date in
the first quarter of 1997, areas of solvent contamination in the
groundwater below a section of the property were identified. Additional
sampling and delineation are required in this area of the property.
Prometcor has also proceeded with reporting to the
United States Nuclear Regulatory Commission ("NRC") in order to
terminate the NRC license held by Prometcor. In 1996, and to date in the
first quarter of 1997, Prometcor's radiological consultant performed
additional sampling and has submitted additional reports to the Company
and to the NRC. As a result of the evaluation of the sampling results by
the Company's radiological consultant and in consideration of comments
from the NRC, low-level contamination was identified and delineated in
certain sections of the Prometcor property. Although the extent is not
yet determinable, additional sampling and remediation will be required
in these areas.
The additional sampling and remediation required will
increase the time and costs projected to receive clearance from the
NJDEP and the NRC. As a result, the Company recorded a charge of
$1,370,000 in the fourth quarter of 1996 ($1,190,000 net of a deferred
income tax benefit). Although the Company believes it has accrued for
all costs to be incurred, the full extent of the costs is not
determinable until all testing and remediation have been completed and
accepted by the NJDEP and NRC.
Two of the Company's subsidiaries are subject to the New
Jersey Underground Storage Tank Law, N.J.S.A. 58:10A-21 et seq. and the
regulations promulgated thereunder, N.J.A.C. 7:14B-1.1 et seq.,
requiring upgrades to existing underground storage tanks. The Company
has replaced its underground storage tanks at one of its New Jersey
facilities. The Company will be required to upgrade or close its
underground storage tanks at its other New Jersey facility prior to
December 31, 1998. The cost of the remaining activities is not yet
determinable.
<PAGE>
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, 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
determination that the waste volume is "de minimis". No further
communication was received by the Company related to this matter in
1996. 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.
Other than the expenditures related to the upgrade or
closure of underground storage tanks, the Company does not believe that
compliance with environmental laws and regulations will have a material
effect upon the Company's future capital expenditures. The Company
believes that compliance with environmental laws and regulations will
not have a material effect upon the Company's earnings or competitive
position.
PATENTS AND TRADEMARKS
The Company maintains numerous patents and trademarks for
varying periods in the United States, Canada, Mexico and a limited
number of other countries. While both industry segments may benefit from
the Company's name as a registered trademark, the patents and trademarks
which are held principally benefit the consumer products segment of the
Company's business.
SEASONALITY AND METHODS OF COMPETITION
No material portion of the Company's business is seasonal.
The Company uses various methods of competition as appropriate in both
of its industry segments, such as price, service and product
performance.
<PAGE>
RESEARCH ACTIVITIES
The Company's consumer products segment expensed
approximately $134,000, $135,000 and $86,000 during the fiscal years
ended December 31, 1996, 1995 and 1994, respectively, on research
activities relating to the development of new products and the
improvement of existing products, all of which were Company sponsored.
NUMBER OF EMPLOYEES
As of December 31, 1996, the Company and its subsidiaries
employed a total of 137 persons.
CUSTOMER DEPENDENCE
See above under "Consumer Products".
SALES AND REVENUES
The following table sets forth the percentage of total sales
contributed by each of the Company's classes of similar products which
contributed to total sales during the last three fiscal years.
Consumer Aviation Operations
Products and Services
-------- -------------------
1994 51% 49%
1995 56% 44%
1996 65% 35%
(d) Financial information about foreign and domestic operations and
export sales.
Since 1981, the Company has not been engaged in significant
operations in foreign countries, although after December 31, 1982 it
recommenced sales of certain consumer products in Canada. In June 1985,
Ronson-Canada was incorporated. This subsidiary is the principal
distributor of the Company's consumer products in Canada. The Company
has sold many of its trademarks outside of the USA, Canada and Mexico.
Item 2 - PROPERTIES
The following list sets forth the location and certain other
information concerning the Company's principal manufacturing and office
facilities. The Company's manufacturing facilities are in relatively
modern buildings which were designed for their present purpose. The
Company believes its manufacturing and other facilities to be suitable
for the operations carried on. (See paragraphs (a) and (b) below.) In
the list below, "medium" facilities are those which have between 20,000
and 100,000 square feet; and "small" facilities are those which have
less than 20,000 square feet.
<PAGE>
(a) The facilities in Woodbridge, New Jersey, and Canada
comprise the consumer products segment. The Trenton, New Jersey,
facilities are used by the aviation services segment.
(b) All facilities are fully utilized by the Company, except
for the facility of Prometcor, Newark, New Jersey (see Item 1 (a)
above).
(1) Woodbridge, New Jersey
Facilities included in (a) and (b) below are owned subject
to first and second mortgages in favor of Summit Bank.
(a) One medium facility for manufacturing consumer products.
This facility is owned and is constructed of brick, steel and cinder
block.
(b) One small facility for storage. This facility is owned
and is constructed of metal, cinder block and cement.
(2) Newark, New Jersey
One small and two medium facilities are owned and are
constructed of brick, steel, concrete block and concrete. Operations of
these facilities have terminated.
(3) Somerset, New Jersey
One small facility for executive and consumer products
offices. This facility is leased under a lease which expires in June
2001. The facility is constructed of metal, cinder block and cement.
(4) Trenton, New Jersey
Facilities included in (a) and (b) below are owned subject
to a mortgage in favor of the Bank of New York, National Community
Division.
(a) One medium facility for fixed wing operations and
services and helicopter services, sales and office space leased to
others. This building is owned and is constructed of steel and concrete.
The land on which this building is located is leased under a leasehold
with six five-year terms automatically renewed, with the last five-year
term expiring in November 2007. The lease may be extended for five
additional five-year terms through November 2032, provided that during
the five-year term ending November 2007, Ronson Aviation invests
$1,500,000 in capital improvements.
(b) One medium facility - "T" hangars. These structures are
owned and are constructed of aluminum and concrete. The land upon which
these structures are located is leased under a leasehold on the same
terms as in 4 (a) above.
(5) Mississauga, Ontario, Canada
One small facility for sales and marketing, distribution
center and storage. This facility is subject to a lease which expires in
March 2001. This facility is constructed of brick and cinder block.
<PAGE>
Item 3 - LEGAL PROCEEDINGS
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
The Company is the Defendant in a product liability lawsuit
pending in the Superior Court of Wilkinson County, Georgia, 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. Management
believes that the outcome of these lawsuits will not have a material
adverse effect on the Company's financial position.
See Item 1. "Business-Environmental Matters" above for discussion
of a pending environmental matter involving a Superfund site in
California.
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
Not Applicable.
<PAGE>
PART II
Item 5 - MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The principal market for trading in Ronson common stock is
the Nasdaq SmallCap Market. Prior to October 2, 1995, the principal
market for trading in Ronson common stock was the NASD Electronic
Bulletin Board. Market data for the last two fiscal years are listed
below for information and analysis. The data presented reflect
inter-dealer prices, without retail markup, markdown or commission and
may not necessarily represent actual transactions.
1996
----
Quarter 1st 2nd 3rd 4th
------- --- --- --- ---
High Bid 4 1/8 2 7/8 2 7/8 2 1/4
Low Bid 2 5/8 2 1/4 2 3/8 1 7/8
1995
----
Quarter 1st 2nd 3rd 4th
------- --- --- --- ---
High Bid 1 5/16 2 3/8 4 3/4 4 7/8
Low Bid 1 3/4 1 1/4 2
At March 10, 1997, there were 2,553 stockholders of record
of the Company's common stock. Information required by this Item on the
frequency and amount of dividends is contained in Item 6 and is
incorporated herein by reference.
Item 6 - SELECTED FINANCIAL DATA
The information required by this Item is filed with this
report on page 31 and is incorporated herein by reference.
<PAGE>
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1996 Compared to 1995
Ronson Corporation's (the "Company's") Earnings from
Continuing Operations were $335,000 in 1996 as compared to $1,500,000 in
1995. After Losses from Discontinued Operations in 1996 and 1995 of
$1,190,000 and $860,000, respectively, the Company's Net Loss in 1996
was $855,000, compared to Net Earnings in 1995 of $640,000. The Losses
from Discontinued Operations of Prometcor, Inc. ("Prometcor"), formerly
known as Ronson Metals Corporation, Newark, New Jersey, related to
additional costs and expenses projected to complete compliance with
environmental requirements and the eventual sale of Prometcor's
properties.
Consolidated Net Sales were $25,454,000 in 1996
compared to $26,953,000 in 1995. Net Sales of consumer products
increased at Ronson Consumer Products Corporation ("RCPC"), Woodbridge,
New Jersey, and at Ronson Corporation of Canada, Ltd. ("Ronson-Canada"),
(together "Ronson Consumer Products"), by 10% in 1996 compared to 1995,
primarily as the result of increased shipments of its lighter and
accessory products. Net Sales at Ronson Aviation, Inc. ("Ronson
Aviation"), Trenton, New Jersey, decreased by 25% in 1996 compared to
1995, primarily due to lower sales of aircraft in 1996.
The Company's Consolidated Cost of Sales, as a
percentage of Net Sales, was lower at 65% in 1996 compared to 68% in
1995. The lower Consolidated Cost of Sales percentage was due to the Net
Sales of Ronson Consumer Products constituting a greater portion of the
Consolidated Net Sales of the Company in 1996 as compared to 1995. This
reduction was partially offset by an increased Cost of Sales percentage
at Ronson Consumer Products. The Cost of Sales percentage at Ronson
Consumer Products increased to 52% in 1996 as compared to 51% in 1995
primarily due to a change in the mix of products sold. The Cost of Sales
percentage at Ronson Aviation remained unchanged at 89% in 1996 and
1995.
Consolidated Selling, Shipping and Advertising
Expenses, as a percentage of Net Sales, increased to 14% in 1996 from
12% in 1995. The increase was due primarily to increased shipping and
advertising expenses at Ronson Consumer Products. Since Net Sales
increased at Ronson Consumer Products; however, the Selling, Shipping
and Advertising percentage at Ronson Consumer Products was unchanged at
22% in 1996 compared to 1995.
General and Administrative Expenses, as a percentage
of Consolidated Net Sales, increased to 13% in 1996 from 12% in 1995,
primarily due to the decrease in Net Sales in 1996.
Interest Expense increased to $762,000 in 1996 from
$541,000 in 1995. This increase was primarily due to the additional
long-term debt from the new mortgage loan between RCPC and Summit Bank
("Summit"), formerly known as United Jersey Bank, dated December 1,
1995, and to increased short-term debt at Ronson Aviation utilized to
finance increased aircraft inventory.
<PAGE>
Other-Net in 1996 included a non-recurring charge of
$434,000 at Ronson Aviation in the third quarter of 1996 which resulted
from a revaluation of certain aircraft inventory and costs of
restructuring Ronson Aviation's operations. The Company believes that
the actions taken in the third quarter 1996 will enable Ronson Aviation
to expand its aircraft sales and charter operations and to return to
profitable operations in 1997.
Other-Net in 1995 included a gain of approximately
$96,000 from insurance proceeds. This was more than offset by expenses
totalling approximately $197,000 related to settlement of a legal matter
and to costs related to a Superfund site matter, more fully described in
the Financial Condition section below, in which Ronson Hydraulic Units
Corporation ("RHUCOR-CA"), Duarte, California, sold by the Company to
the Boeing Corporation in 1981, has been identified as a "de minimis"
Potentially Responsible Party ("PRP").
Earnings from Continuing Operations before Income
Taxes was $206,000 in 1996 compared to $1,003,000 in 1995. This decline
was due primarily to a Loss from Operations at Ronson Aviation of $7,000
in 1996 compared to Earnings from Operations in 1995 of $246,000 and to
the non-recurring charge at Ronson Aviation of $434,000 in 1996.
Loss from Discontinued Operations included the costs
recorded by the Company in 1996 and 1995 related to the discontinuance
of Prometcor, as follows (in thousands):
Year Ended December 31,
1996 1995
---- ----
Discontinuance costs accrued $ 1,370 $ 970
Deferred income tax benefit ( 180) (110)
------- -------
Loss from Discontinued Operations $ 1,190 $ 860
======= =======
<PAGE>
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, and to comply
with the New Jersey Environmental Industrial Site Recovery Act ("ISRA")
(formerly ECRA) and all other applicable laws. As part of the plan to
sell the properties of Prometcor's discontinued operations, Prometcor
has also been involved in the termination of its United States Nuclear
Regulatory Commission ("NRC") license. Prior to the fourth quarter 1996,
the total costs and expenses related to terminating the Prometcor
operations, less the expected gain from the eventual sales of
Prometcor's assets, were projected to be approximately $2,890,000. These
costs and expenses consisted of: termination of Prometcor's operations;
maintenance of the Prometcor property; and completion of compliance by
Prometcor with environmental regulations. In the fourth quarters of
1995, 1993, 1992, 1991 and 1990; the amounts of $970,000, $625,000,
$200,000, $520,000 and $575,000, respectively, (which total $2,890,000)
were charged against the Company's Loss from Discontinued Operations,
prior to deferred income tax benefits. These charges between the
beginning of 1990 and year end 1995 were due primarily: to costs
incurred; to previously projected costs related to compliance with the
New Jersey Department of Environmental Protection ("NJDEP")
requirements; to NRC related activities; and to the extended period of
time previously projected for NJDEP and NRC clearance. The liability for
these costs and expenses recorded in the financial statements at
December 31, 1995 was considered adequate by the Company, based upon:
the results of testing completed by year end 1995; NJDEP and NRC
comments through 1995; reports to the Company by its environmental
counsel and environmental consultants that the environmental compliance
would be completed in 1996; and that the sale of the Prometcor property
would be completed prior to December 31, 1996.
As the result of the continuation of sampling and
evaluation of the results by the Company's radiological and other
environmental consultants in the third and fourth quarters of 1996 and
to date in the first quarter of 1997, and in consideration of comments
from the NJDEP and NRC in this same time period, certain additional
areas requiring remedial action were identified and delineated. The
testing indicated low-level radiological contamination in various areas
of the Prometcor property and solvent contamination in the groundwater
below a section of the property. Additional sampling and remediation are
required and will increase the costs and time projected to receive
clearance from the NJDEP and the NRC. As a result of the information and
regulatory comments received in the fourth quarter of 1996 and to date
in the first quarter of 1997, the Company accrued a charge in the fourth
quarter of 1996 of $1,370,000 ($1,190,000 net of the deferred income tax
benefit) due to the potential additional time and costs projected.
In the fourth quarter of 1996, the Company adopted
Statement of Position 96-1, "Environmental Remediation Liability", ("SOP
96-1"), issued by the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants. In accordance with
the provisions of SOP 96-1, the charge in the fourth quarter of 1996
included approximately $207,000 of costs of compensation and benefits
for employees of the Company who have and are expected to devote a
significant amount of time directly to the remediation effort. Of this
amount, $99,000 related to employee costs was incurred in 1996, and
$108,000 in costs is expected to be incurred in 1997.
<PAGE>
Although the Company believes it has accrued for all
future costs at Prometcor, the full extent of the costs and time
required is not determinable until additional sampling and remediation,
if any, has been completed and accepted by the NJDEP and by the NRC.
1995 Compared to 1994
The Company's Earnings from Continuing Operations
increased in 1995 to $1,500,000 from $1,074,000 in 1994, an increase of
$426,000. The Company's Net Earnings in 1995 were $640,000 compared to
$1,074,000 in 1994. As discussed more fully below, the Net Earnings in
1995 were net of a Loss from Discontinued Operations of Prometcor, of
$860,000 related to additional costs and expenses projected to complete
compliance with environmental requirements and the sale of Prometcor's
property.
Consolidated Net Sales increased to $26,953,000 in
1995 compared to $25,583,000 in 1994, an increase of 5%. Net Sales of
consumer products increased at Ronson Consumer Products by 15% in 1995
compared to 1994 primarily as the result of increased shipments of its
products. Net Sales at Ronson Aviation decreased by 5% in 1995 compared
to 1994 primarily due to reduced sales of general aviation services in
1995.
The Company's Cost of Sales, as a percentage of Net
Sales, was unchanged at 68% in 1995 compared to 1994. The Cost of Sales
percentage at Ronson Consumer Products increased to 51% in 1995 from 49%
in 1994 primarily as the result of a change in the mix of products sold.
The Cost of Sales percentage at Ronson Aviation increased to 91% in 1995
from 88% in 1994 primarily due to the lower sales of general aviation
services.
Selling, Shipping and Advertising Expenses, as a
percentage of Net Sales, were unchanged in 1995 at 12% compared to 1994.
General and Administrative Expenses, as a percentage of Net Sales,
decreased to 12% in 1995 from 13% in 1994 primarily due to increased Net
Sales in 1995.
Interest Expense increased to $541,000 in 1995 from
$322,000 in 1994. The increase in Interest Expense in 1995 was primarily
due to the additional debt from the new line of credit agreement between
RCPC and Summit in January 1995 and to increased short-term debt
financing related to increased average inventory of aircraft at Ronson
Aviation.
Other-Net in 1995 included a gain of approximately
$96,000 from insurance proceeds. This was more than offset by expenses
totalling approximately $197,000 related to settlement of a legal matter
and to costs related to a Superfund site matter, more fully described in
the Financial Condition section below. Other-Net in 1994 included
$212,000 in expenses related to the retirement of certain employees.
Loss from Discontinued Operations included the costs
recorded by the Company related to the discontinuance of Prometcor of
$860,000 net of a deferred income tax benefit of $110,000.
<PAGE>
INCOME TAXES
In 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) #109, "Accounting for Income Taxes". In
1996, 1995 and 1994, the Company recognized deferred income tax benefits
of $390,000, $686,000 and $354,000, respectively, as the result of
reductions in the valuation allowance related to the Company's deferred
income tax assets. The 1995 and 1994 current income taxes were presented
net of credits arising from the utilization of available tax losses and
loss carryforwards in accordance with SFAS #109. In 1996 and 1995,
current income tax expenses were composed of state income taxes of
$81,000 and $79,000, respectively. At December 31, 1996, the Company had
net operating loss carryforwards for federal income tax purposes of
approximately $12,550,000, investment tax credit carryforwards of
$83,000 and alternative minimum tax credit carryforwards of $60,000.
(Refer to Note 3 of the Notes to Consolidated Financial Statements.)
IMPACT OF INFLATION
The Company recognizes that inflation can adversely
affect the operating performance of a company. Therefore, in formulating
operating and pricing policy, the Company carefully considers changing
price levels. The Company believes that it has been able to pass along
cost increases as they relate to the production of goods and services.
FINANCIAL CONDITION
The Company's Stockholders' Equity was $1,210,000 at
December 31, 1996 compared with $2,034,000 at December 31, 1995. The
Company also had a deficiency in working capital at December 31, 1996 of
$2,119,000 as compared to $563,000 at December 31, 1995. The reductions
in 1996 in the Company's Stockholders' Equity and in working capital
were due primarily to the 1996 Loss from Discontinued Operations at
Prometcor of $1,370,000, prior to the deferred income tax benefit.
The Company's inventories were reduced by $1,412,000
in the year ended December 31, 1996, primarily due to reduction in
aircraft inventory at Ronson Aviation. Short-term debt was reduced by
$1,112,000 in 1996 primarily as the result of repayment of
aircraft-related loans upon the sales of the aircraft.
The Company's current liabilities of discontinued
operations increased by approximately $760,000 in 1996, primarily as the
result of the accrual of additional cost and expenses projected to
complete compliance by Prometcor with environmental requirements.
<PAGE>
On March 6, 1997, RCPC and Summit extended RCPC's
Revolving Loan by over three years to June 30, 2000. The Revolving Loan
was originally dated January 11, 1995 for a period of two years. The
extended agreement also amended certain other terms of the Revolving
Loan agreement. The Revolving Loan 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
available under the Revolving Loan is determined by the level of
receivables and inventory. RCPC's 1995 Term Loan with Summit with a
balance at December 31, 1996 of approximately $100,000 is payable in
equal installments of $6,250, plus interest. The loans currently bear
interest at the rate of 1.5% above Summit's prime rate (8.25% at
December 31, 1996). Prior to the 1997 amendment, the interest rate on
the loans was 2% above Summit's prime rate. The Revolving Loan and Term
Loan are secured by the accounts receivable, inventory, machinery and
equipment of RCPC, a second mortgage on the land, buildings and
improvements of RCPC and the guarantee of the Company. The Summit
agreement also has restrictive covenants which, among other things,
limit the transfer of assets between the Company and its subsidiaries.
In February 1997, Ronson Aviation and Bank of New
York/National Community Division extended to July 31, 1997 the Ronson
Aviation mortgage, which had a balance of $348,000 on December 31, 1996.
The mortgage balance had been due to be paid on January 31, 1997. The
monthly payment on the mortgage is $9,000, plus interest.
In November 1995, Ronson-Canada entered into an
agreement with Canadian Imperial Bank of Commerce ("CIBC") for a line of
credit of C$250,000. The line of credit is secured by the accounts
receivable and inventory of Ronson-Canada and amounts available under
the line are based on the level of accounts receivable. The loan bears
interest at the rate of 2% over the CIBC prime rate (4.75% at December
31, 1996). The line of credit is guaranteed by the Company.
Based on the amount of the loans outstanding and the
levels of accounts receivable and inventory at December 31, 1996, Ronson
Consumer Products had unused borrowings available at December 31, 1996,
of about $340,000 under the Summit and CIBC lines of credit described
above.
Ronson Aviation has consistently obtained financing
from Raytheon Aircraft Credit Corp., formerly Beech Acceptance
Corporation, Inc., for financing specific aircraft. Also, Summit
provides term financing for several Ronson Aviation aircraft, and the
Company is in discussions with Summit for additional financing for
Ronson Aviation. During the year ended December 31, 1996, various lines
of credit which had been available to Ronson Aviation for the purchase
of aircraft inventory were not renewed by the lenders, Summit, Cessna
Finance Corporation, and General Electric Capital Corporation.
<PAGE>
During the year ended December 31, 1995, the Company
made large payments to its principal defined benefit pension plan, the
Ronson Corporation Retirement Plan ("Retirement Plan"), substantially
reducing the Accumulated Benefit Obligation in Excess of Plan Assets to
$225,000 at December 31, 1995, from $2,154,000 at December 31, 1994, a
reduction of 90%. At December 31, 1996, the Accumulated Benefit
Obligation in Excess of Plan Assets was further reduced to $184,000. A
contribution of $850,000 was made in January 1995 to the Retirement Plan
by the Company from the proceeds of the RCPC line of credit from Summit.
A further contribution of approximately $1,124,000 was made by the
Company to the Retirement Plan on December 1, 1995 out of the proceeds
of the mortgage loan from Summit. As a result of these payments and the
favorable actuarial results of the Retirement Plan's assets and
liabilities, the required contribution to the Retirement Plan for the
plan year ended June 30, 1996 was approximately $600,000, or about
$320,000 (35%) lower than the contribution for the prior plan year. The
final payment of this required contribution in the amount of $135,000
was paid to the Retirement Plan in February 1997. This reduction in the
required contribution is because asset appreciation and prior
contributions have brought the Retirement Plan to fully-funded status
for purposes of the Employees' Retirement Income Security Act ("ERISA").
Further required contributions, if any, to the Retirement Plan will be
limited to only those required as the result of changes in actuarial
assumptions or of actuarial results less favorable than presently
assumed.
On February 28, 1997, the Retirement Plan completed
the sale of its Salisbury, North Carolina, land for the cash proceeds,
net of related expenses, of about $800,000. The land had previously been
valued in the Retirement Plan assets, for financial reporting purposes,
at the appraised value of $675,000. The excess of about $125,000 of the
net sales proceeds over the prior appraised value has increased the Plan
Assets at Fair Value at December 31, 1996 (refer to Note 7 of the Notes
to Consolidated Financial Statements). The net proceeds of the sale of
the property has also satisfied a substantial portion of a settlement
with the United States Department of Labor ("DOL") and the Internal
Revenue Service ("IRS") as described below.
On December 30, 1994, the Company had agreed to a
settlement with the DOL and on February 3, 1995, the Company had agreed
to a settlement with an appellate officer of the 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 in Salisbury,
North Carolina, not used in operations, to the 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. Under the
terms of the settlements with the IRS and DOL, the land previously
contributed remained 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 was stayed, and no
collection action would be taken if the Company met certain terms.
Further, a substantial amount of the judgment was satisfied by the net
proceeds of about $800,000 from the February 28, 1997 sale of the North
Carolina land by the Retirement Plan.
<PAGE>
In addition, in accordance with the terms of the
settlements, in March 1997, the Company transferred the balance of about
$52,000 held in an escrow account to the Retirement Plan, satisfying a
further portion of the settlement amount. The balance of the
settlements, approximately $92,000, will be paid by the Company to the
Retirement Plan in 1997.
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. The Company
did not accept any of the tendered preferred shares for exchange prior
to December 31, 1996, and, therefore, the effects of the Exchange Offer
have not been included in the Company's Consolidated Balance Sheets or
Consolidated Statements of Operations at December 31, 1996. Through
March 10, 1997, the Company has accepted 623,016 preferred shares for
exchange, or about 74% of the preferred shares outstanding on the date
of the Exchange Offer.
If, on December 31, 1996, the Company had accepted
these 623,016 preferred shares and issued the 1,059,127 common shares in
exchange, there would have been 214,579 shares of preferred stock and
2,860,961 shares of common stock outstanding on that date. Also, the
aggregate dividends in arrears at December 31, 1996 would have been
approximately $192,000, a reduction of $556,000. (Refer to Notes 10 and
15 of the Notes to Consolidated Financial Statements.)
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 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, 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 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.
<PAGE>
On December 31, 1996, the Company did not have
significant capital commitments. The Company has operating leases, the
most significant of which related to office space used by the Company
and Ronson Consumer Products. The Company's total commitments under
capital and operating leases are presented in Note 6 of the Notes to
Consolidated Financial Statements.
At December 31, 1996, net assets of consolidated
subsidiaries, excluding intercompany accounts, amounted to approximately
$2,225,000, of which approximately $2,180,000 is restricted by loan
covenants as to transfer to the parent. (Refer to Note 5 of the Notes to
Consolidated Financial Statements.)
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, unused available borrowing under its
existing lines of credit, established external financing arrangements,
potential additional sources of financing and existing cash balances.
Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements required by this item are included in
Item 14.
Item 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There were no disagreements with accountants in the years
ended December 31, 1996, 1995 and 1994.
<PAGE>
PART III
Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
(a) Identification of directors.
The following table indicates certain information
about the Company's seven (7) directors.
<TABLE>
<CAPTION>
Positions and Offices
with Company
Presently Held (other
than that of Director);
Period Business Experience
Served Term as During Past Five Years
As Director (with Company unless
Name of Director Age Director Expires otherwise noted)
---------------- --- -------- ------- ----------------
<S> <C> <C> <C> <C>
Louis V. Aronson II 74 1952 - 1999 President & Chief
Present Executive Officer; Chairman
of Executive Committee;
Member of Nominating
Committee.
Robert A. Aronson 47 1993 - 1998 Member of Audit Committee;
Present Managing Member of
Independence Leather, L.L.C.,
Mountainside, NJ, the
principal business of which
is the import of leather
products, May 1996 to
present; Senior Vice
President/Chief Financial
Officer of Dreher, Inc.,
Newark, NJ, the principal
business of which is the
manufacture and import of
leather products, October
1987 to May 1996; son of the
President and Chief Executive
Officer of the Company.
<PAGE>
<CAPTION>
Positions and Offices
with Company
Presently Held (other
than that of Director);
Period Business Experience
Served Term as During Past Five Years
As Director (with Company unless
Name of Director Age Director Expires otherwise noted)
---------------- --- -------- ------- ----------------
<S> <C> <C> <C> <C>
Barton P. Ferris, Jr. 56 1989 - 1999 Managing Director-Corporate
Present Finance, Commonwealth
Associates, New York, NY, the
principal business of which
is investment banking and
securities brokerage, October
1995 to present. Managing
Director-Investment Banking,
Lepercq, de Neuflize &
Co.,Incorporated, New York,
NY, the principal business of
which is investment banking
and money management, January
1990 to October 1995;
Director of Family Bargain
Corporation.
Erwin M. Ganz 67 1976 - 1998 Chairman of Audit
Present Committee; Member of
Executive Committee and
Nominating Committee;
Executive Vice President-
Industrial Operations, 1975-
1993; Chief Financial
Officer, 1987-1993.
Gerard J. Quinnan 67 June 1996 - 1997 Consultant for the Company,
Present 1990 - present; Vice
President-General Manager
of Ronson Consumer
Products Corporation,
1981-1990.
<PAGE>
<CAPTION>
Positions and Offices
with Company
Presently Held (other
than that of Director);
Period Business Experience
Served Term as During Past Five Years
As Director (with Company unless
Name of Director Age Director Expires otherwise noted)
---------------- --- -------- ------- ----------------
<S> <C> <C> <C> <C>
Justin P. Walder 61 1972 - 1998 Secretary; Assistant Cor-
Present poration Counsel; Member of
Executive Committee and
Nominating Committee;
Principal in Walder, Sondak
& Brogan, P.A., Attorneys
at Law, Roseland, NJ.
Saul H. Weisman 71 1978 - 1997 Member of Executive
Present Committee and Audit
Committee; President, Jarett
Industries, Inc., Cedar
Knolls, NJ, the principal
business of which is the sale
of hydraulic and pneumatic
equipment to industry.
</TABLE>
No director also serves as a director of another company
registered under the Securities Exchange Act of 1934, except for Mr. Ferris, who
serves as a director of Family Bargain Corporation.
<PAGE>
(b) Identification of executive officers.
The following table sets forth certain information
concerning the executive officers of the Company, each of whom is
serving a one-year term of office, except Mr. Louis V. Aronson II, who
is a party to an employment contract with the Company which expires on
December 31, 1998.
<TABLE>
<CAPTION>
Positions and Offices
Period Served with Company;
Name Age as Officer Family Relationships
---- --- ---------- --------------------
<S> <C> <C> <C>
Louis V. Aronson II 74 1953 - President & Chief Executive
Present Officer; Chairman of
Executive Committee; Director.
Daryl K. Holcomb 46 June 1996 - Vice President;
Present
1993 - Chief Financial Officer;
Present
1988 - Controller and Treasurer; None.
Present
Justin P. Walder 61 1989 - Secretary;
Present
1972 - Assistant Corporation Counsel;
Present Director; None.
</TABLE>
Messrs. L.V. Aronson and Holcomb have been employed by
the Company in executive and/or professional capacities for at least the
five-year period immediately preceding the date hereof. Mr. Walder has
been Assistant Corporation Counsel and a director of the Company and a
principal in Walder, Sondak & Brogan, P.A., Attorneys at Law, for at
least the five-year period immediately preceding the date hereof.
(c) Section 16(a) Beneficial Ownership Reporting Compliance
Under Securities and Exchange Commission ("SEC") rules,
the Company is required to review copies of beneficial ownership reports
filed with the Company which are required under Section 16(a) of the
Exchange Act by officers, directors and greater than 10% beneficial
owners. Based solely on the Company's review of forms filed with the
Company, the Company believes no information is required to be reported
under this item.
<PAGE>
Item 11 - EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table presents compensation
information for the years ended December 31, 1996, 1995 and 1994 for the
Chief Executive Officer and the other executive officer of the Company
whose base salary and bonus exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensa- All
Annual Compensation tion Other
Name and ------------------- --------- Compen-
Principal Bonus Options/ sation
Position Year Salary (1) SARS (#) (2)
--------- ---- ------ ----- -------- --------
<S> <C> <C> <C> <C> <C>
Louis V. Aronson II 1996 $432,154 $53,229 22,500 $10,024
President & Chief 1995 403,882 53,031 -- 9,264
Executive Officer 1994 377,460 78,830 -- 9,174
Daryl K. Holcomb 1996 111,687 15,969 10,000 2,500
Vice President & 1995 100,625 13,322 5,500 2,424
Chief Financial 1994 95,625 20,583 -- 2,040
Officer, Controller
& Treasurer
</TABLE>
Footnotes
(1) The compensation included in the bonus column is an incentive
payment resulting from the attainment by the Company's subsidiaries
of certain levels of net sales and profits before taxes.
(2) In 1996, All Other Compensation included matching credits by the
Company under its Employees' Savings Plan (Mr. L.V. Aronson, $3,000
and Mr. Holcomb, $2,500); and the cost of term life insurance
included in split-dollar life insurance policies (Mr. L.V. Aronson,
$7,024).
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants |
----------------- | Potential
Percent | Realizable
Number of of Total | Value at Assumed
Securities Options | Annual Rates of
Underlying Granted to | Stock Price
Options Employees Exercise | Appreciation for
Granted in Fiscal Price Expiration | Option Term (1)
Name (#) Year (per sh) Date | 5% 10%
---- ---------- ---------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Louis V. |
Aronson II 22,500 26% $3.1625 June 26, 2001| $11,403 $33,024
|
Daryl K. |
Holcomb 10,000 11% 2.875 June 26, 2001| 7,943 17,552
</TABLE>
Footnote
(1) Amounts for the named executive shown in these columns have been
derived by multiplying the exercise price by the annual
appreciation rate shown (compounded for the term of the options),
multiplying the result by the number of shares covered by the
options, and subtracting the aggregate exercise price of the
options. The dollar amounts set forth under this heading are the
result of calculations at the 5% and 10% rates set by the SEC and,
therefore, are not intended to forecast possible future
appreciation, if any, of the stock price of the Company.
AGGREGATED OPTION EXERCISES AND YEAR END OPTION VALUES
The following table summarizes, for each of the named
executive officers, the number of stock options unexercised at December
31, 1996. All options held by the named executives were exercisable at
December 31, 1996. "In-the-money" options are those where the fair
market value of the underlying securities exceeds the exercise price of
the options.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
Value of
Shares Number of In-the-Money
Acquired Unexercised Options Options at
on Value (1) at FY-End (2) FY-End (3)
Name Exercise Realized Exercisable Exercisable
---- -------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Louis V. Aronson II 20,000 $ -- 22,500 $ --
Daryl K. Holcomb 7,500 10,219 22,500 12,741
</TABLE>
<PAGE>
Footnotes
(1) The value realized equals the market value of the common stock
acquired on the date of exercise minus the exercise price. The
exercise price of the options exercised by Mr. L.V. Aronson in 1996
exceeded the market price of the shares, and, therefore, no value
was realized.
(2) The options held by the named executive officers at December 31,
1996 are exercisable at any time and expire at various times from
March 11, 1998 through June 26, 2001.
(3) The value of the unexercised options was determined by comparing
the average of the bid and ask prices of the Company's common stock
at December 31, 1996, to the option prices. Options to purchase
12,500 shares held by Mr. Holcomb were in-the-money at December 31,
1996.
LONG-TERM INCENTIVE PLANS
None.
PENSION PLAN
No named executive is a participant in a defined benefit
pension plan of the Company.
COMPENSATION OF DIRECTORS
Directors who are not officers of the Company receive an
annual fee of $7,500 and, in addition, are compensated at the rate of
$600 for each meeting of the Company's Board of Directors actually
attended and $350 for each meeting of a Committee of the Company's Board
of Directors actually attended. Officers receive no compensation for
their services on the Board or on any Committee.
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
Mr. L.V. Aronson II is a party to an employment contract
with the Company dated September 21, 1978, which, as amended on July 24,
1980, July 1, 1982, October 11, 1985, July 7, 1988, May 10, 1989, August
22, 1991 and May 22, 1995, provides for a term expiring December 31,
1998. The employment contract provides for the payment of a base salary
which is to be increased 7% as of January 1 of each year. It also
provides that the Company shall reimburse Mr. L.V. Aronson for expenses,
provide him with an automobile, and pay a death benefit equal to two
years' salary. During 1990, Mr. L.V. Aronson offered and accepted a 5%
reduction in his base salary provided for by the terms of his employment
contract, and, in addition, a 7% salary increase due January 1, 1991
under the terms of the contract was waived. During 1992 also, Mr. L.V.
Aronson offered and accepted a 7% reduction in his base salary.
Effective September 1, 1993, Mr. L.V. Aronson offered and accepted a
further 5% reduction in his base salary. Under the employment contract,
Mr. L.V. Aronson's full compensation will continue in the event of Mr.
L.V. Aronson's disability for the duration of the agreement or one full
year, whichever is later. The employment contract also provides that if,
following a Change in Control (as defined in the employment contract),
Mr. L.V. Aronson's employment with the Company terminated under
prescribed circumstances as set forth in the employment contract, the
Company will pay Mr. L.V. Aronson a lump sum equal to the base salary
(including the required increases in base salary) for the remaining term
of the employment contract.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Board of the Company, as a whole, provides overall
guidance of the Company's executive compensation program. All members of
the Board participate in the review and approval of each of the
components of the Company's executive compensation program described
below, except that no director who is also a Company employee
participates in the review and approval of his compensation. Directors
of the Company who are also current employees of the Company are Messrs.
L.V. Aronson and Walder. Directors of the Company who are also former
employees of the Company are Messrs. R.A. Aronson, whose employment with
the Company ceased in 1987, Ganz, who retired from the Company in 1993,
and Quinnan, who retired from Ronson Consumer Products in 1990. Mr. Ganz
has a consulting agreement with the Company for the period ending
December 31, 1998 which is cancellable at any time by either party with
60 days notice and which compensated Mr. Ganz for his services at the
rate of $57,500 in the year ended December 31, 1996, and, effective
February 1, 1997, provides compensation at the annual rate of $77,500
for the years ending December 31, 1997 and 1998, plus participation in
the Company's health and life insurance plans and the use of an
automobile. Mr. Quinnan performs consulting services for the Company and
Ronson Consumer Products, and in 1996, Mr. Quinnan was compensated
$14,000 for his services, of which $8,000 was deferred, and was provided
the use of an automobile.
<PAGE>
(a) Transactions with management and others.
During the year ended December 31, 1996, the Company and
Ronson Consumer Products were provided printing services by Michael
Graphics, Inc., a New Jersey corporation, amounting to $88,190. A
greater than 10% shareholder of Michael Graphics, Inc. is the son-in-law
of the Company's President, who also serves as a director.
During the year ended December 31, 1996, RCPC, Ronson
Aviation and Prometcor retained the firm of Walder, Sondak & Brogan,
P.A., Attorneys at Law, to perform legal services amounting to $103,880.
Justin P. Walder, a principal in that firm, is a director and officer of
the Company.
(b) Certain business relationships.
None.
Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security ownership of certain beneficial owners.
Set forth below are the persons who, to the best of
management's knowledge, own beneficially more than five percent of any
class of the Company's voting securities, together with the number of
shares so owned and the percentage which such number constitutes of the
total number of shares of such class presently outstanding:
<TABLE>
<CAPTION>
Name and Address
of Beneficial Title of Beneficially Percent of
Owner Class Owned Class
---------------- -------- ------------ ----------
<S> <C> <C> <C>
Louis V. Aronson II Common 646,320 (1)(2) 22.4% (1)(2)
Campus Drive
P.O. Box 6707
Somerset, New Jersey 08875
Ronson Corporation Retirement
Plan Common 165,260 (2) 5.6% (2)
Campus Drive
P.O. Box 6707
Somerset, New Jersey 08875
Patrick Kintz Common 226,166 (3) 7.9% (3)
8323 Misty Vale
Houston, Texas 77075
</TABLE>
<PAGE>
(1) Includes 22,500 shares of unissued common stock issuable to Mr.
L.V. Aronson upon exercise of stock options held by Mr. L.V.
Aronson under the Ronson Corporation 1996 Incentive Stock Option
Plan.
(2) The Ronson Corporation Retirement Plan ("Retirement Plan") is the
beneficial owner of 165,260 shares which include 91,487 shares of
unissued common stock issuable to the Retirement Plan upon
conversion of 91,487 shares of 12% Cumulative Convertible Preferred
Stock owned by the Retirement Plan. The shares held by the
Retirement Plan are voted by the Retirement Plan's trustees,
Messrs. L.V. Aronson, Ganz and Gedinsky. If the shares held by the
Retirement Plan were included in Mr. L.V. Aronson's beneficial
ownership, Mr. L.V. Aronson's beneficial ownership would be 811,580
shares, or 27.3% of the class. If the shares held by the Retirement
Plan were included in Mr. Ganz's beneficial ownership, Mr. Ganz's
beneficial ownership would be 188,902 shares, or 6.4% of the class.
If the shares held by the Retirement Plan were included in Mr.
Gedinsky's beneficial ownership, Mr. Gedinsky's beneficial
ownership would be 165,260 shares or 5.7% of the class. The
Retirement Plan's holdings were reported in 1988 on Schedule 13G.
(3) Includes 198,066 common shares owned directly, 25,000 common shares
owned as tenant in common with his spouse and 3,100 common shares
owned by his spouse. This information was provided to the Company
by Mr. Kintz.
<PAGE>
(b) Security Ownership of Management.
The following table shows the number of shares of common
stock beneficially owned by each director and by all directors and
officers as a group and the percentage of the total shares of common
stock outstanding owned by each individual and by the group shown in the
table. Individuals have sole voting and investment power over the stock
shown unless otherwise indicated in the footnotes:
<TABLE>
<CAPTION>
Name of Individual or Amount and Nature of Percent of
Identity of Group Beneficial Ownership(2) Class
----------------- ----------------------- -----
<S> <C>
Louis V. Aronson II 646,320 (3) 22.4%
Robert A. Aronson 1,995 (1)
Barton P. Ferris, Jr. 54,136 1.9%
Erwin M. Ganz 23,642 (3) (1)
Gerard J. Quinnan 500 (1)
Justin P. Walder 39,503 1.4%
Saul H. Weisman 10,843 (1)
All Directors and
Officers as a group
(nine (9) individuals
including those named above) 811,909 27.9%
</TABLE>
(1) Shares owned beneficially are less than 1% of total shares
outstanding.
(2) Shares listed as owned beneficially include 54,500 shares subject
to option under the Ronson Corporation 1983, 1987 and 1996
Incentive Stock Option Plans as follows:
Common Shares
Under Option
------------
Louis V. Aronson II 22,500
Justin P. Walder 5,000
All Directors and Officers
as a group (nine (9)
individuals including
those named above) 54,500
<PAGE>
(3) Does not include 73,773 shares of issued common stock owned by the
Retirement Plan and 91,487 shares of unissued common stock issuable
to the Retirement Plan upon conversion of 91,487 shares of 12%
Cumulative Convertible Preferred Stock. The shares held by the
Retirement Plan are voted by the Plan's trustees, Messrs. L.V.
Aronson, Ganz and Gedinsky. If the shares held by the Retirement
Plan were included in Mr. L.V. Aronson's beneficial ownership, Mr.
L.V. Aronson's beneficial ownership would be 811,580 shares, or
27.3% of the class. If the shares held by the Retirement Plan were
included in Mr. Ganz's beneficial ownership, Mr. Ganz's beneficial
ownership would be 188,902 shares, or 6.4% of the class.
(c) Changes in control.
The Company knows of no contractual arrangements which
may operate at a subsequent date to result in a change in control of the
Company.
Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Compensation Committee Interlocks and Insider
Participation in Item 11 - Executive Compensation above for information
in response to (a) and (b) of this Item.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
Not applicable.
<PAGE>
PART IV
Item 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1) and (2) - The response to this portion of Item 14 is submitted
as a separate section of this report.
(3) Listing of exhibits, as applicable.
(3) Articles of incorporation are incorporated herein
by reference. The By-Laws of the Company were amended on March 5, 1997
to include a new Section 9 of Article I, Nomination for Board of
Directors. The amended By-Laws are attached hereto as Exhibit 3.
(4) Instruments defining the rights of security
holders, including indentures.
Reference is made to Company's Form S-2 filed on
September 18, 1987 and incorporated herein by reference.
Reference is made to Company's Form S-2 filed on
April 8, 1988 and incorporated herein by reference.
(10) Material contracts.
On January 6, 1995, RCPC entered into an
agreement with Summit Bank for a Revolving Loan and a Term Loan. On
March 6, 1997, the Revolving Loan was amended and extended to June 30,
2000 (refer to Notes 4 and 5 of the Notes to Consolidated Financial
Statements). The 1995 agreements were attached to the Company's 1994
Form 10-K as Exhibits 10(a)-10(f). The March 1997 amendments to the
Revolving Loan are attached hereto as Exhibits 10(a)-10(c) as follows:
(a) Amendment to Loan and Security Agreement
dated March 6, 1997, between Ronson Consumer Products Corporation and
Summit Bank.
(b) Amended and Restated Master Note dated March
6, 1997, to Summit Bank by Ronson Consumer Products Corporation.
(c) Mortgage Modification Agreement dated March
6, 1997 between Ronson Consumer Products Corporation and Summit Bank.
On December 1, 1995 the Company and RCPC entered
into a mortgage loan agreement with Summit (refer to Note 5 of the Notes
to Consolidated Financial Statements). The agreements were attached to
the Company's 1995 Form 10-K as Exhibits 10(a) and 10(b).
Ronson Aviation has an outstanding mortgage loan
agreement with the Bank of New York, National Community Division, which
was filed as Exhibits 2 and 3 to the Company's Form 10-Q for the quarter
ended June 30, 1995. In March 1997, the mortgage was extended to July
31, 1997. (Refer to Note 5 of the Notes to Consolidated Financial
Statements.)
<PAGE>
For further information on Company's loan
agreements, reference is made to Notes 4 and 5 of the Notes to
Consolidated Financial Statements contained in the Company's financial
statements for the year ended December 31, 1996, filed with this Report
pursuant to Item 8, which is incorporated herein by reference.
The Company is a party to an employment contract
with Mr. Louis V. Aronson II dated December 21, 1978, as amended July
24, 1980, July 1, 1982, October 11, 1985, July 7, 1988, May 10, 1989,
August 22, 1991 and May 22, 1995. This contract is incorporated herein
by reference as filed as Exhibit 10.16 to Registration Statement No.
33-13696 on Form S-2 dated September 18, 1987.
(c) The Summary of the Management Incentive Plan
of the Company and its subsidiaries is attached as Exhibit 10(d).
(11) Statement re computation of per share earnings
is attached hereto as Exhibit 11.
(20) Other documents or statements to security holders.
The Ronson Corporation Notice of Meeting of
Stockholders held on August 27, 1996, and Proxy Statement was filed on
July 29, 1996, and is incorporated herein by reference.
On November 15, 1996, the Company issued an offer
to exchange up to 1,423,912 aggregate shares of its common stock for all
of the 837,595 issued and outstanding shares of its 12% Cumulative
Convertible Preferred Stock. For each share of preferred stock
exchanged, the Company has offered to issue 1.7 shares of common stock.
The terms and conditions of the offer are more fully described in the
Offering Circular and the accompanying Letter of Transmittal filed on
November 15, 1996 (together the "Exchange Offer") which are incorporated
herein by reference.
(21) Subsidiaries of the Company.
The Company is the owner of 100% of the voting
power of the following subsidiaries, each of which is included in the
consolidated financial statements of the Company:
Wholly Owned Subsidiary State or Other Jurisdiction
and Business Name of Incorporation or Organization
----------------- --------------------------------
Domestic
--------
Ronson Consumer Products Corporation New Jersey
Ronson Aviation, Inc. New Jersey
Prometcor, Inc. (formerly known as New Jersey
Ronson Metals Corporation)
Foreign
--------
Ronson Corporation of Canada, Ltd. Canada
The Company also holds 100% of the voting power
of three additional subsidiaries which are included in its consolidated
financial statements and which, if considered in the aggregate as a
single subsidiary, would not constitute a significant subsidiary.
(23) Consent of experts and counsel attached hereto
as Exhibit 23(a).
<PAGE>
(99) Additional exhibits.
None.
(b) Reports on Form 8-K filed in the fourth quarter of 1996.
None.
(c) Exhibits - The response to this portion of Item 14 is submitted as a
separate section of this report. (See Item (a) (3).)
(d) Financial Statement Schedules - The response to this portion of Item
14 is submitted as a separate section of this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
RONSON CORPORATION
Dated: March 28, 1997 By: /s/Louis V. Aronson II
----------------------------------------
Louis V. Aronson II, President and
Chief Executive Officer and Director
Dated: March 28, 1997 By: /s/Daryl K. Holcomb
----------------------------------------
Daryl K. Holcomb, Vice President &
Chief Financial Officer, Controller
and Treasurer
Dated: March 28, 1997 By: /s/Justin P. Walder
----------------------------------------
Justin P. Walder, Secretary and
Director
Dated: March 28, 1997 By: /s/Robert A. Aronson
----------------------------------------
Robert A. Aronson, Director
Dated: March 28, 1997 By: /s/Barton P. Ferris, Jr.
----------------------------------------
Barton P. Ferris, Jr., Director
Dated: March 28, 1997 By: /s/Erwin M. Ganz
----------------------------------------
Erwin M. Ganz, Director
Dated: March 28, 1997 By: /s/ Gerard J. Quinnan
----------------------------------------
Gerard J. Quinnan, Director
Dated: March 28, 1997 By: /s/Saul H. Weisman
----------------------------------------
Saul H. Weisman, Director
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14 (a) (1) and (2), and (d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1996
RONSON CORPORATION
SOMERSET, NEW JERSEY
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION FIVE-YEAR SELECTED FINANCIAL DATA
----------------------------------------------------
Dollars (other than per share amounts) in thousands
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales (1)............................................ $ 25,454 $ 26,953 $ 25,583 $ 19,725 $ 22,727
Earnings (loss) from
continuing operations (1) ............................. 335 1,500 1,074 (821) (1,073)
Total assets ............................................ 12,104 13,403 11,887 9,896 16,874
Long-term obligations (2) ............................... 2,963 3,312 2,389 3,619 6,895
Per common share (4):
Earnings (loss) from continuing operations (3):
Assuming no dilution ............................. 0.09 0.77 0.52 (0.59) (0.75)
Assuming full dilution ........................... 0.09 0.58 0.42 (0.59) (0.75)
</TABLE>
(1) Net sales and loss from continuing operations for 1992 has been
reclassified to conform with the presentation of continuing and
discontinued operations.
(2) Certain amounts were reclassified in 1992 through 1995 for
comparability with the current presentation.
(3) "No dilution" assumes no conversion of preferred shares to common
and "full dilution" assumes full conversion of all preferred
shares to common. The assumed conversion of preferred shares to
common was anti-dilutive for the years ended December 31, 1992,
1993 and 1996, and therefore, was excluded from the computation
of loss per common share, assuming full dilution, for purposes of
this presentation.
(4) No dividends on common stock were declared or paid during the
five years ended December 31, 1996.
<PAGE>
FORM 10-K -- ITEM 14 (a) (1) and (2)
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Ronson Corporation and its
wholly owned subsidiaries are included in Item 8:
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Operations - Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows - Years Ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
The following consolidated financial statement schedules of Ronson
Corporation and its wholly owned subsidiaries to be included in Item 14(d)
will be filed by the Company by amendment before April 30, 1997.
Schedule I Condensed Financial Information
of Company
Schedule II Valuation and Qualifying Accounts
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Ronson Corporation
We have audited the accompanying consolidated balance sheets of Ronson
Corporation and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations and cash flows for each of
the years in the three-year period ended December 31, 1996. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards required that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Ronson Corporation and subsidiaries as of December 31, 1996 and 1995,
and the consolidated results of their operations for each of the years
in the three-year period ended December 31, 1996 in conformity with
generally accepted accounting principles.
DEMETRIUS & COMPANY, L.L.C.
Wayne, New Jersey
March 15, 1997
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
Dollars in thousands
ASSETS
------
December 31,
-----------------
1996 1995 *
------- -------
<S> <C> <C>
CURRENT ASSETS:
Cash ....................................................... $ 116 $ 64
Accounts receivable, less allowances for doubtful accounts
of: 1996, $64; 1995, $86 ................................. 1,617 1,940
Inventories:
Finished goods ........................................... 2,428 3,643
Work in process .......................................... 160 177
Raw materials ............................................ 520 700
------- -------
3,108 4,520
Other current assets ....................................... 613 783
Current assets of discontinued operations .................. 358 187
------- -------
TOTAL CURRENT ASSETS ................................. 5,812 7,494
PROPERTY, PLANT AND EQUIPMENT:
Land ....................................................... 19 19
Buildings and improvements ................................. 3,638 3,477
Machinery and equipment .................................... 5,678 5,211
Construction in progress ................................... 55 45
------- -------
9,390 8,752
Less accumulated depreciation and amortization ............. 5,056 4,728
------- -------
4,334 4,024
INTANGIBLE PENSION ASSETS .................................. 357 419
OTHER ASSETS ............................................... 775 764
OTHER ASSETS OF DISCONTINUED OPERATIONS .................... 826 702
------- -------
$12,104 $13,403
======= =======
</TABLE>
See notes to consolidated financial statements.
* Reclassified for comparability.
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
Dollars in thousands (except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
December 31,
--------------------
1996 1995 *
-------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt ............................................ $ 2,084 $ 3,196
Current portion of long-term debt .......................... 598 370
Current portion of lease obligations ....................... 108 40
Accounts payable ........................................... 1,477 1,428
Accrued expenses ........................................... 1,911 2,030
Current liabilities of discontinued operations ............. 1,753 993
-------- --------
TOTAL CURRENT LIABILITIES ............................. 7,931 8,057
LONG-TERM DEBT ............................................. 2,352 2,845
LONG-TERM LEASE OBLIGATIONS ................................ 250 37
PENSION OBLIGATIONS ........................................ 268 287
OTHER LONG-TERM LIABILITIES ................................ 36 78
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS ........... 57 65
COMMITMENTS AND CONTINGENCIES
<PAGE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
Dollars in thousands (except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
December 31,
--------------------
1996 1995 *
-------- --------
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, authorized 5,000,000 shares:
12% cumulative convertible, $.01 stated value, outstanding
1996, 837,595 and 1995, 847,308 .......................... 8 8
Common stock par value $1
1996 1995
---- ----
Authorized shares............... 11,848,106 11,848,106
Reserved shares................. 941,445 917,374
Issued (including treasury)..... 1,863,939 1,820,893 1,864 1,821
Additional paid-in capital ................................. 30,345 30,308
Accumulated deficit ........................................ (27,936) (27,081)
Unrecognized net loss on pension plans ..................... (1,441) (1,403)
Cumulative foreign currency translation adjustment ......... (36) (26)
-------- --------
2,804 3,627
Less cost of treasury shares:
1996, 62,105 and 1995, 62,087 common shares ................ 1,594 1,593
-------- --------
TOTAL STOCKHOLDERS' EQUITY ............................... 1,210 2,034
-------- --------
$ 12,104 $ 13,403
======== ========
</TABLE>
See notes to consolidated financial statements.
* Reclassified for comparability.
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
Dollars in thousands (except per share data)
Year Ended December 31,
--------------------------------------------
1996 1995 * 1994 *
-------- -------- --------
<S> <C> <C> <C>
NET SALES ..................................................................... $ 25,454 $ 26,953 $ 25,583
-------- -------- --------
Cost and expenses:
Cost of sales ............................................................... 16,608 18,292 17,223
Selling, shipping and advertising ........................................... 3,650 3,340 3,166
General and administrative .................................................. 3,196 3,141 3,272
Depreciation and amortization ............................................... 465 468 538
-------- -------- --------
23,919 25,241 24,199
-------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS BEFORE
INTEREST AND OTHER ITEMS .................................................... 1,535 1,712 1,384
-------- -------- --------
Other expense:
Interest expense ............................................................ 762 541 322
Other-net ................................................................... 567 168 342
-------- -------- --------
1,329 709 664
-------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES ......................................................... 206 1,003 720
Income tax benefits-net ....................................................... 129 497 354
-------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS ........................................... 335 1,500 1,074
-------- -------- --------
Loss from discontinued operations (net of applicable deferred
income tax benefit of:
1996, $180; 1995, $110) ..................................................... (1,190) (860) --
-------- -------- --------
NET EARNINGS (LOSS) ........................................................... $ (855) $ 640 $ 1,074
======== ======== ========
<PAGE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
Dollars in thousands (except per share data)
Year Ended December 31,
--------------------------------------------
1996 1995 * 1994 *
-------- -------- --------
<S> <C> <C> <C>
EARNINGS (LOSS) PER COMMON SHARE:
Assuming no dilution:
Earnings from continuing operations ......................................... $ 0.09 $ 0.77 $ 0.52
Loss from discontinued operations ........................................... (0.66) (0.50) --
-------- -------- --------
Net earnings (loss) ......................................................... $ (0.57) $ 0.27 $ 0.52
======== ======== ========
Assuming full dilution:
Earnings from continuing operations ......................................... $ 0.09 $ 0.58 $ 0.42
Loss from discontinued operations ........................................... (0.66) (0.33) --
-------- -------- --------
Net earnings (loss) ......................................................... $ (0.57) $ 0.25 $ 0.42
======== ======== ========
</TABLE>
See notes to consolidated financial statements
* Reclassified for comparability.
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------
Dollars in thousands Year Ended December 31,
-----------------------------------------------
1996 1995 * 1994 *
------- ------- -------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss) .................................................... $ (855) $ 640 $ 1,074
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization ....................................... 465 468 538
Deferred income tax benefits ........................................ (390) (686) (354)
Increase (decrease) in cash from changes in:
Accounts receivable .............................................. 323 (243) (417)
Inventories ...................................................... 1,412 (1,424) (1,319)
Other current assets ............................................. 121 (19) (246)
Accounts payable ................................................. 58 (287) 252
Accrued expenses ................................................. 667 141 181
Net change in pension-related accounts .............................. (30) (1,669) 292
Other ............................................................... 122 338 (65)
------- ------- -------
Net cash provided by (used in) operating
activities .................................................... 1,893 (2,741) (64)
------- ------- -------
Cash Flows from Investing Activities:
Net cash used in investing activities,
capital expenditures .......................................... (466) (343) (493)
------- ------- -------
Cash Flows from Financing Activities:
Proceeds from long-term debt ........................................... 400 1,563 106
Proceeds from short-term debt .......................................... 1,847 8,818 1,422
Proceeds from exercise of stock options ................................ 80 31 4
Payments of dividends on preferred stock ............................... -- -- (92)
Payments of long-term debt ............................................. (665) (545) (443)
Payments of long-term lease obligations ................................ (78) (60) (55)
Payments of short-term debt ............................................ (2,959) (6,845) (806)
------- ------- -------
Net cash provided by (used in)
financing activities .......................................... (1,375) 2,962 136
------- ------- -------
Net increase (decrease) in cash ........................................ 52 (122) (421)
Cash at beginning of year .............................................. 64 186 607
------- ------- -------
Cash at end of year .................................................... $ 116 $ 64 $ 186
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
* Reclassified for comparability.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation - The consolidated financial statements
include the accounts of Ronson Corporation (the "Company") and its
subsidiaries, all of which are wholly owned. Its principal subsidiaries are
Ronson Consumer Products Corporation ("RCPC"), Woodbridge, New Jersey; Ronson
Corporation of Canada, Ltd. ("Ronson-Canada"), Mississauga, Ontario, Canada
(together "Ronson Consumer Products"); Ronson Aviation, Inc. ("Ronson
Aviation"), Trenton, New Jersey; and Prometcor, Inc., ("Prometcor"), formerly
known as Ronson Metals Corporation, Newark, New Jersey. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the period. Actual results could differ from those estimates.
Property and Depreciation - Property, plant and equipment are carried at
cost and are depreciated over their estimated useful lives using the
straight-line method. Capitalized leases are amortized over their estimated
useful lives using the straight-line method. Leasehold improvements are
amortized over their estimated useful lives or the remaining lease terms,
whichever is shorter. At December 31, 1996, aircraft utilized by Ronson
Aviation in its charter operations and held for more than one year were
reclassified from finished goods inventories to property, plant and
equipment. The term notes payable secured by the reclassified aircraft were
also reclassified from short-term debt to long-term debt. Certain information
in the prior year's balance sheets and statements of operations and cash
flows have been reclassified for comparability. The reclassification had no
effect on earnings (loss).
Inventories - Inventories, other than aircraft, are valued at the lower
of average cost or market. Aircraft inventory is carried at the lower of
cost, specific identification, or market. In the third quarter of 1996,
certain aircraft were revalued to reflect net realizable values, and the
result was a charge of about $190,000.
Foreign Currency Translation - All balance sheet accounts of the
Company's foreign subsidiary, Ronson-Canada, are translated at the current
exchange rate as of the end of the year. All income statement accounts are
translated at average currency exchange rates. Stockholders' Equity accounts
are translated at historical exchange rates. The resulting translation
adjustment is recorded as a separate component of Stockholders' Equity.
Transaction gains and losses are not significant in the periods presented.
Fair Value of Financial Instruments - In 1995, the Company adopted SFAS
#107 "Disclosures about Fair Value of Financial Instruments" which requires
all entities to disclose the fair value of financial instruments for which it
is practicable to estimate fair value.
The Company's financial instruments include cash, accounts receivable,
accounts payable, accrued expenses and other current liabilities and
long-term debt. The book values of cash, accounts receivable, accounts
payable and accrued expenses and other current liabilities are representative
of their fair values due to the short-term maturity of these instruments. The
book value of the Company's long-term debt is considered to approximate its
fair value, based on current market rates and conditions.
<PAGE>
Research and Development Costs - Costs of research and new product
development are charged to operations as incurred and amounted to
approximately $134,000, $135,000 and $86,000 for the years ended December 31,
1996, 1995 and 1994, respectively.
Advertising Costs - Costs of advertising are expensed as incurred and
amounted to approximately $561,000, $258,000 and $331,000 for the years ended
December 31, 1996, 1995 and 1994, respectively.
Income Taxes - In 1993, the Company adopted SFAS #109, "Accounting for
Income Taxes". In 1996, 1995 and 1994, the Company recorded net deferred
income tax assets of $390,000, $686,000 and $354,000, respectively.
Per Common Share Data - Earnings (Loss) per Common Share, Assuming No
Dilution, was computed by dividing earnings (loss) less cumulative preferred
dividends by the weighted average number of common shares outstanding.
Earnings (Loss) per Common Share, Assuming Full Dilution, was computed
by dividing earnings (loss) by the weighted average number of common shares
outstanding plus the assumed conversion of the preferred shares into common
shares.
The weighted average number of shares used for these computations was as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Average number of common shares:
Assuming no dilution 1,791,535 1,719,867 1,700,075
Assuming full dilution 2,630,438 2,589,787 2,576,932
</TABLE>
Stock options are not included in earnings (loss) per common share
computations since their dilutive effect would not be material.
(Refer to Note 11.)
Stock Options - The Company has elected to follow Accounting Principles
Board Opinion #25, "Accounting for Stock Issued to Employees" (APB #25) and
related Interpretations in accounting for its employee stock options because,
as discussed below, the alternative fair value accounting provided for under
SFAS #123, "Accounting for Stock-Based Compensation", requires use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB #25, because the exercise price of the Company's employee
stock options equals or exceeds the market price of the underlying stock on
the date of grant, no compensation expense is recognized.
<PAGE>
Note 2. 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, and to comply with the New
Jersey Environmental Industrial Site Recovery Act ("ISRA") (formerly ECRA)
and all other applicable laws. As part of the plan to sell the properties of
the Prometcor discontinued operations, Prometcor has also been involved in
the termination of its United States Nuclear Regulatory Commission ("NRC")
license. Prior to the fourth quarter 1996, the total costs and expenses
related to terminating the Prometcor operation, less the expected gain from
the eventual sale of Prometcor's assets, were projected to be approximately
$2,890,000. These costs and expenses consisted of: termination of Prometcor's
operations; maintenance of the Prometcor property; and completion of
compliance by Prometcor with environmental regulations. In the fourth
quarters of 1995, 1993, 1992, 1991 and 1990; the amounts of $970,000,
$625,000, $200,000, $520,000 and $575,000, respectively, (which total
$2,890,000) were charged against the Company's Losses from Discontinued
Operations, prior to deferred income tax benefits. These charges between the
beginning of 1990 and year end 1995 were due primarily: to costs incurred; to
previously projected costs related to the New Jersey Department of
Environmental Protection ("NJDEP"); to NRC related activities; and to the
extended period of time previously projected for NJDEP and NRC clearance. The
liability for these costs and expenses recorded in the financial statements
at December 31, 1995, was considered adequate by the Company, based upon: the
results of testing completed by year end 1995; NJDEP and NRC comments through
1995; reports to the Company by its environmental counsel and environmental
consultants that the environmental compliance would be completed in 1996; and
that the sale of the Prometcor property would be completed prior to December
31, 1996.
As the result of further testing completed and reported to the Company
by its radiological consultant and other environmental consultants in the
third and fourth quarters of 1996 and to date in the first quarter of 1997,
and to further comments from the NJDEP and NRC in the fourth quarter of 1996
and to date in the first quarter of 1997, somewhat expanded areas of
contamination were identified and delineated. The testing indicated low-level
radiological contamination in various areas of the Prometcor property and
solvent contamination in the groundwater below a section of the property.
Additional testing and remediation are required and will increase the costs
and time projected to receive clearance from the NJDEP and the NRC. As a
result of the information and regulatory comments received in the fourth
quarter of 1996 and to date in the first quarter of 1997, the Company accrued
a charge in the fourth quarter of 1996 of $1,370,000 ($1,190,000 net of the
deferred income tax benefit of $180,000) due to the potential additional time
and costs projected.
Although the Company believes it has accrued for all future costs, the
full extent of the costs and time required is not determinable until
additional testing and remediation, if any, has been completed and accepted
by the NJDEP and by the NRC.
Prometcor is being accounted for as a discontinued operation, and,
accordingly, its operating results are reported in this manner in all years
presented in the accompanying Consolidated Statements of Operations and other
related operating statement data.
<PAGE>
The assets and liabilities of Prometcor are reflected in the
Consolidated Balance Sheets under assets and liabilities of discontinued
operations. At December 31, 1996, Other Assets of Discontinued Operations
consisted primarily of land and buildings and net deferred income tax assets
of Prometcor. The Current Liabilities of Discontinued Operations and
Long-Term Liabilities of Discontinued Operations at December 31, 1996,
consisted principally of $1,403,000 of accrued costs related to the
environmental compliance of Prometcor and accrued costs related to
discontinuance of Prometcor.
Note 3. INCOME TAXES:
At December 3l, 1996, the Company had, for federal income tax purposes,
net operating loss carryforwards of approximately $12,550,000, expiring as
follows: $l,500,000 in 1997; $4,000,000 in 1998; $2,800,000 in 1999; $800,000
in 2000 to 2001; and $3,450,000 in 2005 to 2011.
In addition, the Company had approximately $83,000 of available
investment tax credit carryforwards expiring as follows: $20,000 in 1997;
$20,000 in 1998; $32,000 in 1999 and $11,000 in 2000. In accordance with
provisions enacted in the Tax Reform Act of 1986, the investment tax credit
carryforwards available for future periods have been reduced by 35%. The
Company also had available alternative minimum tax credit carryforwards of
approximately $60,000.
The income tax benefits (expenses) consisted of the following (in
thousands):
Year Ended December 31,
1996 1995 1994
---- ---- ----
Current:
Federal. . . . . . . . . . . . . . . . . $ -- $ -- $ --
State. . . . . . . . . . . . . . . . . . (81) (79) --
----- ----- -----
(81) (79) --
----- ----- -----
Deferred:
Federal. . . . . . . . . . . . . . . . . 342 557 314
State. . . . . . . . . . . . . . . . . . 48 129 40
----- ----- -----
390 686 354
----- ----- -----
309 607 354
Allocated to discontinued operations . . . 180 110 --
----- ----- -----
Income tax benefits-net. . . . . . . . . $ 129 $ 497 $ 354
===== ===== =====
In accordance with SFAS #109, the provision for federal income taxes in
1994 of $7,000 was offset by available net operating loss carryforwards.
<PAGE>
The reconciliation of estimated income taxes attributed to continuing
operations at the United States statutory tax rate to reported income tax
benefits (expenses) is as follows (in thousands):
Year Ended December 31,
1996 1995 1994
---- ---- ----
Tax expense amount computed
using statutory rate. . . . . . . . . . $ (70) $(341) $(245)
State taxes, net of federal benefit . . . (53) (52) --
Operations outside the US . . . . . . . . 4 100 16
Recognition of deferred income tax assets:
Federal . . . . . . . . . . . . . . . . 162 447 314
State . . . . . . . . . . . . . . . . . 48 129 40
Discontinued operations and other . . . . 38 214 229
----- ----- -----
Income tax benefits-net . . . . . . . . . $ 129 $ 497 $ 354
===== ===== =====
<PAGE>
The tax effects of temporary differences that give rise to significant
portions of the deferred income tax assets and deferred income tax
liabilities are presented below (in thousands):
December 31,
1996 1995
------ ------
Deferred income tax assets:
Inventories, principally due to additional costs
inventoried for tax purposes pursuant to the
Tax Reform Act of 1986 and valuation reserves
for financial reporting purposes. . . . . . . . . . . $ 221 $ 183
Compensated absences, principally due to accrual for
financial reporting purposes. . . . . . . . . . . . . 108 100
Compensation, principally due to accrual
for financial reporting purposes. . . . . . . . . . . 157 200
Accrual of discontinued operations costs, principally
related to compliance with NJDEP and NRC
requirements. . . . . . . . . . . . . . . . . . . . . 562 285
Net operating loss carryforwards. . . . . . . . . . . . 4,783 4,469
Investment tax credit carryforwards . . . . . . . . . . 83 104
Other . . . . . . . . . . . . . . . . . . . . . . . . . 125 135
------ ------
Total gross deferred income tax assets. . . . . . . . 6,039 5,476
Less valuation allowance. . . . . . . . . . . . . . . 4,035 3,902
------ ------
Net deferred income tax assets. . . . . . . . . . . . 2,004 1,574
------ ------
Deferred income tax liabilities:
Pension expense, due to contributions in excess of
net accruals. . . . . . . . . . . . . . . . . . . . . 542 529
Other . . . . . . . . . . . . . . . . . . . . . . . . . 32 5
------ ------
Total gross deferred income tax liabilities . . . . . 574 534
------ ------
Net deferred income taxes . . . . . . . . . . . . . . $1,430 $1,040
====== ======
A valuation allowance is provided when it is more likely than not that
some portion or all of the deferred income tax assets will not be realized. A
valuation allowance has been established based on the likelihood that a
portion of the deferred income tax assets will not be realized. Realization
is dependent on generating sufficient taxable income prior to expiration of
the loss carryforwards. Management has assessed the Company's recent
operating earnings history and expected future earnings. Based on these past
and future earnings, on the expected completion of compliance by Prometcor
with environmental regulations and on tax planning strategies, although
realization is not assured, management believes it is more likely than not
that $2,004,000 of the deferred income tax asset will be realized. The
ultimate realization of the deferred income tax asset will require aggregate
taxable income of approximately $3,000,000 in the years prior to the
expiration of the net operating loss carryforwards in 2011. The amount of the
deferred income tax asset considered realizable, however, could be reduced in
the near term if estimates of future taxable income during the carryforward
period are reduced. A portion of the deferred income tax asset is the result
of a tax planning strategy for state income tax purposes of merging certain
of the Company's subsidiaries resulting in realization of net operating loss
carryforwards. The valuation allowance was increased from $3,902,000 at
December 31, 1995, to $4,035,000 at December 31, 1996, but was reduced from
$4,783,000 at December 31, 1994 to $3,902,000 at December 31, 1995.
Of the net deferred income tax assets, approximately $355,000 were
classified as current and $1,075,000 were classified as long-term at December
31, 1996.
<PAGE>
Note 4. SHORT-TERM DEBT:
Composition (in thousands): December 31,
1996 1995 *
---- ------
Revolving loans (a). . . . . . . . . . . . . . . $ 1,086 $ 1,164
Notes payable, banks (b) . . . . . . . . . . . . -- 1,235
Notes payable, commercial finance companies (c). 998 679
Note payable, equipment lessor . . . . . . . . . -- 118
------- -------
Total Short-Term Debt. . . . . . . . . . . . . . $ 2,084 $ 3,196
======= =======
* Reclassified for comparability.
(a) On January 11, 1995, RCPC entered into an agreement with Summit Bank
("Summit"), formerly United Jersey Bank, for a Revolving Loan and a Term Loan
(refer to Note 5(b) below regarding the Term Loan). On March 6, 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 $1,010,000 at December 31,
1996 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 available under the Revolving Loan is determined by
the level of receivables and inventory. The Revolving Loan currently bears
interest at the rate of 1.5% above Summit's prime rate (8.25% at December 31,
1996). Prior to the 1997 amendment, the interest rate on the loan was 2%
above Summit's prime rate. The Revolving Loan is payable on demand under an
agreement which expires June 30, 2000. The Revolving Loan and Term Loan are
secured by the accounts receivable, inventory and machinery and equipment of
RCPC; a second mortgage on the land, buildings and improvements of RCPC; and
the guarantee of the Company. At December 31, 1996, RCPC also had outstanding
Letters of Credit of approximately $65,000. The Summit agreement also has
restrictive covenants which, among other things, limit the transfer of assets
between the Company and its subsidiaries.
In November 1995, Ronson-Canada entered into an agreement with Canadian
Imperial Bank of Commerce ("CIBC") for a line of credit of C$250,000. The
Revolving Loan balance of $76,000 (C$104,000) at December 31, 1996, by
Ronson-Canada under the line of credit is secured by the accounts receivable
and inventory of Ronson-Canada, and the amounts available under the line are
based on the level of accounts receivable. The loan bears interest at the
rate of 2% over the CIBC prime rate (4.75% at December 31, 1996). The line of
credit, payable on demand, is guaranteed by the Company. The CIBC agreement
has restrictive covenants which, among other things, limit the transfer of
assets from Ronson-Canada to RCPC and the Company.
Based on the amount of the loans outstanding and the levels of accounts
receivable and inventory at December 31, 1996, Ronson Consumer Products had
unused borrowings available at December 31, 1996, of about $340,000 under the
Summit and CIBC lines of credit described above. (Refer to Note 5 below for
information regarding the book value of assets pledged as collateral for the
debt in (a) above.)
<PAGE>
(b) At December 31, 1995, notes payable, banks, consisted of notes
payable of $1,235,000 by Ronson Aviation to Summit under a line of credit in
the amount of $2,000,000. In 1996, the notes were either repaid or converted
to term notes (refer to Note 5(d) below). The line of credit expired in 1996.
(c) At December 31, 1996, the notes payable, commercial finance
companies, consisted of notes payable by Ronson Aviation as follows: 1)
$620,000 due to Raytheon Aircraft Credit Corp., formerly Beech Acceptance
Corporation, Inc.; 2) $270,000 due to Cessna Finance Corporation ("Cessna");
and 3) $108,000 due to Green Tree Financial Servicing Corporation ("Green
Tree"). Notes payable to these commercial finance companies by Ronson
Aviation are each collateralized by specific aircraft, and the notes are
repaid from the proceeds from the sale of the aircraft. The notes bear
interest at rates of 1% to 2% over the prime rate except that the Green Tree
notes bear interest at the rate of 11%. The notes are secured by aircraft
inventory of Ronson Aviation with a book value of $977,000 at December 31,
1996, and the notes due to Cessna are guaranteed by the Company.
At December 31, 1996, the weighted average interest rate for the total
short-term debt was 9.90%.
Note 5. LONG-TERM DEBT:
Composition (in thousands): December 31,
1996 1995*
---- -----
Mortgage loan payable, Summit (a) . . . . . . . $ 1,276 $ 1,300
Term note payable, Summit (b) . . . . . . . . . 100 175
Mortgage loan payable, BONY/NCD (c) . . . . . . 348 456
Notes payable, banks (d). . . . . . . . . . . . 1,076 752
Notes payable, commercial finance companies (e) 146 524
Other . . . . . . . . . . . . . . . . . . . . . 4 8
------- -------
2,950 3,215
Less portion in current liabilities . . . . . . 598 370
------- -------
Balance of Long-Term Debt . . . . . . . . . . . $ 2,352 $ 2,845
======= =======
* Reclassified for comparability.
(a) On December 1, 1995, the Company and RCPC entered into a Mortgage
Loan agreement with Summit in the original amount of $1,300,000. The loan
with a balance of $1,276,000 at December 31, 1996 is secured by a first
mortgage on the land, buildings and improvements of RCPC and is payable in
sixty monthly installments of $11,689, including interest, and a final
installment on December 1, 2000 of $1,152,000. The loan bears interest at a
fixed rate of 8.75%.
(b) In January 1995, RCPC entered into a Term Loan agreement with Summit
in the original amount of $225,000. The Term Loan with a balance of $100,000
at December 31, 1996, is payable in monthly installments of $6,250 plus
interest through April 1998, and the Term Loan bears interest at the rate of
2% over the prime rate. (Refer to Note 4(a) above.)
<PAGE>
(c) The Mortgage Loan with a balance of $348,000 at December 31, 1996,
is payable by Ronson Aviation to Bank of New York/National Community Division
("BONY/NCD") and is collateralized by leasehold improvements, certain fixed
assets, inventory, and accounts and notes receivable of Ronson Aviation. In
February 1997, Ronson Aviation and BONY/NCD extended to July 31, 1997 the
Ronson Aviation mortgage. The mortgage balance had been due to be paid on
January 31, 1997. The monthly payment on the mortgage is $9,000, plus
interest. The Mortgage Loan bears interest at a variable rate of 2.5% above
prime. The BONY/NCD mortgage loan agreement contains certain covenants and
restrictions on Ronson Aviation only, including liquidity ratios and
restrictions on the payment of dividends, management fees, certain interest
and subordinated debt to the Company.
(d) The notes payable, banks, consisted of three term loans payable by
Ronson Aviation to Summit. The notes bear interest at the rate of 1.5% over
the prime rate, are collateralized by specific aircraft with a net book value
of $1,586,000 at December 31, 1996 and are guaranteed by the Company. Two of
the notes in the amount of approximately $676,000 at December 31, 1996, are
payable in monthly installments totalling $6,375 plus interest through
September 2000, with a final payment of about $383,000 on October 5, 2000.
The third note in the amount of $400,000 at December 31, 1996, is payable in
monthly installments of $6,436 including interest through December 31, 2001
with a final installment of about $155,000 on January 29, 2002.
(e) At December 31, 1996, notes payable, commercial finance companies,
consisted of notes payable by Ronson Aviation as follows: 1) $64,000 due to
Cessna; and 2) $82,000 due to Green Tree. The notes payable to Cessna bear
interest at the rate of 1.75% above the prime rate, are guaranteed by the
Company and are due in monthly installments of $1,574 including interest
through April 2001. The note payable to Green Tree bears interest at the
fixed rate of 11% and is payable in monthly installments of $1,702 including
interest through May 2002. The notes are collateralized by specific aircraft
with a net book value of $158,000 at December 31, 1996.
At December 31, 1996, fixed assets with a net book value of $4,187,000
and accounts receivable and inventories of $3,787,000 are pledged as
collateral for the debt detailed in Notes 4(a) and 5(a) through 5(e) above.
Net assets of consolidated subsidiaries, excluding intercompany
accounts, amounted to approximately $2,225,000 at December 31, 1996, of which
approximately $2,180,000 was restricted as to transfer to the Company and its
other subsidiaries due to various covenants of their debt agreements at
December 31, 1996.
Long-term debt matures during the next six years as follows: 1997,
$598,000; 1998, $203,000; 1999, $188,000; 2000, $1,721,000; 2001, $82,000;
and 2002, $158,000.
<PAGE>
Note 6. LEASE OBLIGATIONS:
Lease expenses in continuing operations, consisting principally of
equipment rentals, totalled $539,000, $468,000 and $508,000 for the years
ended December 31, 1996, 1995 and 1994, respectively. Sublease income
amounted to $168,000, $142,000 and $240,000 for the same periods,
respectively.
At December 31, 1996, the Company's future minimum lease payments under
operating and capitalized leases with initial or remaining noncancellable
lease terms in excess of one year are presented in the table below (in
thousands):
Operating Capitalized
Total Leases Leases
----- ------ ------
Year Ending December 31:
1997 . . . . . . . . . $ 464 $ 322 $ 142
1998 . . . . . . . . . 390 283 107
1999 . . . . . . . . . 356 249 107
2000 . . . . . . . . . 313 235 78
2001 . . . . . . . . . 92 92 --
------ ------ ------
Total Obligations. . . . . $1,615 $1,181 434
====== ======
Less: Amount representing
interest . . . . . 76
------
Present value of capitalized
lease obligations. . . . $ 358
======
Capitalized lease property included in the Consolidated Balance Sheets
is presented below (in thousands):
December 31,
1996 1995
---- ----
Machinery and equipment . . . . . . $ 574 $ 234
Less accumulated amortization . . . . 90 89
----- -----
$ 484 $ 145
===== =====
<PAGE>
Note 7. RETIREMENT PLANS:
The Company and its subsidiaries have several trusteed retirement plans
covering substantially all employees. The Company's funding policy is to make
minimum annual contributions as required by applicable regulations. Plans
covering union members generally provide benefits of stated amounts for each
year of service. The Company's salaried pension plan provides benefits using
a formula which is based upon employee compensation. On June 30, 1985, the
Company amended its salaried pension plan so that benefits for future service
would no longer accrue. A defined contribution plan was established on July
1, 1985 in conjunction with the amendments to the salaried pension plan.
The following table sets forth the plans' aggregate funded status and
amounts recognized in the Company's Consolidated Balance Sheets (in
thousands):
December 31,
1996 1995
------- -------
Accumulated benefit obligation, including vested
benefits of: 1996, $4,596; 1995, $4,672. . . $ 4,599 $ 4,679
Less plan assets at fair value . . . . . . 4,085 4,112
------- -------
Accumulated benefit obligation in excess of
plan assets . . . . . . . . . . . . (514) (567)
Unrecognized net obligation at 1/1/85 being
recognized over 15 to 18 years. . . . . . 193 231
Unrecognized prior service cost . . . . . . 164 188
Unrecognized net loss from past experience
different from that assumed and effects of
changes in assumptions . . . . . . . . 1,441 1,403
------- -------
Prepaid pension net recognized in the
Consolidated Balance Sheets. . . . . . . $ 1,284 $ 1,255
======= =======
Plan assets primarily include U.S. Treasury Securities, real property
sold in February 1997 (refer to Note 8 below), 73,773 shares of common stock
and 91,487 shares of preferred stock of the Company, money market funds and
funds held in insurance company group accounts.
Accounts corresponding to the additional minimum liability were recorded
in the Consolidated Balance Sheets as follows (in thousands):
December 31,
1996 1995
------- -------
Intangible Pension Assets . . . . . . . $ 357 $ 419
Unrecognized Net Loss on Pension Plans. . . 1,441 1,403
------- -------
$ 1,798 $ 1,822
======= =======
If the additional minimum liability recorded exceeds unrecognized prior
service cost and the unrecognized net obligation at transition, that
difference, an unrecognized net loss, is to be reported as a separate
component of Stockholders' Equity. This unrecognized net loss is being
amortized over future periods as a component of pension expense.
<PAGE>
The Company's Consolidated Statements of Operations included pension
expense consisting of the following components (in thousands):
Year Ended December 31,
1996 1995 1994
------- ------- -------
Service cost. . . . . . $ 18 $ 17 $ 15
Interest cost . . . . . 339 350 357
Actual return on plan assets (154) (467) 53
Net amortization and deferral 62 467 (72)
------- ------- -------
Net pension expense . . . $ 265 $ 367 $ 353
======= ======= =======
The weighted average discount rates used in determining the actuarial
present value of the accumulated benefit obligation were 7.25%, 7.25% and
7.75% in 1996, 1995 and 1994, respectively. The estimated long-term rates of
return on assets were 6.7%, 7.3% and 7.5% in 1996, 1995 and 1994,
respectively.
The Company contributes to its defined contribution plan at the rate of
1% of each covered employee's compensation. The Company also contributes an
additional amount equal to 50% of a covered employee's contribution to a
maximum of 1% of compensation. Expenses of $66,000, $65,000 and $64,000 for
this plan were recorded in 1996, 1995 and 1994, respectively.
Note 8. COMMITMENTS AND CONTINGENCIES:
On February 28, 1997, the Ronson Corporation Retirement Plan
("Retirement Plan") completed the sale of its Salisbury, North Carolina, land
for cash proceeds, net of related expenses, of about $800,000. The land had
previously been valued in the Retirement Plan assets, for financial reporting
purposes, at the appraised value of $675,000. The excess of about $125,000 of
the net proceeds from the sale over the prior appraised value has increased
the Plan Assets at Fair Value at December 31, 1996 (refer to Note 7 above).
The net proceeds of the sale of the property has also satisfied a substantial
portion of a settlement with the United States Department of Labor ("DOL")
and the Internal Revenue Service ("IRS") as described below.
On December 30, 1994, the Company agreed to a settlement with the DOL
and on February 3, 1995, the Company agreed to a settlement with an appellate
officer of the 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 in Salisbury, North Carolina, not used in operations, to
the 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. Under
the terms of the settlements with the IRS and DOL, the North Carolina land
previously contributed remained 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 was stayed, and no
collection action would be taken if the Company met certain terms. Further, a
substantial amount of the judgment was satisfied by the net proceeds of about
$800,000 from the February 28, 1997, sale of the North Carolina land by the
Retirement Plan.
<PAGE>
In addition, in accordance with the terms of the settlements, in March
1997, the Company transferred the balance of about $52,000 held in an escrow
account to the Retirement Plan, satisfying a further portion of the
settlement amount. The balance of the settlements, approximately $92,000,
will be paid by the Company to the Retirement Plan in 1997.
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, 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 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.
<PAGE>
The Company has an employment contract with an officer. The contract
expires on December 3l, 1998. Base salaries in the years 1997 and 1998 are
$462,405 and $494,773, respectively, and the contract provides for additional
compensation and benefits, including a death benefit equal to two years'
salary.
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.
<PAGE>
Note 9. STOCKHOLDERS' EQUITY:
A summary of activity within Stockholders' Equity is as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Preferred stock issued:
Balance at beginning of year ........... $ 8 $ 9 $ 9
Conversion of preferred stock
to common stock ...................... -- (1) --
-------- -------- --------
Balance at end of year ................. 8 8 9
-------- -------- --------
Common stock issued:
Balance at beginning of year ........... 1,821 1,768 1,761
Exercise of stock options .............. 33 27 3
Conversion of preferred stock
to common stock ...................... 10 26 4
-------- -------- --------
Balance at end of year ................. 1,864 1,821 1,768
-------- -------- --------
Additional paid-in capital:
Balance at beginning of year ........... 30,308 30,329 30,332
Exercise of stock options .............. 47 4 1
Conversion of preferred stock
to common stock ...................... (10) (25) (4)
-------- -------- --------
Balance at end of year ................. 30,345 30,308 30,329
-------- -------- --------
Accumulated deficit:
Balance at beginning of year ........... (27,081) (27,721) (28,749)
Net earnings (loss) .................... (855) 640 1,074
Dividends on preferred stock ........... -- -- (46)
-------- -------- --------
Balance at end of year ................. (27,936) (27,081) (27,721)
-------- -------- --------
Unrecognized net loss on pension plans:
Balance at beginning of year ........... (1,403) (1,595) (1,525)
Expensed during the year ............... 125 153 124
Unrecognized net gain (loss)
during the year ...................... (163) 39 (194)
-------- -------- --------
Balance at end of year ................. (1,441) (1,403) (1,595)
-------- -------- --------
Cumulative foreign currency
translation adjustment ................. (36) (26) (26)
-------- -------- --------
Treasury stock (at cost) ................... (1,594) (1,593) (1,593)
-------- -------- --------
Total Stockholders' Equity ................. $ 1,210 $ 2,034 $ 1,171
======== ======== ========
</TABLE>
<PAGE>
Note 10. PREFERRED STOCK:
Each share of 12% Cumulative Convertible Preferred Stock has a stated
value of $0.01 per share and a liquidation preference of $1.75 per share
($1,466,000 at December 31, 1996, in the aggregate) plus accrued dividends.
The shares are non-voting and have a right to cumulative dividends at the
annual rate of $0.21 per share. The holders of the preferred shares may, at
any time, convert each preferred share into one share of common stock unless
the preferred shares were previously redeemed. During 1996, 1995 and 1994,
9,713, 25,959 and 4,145 preferred shares, respectively, were converted into
common shares. The Company has the option to redeem all or part of the
preferred stock at $2.25 per share plus accrued dividends.
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. The Company did not accept any of the tendered
preferred shares for exchange prior to December 31, 1996, and, therefore, the
effects of the Exchange Offer have not been included in the Company's
Consolidated Balance Sheets or Consolidated Statements of Operations at
December 31, 1996. (Refer to Note 15 below.)
Dividends in arrears at December 31, 1996 totalled $0.8925 per share of
preferred stock (seventeen quarters at $0.0525 per share per quarter), or
approximately $748,000 in the aggregate.
Note 11. STOCK OPTIONS:
The Company has three incentive stock option plans which provide for the
grant of options to purchase shares of the Company's common stock. The
options may be granted to officers and other key employees of the Company and
its subsidiaries (including directors if they are also employees of the
Company or one of its subsidiaries) at not less than 100% of the fair market
value on the date on which options are granted. In August 1996, the
stockholders approved the adoption of the Company's 1996 Incentive Stock
Option Plan which provides for the grant of options for up to 100,000 shares
of common stock. In August 1987, the stockholders approved the adoption of
the Company's 1987 Incentive Stock Option Plan and, in November 1983, the
stockholders approved the adoption of the Company's 1983 Incentive Stock
Option Plan, each of which provides for the grant of options for up to 66,666
shares of common stock. After January 21, 1997, no further options may be
granted under the 1983 and 1987 plans. Options granted under the 1983 and
1987 plans are exercisable at any time within five years from the date of
grant, at which time such options expire. Options granted under the 1996 plan
are exercisable after six months from the date of the grant and within five
years of the grant date, at which time such options expire. All options are
vested on the date of the grant.
Pro forma information regarding net earnings (loss) and earnings (loss)
per common share is required by SFAS #123, and has been determined as if the
Company had accounted for its employee stock options under the fair value
method of that statement. The fair value for these options was estimated at
the date of grant using a Black-Scholes option pricing model with the
following weighted average assumptions for 1996: risk-free interest rate of
6.5%; dividend yield of 0%; volatility factor of the expected market price of
the Company's common stock of 0.5; and a weighted average expected life of
the option of five years.
<PAGE>
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which are fully transferable. In
addition, option valuation models require the input of highly subjective
assumptions including the expected stock price volatility. Because the
Company's employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
The Company's pro forma results of operations after adjustment for the
estimated compensation expense under SFAS #123 for the years ended December
31, 1996 and 1995 were as follows (in thousands, except for earnings (loss)
per share information):
Year Ended December 31,
1996 1995
------- -------
Pro forma Results of Operations:
Earnings from continuing operations..... $ 210 $ 1,495
Loss from discontinued operations....... (1,190) (860)
------- -------
Net earnings (loss)..................... $ (980) $ 635
======= =======
Pro forma Earnings (Loss) per Common Share:
Assuming no dilution:
Earnings from continuing operations... $ 0.02 $ 0.77
Loss from discontinued operations..... (0.66) (0.50)
------- -------
Net earnings (loss)................... $ (0.64) $ 0.27
======= =======
Assuming full dilution:
Earnings from continuing operations... $ 0.02 $ 0.58
Loss from discontinued operations..... (0.66) (0.33)
------- -------
Net earnings (loss)................... $ (0.64) $ 0.25
======= =======
<PAGE>
A summary of the Company's stock option activity and related information
for the three years ended December 31, 1996, is as follows:
Number of Weighted Average
Options Exercise Price
------- --------------
Outstanding at beginning of year 1994... 132,199 $ 1.65
Granted............................... 10,000 1.31
Exercised............................. (3,000) 1.20
Expired............................... (32,967) 1.83
-------
Outstanding at December 31, 1994........ 106,232 1.58
Granted............................... 5,500 1.63
Exercised............................. (27,000) 1.18
Expired............................... (14,666) 1.20
-------
Outstanding at December 31, 1995........ 70,066 1.82
Granted............................... 87,200 2.88
Exercised............................. (33,333) 2.39
Expired............................... (20,083) 1.49
-------
Outstanding at December 31, 1996........ 103,850 $ 2.59
======= ======
Exercisable at December 31, 1996........ 93,850 $ 2.62
====== ======
Weighted average fair value of options
granted during the year for options
on which the exercise price:
Equals the market price on the
grant date.......................... $ 1.44
======
Exceeds the market price on the
grant date.......................... $ 1.41
======
Exercise prices for options outstanding as of December 31, 1996 ranged
as follows: 13,900 options at $1.20 per share, 15,500 options from $1.63 to
$2.25 per share and 74,450 options from $2.88 to $3.16 per share. The
weighted average contractual life of those options is 4 years.
<PAGE>
Note 12. STATEMENTS OF CASH FLOWS:
Certificates of deposit that have a maturity of 90 days or more
are not considered cash equivalents for purposes of the accompanying
Consolidated Statements of Cash Flows.
Supplemental disclosures of cash flow information are as follows
(in thousands):
Year Ended December 31,
1996 1995 1994
----- ----- -----
Cash Payments for:
Interest . . . . . . . . . $ 747 $ 478 $ 289
Income taxes . . . . . . . . 85 1 94
Financing & Investing Activities
Not Affecting Cash:
Capital lease obligations incurred. 361 -- --
Note payable as deposit on equipment
to be leased . . . . . . . -- 118 --
<PAGE>
Note 13. INDUSTRY SEGMENTS INFORMATION:
Financial information by industry segment is summarized below
(in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 * 1994 *
-------- -------- --------
<S> <C> <C> <C>
Net sales:
Consumer Products ............ $ 16,534 $ 15,065 $ 13,129
Aviation Services ............ 8,920 11,888 12,454
-------- -------- --------
Consolidated ......... $ 25,454 $ 26,953 $ 25,583
======== ======== ========
Earnings (loss) before
general corporate
expenses and other:
Consumer Products ............ $ 2,837 $ 2,807 $ 2,219
Aviation Services ............ (7) 246 523
-------- -------- --------
Consolidated ......... 2,830 3,053 2,742
General corporate
expenses ..................... (1,295) (1,341) (1,358)
Interest expense ..................... (762) (541) (322)
Other expense-net .................... (567) (168) (342)
-------- -------- --------
Earnings from continuing
operations before
income taxes ................. $ 206 $ 1,003 $ 720
======== ======== ========
Depreciation and
amortization expense
identified to segments:
Consumer Products ............ $ 219 $ 201 $ 187
Aviation Services ............ 232 255 330
-------- -------- --------
451 456 517
Corporate .................... 14 12 21
-------- -------- --------
Consolidated ......... $ 465 $ 468 $ 538
======== ======== ========
Assets identified
to segments:
Consumer Products ............ $ 5,306 $ 5,681 $ 5,070
Aviation Services ............ 5,007 6,331 5,525
-------- -------- --------
10,313 12,012 10,595
Corporate .................... 607 502 764
Discontinued Operations ...... 1,184 889 528
-------- -------- --------
Consolidated ......... $ 12,104 $ 13,403 $ 11,887
======== ======== ========
<PAGE>
<CAPTION>
Year Ended December 31,
1996 1995 * 1994 *
-------- -------- --------
<S> <C> <C> <C>
Capital additions, including
capitalized leases
identified to segments:
Consumer Products ............ $ 619 $ 229 $ 272
Aviation Services ............ 166 111 205
-------- -------- --------
785 340 477
Corporate .................... 42 3 16
-------- -------- --------
Consolidated ......... $ 827 $ 343 $ 493
======== ======== ========
</TABLE>
* Reclassified for comparability.
The above segments are comprised as follows:
Consumer Products - consists of packaged fuels, flints,
refillable lighters and ignitors, a penetrant spray lubricant, a spot
remover, and a surface protectant, which are distributed through
distributors, food brokers, automotive and hardware representatives and
chain stores. Consumer Products is a principal supplier of packaged
flints and lighter fuels in the United States and Canada.
Aviation Services - represents the chartering, servicing
and sales of fixed wing aircraft and servicing of helicopters. Aircraft
are sold through Company sales personnel. Aviation Services provides a
wide range of general aviation services to the general public and to
government agencies located in the vicinity of its facilities in
Trenton, New Jersey.
Discontinued Operations - represents the operations of
the Company's metals segment. The segment is being accounted for as a
discontinued operation, and accordingly, its operating results are
reported in this manner in all years presented. (Refer to Note 2 above.)
The Company performs ongoing credit evaluations of its
customers' financial condition and generally requires no collateral from
its customers.
For the year ended December 31, 1996, sales which
amounted to approximately 14% of Consolidated Net Sales were made by
Ronson Consumer Products to various units of one customer. No other
customer accounted for more than 10% of Consolidated Net Sales for the
year ended December 31, 1996. No customer represented more than 10% of
Consolidated Net Sales for the years ended December 31, 1995 and 1994.
<PAGE>
Note 14. CONCENTRATIONS:
At December 31, 1996, a subsidiary of the Company had cash
balances in a bank which exceeded the insured limit by approximately
$131,000.
Ronson Consumer Products currently purchases lighter
products from manufacturers in Spain, Peoples Republic of China and
Korea. Since there are a number of sources of similar lighter products,
management believes that other suppliers could provide lighters on
comparable terms. A change of suppliers, however, might cause a delay in
delivery of the Company's lighter products and, possibly, a short-term
loss in sales which could have a short-term adverse effect on operating
results.
Note 15. SUBSEQUENT EVENT:
In 1997, through March 10, 1997, the Company accepted
623,016 shares of preferred stock for exchange under the Company's
November 15, 1996 Exchange Offer. As a result, on March 10, 1997, the
Company has outstanding 214,579 shares of preferred stock and 2,860,961
shares of common stock.
If on December 31, 1996, the Company had accepted these
623,016 preferred shares and issued the 1,059,127 common shares in
exchange, the aggregate dividends in arrears at December 31, 1996 would
have been approximately $192,000, a reduction of $556,000.
If the shares had been exchanged on January 1, 1996, the
Earnings (Loss) per Common Share in the year ended December 31, 1996
would have been as follows:
Assuming no dilution:
Earnings from continuing operations............ $ 0.10
Loss from discontinued operations.............. (0.42)
------
Net loss....................................... $(0.32)
======
Assuming full dilution:
Earnings from continuing operations............ $ 0.10
Loss from discontinued operations.............. (0.42)
------
Net loss....................................... $(0.32)
======
EXHIBIT 3
BY-LAWS
OF
RONSON CORPORATION
ARTICLE I
Meetings of Stockholders
Section 1: (Annual Meetings). The Annual Meeting of Stockholders
for election of Directors and transaction of such other business as may be
brought before the meeting shall be held at such place as may be designated by
the Board of Directors at such hour as may be designated by the Board of
Directors on such date as may be designated by the Board of Directors.
Section 2: (Special Meetings). Special Meetings of Stockholders
may be held at such place as may be designated by the Board of Directors,
whenever called in writing by the Board of Directors pursuant to Article Tenth,
Section (d) of the Certificate of Incorporation.
Section 3: (Notice). Notice of each Annual and Special Meeting of
Stockholders shall be given to stockholders by such publication as is required
by law and by notice in writing at least ten (10) days prior thereto. Notice of
each Special Meeting shall indicate the object thereof.
Section 4: (Quorum). A majority in interest of all stockholders,
whether present in person or by proxy, shall constitute quorum, except as may be
otherwise provided by statute.
Section 5: (Chairman of Meeting). The Chief Executive Officer of
the Company, whether he be the President or the Chairman of the Board, or such
person as shall be designated by him in writing shall be the presiding officer
at all meetings of Stockholders.
Section 6: (Adjournment). At the order of the Chairman and
presiding officer at the meeting, an adjournment of any meeting of stockholders
shall be by voice vote of a majority of those stockholders present in person at
the meeting.
Section 7: (Inspectors of Election). Inspectors at any meeting of
stockholders shall be appointed in advance of such meeting by resolution of the
Board of Directors. If such inspectors are not appointed by resolution of the
Board of Directors, such inspectors shall be appointed by the Chairman and
presiding officer at the meeting. The number of inspectors shall be fixed by
such appointments.
Section 8: (Filing of Proxies). Upon the call of the Chairman and
presiding officer at the meeting, all proxies shall be filed with the Secretary
of the Corporation, or the Secretary of the meeting (who shall be designated by
the Chairman and presiding officer at the meeting), or with such other person as
shall be designated by the Chairman and presiding officer at the meeting.
Section 9: (Nominations for Board of Directors).
a. The Board of Directors acting as a Nominating Committee or a
Nominating Committee appointed by the Board shall consider and select
nominees for Directors to be presented for election at the Annual
Meeting of Stockholders or at any Special Meeting at which Directors
may be elected.
b. Nominations for the election of Directors may be made by
shareowners entitled to vote in the election of Directors, provided the
shareowners give timely Notice thereof in writing to the Secretary of
the Company. To be timely, such Notice must be delivered to, or mailed
<PAGE>
by United States Postal Service certified first class, postage prepaid
and received at the principal executive offices of the Company (1) with
respect to an election at an Annual Meeting of Stockholders (a) not
later than ninety (90) days prior to the first anniversary of the
preceding year's Annual Meeting, or (b) in the event the date of the
Annual Meeting is more than sixty (60) days before such anniversary
date, not later than ten (10) days after the earlier of the date on
which public announcement of the date of such Meeting is first made by
the Company or the date the Company first mails Notice of such Meeting
to stockholders, and (2) with respect to an election to be held at a
Special Meeting of Stockholders, not later than ten (10) days after the
earlier of the date on which public announcement of such Meeting is
first made by the Company or the date the Company first mails to
shareowners Notice of the Special Meeting.
"Public announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press or comparable
national news service or in a document publicly filed with the
Securities and Exchange Commission pursuant to the Securities Exchange
Act.
c. The written Notice to be submitted to the Company by
shareowners intending to make nominations must set forth: (1) the names
and addresses of the shareowners who intend to make nominations; (2)
representations that the shareowners are owners of stock held of record
entitled to vote at such meeting; (3) the number of shares held of
record and the number of shares held beneficially specifying the
nominee name in which the shares are held, with written verification
thereof; (4) representations that the shareowners (a) will continue to
own such stock through the date on which the Meeting is held, and b)
intend to appear in person or by proxy at the Meeting to nominate the
person or persons specified in the Notice; (5) the name, age, business
and residence addresses and principal occupations or employment of each
nominee; (6) a description of all arrangements and understandings
between the shareowners and each nominee and any other persons (naming
such person or persons) pursuant to which the nomination is to be made;
(7) such other information regarding each nominee proposed by such
shareowner as would be required to be included in a proxy statement
filed pursuant to Regulation 14A promulgated under Section 14 of the
Securities Exchange Act of 1934, as now or hereafter amended and in
effect, had the persons been nominated by the Board of Directors; and
(8) a written consent of each nominee to serve as a Director of the
Company if elected. The Company may require any proposed nominee to
furnish such other information as may reasonably be required to
determine the qualifications of such nominee to serve as a Director.
d. The Chairman of the Stockholders' Meeting shall determine and
declare at the Meeting whether nominations have been made in accordance
with the Section. If the Chairman determines that a nomination was not
made in accordance hereof, the Chairman shall declare at the Meeting
any defective nomination to be null and void and shall instruct the
Inspectors of Election to disallow and not record votes for any such
nomination.
ARTICLE II
Board of Directors
Section 1: (Quorum). A majority of the Directors serving at the
time of any meeting of Directors shall constitute a quorum.
<PAGE>
Section 2: (Regular Meetings). Regular Meetings of the Board of
Directors shall be held at such place as the Board of Directors may from time to
time designate, at an hour to be fixed by the Board of Directors, on such day as
the Board of Directors may designate.
Section 3: (Annual Meetings). The Annual Meeting of the Board of
Directors for election of officers and the transaction of such other business as
may be brought before the meeting shall be held promptly after the Annual
Stockholders' Meeting at such place as the Board of Directors may designate.
Section 4: (Special Meetings). Special Meetings of the Board of
Directors shall be held whenever and wherever called, in writing, by the
Chairman of the Board of Directors, the President, or any four (4) Directors.
The notice of the meeting shall state the purpose or purposes of such meeting
and the business transacted at such meeting shall be limited to the purpose or
purposes contained in the notice of the meeting.
Section 5: (Notice of Meetings). No notice shall be required for
any Annual Meeting of the Board of Directors. Notice of each Regular Meeting
(except the Annual Meeting), and of each Special Meeting of the Board of
Directors, stating the day, hour and place of meeting, shall be given to each
Director at least forty-eight (48) hours prior thereto.
ARTICLE III
Committees of the Board
Section 1: (Executive Committee). The Board of Directors, by a
resolution adopted by a majority of the whole Board, shall designate from its
own members an Executive Committee consisting of not less than three nor more
than four, including the Chief Executive Officer, who shall act as Chairman of
the committee. The Chairman of the Executive Committee shall also be the
Secretary of the Executive Committee, or the Secretary shall be such other
person as may from time to time be designated by the Chairman.
The Executive Committee may hold its meetings on such notice and
at such time and place as the Chairman of the Executive Committee designates, or
the Executive Committee by resolution shall provide. A majority shall constitute
a quorum for the transaction of business, and the committee Chairman must be
present at each meeting to constitute such quorum.
Each member of the Executive Committee shall have a vote. The
affirmative vote of a majority of those present at any meeting shall be
necessary to adopt any resolution or to take any action. In the case of a tie
vote, the Chairman shall be entitled to a tie-breaking vote in addition to his
regular vote.
The Secretary of the committee shall keep minutes of each
committee meeting, and he shall give the minutes to the Chairman of the
Executive Committee, who shall be the custodian responsible for their
safekeeping. Such minutes shall be available for inspection only by the Board of
Directors and by no other person without the express consent of the President.
Actions or recommendations of the Executive Committee shall be
reported to the Board of Directors at its meeting next succeeding such actions
or recommendations.
Compensation of members of the Executive Committee shall be fixed
by resolution of the Board, except that compensation shall not be paid to any
committee member who is receiving compensation as an officer of the Corporation
or chairman of a committee.
Section 2: (Powers of Executive Committee). The Executive
Committee, subject to any condition imposed from time to time by the Board of
Directors and subject to the approval of the Board of Directors, may exercise
all powers of the Board of Directors when the Board is not in session or when a
quorum of the Board of Directors does not attend a meeting properly called,
except that it shall not act in conflict with any action or position previously
<PAGE>
taken by the Board of Directors, nor shall it have power to elect the Officers
of the Corporation, nor to issue bonds or stock of the Corporation, nor to
declare dividends, nor to amend these By-laws; nor shall the Executive Committee
have power to act with respect to any of the matters provided for in Sections
(a), (b), (c) and (d) of Article Seventh of the Certificate of Incorporation.
Section 3: (Finance Committee). The Board of Directors, by a
resolution adopted by a majority of the whole Board, shall designate from its
own members a Finance Committee of not less than three nor more than four
members. The Board shall designate the Chairman and Secretary of the committee,
who may be one and the same.
The Chairman of the Finance Committee shall receive a salary to
be fixed by the Board of Directors.
The Finance Committee may hold its meetings on such notice and at
such time and place as the Chairman thereof may designate or the Finance
Committee, by resolution, may provide, and a majority shall constitute a quorum
for the transaction of business.
Each member of the Finance Committee shall have a vote. The
affirmative vote of a majority of those present at any meeting shall be
necessary to adopt any resolution or to take any action. In the case of a tie
vote, the Chairman shall be entitled to a tie-breaking vote in addition to his
regular vote.
The Secretary of the committee shall keep minutes of each
committee meeting, and he shall give the minutes to the Chief Executive Officer,
who shall be the custodian responsible for their safekeeping. Such minutes shall
be available for inspection only by the members of the Board of Directors, but
by no other person without the express consent of the Chief Executive Officer.
Actions or recommendations of the Finance Committee shall be
reported to the Board of Directors at its meeting next succeeding such actions
or recommendations.
Compensation of members of the Finance Committee shall be fixed
by resolution of the Board, except that compensation shall not be paid to any
committee member who is receiving compensation as an officer of the Corporation
or Chairman of a committee.
Section 4: (Powers of Finance Committee). The Finance Committee
shall examine and inquire into the fiscal affairs of the Corporation and its
financial structure, policy and operation and into all matters incident thereto,
and from time to time make such reports and recommendations thereon to the Board
of Directors as said Committee may deem advisable. The Committee shall perform
such other functions and shall exercise such power and authority as may from
time to time be delegated to it by the Board of Directors.
Section 5: (Audit Committee). The Board of Directors, by a
resolution adopted by a majority of the whole Board, shall designate from its
own members an Audit Committee of not less than three nor more than four
members. The Board shall designate the Chairman and Secretary of the committee,
who may be one and the same.
The Audit Committee may hold its meetings on such notice and at
such time and place as the Chairman thereof may designate or the Audit
Committee, by resolution, may provide, and a majority shall constitute a quorum
for the transaction of business.
Each member of the Audit Committee shall have a vote. The
affirmative vote of a majority of those present at any meeting shall be
necessary to adopt any resolution or to take any action. In the case of a tie
vote, the Chairman shall be entitled to a tie-breaking vote in addition to his
regular vote.
The Secretary of the committee shall keep minutes of each
committee meeting, and he shall give the minutes to the Chief Executive Officer,
who shall be the custodian responsible for their safekeeping. Such minutes shall
be available for inspection only by the members of the Board of Directors, but
by no other person without the express consent of the Chief Executive Officer.
Actions or recommendations of the Audit Committee shall be
reported to the Board of Directors at its meeting next succeeding such actions
or recommendations.
Compensation of members of the Audit Committee shall be fixed by
resolution of the Board, except that compensation shall not be paid to any
committee member who is receiving compensation as an officer of the Corporation
or Chairman of a committee.
<PAGE>
Section 6: (Powers of Audit Committee). The Audit Committee shall
recommend the selection of independent auditors for the Company and shall review
the scope and timing of their work and the results of their audit. The committee
shall review with the auditors the financial accounting and reporting principles
used by the Company, its policies and procedures concerning audits, its
accounting and financial controls and any recommendations to improve its
existing practices. The committee shall from time to time make such reports and
recommendations thereon to the Board of Directors as it may deem advisable and
shall perform such other functions and shall exercise such power and authority
as may from time to time be delegated to it by the Board of Directors.
Section 7: (Other Committees). The Board of Directors may appoint
other committees which shall have and exercise such powers as the Board of
Directors shall confer upon them.
ARTICLE IV
Officers
Section 1: (Chairman of the Board). The Board of Directors, in
its discretion, may elect one of its members Chairman of the Board. The Chairman
of the Board shall preside at all meetings thereof and shall have such other
powers and duties as are provided in these By-laws or as the Board of Directors
may assign to him. The Chairman of the Board of Directors shall be entitled to
compensation to be fixed by the Board of Directors. The Board of Directors may
designate the Chairman of the Board as the Chief Executive Officer of the
Company, in which case he shall have general charge of the business affairs,
property and corporate functions of the Company and shall keep the Board of
Directors fully informed with respect thereto.
Section 2: (President). The Board of Directors, at its Annual
Meeting, shall elect a President from among its members. The President shall
preside at all meetings of the Board of Directors if a Chairman of the Board
shall not have been elected pursuant to Section 1 of this Article, or if the
Chairman of the Board is unable to attend. If neither the Chairman of the Board
(if there be a Chairman of the Board) nor the President is available to preside
at any meeting of the Board of Directors, either may designate in writing
another member of the Board of Directors to preside at such meeting.
If neither the Chairman of the Board nor the President shall
designate another member of the Board of Directors pursuant to the preceding
sentence, the Board of Directors shall by majority vote designate one of its
members to preside at the meeting in the absence of the Chairman of the Board
and the President. Unless the Board of Directors shall have designated the
Chairman of the Board as the Chief Executive Officer of the Company, the
President shall be the Chief Executive Officer of the Company and shall have
general charge of the business affairs, property and corporate functions of the
Company and shall keep the Board of Directors fully informed with respect
thereto. Whether or not he shall be the Chief Executive Officer, the President
shall have such further powers and duties as are provided in these By-laws or as
the Board of Directors may assign to him.
Section 3: (Vice Presidents). The Board of Directors, at its
Annual Meeting, may elect such number of Vice Presidents as it may deem
necessary. Each such Vice President shall have such powers and shall perform
such duties as shall be assigned to him by the Board of Directors or the Chief
Executive Officer.
<PAGE>
Section 4: (Secretary). The Board of Directors, at its Annual
Meeting, shall elect a Secretary who shall be sworn to the faithful discharge of
his duties. He shall, in general, do all the things required by law to be done
by, or incident to, the office of a Secretary, including attendance at and
keeping minutes of all meetings of stockholders and of Directors and of each
committee (unless otherwise directed by the Board of Directors or by such
committee) and recording all such minutes and all the votes of the stockholders,
Directors and committees in books to be kept for that purpose. He shall attend
to the giving of all notices required by law or by these By-laws to be given to
stockholders, Directors or committee members. Any of his duties may be delegated
by him to, and under his direction and supervision performed by, any Assistant
Secretary.
Section 5: (Assistant Secretaries). The Board of Directors at its
Annual Meeting may elect such number of Assistant Secretaries as it may deem
necessary. They shall severally have such powers and perform such duties as are
provided in these By-laws or as may be assigned to them, respectively, by the
Board of Directors, the Chief Executive Officer or the Secretary.
Section 6: (Treasurer). The Board of Directors, at its Annual
Meeting, shall elect a Treasurer who shall be custodian of all the funds and
securities of the Company which may come into his hands and, in general, shall
do all things required by law to be done or incident to the office of the
Treasurer. Any of his duties may be assigned by him to any Assistant Treasurer,
but only if such duties are performed under his direction and supervision and he
remains responsible for their performance.
Section 7: (Assistant Treasurers). The Board of Directors may
elect such number of Assistant Treasurers as it shall deem necessary. They shall
severally have such powers and perform such duties as are provided in these
By-laws or as may be assigned to them, respectively, by the Board of Directors,
the Chief Executive Officer or the Treasurer.
Section 8: (Comptroller). The Board of Directors, at its Annual
Meeting, shall elect a Comptroller who shall be the principal officer in charge
of the accounts of the Company. He shall report to the Chief Financial Officer
or, in his absence, to the Chief Executive Officer. He shall have such further
powers and duties as are provided in these By-laws and as the Board of
Directors, the Chief Executive Officer or the Chief Financial Officer shall
assign to him.
Section 9: (Term of Office and Removal). Subject to removal as
herein set forth, all officers shall hold office until their respective
successors shall have been duly chosen and qualified. All officers shall be
subject to removal at any time by the Board of Directors (except the Chairman of
the Board and the President, who shall be subject to removal only for cause) at
any meeting of the Board by the affirmative vote of a majority of the members of
the Board.
Section 10: (Delegation of Powers). In the event of the death,
resignation, absence, disability or removal of any officer, the Board of
Directors or the Chief Executive Officer may delegate his powers and duties to
any other officer or officers for the time being.
Section 11: (Vacancies). A vacancy in any of the offices referred
to in Sections 1 to 8 inclusive of this Article may be filled by the Board of
Directors at any Regular or Special Meeting thereof.
Section 12: (Bonds). The Treasurer, and every other officer or
employee of the Company required to do so by the Board of Directors, shall
furnish at the expense of the Company, for the faithful performance of his
duties, a surety company bond, in amounts prescribed by, and with such surety
and in such form as is approved by the Board of Directors.
<PAGE>
ARTICLE V
Corporate Seal
The Corporate seal of the Company shall be in a form now used by
the Company, an impression whereof appears on the margin hereof. The seal shall
be in the charge of the Secretary or the Treasurer.
ARTICLE VI
Certificate of Stock
Certificates of stock in the Company shall be signed by the
President or any Vice President designated in writing by the President, and
countersigned by the Treasurer or any Assistant Treasurer, or by the Secretary
or any Assistant Secretary; provided, however, that when such certificate is
signed by a transfer agent or an assistant transfer agent or by a transfer clerk
on behalf of the Company, and a registrar, the signatures of the President, Vice
President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary may
be facsimiles.
ARTICLE VII
Transfer of Stock
No transfer of stock of this Company shall be recognized by the
Company unless made upon its books by the person or persons or corporation
owning the said stock, or by his, her, their or its attorney or agent, legally
constituted or appointed, or in case of death, of his, her or their legal
representatives.
The Board of Directors shall have the power to close the stock
transfer books of the Company for a period not exceeding fifty (50) days
preceding the date of any meeting of stockholders, or the date for payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect within
the limits provided by law; provided, however, in lieu of so closing the stock
transfer books, the Board of Directors may fix, in advance, a date not exceeding
sixty days preceding the date of any meeting of stockholders, or the date for
the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, as a record date for the determination of the stockholders entitled to
notice of, and to vote at any such meeting, or entitled to receive payment of
any such dividend, or any such allotment of rights, or to exercise the rights in
respect to any such change, conversion or exchange of capital stock, and in such
case only stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at such meeting or to receive payment of such dividend,
or allotment of rights or exercise of such rights, as the case may be, and
notwithstanding any transfer of any stock on the books of the Company after any
such record date fixed as aforesaid.
The Board of Directors shall have power and authority to make all
such rules and regulations as it deems expedient concerning the issue, transfer
and registration of certificates for shares of the capital stock.
The Board of Directors may appoint a transfer agent and a
registrar of transfers, and may require all stock certificates to bear the
signature of such transfer agent and of such registrar of transfers.
<PAGE>
ARTICLE VIII
Dividends
The Board of Directors, in accordance with law, may declare and
cause to be paid dividends in cash, property or shares of stock or securities of
this Company, or shares of stock or securities owned by this Company.
ARTICLE IX
Checks, Notes, Drafts, etc.
Section 1: All checks, notes and drafts which shall be made or
accepted in the name of the Corporation shall be signed by such officer and/or
employees as the Board of Directors may from time to time designate. All notes,
checks and other negotiable instruments received by the Corporation may be
endorsed for deposit in any account of the Corporation by any officer of the
Corporation who is designated in writing by the Chief Executive Officer.
Section 2: All notes which shall be made in the name of the
Corporation shall be signed by such officers as shall from time to time be
designated by the Board of Directors.
ARTICLE X
Indemnification
Section 1: Any person who was, or is, or hereafter shall be a
director or officer of the Corporation shall be indemnified by the Corporation
against his expenses and liabilities in connection with any proceeding involving
the director or officer by reason of his being or having been a director or
officer of the Corporation or of any other enterprise, to the full extent
permitted by the laws of the State of New Jersey.
Section 2: Whenever in this By-law a Director or Officer is
referred to, such reference shall be inclusive of his heirs, executors and
administrators.
Section 3: The foregoing right of indemnification shall be in
addition to, and not in restriction or limitation of, any other rights to which
the Directors and Officers of the Corporation may be entitled as a matter of law
or equity or under any By-laws, agreement, vote of stockholders, or otherwise.
ARTICLE XI
Amendment of By-laws
These By-laws may be altered, amended and repealed by the
affirmative vote of a majority of the Board of Directors, subject to the power
of the stockholders of the Corporation entitled to vote thereon, to alter, amend
or repeal any By-laws made by the Board of Directors and subject to the
Certificate of Incorporation.
EXHIBIT 10(a)
AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment") is made
this 6th day of March, 1997, by and between RONSON CONSUMER PRODUCTS
CORPORATION, a New Jersey corporation (the "Borrower") and SUMMIT BANK,
successor-by-merger to United Jersey Bank (the "Bank").
WHEREAS, the Borrower and the Bank are parties to a certain credit
facility, pursuant to a certain Loan and Security Agreement dated January 6,
1995, as amended by certain letter amendments dated August 22, 1995, December 1,
1995, March 20, 1996, May 20, 1996, August 22, 1996, September 10, 1996 and
December 12, 1996 (collectively and individually referred to as the "Loan
Agreement") (all capitalized terms used, but not specifically defined, herein
shall have the meaning provided for such terms in the Loan Agreement); and
WHEREAS, in order to provide the Borrower with a continuing source of
working capital, the Borrower has requested that the Bank increase the maximum
principal amount of the Revolving Loan from Two Million ($2,000,000.00) Dollars
to Two Million Five Hundred Thousand ($2,500,000.00) Dollars and has requested
that the Bank otherwise amend certain terms and conditions of the Loan
Agreement; and
WHEREAS, to induce the Bank to increase the maximum principal amount of
the Revolving Loan and to otherwise amend certain terms and conditions of the
Loan Agreement, the Borrower has offered to execute and deliver this Amendment;
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Bank and the Borrower agree as follows:
1. The Borrower acknowledges and agrees that the Obligations are due
and owing without any defenses, set-offs, recoupments, claims or counterclaims
of any kind as of the date hereof. To the extent that any defenses, set-offs,
recoupments, claims or counterclaims may exist, the Borrower waives and releases
the Bank from the same.
2. As of the date of this Amendment, Subsection 1.1(aq) of the Loan
Agreement is amended in its entirety as follows:
"(aq) "Revolving Loan Final Maturity Date": June 30, 2000."
3. As of the date of this Amendment, Subsection 1.1 of the Loan
Agreement is amended by the addition of this sub-paragraph (ar) to read in its
entirety as follows:
"(ar) "Acceptance" or "Banker's Acceptance": A draft drawn by
the Borrower against the Bank, as drawee, which the Bank has, by a
signed written agreement on the draft, agreed to pay as presented."
4. As of the date of this Amendment, Subsections 2.1(a), 2.1(c), 2.1(h)
and 2.1(i) of the Loan Agreement are amended in their entirety to read as
follows:
<PAGE>
"(a) The Bank shall lend and re-lend to the Borrower amounts
which shall not exceed in the aggregate of unpaid principal of such
amounts outstanding at any one time the lesser of (i) Two Million Five
Hundred Thousand ($2,500,000.00) Dollars, or (ii) the sum of --
(A) Eighty (80%) percent of the Qualified Accounts
Receivable of the Borrower, less the aggregate sum of all debit memos,
plus
(B) the lesser of (i) fifty (50%) percent of the
lower of the net cost to the Borrower or the market value of the
Qualified Inventory, or (ii) One Million Two Hundred Fifty Thousand
($1,250,000.00) Dollars, less
(C) A reserve for the full face amount of all issued
and outstanding Letters of Credit."
"(c) The outstanding principal amount of the Revolving Loan
shall bear interest at a rate of interest per annum equal to the Bank's
Floating Base Rate plus one and one-half (1.5%) percent, computed
daily, with each change in the Bank's Floating Base Rate, for the
actual number of days elapsed as if each full calendar year consisted
of three hundred sixty (360) days."
"(h) Upon the request of the Borrower, the Bank agrees to
issue from time to time prior to the Revolving Loan Final Maturity Date
(i) documentary Letters of Credit in the aggregate face amount of up to
Seven Hundred Thousand ($700,000.00) Dollars and (ii) standby Letters
of Credit in the aggregate face amount of up to One Hundred Thousand
($100,000.00) Dollars, all in such form as may be approved from time to
time by the Bank, and in accordance with the Letter of Credit
Application; provided, however, that the Bank's agreement to issue
Letters of Credit shall terminate immediately upon termination of the
Revolving Loan. Each documentary Letter of Credit shall be for periods
of not more than sixty (60) days. No documentary Letter of Credit shall
have an expiration date later than thirty (30) days prior to the
Revolving Loan Final Maturity Date. Each standby Letter of Credit shall
have an expiration date of (i) not more than one (1) year after the
date of issuance or (ii) thirty (30) days prior to the Revolving Loan
Final Maturity Date, whichever of (i) or (ii) occurs earlier. Each
standby Letter of Credit may, if required, provide for automatic
renewal unless the beneficiary is notified within thirty (30) days
prior to the expiration date; provided, however, that no standby Letter
of Credit shall provide for automatic renewal beyond the Revolving Loan
Final Maturity Date."
"(i) Should the Borrower terminate the Revolving Loan prior to
the Revolving Loan Final Maturity Date, the Borrower shall pay a
prepayment/termination premium in an amount equal to:
(i) one and one-half (1.5%) percent of the maximum
amount of the Revolving Loan if terminated on or before June
30, 1998; or
(ii) three-quarters (0.75%) percent of the maximum
amount of the Revolving Loan if terminated on or before June
30, 2000.
<PAGE>
Having a zero balance under the Revolving Loan shall not be deemed a
prepayment or termination subject to the aforementioned
prepayment/termination premium unless and until such time as the
Borrower terminates this Agreement and satisfies all outstanding
Obligations, and the Bank is released of any obligation to make loans,
advances or extensions of credit to the Borrower."
5. As of the date hereof, Subsection 2.1 of the Loan Agreement is
amended by the addition of sub-paragraph 2.1(j) to read in its entirety as
follows:
"(j) Upon the request of the Borrower and presentment of
drafts for payment, the Bank may from time to time prior to the
Revolving Loan Final Maturity Date, in its sole and absolute
discretion, create Acceptances in accordance with the Bank's customary
practices and procedures in the aggregate face amount of up to Four
Hundred Thousand ($400,000.00) Dollars. Each Acceptance shall be for
periods of not more than sixty (60) days. No Acceptance shall have a
maturity date later than thirty (30) days prior to the Revolving Loan
Final Maturity Date. The Bank's agreement to create Acceptances shall
terminate immediately upon termination of the Revolving Loan.
Acceptances shall be created in lieu of, and shall be deemed to be,
advances under the Revolving Loan immediately when created."
6. As of the date hereof, Subsection 6.32(b) of the Loan Agreement is
amended in its entirety to read as follows:
"(b) The Borrower shall pay to the Bank a commission with
respect to each stand-by Letter of Credit, in an amount equal to one
(1.0%) percent per annum of the stated amount of each such stand-by
Letter of Credit, and any renewals thereof, to be paid by the Borrower
upon issuance of each such stand-by Letter of Credit."
7. As of the date hereof, Subsection 6.32 of the Loan Agreement is
amended by the addition of this Subsection (e) to read in its entirety as
follows:
"(e) The Borrower shall pay the Bank a commission fee for the
creation of each Acceptance, in an amount equal to three and
three-quarters (3.75%) percent in excess of the Bank's normal and
customary rates for banker's acceptances, to be paid by the Borrower
upon creation of each Acceptance. The Borrower shall also pay all other
normal and customary costs and expenses incurred or charged by the Bank
in creating, effecting payment under, amending or otherwise
administering any Acceptance, all due and payable immediately upon such
costs or expenses being incurred or charged by the Bank."
8. As of the date of this Amendment, Subsections 6.33(a), 6.33(b) and
6.33(d) of the Loan Agreement are amended in their entirety to read as follows:
"(a) Minimum Tangible Capital Funds of not less than (i) One
Million ($1,000,000.00) Dollars at December 31, 1996 and thereafter,
(ii) Two Million Seven Hundred Thousand ($2,700,000.00) Dollars at
December 31, 1997 and thereafter, (iii) Three Million One Hundred
Thousand ($3,100,000.00) Dollars at December 31, 1998 and thereafter,
and (iv) Three Million Five Hundred Thousand ($3,500,000.00) Dollars at
December 31, 1999 and thereafter."
<PAGE>
"(b) A ratio of unsubordinated debt to Minimum Tangible
Capital Funds of not greater than 3.25 to 1 at all times during the
term of this Agreement."
"(d) A Minimum Net Profit of not less than Two Million Two
Hundred Fifty Thousand ($2,250,000.00) Dollars for each fiscal year."
9. In consideration of the Bank's agreement to (i) extend the maturity
date of the Revolving Loan from March 7, 1997 until June 30, 2000 and (ii)
otherwise amend certain terms and conditions of the Loan Agreement as set forth
herein, the Borrower shall pay to the Bank, simultaneously with the execution of
this Amendment, a non-refundable renewal fee in an amount equal to Twelve
Thousand Five Hundred ($12,500.00) Dollars, which is and shall be deemed to be
earned upon execution of this Amendment. The Borrower hereby authorizes the Bank
to charge the Borrower's Revolving Loan or demand deposit account maintained
with the Bank for the payment of this renewal fee.
10. The Borrower shall pay on demand all reasonable legal fees,
recording expenses and other reasonable and necessary disbursements of the Bank
incident to the preparation, execution and delivery of this Amendment, and any
and all other documents, instruments, writings and agreements related to this
Amendment.
11. The Borrower hereby agrees to and does indemnify and hold the Bank
and each of its directors, officers, employees, affiliates, attorneys and agents
harmless from and against any and all liabilities which may be imposed on,
incurred by or asserted against the same in any manner relating to or arising
out of the Loan Agreement or any act, event or transaction related to, attendant
to or preceding the execution of this Amendment, other than those resulting from
the Bank's gross negligence or wilful misconduct.
12. The Borrower hereby agrees with, reaffirms and acknowledges the
representations and warranties contained in the Loan Agreement, except as set
forth on Schedule J annexed hereto which shall be deemed to amend Schedule J of
the Loan Agreement. Furthermore, the Borrower represents that the
representations and warranties contained in the Loan Agreement continue to be
true and in full force and effect. This agreement, reaffirmation and
acknowledgment is given to the Bank by the Borrower without defenses, claims or
counterclaims of any kind. To the extent that any such defenses, claims or
counterclaims against the Bank may exist, the Borrower waives and releases the
Bank from same.
13. The Borrower ratifies and reaffirms all terms, covenants,
conditions and agreements contained in the Loan Agreement.
14. All other terms and conditions of the Loan Agreement, and any and
all exhibits and schedules annexed thereto and all other writings submitted by
the Borrower to the Bank pursuant thereto, shall remain unchanged and in full
force and effect.
15. This Amendment shall not constitute a waiver or modification of any
of the Bank's rights and remedies or of any of the terms, conditions,
warranties, representations, or covenants contained in the Loan Agreement,
except as specifically set forth above, and the Bank hereby reserves all of its
rights and remedies pursuant to the Loan Agreement and applicable law.
<PAGE>
16. Subject to any applicable grace and/or cure periods under the Loan
Agreement, the failure of the Borrower to satisfy any of the terms and
conditions of this Amendment shall constitute an Event of Default under the Loan
Agreement.
17. This Amendment may be executed in counterparts, each of which, when
taken together, shall be deemed to be one and the same instrument.
Executed at Somerset, New Jersey, on the date first written above.
Witness: RONSON CONSUMER PRODUCTS
CORPORATION
/s/Daryl Holcomb By:/s/Louis V. Aronson II
- ---------------- -----------------------
Daryl Holcomb Louis V. Aronson, II
President and Chief
Executive Officer
SUMMIT BANK
/s/Robert Munns By:/s/Amy Lindsay
- --------------- --------------
Robert Munns Amy Lindsay,
Vice President
<PAGE>
EXHIBIT 10(b)
AMENDED AND RESTATED MASTER NOTE
Secured
$2,500,000.00 March 6, 1997
In consideration of such loans as SUMMIT BANK, successor-by-merger to
United Jersey Bank (the "Bank") from time to time may elect to make hereon to or
for the benefit of or at the request of the undersigned (the "Revolving Loan"),
the undersigned hereby promises to pay on demand, in accordance with Subsection
8.1(a) of a certain Loan and Security Agreement dated January 6, 1995 (the
"Original Loan Agreement"), as amended by certain letter amendments dated August
22, 1995, December 1, 1995, March 20, 1996, May 20, 1996, August 22, 1996,
September 10, 1996 and December 12, 1996, and a certain Amendment to Loan and
Security Agreement of even date herewith, all by and between the undersigned and
the Bank (collectively and individually referred to as the "Amendments") (the
Original Loan Agreement and the Amendments are collectively and individually
referred to as the "Loan Agreement"), or upon the occurrence of an Event of
Default as defined in the Loan Agreement provided, however, if no demand shall
be made, then on June 30, 2000, to the order of SUMMIT BANK at its office
located at 750 Walnut Street, Cranford, New Jersey, in lawful money of United
States of America, all loans, plus any interest thereon, then unpaid. The unpaid
balance of each loan shall bear interest from the date thereof until paid at the
rate of one and one-half percent (1.5%) percent in excess of the Bank's Floating
Base Rate, as adjusted from time to time, computed on the basis of actual days
elapsed and a year of 360 days, unless prohibited by law, which interest shall
be payable monthly. Notwithstanding any other limitations contained in this
note, the Bank does not intend to charge and the undersigned shall not be
required to pay any interest or other fees or charges in excess of the maximum
permitted by applicable law. Any payments in excess of such maximum shall be
refunded to the undersigned or credited against principal. The Bank's Floating
Base Rate means the floating base rate announced from time to time by the Bank
at its main office, from which the floating base rate and other borrowing rates
may be determined (which is not necessarily the lowest rate of interest charged
by the Bank).
The unpaid principal balance hereon at any time shall not exceed Two
Million Five Hundred Thousand ($2,500,000.00) Dollars and shall be equal to the
aggregate amount of all loans then made less the aggregate amount of all
payments then made thereon. The holder hereof is authorized to set forth in
writing from time to time on the reverse hereof the date and amount of each loan
and any payment of principal and the principal balance then unpaid hereon.
The undersigned may pay this note in full at any time and in part from
time to time subject to the prepayment/termination premium schedule set forth
hereafter, and the Bank may make subsequent advances hereunder (provided that
the outstanding principal balance shall not exceed the amount stated herein)
without affecting the validity of or security of this note. Should the Borrower
terminate the Revolving Loan prior to the expiration of the term set forth
herein, the Borrower shall pay a prepayment/termination premium on the maximum
amount of the Revolving Loan, in an amount equal to:
(i) one and one-half (1.5%) percent of the maximum amount of
the Revolving Loan if terminated on or before June 30, 1998; or
(ii) three-quarters (0.75%) percent of the maximum amount of
the Revolving Loan if terminated on or before June 30, 2000.
<PAGE>
Having a zero balance under the Revolving Loan shall not be deemed a prepayment
or termination subject to the aforementioned prepayment/termination premium
unless and until such time as the Borrower terminates the Loan Agreement and
satisfies all outstanding Obligations (as such term is defined in the Loan
Agreement), and the Bank is no longer obligated to make loans, advances or
extensions of credit to the Borrower.
Any loan shall be conclusively presumed to have been made to and for
the benefit and at the request of the undersigned when:
1. Deposited or credited to an account of the undersigned with the
Bank, notwithstanding that such advance was requested, orally or in writing, by
someone other than the undersigned or that someone other than the undersigned is
authorized to draw on such account and may or does withdraw the whole or any
part of such loan; or
2. Made in accordance with the oral or written instructions of the
undersigned, or any one of them if more than one, or of anyone signing below for
or on behalf of the undersigned.
The Bank is not responsible in any way for the refusal by its employees
to make a loan or to honor a request for a loan.
This note is secured by each and every security agreement, assignment,
stock power and/or mortgage, covering personal or real property (all of which
are hereinafter included in the term security agreements) which secures any
indebtedness so defined as to include this note including, without limitation,
the Loan Agreement, a certain Mortgage dated January 6, 1995 and recorded
January 12, 1995 in the Office of the Clerk of Middlesex County in Mortgage Book
4850 at Page 211, which is about to be modified by a certain Mortgage
Modification Agreement of even date herewith, evidencing a lien, second in
priority, upon real property located at 3 and 6 Ronson Drive, Woodbridge, New
Jersey, given by the undersigned to the Bank; a certain Assignment of Rents and
Leases dated January 6, 1995 and recorded January 12, 1995 in the Office of the
Clerk of Middlesex County in Mortgage Book 4850 at Page 226; and a certain
Corporate Guaranty Agreement dated January 6, 1995 given by Ronson Corporation
to the Bank.
The Bank shall take reasonable care in custody and preservation of any
collateral held by it to the extent required by law, but, if the collateral so
held consists in whole or in part of instruments or chattel paper, it shall not
be a breach of reasonable care if the Bank does not take necessary steps to
preserve rights against prior parties, nor shall it constitute a breach of
reasonable care if the Bank fails to undertake to collect the principal of or
interest or other increment on any instrument or investment security, or fails
to present any investment security for conversion or other change, unless, after
written notice to the Bank from the undersigned or from any other party liable
hereon in any capacity whose property is held as collateral hereunder that such
interest, other increment or principal is due, or that such investment security
has been called for conversion or other change, the Bank fails to use reasonable
diligence to undertake collection of such interest, increment or principal, or
fails to make presentation for conversion or other change, or fails to enable
the undersigned or such other party to do so.
<PAGE>
If this note is payable otherwise than on demand, and if, prior to the
time stated for the payment hereof, any party hereto liable for the payment
hereof as maker, endorser or guarantor defaults in the payment of any other debt
or liability owing to the Bank; or if any such party fails to comply with any
term or condition of any loan agreement relating to the loans evidenced by this
note; or if any such party dies; or if a petition in Bankruptcy is filed by or
against any such party; or if any such party makes an assignment for the benefit
of creditors or becomes a party to any proceeding under state or federal law for
an adjustment, settlement, extension or composition of or other relief from such
party's debts; or if a levy, distraint, attachment or execution is made against
the property of any such party; or if, in the opinion of the Bank, the amount of
the collateral held by the Bank as security for the payment of this note and for
the payment of all other debts and liabilities of any such party to the Bank is
insufficient; or if the Bank demands that additional property by pledged with it
as security for the payment hereof, and such demand is not complied with within
the time specified by the Bank; or if any information heretofore or hereafter
furnished to the Bank by any such party in connection with the loan evidenced
hereby or any guaranty submitted in connection therewith should be materially
false; or if any such party fails to furnish such financial and other
information as the Bank may reasonably request; or if any event takes place
which, in the opinion of the Bank, impairs the financial responsibility of any
such party; or if the Bank deems itself insecure for any other reason; then, if
any such event this note, and all other debts and liabilities of each such party
to the Bank, shall, at the option of the Bank, and without notice to any such
party, become immediately due and payable.
Upon nonpayment of this note at its stated or accelerated maturity, the
Bank may, in addition to such other and further rights and remedies provided by
law, (1) collect interest from the date of such maturity on the principal
balance owing hereon at the rate on the note or at the highest legal rate at the
time of default, whichever is higher, except that loans exempt from the usury
statute will be charged a rate two percent (2%) over either the rate on the note
or the legal rate at the time of default, whichever is higher; (2) setoff the
amount owing hereon against any deposit account maintained in the Bank by the
undersigned or by any other person liable hereon as endorser or guarantor, and
such right of setoff shall be deemed to have been exercised immediately upon the
stated or accelerated maturity hereof even though such setoff is not noted on
the Bank's records until a later time; (3) sell all or part of the collateral at
public or private sale, with such notice, if any, as may be required by law, all
such notice being hereby waived to the extent permitted by law; and (4) hold as
security for the payment hereof any other property heretofore or hereafter
delivered into the custody, control or possession of the Bank for any reason or
purpose whatsoever, by any person liable for the payment hereof as maker,
endorser or guarantor.
The undersigned and all endorsers waive presentment, notice of dishonor
and protest.
The Bank may date this note as the date of the making of the first
advance evidenced by this note; complete any blank spaces in this note according
to the terms of the agreement pursuant to which the loans evidenced by this note
are made; and may cause the signature of one or more additional makers of
endorsers of this note to be added at any time without notice to any prior
signers.
<PAGE>
The Bank may, without notice to or consent of any party liable for the
payment hereof as maker, endorser or guarantor, and without impairing or in any
way affecting the liability of such person to the Bank (1) extend or otherwise
alter the time for payment of this note; (2) alter any other term of this note
by agreement with the maker hereof; (3) release, or settle or compromise with
any other party liable for the payment hereof; and (4) release, or substitute
for or fail to protect any interest in any collateral held by the Bank as
security for the payment of any sum owing to the Bank by any party hereto; (5)
accept a check or other order marked paid in full or with similar language as a
payment under this note.
No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waiver of such right or of any other right under
this note.
The undersigned shall pay on demand all reasonable and necessary
expenses and expenditures of the Bank including, without limitation,
extraordinary field examination expenses, reasonable attorneys' fees and
expenses (including, without limitation, recording expenses and other reasonable
and necessary disbursements of the Bank incident to the preparation, execution
and delivery of this note, the Loan Agreement and related loan documents)
incurred or paid by the Bank in protecting, enforcing or exercising its
interests, rights or remedies created by, connected with or provided in the Loan
Agreement and the related loan documents, or performance pursuant to this note
the Loan Agreement and the related loan documents. The Bank is authorized to
direct charge the undersigned's demand deposit account for all such expenses and
will provide subsequent notice to the undersigned of any such charge.
If payment of this note is made by any co-maker or endorser the Bank is
authorized at its election to surrender the collateral to the person making such
payment.
If, at the time when this note is paid in full, any party liable
thereon as maker, endorser or guarantor is liable to the Bank for the payment of
any other debt or liability, the Bank may retain as security for the payment of
such other debts and liabilities the collateral held by it as security for the
payment of this note, with all the rights and remedies herein and otherwise
conferred upon the Bank as a secured party by law, notwithstanding the surrender
by the Bank of this note upon payment hereof.
This note is binding on the undersigned, its successors, administrators
and assigns.
If this note is executed by more than one maker, the word undersigned
as used herein shall be deemed to refer to each of them and their liability
hereunder shall be joint and several.
This note and the rights and obligations of all parties hereto shall be
subject to and governed by the laws of the State of New Jersey.
In the event any scheduled payment of interest due hereunder is
received by the Bank more than ten (10) days after the date due, there shall be
due a late charge of five (5%) percent of such payment, which late charge shall
be not less than $25.00 nor more than $2,500.00. Any payment received later than
3:00 p.m on any banking day shall be deemed to have been received on the next
succeeding banking day. Such late charge represents the cost to Bank in
processing late payments and shall not be deemed to constitute additional
interest.
<PAGE>
This note is given in replacement of and substitution for a certain
Master Note dated January 6, 1995, as amended by the Amendments, and is deemed
to be the Master Note referred to in and is subject to the terms and conditions
of the Loan Agreement. In the event of any ambiguity or inconsistency between
the terms of this note and the Loan Agreement, then the terms of the Loan
Agreement shall govern.
IN WITNESS WHEREOF, the undersigned have caused this note to be executed the
day and year aforesaid.
Witness: RONSON CONSUMER PRODUCTS
CORPORATION
/s/Daryl Holcomb By:/s/Louis V. Aronson II
- ---------------- -----------------------
Daryl Holcomb Louis V. Aronson, II,
President and
Chief Executive Officer
<PAGE>
EXHIBIT 10(c)
MORTGAGE MODIFICATION AGREEMENT
This Mortgage Modification Agreement (the "Modification") is made as of
the 6th day of March, 1997 between RONSON CONSUMER PRODUCTS CORPORATION, a New
Jersey corporation having its principal place of business located at Corporate
Park III, Campus Drive, P.O. Box 6707, Somerset, New Jersey 08875-6707 (the
"Mortgagor"), and SUMMIT BANK, successor-by-merger to United Jersey Bank, with
an office located at 210 Main Street, Hackensack, New Jersey (the "Mortgagee"),
to modify the terms of a certain Mortgage dated January 6, 1995 and recorded
January 12, 1995 in the Office of the Clerk of Middlesex County, New Jersey in
Mortgage Book 4850 at Page 211 (the "Mortgage") (all capitalized terms used, but
not specifically defined, herein shall have the meaning provided for such terms
in the Mortgage).
WHEREAS, the Mortgage was given to secure all obligations of the
Mortgagor to the Mortgagee, including, without limitation, the obligations
evidenced by a certain Master Note dated January 6, 1995, as amended, in the
original principal amount of Two Million ($2,000,000.00) Dollars (the "Master
Note"); and
WHEREAS, the lien of the Mortgage encumbers the property commonly known
and designated as Lot 1-D, Block 367, on the Tax Map of the Township of
Woodbridge, Middlesex County, New Jersey, as more particularly described on
Schedule A annexed to the Mortgage (the "Property"); and
WHEREAS, the lien of the Mortgage is second in priority; and
WHEREAS, the Mortgagor has requested that the Mortgagee increase the
maximum principal amount of the Master Note and otherwise modify certain terms
and conditions of the obligation evidenced by the Master Note; and
WHEREAS, to induce the Mortgagee to increase the maximum principal
amount of the Master Note and to otherwise modify certain terms and conditions
of the obligation evidenced by the Master Note, the Mortgagor has offered to
modify certain terms and conditions of the Mortgage, as set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Mortgagor and the Mortgagee to modify the terms and conditions
of the Mortgage as follows:
1. The Mortgagor acknowledges that its obligations to the Mortgagee
secured by the Mortgage are due and owing without any defenses, set-offs,
recoupments, claims or counterclaims of any kind as of the date hereof. To the
extent that any defenses, set-offs, recoupments, claims or counterclaims may
exist, the Mortgagor waives and releases the Mortgagee from the same.
2. As of the date of this Modification, the definition of "Revolving
Loan", as set forth in the second paragraph on page 1 of the Mortgage, is
amended in its entirety to reflect an increase in the maximum principal amount
of such Revolving Loan from Two Million ($2,000,000.00) Dollars to Two Million
Five Hundred Thousand ($2,500,000.00) Dollars.
<PAGE>
3. As of the date of this Modification, the definition of "Notes", as
set forth in the second paragraph on page 1 of the Mortgage, is amended to
include a certain Amended and Restated Master Note dated the date of the
Modification, in the maximum principal amount of Two Million Five Hundred
Thousand ($2,500,000.00) Dollars, and any renewals, substitutions or
replacements therefor, and any renewals, substitutions or replacements for the
Term Note.
4. The Mortgagor hereby agrees to and does indemnify and hold the
Mortgagee and each of its directors, officers, employees, affiliates, attorneys
and agents harmless from and against any and all liabilities which may be
imposed on, incurred by or asserted against the same in any manner relating to
or arising out of the Mortgage or any act, event or transaction related to,
attendant to or preceding the execution of this Modification, other than those
resulting from the Bank's gross negligence or wilful misconduct.
5. The Mortgagor hereby agrees with, reaffirms and acknowledges the
representations and warranties contained in the Mortgage. Furthermore, the
Mortgagor represents that the representations and warranties contained in the
Mortgage continue to be true and in full force and effect. This agreement,
reaffirmation and acknowledgment is given to the Mortgagee by the Mortgagor
without defenses, claims or counterclaims of any kind. To the extent that any
such defenses, claims or counterclaims against the Mortgagee may exist, the
Mortgagor waives and releases the Mortgagee from the same.
6. The Mortgagor ratifies and reaffirms all terms, covenants,
conditions and agreements contained in the Mortgage.
7. All other terms and conditions of the Mortgage, and any and all
exhibits and schedules annexed thereto and all other writings submitted by the
Mortgagor to the Mortgagee pursuant thereto, shall remain unchanged and in full
force and effect.
8. This Modification shall not constitute a waiver or modification of
any of the Mortgagee's rights and remedies or of any of the terms, conditions,
warranties, representations, or covenants contained in the Mortgage, except as
specifically set forth above, and the Mortgagee hereby reserves all of its
rights and remedies pursuant to the Mortgage and applicable law.
9. Subject to any applicable grace and/or cure periods under the
Mortgage, the failure of the Mortgagor to satisfy any of the terms and
conditions of this Modification shall constitute an Event of Default under the
Mortgage.
10. This Modification may be executed in counterparts, each of which,
when taken together, shall be deemed to be one and the same instrument.
By execution of this Modification on the date shown above, the
undersigned signify their consent to its terms.
Mortgagor acknowledges receipt of a certified copy of this
Modification.
<PAGE>
IN WITNESS WHEREOF, the Mortgagor(s) have hereunto set their hands and
seals, the day and year first above mentioned.
Witness: RONSON CONSUMER PRODUCTS
CORPORATION
/s/Daryl Holcomb By:/s/Louis V. Aronson II
- ---------------- -----------------------
Daryl Holcomb Louis V. Aronson, II,
President and Chief
Executive Officer
SUMMIT BANK
/s/Robert Munns By:/s/Amy Lindsay
- --------------- --------------
Robert Munns Amy Lindsay,
Vice President
<PAGE>
EXHIBIT 10(d)
SUMMARY OF MANAGEMENT INCENTIVE PLAN
The Registrant's Management Incentive Plan ("Plan") is
adopted annually for the ensuing year by the Board of Directors
("Board"). Each year the Board sets the formula for determining
compensation under the Plan based upon (1) the amount by which the net
sales of each of the Company's subsidiaries exceed thresholds
established by the Board and (2) pretax profits as a percent of net
sales. The Board determines who of the Registrant's key employees is
eligible to participate in the Plan and what the employee's level of
participation may be. The thresholds set by the Board must be met by the
end of the fiscal year in order for an eligible employee to receive an
award under the Plan for that year.
<TABLE>
<CAPTION>
RONSON CORPORATION Exhibit 11
CALCULATION OF EARNINGS (LOSS) PER COMMON SHARE
(Dollars in thousands, except per common share data)
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Assuming no dilution:
Earnings from continuing operations .......... $ 335 $ 1,500 $ 1,074
Less cumulative preferred dividends .......... (176) (178) (184)
----------- ----------- -----------
Earnings from continuing operations
applicable to common stock ................ $ 159 $ 1,322 $ 890
=========== =========== ===========
Weighted average number of common shares
outstanding (1) ........................... 1,791,535 1,719,867 1,700,075
----------- ----------- -----------
Earnings from continuing operations
per common share .......................... $ 0.09 $ 0.77 $ 0.52
=========== =========== ===========
Loss from discontinued operations ............ (1,190) (860) --
----------- ----------- -----------
Loss from discontinued operations
per common share .......................... $ (0.66) $ (0.50) $ --
=========== =========== ===========
Net earnings (loss) .......................... $ (855) $ 640 $ 1,074
Less cumulative preferred dividends .......... (176) (178) (184)
----------- ----------- -----------
Net earnings (loss) applicable to common stock $ (1,031) $ 462 $ 890
=========== =========== ===========
Net earnings (loss) per common share ......... $ (0.57) $ 0.27 $ 0.52
=========== =========== ===========
Assuming full dilution:
Earnings from continuing operations .......... $ 335 $ 1,500 $ 1,074
=========== =========== ===========
Weighted average number of common shares
outstanding (1) ........................... 1,791,535 1,719,867 1,700,075
Additional common shares outstanding
resulting from assumed conversion of
preferred stock to common stock ........... 838,903 869,920 876,857
----------- ----------- -----------
Total ........................................ 2,630,438 2,589,787 2,576,932
=========== =========== ===========
<PAGE>
<CAPTION>
RONSON CORPORATION
CALCULATION OF EARNINGS (LOSS) PER COMMON SHARE
(Dollars in thousands, except per common share data)
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Earnings from continuing operations
per common share .......................... $ 0.13 $ 0.58 $ 0.42
=========== =========== ===========
Loss from discontinued operations ............ $ (1,190) $ (860) $ --
=========== =========== ===========
Loss from discontinued operations
per common share .......................... $ (0.45) $ (0.33) $ --
=========== =========== ===========
Net earnings (loss) .......................... $ (855) $ 640 $ 1,074
=========== =========== ===========
Net earnings (loss) per common share ......... $ (0.32) $ 0.25 $ 0.42
=========== =========== ===========
</TABLE>
(1) The stock options were not included as commom stock equivalents in the
years ended December 31, 1996 and 1995 since their dilutive effect on
earnings per common share was not material.
The exercise price of outstanding stock options exceeded the market
price in the year ended December 31, 1994. Therefore, the stock
options are anti-dilutive and not included as common stock equivalents
in that year.
(2) Since the assumed conversion of the preferred shares to common shares
was anti-dilutive for the year ended December 31, 1996, such assumed
conversion was excluded from the computation of earnings (loss) per
common share for this period.
Exhibit 23(a)
Independent Auditors' Consent
The Board of Directors
Ronson Corporation:
We consent to incorporation by reference in the Registration Statements
(No. 2-87783, No. 33-13696, No. 33-25240 and No. 33-21042) on Forms S-8,
S-2, S-8 and S-2, respectively, of Ronson Corporation of our report,
dated March 15, 1997, relating to the consolidated balance sheet,
statements of operations and cash flows of Ronson Corporation and
subsidiaries for the year ended December 31, 1996, which report appears
in the December 31, 1996 annual report on Form 10-K of Ronson
Corporation.
DEMETRIUS & COMPANY, L.L.C.
Wayne, New Jersey
March 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 116
<SECURITIES> 0
<RECEIVABLES> 1,681
<ALLOWANCES> (64)
<INVENTORY> 3,108
<CURRENT-ASSETS> 5,812
<PP&E> 9,390
<DEPRECIATION> 5,056
<TOTAL-ASSETS> 12,104
<CURRENT-LIABILITIES> 7,931
<BONDS> 2,602
0
8
<COMMON> 1,864
<OTHER-SE> (662)
<TOTAL-LIABILITY-AND-EQUITY> 12,104
<SALES> 25,454
<TOTAL-REVENUES> 25,454
<CGS> 16,608
<TOTAL-COSTS> 16,608
<OTHER-EXPENSES> 7,832
<LOSS-PROVISION> 46
<INTEREST-EXPENSE> 762
<INCOME-PRETAX> 206
<INCOME-TAX> (129)
<INCOME-CONTINUING> 335
<DISCONTINUED> (1,190)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (855)
<EPS-PRIMARY> (0.57)
<EPS-DILUTED> (0.57)
</TABLE>
