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
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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: (732) 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 Over-the-Counter Bulletin Board
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. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant was $6,914,801 as of March 10, 1998.
As of March 10, 1998, there were 3,177,175 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 offered to issue 1.7 shares of common stock. The terms and
conditions of the offer were 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. The Company's Exchange Offer expired on September 30, 1997.
After the expiration of the Offer, the Company had accepted 800,844
shares of preferred stock in exchange and had issued 1,361,435 shares of
common stock under the Company's Exchange Offer.
At the time of the termination of the Exchange Offer on September
30, 1997, there were about 37,000 shares of preferred stock remaining
outstanding. Because the number of remaining outstanding preferred
shares no longer met the NASDAQ minimum requirement of 100,000
outstanding shares in order to be listed on the Nasdaq SmallCap Market,
the Company's preferred stock was delisted from the Nasdaq SmallCap
Market. Immediately upon the delisting of the preferred shares from the
Nasdaq SmallCap Market, the preferred shares were listed on the NASD
Over-the-Counter ("OTC") Bulletin Board.
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 1997 and into 1998. (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,
sales to various units of WalMart Stores, Inc. in 1997 and 1996
accounted for 10% and 14%, respectively, of Consolidated Net Sales of
the Company and 15% and 22% of Net Sales of the segment in 1997 and
1996, respectively.
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.
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
<PAGE>
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, New Jersey). In its passenger and cargo services, Ronson
Aviation operates a total of five aircraft, including a Citation Jet and
two twin-engine turbo-prop airplanes in charter operations. 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 Raytheon Aircraft and
Parts Sales and Service Center and a customer service facility for Bell
Helicopter Textron.
At December 31, 1997, Ronson Aviation had one new aircraft in
sales inventory and orders to purchase two new aircraft from Raytheon
Aircraft Corporation, all of which are for resale. The total sales value
of these aircraft is approximately $1,580,000. The order is 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 1996 and in the first quarter of 1997,
areas of solvent contamination in the groundwater below a section of the
property were identified. Sampling and delineation have been and are
continuing in this area of the property.
Prometcor has also proceeded with reporting to the NRC in
order to terminate the NRC license held by Prometcor. In 1996 and 1997
Prometcor's radiological consultants performed additional sampling and
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. In
November 1997 Prometcor completed the necessary radiological cleanup
activities for one of the three parcels of property and amended the
Prometcor license to release this property. Also, in January 1998, the
NJDEP provided a "No Further Action" letter for this portion of the
property. It is now available to be sold without any further
environmental clearance needed.
Additional sampling and remediation required for the two
remaining parcels are continuing. 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
<PAGE>
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 related to these storage tanks is expected
to be approximately $325,000, which will be incurred in 1998.
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
or 1997. 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 believes that compliance with
environmental laws and regulations will not 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.
<PAGE>
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.
RESEARCH ACTIVITIES
The Company's consumer products segment expensed approximately
$141,000, $134,000 and $135,000 during the fiscal years ended December
31, 1997, 1996 and 1995, 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, 1997, the Company and its subsidiaries employed
a total of 135 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
-------- ------------
1997 66% 34%
1996 65% 35%
1995 56% 44%
(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.
<PAGE>
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 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
conducted. (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.
(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
(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.
<PAGE>
(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.
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 has been the Defendant in a product liability lawsuit
pending in the Superior Court of Wilkinson County, Georgia, in which
Plaintiffs sought substantial damages 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 matter was settled in
October 1997 and the settlement did not have a material effect on the
Company's results of operations or financial condition.
The Company is a defendant in three product liability cases now
pending alleging the wrongful deaths of teenagers resulting from their
abuse of Multi-Fill butane by deliberate inhalation. The plaintiffs have
claimed unspecified damages. While the amounts claimed may be
substantial, the ultimate liability cannot now be determined because of
the considerable uncertainties that exist. Therefore, it is possible
that results of operations or liquidity in a particular period could be
materially affected by these matters. However, based on facts currently
available, management believes that damages awarded, if any, would be
within existing insurance coverage.
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. 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.
1997
----
Quarter 1st 2nd 3rd 4th
------- --- --- --- ---
High Bid 2 5/8 2 1/2 3 1/4 4 1/8
Low Bid 2 1/4 1 13/16 2 2 1/4
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
At March 10, 1998, there were 2,837 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
below and is incorporated herein by reference.
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1997 Compared to 1996
Ronson Corporation's (the "Company's") Earnings from
Continuing Operations increased to $783,000 in 1997 from $335,000 in
1996, an increase of $448,000, or 134%. After the Loss from Discontinued
Operations in 1996 of $1,190,000, the Company's Net Loss in 1996 was
$855,000, compared to Net Earnings in 1997 of $783,000. The 1996
$1,190,000 Loss from Discontinued Operations of Prometcor, Inc.
("Prometcor"), Newark, New Jersey, related to additional costs and
expenses projected to complete compliance with environmental
requirements and the eventual sale of Prometcor's properties.
<PAGE>
Consolidated Net Sales were $23,170,000 in 1997 compared to
$25,454,000 in 1996. Net Sales of consumer products decreased at Ronson
Consumer Products Corporation ("RCPC"), Woodbridge, New Jersey, and at
Ronson Corporation of Canada, Ltd. ("Ronson-Canada"), (together "Ronson
Consumer Products"), by 7% in 1997 compared to 1996, primarily as the
result of reduced shipments of the Varaflame Ignitor. Net Sales at
Ronson Aviation, Inc. ("Ronson Aviation"), Trenton, New Jersey,
decreased by 12% in 1997 compared to 1996, primarily because increased
sales of general aviation services were more than offset by lower sales
of aircraft in 1997.
Consolidated Cost of Sales, as a percentage of Consolidated
Net Sales, was lower at 63% in 1997 compared to 65% in 1996. The Cost of
Sales percentage at Ronson Consumer Products was unchanged at 52% in
1997 and 1996. The Cost of Sales percentage at Ronson Aviation was
reduced to 83% in 1997 from 88% in 1996. The Cost of Sales percentage
decrease at Ronson Aviation in 1997 was due to cost reductions and to
increased sales of general aviation services.
Consolidated Selling, Shipping and Advertising Expenses, as a
percentage of Consolidated Net Sales, increased to 16% in 1997 from 14%
in 1996. The increase was due primarily to the lower Consolidated Net
Sales in 1997 as compared to 1996.
Consolidated General and Administrative Expenses, as a
percentage of Consolidated Net Sales, increased to 15% in 1997 from 13%
in 1996, primarily due to the decrease in Consolidated Net Sales in 1997
and to increased personnel-related costs and professional fee expenses.
Interest Expense decreased to $523,000 in 1997 from $762,000
in 1996. This decrease was primarily due to reduced short-term debt at
Ronson Aviation utilized to finance lower aircraft inventory.
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 Loss from Discontinued Operations in the year ended
December 31, 1996, included the costs recorded by the Company related to
the discontinuance of Prometcor, as follows (in thousands):
Discontinuance costs accrued $ 1,370
Deferred income tax benefit (180)
-------
Loss from Discontinued Operations $ 1,190
=======
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. The total costs and expenses
<PAGE>
related to terminating the Prometcor operations, less the expected gain
from the eventual sales of Prometcor's assets, have been projected to be
approximately $4,260,000. 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 1996, 1995, 1993, 1992, 1991 and
1990; the amounts of $1,370,000, $970,000, $625,000, $200,000, $520,000
and $575,000, respectively, (which total $4,260,000) 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 1996 were due primarily to: costs incurred; previously
projected costs related to compliance with the New Jersey Department of
Environmental Protection ("NJDEP") requirements; NRC related activities;
and 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, 1997, was considered adequate by
the Company, based upon: the results of testing completed; NJDEP and NRC
comments; reports to the Company by its environmental counsel and
environmental consultants.
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.
1996 Compared to 1995
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 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 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 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 was reduced to 88% in 1996 compared to 89%
in 1995.
<PAGE>
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.
Consolidated 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")
dated December 1, 1995, and to increased short-term debt at Ronson
Aviation utilized to finance increased aircraft inventory.
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.
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
======= =======
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 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
<PAGE>
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.
INCOME TAXES
In accordance with Statement of Financial Accounting
Standards ("SFAS") #109, "Accounting for Income Taxes", in 1997, 1996
and 1995, the Company recognized deferred income tax benefits of
$225,000, $390,000 and $686,000, respectively, as the result of
reductions in the valuation allowance related to the Company's deferred
income tax assets. The 1995 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 1997, 1996 and 1995,
current income tax benefits (expenses) were composed of state income
taxes of $141,000, ($81,000) and ($79,000), respectively. At December
31, 1997, the Company had net operating loss carryforwards for federal
income tax purposes of approximately $11,350,000, investment tax credit
carryforwards of $63,000 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 $1,864,000 at December
31, 1997, compared with $1,210,000 at December 31, 1996. The increase of
$654,000 in 1997 in the Company's Stockholders' Equity was due primarily
to the 1997 Net Earnings of $783,000, partially offset by a net loss on
pension plans. The Company had a deficiency in working capital at
December 31, 1997, of $1,605,000 as compared to $2,293,000 at December
31, 1996. The 1997 improvement in working capital of $688,000 was
primarily due to the Net Earnings in 1997.
<PAGE>
The Company's inventories were reduced by $1,412,000 in the
year ended December 31, 1996, primarily due to a 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. Cash increased in 1997 from changes in
inventories primarily due to sales by Ronson Aviation of aircraft
transferred from fixed assets into inventories.
The Company's current liabilities of discontinued operations
declined by $647,000 in 1997 primarily due to the expenditures incurred
in the year related to Prometcor's environmental compliance. The
Company's current liabilities of discontinued operations increased by
approximately $760,000 in 1996 primarily as the result of the 1996
accrual of additional costs and expenses projected to complete
compliance by Prometcor with environmental requirements.
Capital expenditures increased to $2,138,000 in 1997 from
$504,000 in 1996 primarily due to the fourth quarter 1997 Ronson
Aviation purchase of a Citation II jet for use in its charter
operations. The acquisition of the aircraft was financed by long-term
debt from Summit. (Refer to Note 5 of the Notes to Consolidated
Financial Statements.)
In March 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, 1997, of $25,000 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
(8.5% at December 31, 1997). 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 July 1997 RCPC and Summit amended the Revolving Loan
agreement to provide $400,000 in additional loan availability. The
$400,000 additional amount available will be reduced in monthly amounts
of $14,583 from October 1997 to March 1998 and monthly amounts of
$20,833 from April 1998 to June 1999. The amount of the additional loan
availability was about $356,000 at December 31, 1997. The loan amount
outstanding due to the overadvance is included in the balance of the
Revolving Loan referred to in the paragraph above.
<PAGE>
In August 1997 Ronson Aviation entered into an agreement with
Summit for a Revolving Loan and a Term Loan. The Revolving Loan provides
a line of credit, which expires on June 30, 2000, of up to $400,000 to
Ronson Aviation based on accounts receivable. The Term Loan in the
amount of $285,000 was utilized to repay the prior mortgage loan from
Bank of New York/National Community Division to Ronson Aviation. The
Term Loan is due in monthly installments of $4,750 plus interest through
September 1, 1999, and a final installment of $171,000 on September 30,
1999. The Revolving Loan and Term Loan bear interest at 1.5% above
Summit's prime rate and are secured by the accounts receivable,
inventory, and machinery and equipment of Ronson Aviation and the
guarantees of the Company and RCPC.
Based on the amount of the loans outstanding and the levels
of accounts receivable and inventory at December 31, 1997, Ronson
Consumer Products had unused borrowings available at December 31, 1997,
of about $60,000 under the Summit and Canadian Imperial Bank of Commerce
lines of credit. Ronson Aviation had no outstanding loans under the new
Summit Revolving Loan. Based on the level of accounts receivable, Ronson
Aviation had unused borrowings of about $270,000 under the Summit line
of credit at December 31, 1997.
On February 28, 1997, the Ronson Corporation Retirement Plan
("Retirement Plan") completed the sale of its Salisbury, North Carolina,
land for the cash proceeds, net of related expenses, of about $800,000.
The net proceeds of the sale of the property satisfied a substantial
portion of a 1997 settlement with the United States Department of Labor
("DOL") and the Internal Revenue Service ("IRS"). The $144,000 balance
of the settlement was paid by the Company 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's
Exchange Offer expired on September 30, 1997. After the expiration of
the Offer, the Company had accepted 800,844 shares of preferred stock
for exchange and had issued 1,361,435 shares of common stock under the
Company's Exchange Offer. The aggregate preferred dividends in arrears
at December 31, 1997, were about $40,000. If the Company had not done
the Exchange Offer, the aggregate dividends in arrears would have been
about $923,000.
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
<PAGE>
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.
Ronson Aviation is subject to the New Jersey Underground
Storage Tank Law, which requires upgrades to existing underground
storage tanks by December 22, 1998. The Company expects the cost of
upgrading or replacing Ronson Aviation's aircraft fueling facilities to
require expenditures of approximately $300,000. A substantial portion of
these expenditures is expected to be financed with long-term financing.
At December 31, 1997, the Company did not have significant
other 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, 1997, net assets of consolidated
subsidiaries, excluding intercompany accounts, amounted to approximately
$2,440,000, of which approximately $2,400,000 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 reviewed its primary information management
systems related to the systems' function when the year 2000 is a factor.
Based on this review, the Company believes that the costs of making its
systems functional when using the year 2000 will not be material.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997 the Financial Accounting Standards Board ("FASB")
issued SFAS #130, "Reporting Comprehensive Income", which is effective
for fiscal years beginning after December 15, 1997. SFAS #130 requires
the reporting and display of comprehensive income and its components.
The Company will adopt SFAS #130 in 1998 as required. Under SFAS #130,
the Company will be required to include in the changes in Comprehensive
Income the Company's changes in Unrecognized Net Loss on Pension Plans
and in Cumulative Foreign Currency Translation Adjustment.
<PAGE>
In June 1997 the FASB issued SFAS #131, "Disclosures about
Segments of an Enterprise and Related Information", which is effective
for fiscal years beginning after December 15, 1997. SFAS #131 requires
changes in the reporting of segment information in annual and quarterly
financial information. The Company will adopt SFAS #131 in 1998 as
required.
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, 1997, 1996 and 1995.
<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.
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)
---------------- --- -------- -------- ---------------------------
Louis V. Aronson II 75 1952- 1999 President & Chief
Present Executive Officer; Chairman
of Executive Committee;
Member of Nominating
Committee.
Robert A. Aronson 48 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 was the
manufacture and import of
leather products, October
1987 to May 1996; son of the
President & Chief Executive
Officer of the Company.
Barton P. Ferris, Jr. 57 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.
<PAGE>
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)
---------------- --- -------- -------- ---------------------------
Erwin M. Ganz 68 1976- 1998 Chairman of Audit
Present Committee; Member of
Executive Committee and
Nominating Committee;
Consultant for the Company,
1994 to present; Executive
Vice President-Industrial
Operations, 1975-1993; Chief
Financial Officer,
1987-1993.
Gerard J. Quinnan 69 June 1996- 2000 Consultant for the Company,
Present 1990 - present; Vice
President-General Manager of
Ronson Consumer Products
Corporation, 1981-1990.
Justin P. Walder 62 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 72 1978- 2000 Member of Executive
Present Committee and Audit
Committee; Retired
President, Jarett
Industries, Inc., Cedar
Knolls, NJ, the principal
business of which is the
sale of hydraulic and
pneumatic equipment to
industry, 1955-1997.
No director also serves as a director of another company
registered under the Securities Exchange Act of 1934.
<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, 2000.
Positions and Offices
Period Served with Company;
Name Age as Officer Family Relationships
---- --- ------------- -----------------------
Louis V. Aronson II 75 1953 - President & Chief Executive
Present Officer; Chairman of
Executive Committee; Director.
Daryl K. Holcomb 47 June 1996 - Vice President;
Present
1993 - Chief Financial Officer;
Present
1988 - Controller and Treasurer; None.
Present
Justin P. Walder 62 1989 - Secretary;
Present
1972 - Assistant Corporation Counsel;
Present Director; None.
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, except that a Form 4 filed by Mr. Weisman for June 1997
reporting one transaction was filed six days after its due date.
<PAGE>
Item 11 - EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table presents compensation
information for the years ended December 31, 1997, 1996 and 1995, for
the Chief Executive Officer and the other executive officer of the
Company whose combined base salary and bonus exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term All
Compensa- Other
Name and Annual Compensation tion Compen-
------------------- --------- sation
Principal Salary Bonus Options/
Position Year ($) ($)(1) SARS (#) ($)(2)
--------- ---- --------------------- --------- -------
<S> <C> <C> <C> <C> <C>
Louis V. Aronson II 1997 $462,405 $39,597 -- $10,446
President & Chief 1996 432,154 53,229 22,500 10,024
Executive Officer 1995 403,882 53,031 -- 9,264
Daryl K. Holcomb 1997 119,062 12,724 -- 2,701
Vice President & 1996 111,687 15,969 10,000 2,500
Chief Financial 1995 100,625 13,322 5,500 2,424
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 1997 All Other Compensation included matching credits by the
Company under its Employees' Savings Plan (Mr. L.V. Aronson, $3,200
and Mr. Holcomb, $2,701); and the cost of term life insurance
included in split-dollar life insurance policies (Mr. L.V. Aronson,
$7,246).
OPTION GRANTS IN LAST FISCAL YEAR
None.
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, 1997. All options held by the named executives were exercisable at
December 31, 1997. "In-the-money" options are those where the fair
market value of the underlying securities exceeds the exercise price of
the options.
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of In-the-Money
Unexercised Options Options at
at FY-End (1) FY-End (2)
Name Exercisable Exercisable
---- ------------------- ------------
<S> <C> <C>
Louis V. Aronson II 22,500 $ --
Daryl K. Holcomb 22,500 (2) 14,694
</TABLE>
Footnotes
(1) The options held by the named executive officers at December 31,
1997, are exercisable at any time and expire at various times from
March 11, 1998, through June 26, 2001.
(2) 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, 1997, to the option prices. Options to purchase
12,500 shares held by Mr. Holcomb were in-the-money at December 31,
1997. In March 1998 Mr. Holcomb exercised options for 7,000 of
these shares.
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
Effective August 26, 1997, directors who are not officers of
the Company receive an annual fee of $8,500 and, in addition, are
compensated at the rate of $650 for each meeting of the Company's Board
of Directors actually attended and $400 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, May 22, 1995, and June 11, 1997, provides for a term
expiring December 31, 2000. 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, 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 has a consulting
agreement with the Company for the period ending December 31, 1999,
which is cancellable at any time by either party with 60 days notice.
The agreement provides that Mr. Quinnan perform consulting services for
the Company, Ronson Consumer Products, and Prometcor at a specified
daily rate. In 1997 Mr. Quinnan was compensated $35,688 for his
services, of which approximately $32,000 was deferred, and was provided
the use of an automobile.
<PAGE>
(a) Transactions with management and others.
During the year ended December 31, 1997, the Company and
Ronson Consumer Products were provided printing services by Michael
Graphics, Inc., a New Jersey corporation, amounting to $70,094. A
greater than 10% shareholder of Michael Graphics is the son-in-law of
the Company's President, who also serves as a director.
(b) Certain business relationships.
During the year ended December 31, 1997, RCPC, Ronson Aviation
and Prometcor retained the firm of Walder, Sondak & Brogan, P.A.,
Attorneys at Law, to perform legal services. Justin P. Walder, a
principal in that firm, is a director and officer of the Company.
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 740,155 (1)(2) 23.1%(1)(2)
Campus Drive
P.O. Box 6707
Somerset, New Jersey 08875
Ronson Corporation Retirement
Plan Common 171,300 (2) 5.4%(2)
Campus Drive
P.O. Box 6707
Somerset, New Jersey 08875
Patrick Kintz Common 228,550 (3) 7.2%(3)
8323 Misty Vale
Houston, Texas 77075
Carl W. Dinger III Common 184,666 (4) 5.8%(4)
7 Lake Trail West
Morristown, New Jersey 07960
Steel Partners II, L.P. Common 189,699 (5) 6.0%(5)
750 Lexington Avenue
27th Floor
New York, New York 10022
</TABLE>
(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.
<PAGE>
(2) The Ronson Corporation Retirement Plan ("Retirement Plan") is the
beneficial owner of 171,300 common shares. 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 911,455
shares, or 28.5% 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 198,442 shares, or 6.3% 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 171,300 shares or 5.4% of the class. The
Retirement Plan's holdings were reported in 1988 on Schedule 13G,
as amended September 22, 1997.
(3) 228,550 common shares owned directly. This information was provided
to the Company by Mr. Kintz.
(4) 184,666 common shares owned directly. This information was provided
to the Company by Mr. Dinger.
(5) 189,699 shares owned by Steel Partners II, L.P. Steel Partners,
L.L.C., the general partner of Steel Partners II, L.P., and Mr.
Warren G. Lichtenstein, the sole executive officer and managing
member of Steel Partners, L.L.C., are also beneficial owners of the
shares. This information was obtained from a Schedule 13D filed
with the SEC by Steel Partners II, L.P., and Mr. Lichtenstein.
(b) Security Ownership of Management
The following table shows the number of shares of common stock
beneficially owned by each director, each named executive officer, 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> <C>
Louis V. Aronson II 740,155 (3) 23.1%
Robert A. Aronson 5,495 (1)
Barton P. Ferris, Jr. 54,136 1.7%
Erwin M. Ganz 27,142 (3) (1)
Gerard J. Quinnan 2,500 (1)
Justin P. Walder 44,503 1.4%
Saul H. Weisman 13,843 (1)
Daryl K. Holcomb 32,270 1.0%
All Directors and
Officers as a group
(nine (9) individuals
including those named above) 924,744 28.7%
</TABLE>
<PAGE>
(1) Shares owned beneficially are less than 1% of total shares
outstanding.
(2) Shares listed as owned beneficially include 46,500 shares subject
to option under the Ronson Corporation 1983, 1987 and 1996
Incentive Stock Option Plans as follows:
<TABLE>
<CAPTION>
Common Shares
Under Option
-------------
<S> <C>
Louis V. Aronson II 22,500
Justin P. Walder 5,000
Daryl K. Holcomb 15,500
All Directors and Officers
as a group (nine (9)
individuals including
those named above) 46,500
</TABLE>
(3) Does not include 171,300 shares of issued common stock owned by the
Retirement Plan. 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 911,455 shares, or 28.5% 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
198,442 shares, or 6.3% 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 were filed as Exhibit 3 with the 1996 Form 10-K and
are incorporated herein by reference.
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. On July 8,
1997, the Revolving Loan was further amended to provide $400,000 in
additional loan availability. 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 were attached to the Company's 1996
Form 10-K as Exhibits 10(a)-10(c). The July 1997 amendment was attached
to the Company's September 30, 1997, Form 10-Q as Exhibit 10(g).
On December 1, 1995, the Company and RCPC entered into
a mortgage loan agreement with Summit. The agreements were attached to
the Company's 1995 Form 10-K as Exhibits 10(a) and 10(b).
On August 28, 1997, Ronson Aviation entered into an
agreement with Summit for a Revolving Loan and a Term Loan. The
Revolving Loan and Term Loan agreements were attached to the Company's
September 30, 1997, Form 10-Q as Exhibits 10(a)-10(f).
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, 1997, 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, May 22, 1995, and June 11, 1997. 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.
(a) The Summary of the Management Incentive Plan of the
Company and its subsidiaries is attached as Exhibit 10(a).
<PAGE>
(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 26, 1997, and Proxy Statement was filed on
July 28, 1997, 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 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, which are incorporated herein by reference. The
Exchange Offer terminated September 30, 1997.
(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.
(99) Additional exhibits.
None.
(b) Reports on Form 8-K filed in the fourth quarter of 1997.
None.
<PAGE>
(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 24, 1998 By: /s/Louis V. Aronson II
----------------------
Louis V. Aronson II, President and
Chief Executive Officer and Director
Dated: March 24, 1998 By: /s/Daryl K. Holcomb
-------------------
Daryl K. Holcomb, Vice President &
Chief Financial Officer, Controller
and Treasurer
Dated: March 24, 1998 By: /s/Justin P. Walder
-------------------
Justin P. Walder, Secretary and
Director
Dated: March 24, 1998 By: /s/Robert A. Aronson
--------------------
Robert A. Aronson, Director
Dated: March 24, 1998 By: /s/Barton P. Ferris, Jr.
------------------------
Barton P. Ferris, Jr., Director
Dated: March 24, 1998 By: /s/Erwin M. Ganz
----------------
Erwin M. Ganz, Director
Dated: March 24, 1998 By: /s/Gerard J. Quinnan
--------------------
Gerard J. Quinnan, Director
Dated: March 24, 1998 By: /s/Saul H. Weisman
-------------------
Saul H. Weisman, Director
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, 1997
RONSON CORPORATION
SOMERSET, NEW JERSEY
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION FIVE-YEAR SELECTED FINANCIAL DATA
- ----------------------------------------------------
Dollars (other than per share amounts) in thousands
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales ......................... $ 23,170 $ 25,454 $ 26,953 $ 25,583 $ 19,725
Earnings (loss) from
continuing operations ........... 783 335 1,500 1,074 (821)
Total assets ...................... 13,519 12,104 13,403 11,887 9,896
Long-term obligations ............. 4,222 2,963 3,312 2,389 3,619
Per common share (3):
Earnings (loss) from
continuing operations (1,2):
Basic ...................... 0.26 0.09 0.77 0.52 (0.59)
Diluted .................... 0.25 0.09 0.57 0.42 (0.59)
</TABLE>
(1) Prior years have been restated to include the dilutive effect of
outstanding stock options in accordance with SFAS #128.
(2) Basic Earnings (Loss) per Common Share assumes no conversion of preferred
shares to common shares and Diluted Earnings (Loss) per Common Share
assumes full conversion of all preferred shares to common and includes the
dilutive effect of outstanding stock options. The assumed conversion of
preferred shares to common and the exercise of stock options were
anti-dilutive for the years ended December 31, 1993 and 1996, and,
therefore, they were excluded from the computation of Diluted Earnings
(Loss) per Common Share for those years.
(3) No dividends on common stock were declared or paid during the five years
ended December 31, 1997.
<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, 1997 and 1996
Consolidated Statements of Operations - Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows - Years Ended
December 31, 1997, 1996 and 1995
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, 1998.
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, 1997 and 1996, and the
related consolidated statements of operations and cash flows for each of the
years in the three-year period ended December 31, 1997. 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 require 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, 1997 and 1996, and the
consolidated results of their operations for each of the years in the
three-year period ended December 31, 1997 in conformity with generally
accepted accounting principles.
/s/DEMETRIUS & COMPANY, L.L.C.
-----------------------------
DEMETRIUS & COMPANY, L.L.C.
Wayne, New Jersey
March 11, 1998
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ---------------------------
Dollars in thousands
ASSETS
------
December 31,
-------------------
1997 1996*
------- -------
<S> <C> <C>
CURRENT ASSETS:
Cash ..................................................... $ 32 $ 116
Accounts receivable, less allowances for doubtful accounts
of: 1997, $76; 1996, $64 ............................... 1,865 1,617
Inventories:
Finished goods ......................................... 2,260 2,428
Work in process ........................................ 62 160
Raw materials .......................................... 695 520
------- -------
3,017 3,108
Other current assets ..................................... 527 439
Current assets of discontinued operations ................ 387 358
------- -------
TOTAL CURRENT ASSETS ............................... 5,828 5,638
PROPERTY, PLANT AND EQUIPMENT:
Land ..................................................... 19 19
Buildings and improvements ............................... 3,742 3,638
Machinery and equipment .................................. 7,071 6,028
Construction in progress ................................. 61 55
------- -------
10,893 9,740
Less accumulated depreciation and amortization ........... 5,424 5,232
------- -------
5,469 4,508
INTANGIBLE PENSION ASSETS ................................ 320 357
OTHER ASSETS ............................................. 843 775
OTHER ASSETS OF DISCONTINUED OPERATIONS .................. 1,059 826
------- -------
$13,519 $12,104
======= =======
</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,
-------------------------
1997 1996
-------- -------
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt ............................................. $ 2,713 $ 2,084
Current portion of long-term debt ........................... 368 598
Current portion of lease obligations ........................ 91 108
Accounts payable ............................................ 1,431 1,477
Accrued expenses ............................................ 1,724 1,911
Current liabilities of discontinued operations .............. 1,106 1,753
-------- -------
TOTAL CURRENT LIABILITIES .............................. 7,433 7,931
LONG-TERM DEBT .............................................. 3,561 2,352
LONG-TERM LEASE OBLIGATIONS ................................. 183 250
PENSION OBLIGATIONS ......................................... 394 268
OTHER LONG-TERM LIABILITIES ................................. 36 36
LONG-TERM LIABILITIES OF DISCONTINUED OPERATIONS ............ 48 57
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, authorized 5,000,000 shares:
12% cumulative convertible, $0.01 stated value, outstanding
1997, 36,518 and 1996, 837,595 ............................ -- 8
Common stock par value $1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- ---------------------------
Dollars in thousands (except share data)(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
December 31,
-------------------------
1997 1996 1997 1996
---------- ---------- -------- -------
<S> <C> <C> <C> <C>
Authorized shares................................... 11,848,106 11,848,106
Reserved shares..................................... 139,618 941,445
Issued (including treasury)......................... 3,225,607 1,863,939 3,226 1,864
Additional paid-in capital............................ 28,991 30,345
Accumulated deficit................................... (27,153) (27,936)
Unrecognized net loss on pension plans................ (1,545) (1,441)
Cumulative foreign currency translation adjustment.... (61) (36)
-------- --------
3,458 2,804
Less cost of treasury shares:
1997, 62,332 and 1996, 62,105 common shares......... 1,594 1,594
-------- --------
TOTAL STOCKHOLDERS' EQUITY.......................... 1,864 1,210
-------- --------
$ 13,519 $ 12,104
======== ========
</TABLE>
See notes to consolidated financial statements.
<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,
-----------------------------------
1997 1996 * 1995 *
-------- -------- --------
<S> <C> <C> <C>
NET SALES ........................................ $ 23,170 $ 25,454 $ 26,953
-------- -------- --------
Cost and expenses:
Cost of sales .................................. 14,504 16,522 18,216
Selling, shipping and advertising .............. 3,613 3,650 3,340
General and administrative ..................... 3,384 3,196 3,141
Depreciation and amortization .................. 490 551 544
-------- -------- --------
21,991 23,919 25,241
-------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS BEFORE
INTEREST AND OTHER ITEMS ....................... 1,179 1,535 1,712
-------- -------- --------
Other expense:
Interest expense ............................... 523 762 541
Other-net ...................................... 107 567 168
-------- -------- --------
630 1,329 709
-------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES ............................ 549 206 1,003
Income tax benefits-net .......................... 234 129 497
-------- -------- --------
EARNINGS FROM CONTINUING OPERATIONS .............. 783 335 1,500
-------- -------- --------
Loss from discontinued operations (net of current
tax benefit of: 1997, $132; and deferred
income tax benefits of: 1996, $180; 1995, $110) -- (1,190) (860)
-------- -------- --------
NET EARNINGS (LOSS) .............................. $ 783 $ (855) $ 640
======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------
Dollars in thousands (except per share data)(continued)
Year Ended December 31,
-----------------------------------
1997 1996 * 1995 *
-------- -------- --------
<S> <C> <C> <C>
EARNINGS (LOSS) PER COMMON SHARE:
Basic:
Earnings from continuing operations ............ $ 0.26 $ 0.09 $ 0.77
Loss from discontinued operations .............. -- (0.66) (0.50)
-------- -------- --------
Net earnings (loss) ............................ $ 0.26 $ (0.57) $ 0.27
======== ======== ========
Diluted:
Earnings from continuing operations ............ $ 0.25 $ 0.09 $ 0.57
Loss from discontinued operations .............. -- (0.66) (0.33)
-------- -------- --------
Net earnings (loss) ............................ $ 0.25 $ (0.57) $ 0.24
======== ======== ========
</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,
---------------------------------
1997 1996 * 1995 *
------- ------- -------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss) ............................... $ 783 $ (855) $ 640
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization .................. 490 551 544
Deferred income tax benefits ...................... (225) (390) (686)
Increase (decrease) in cash from changes in:
Accounts receivable ......................... (248) 323 (243)
Inventories ................................. 737 1,412 (1,424)
Other current assets ........................ (73) 133 61
Accounts payable ............................ (46) 49 (265)
Accrued expenses ............................ (72) (84) (294)
Net change in pension-related accounts ......... (56) (30) (1,669)
Other .......................................... 57 137 389
Discontinued operations ........................ (791) 685 357
------- ------- -------
Net cash provided by (used in) operating
activities ............................... 556 1,931 (2,590)
------- ------- -------
Cash Flows from Investing Activities:
Net cash used in investing activities,
capital expenditures ..................... (2,138) (504) (494)
------- ------- -------
Cash Flows from Financing Activities:
Proceeds from long-term debt ...................... 2,085 400 1,563
Proceeds from short-term debt ..................... 1,431 1,847 8,818
Proceeds from exercise of stock options ........... -- 80 31
Payments of long-term debt ........................ (970) (665) (545)
Payments of long-term lease obligations ........... (110) (78) (60)
Payments of short-term debt ....................... (938) (2,959) (6,845)
------- ------- -------
Net cash provided by (used in)
financing activities ..................... 1,498 (1,375) 2,962
------- ------- -------
Net increase (decrease) in cash ................... (84) 52 (122)
Cash at beginning of year ......................... 116 64 186
------- ------- -------
Cash at end of year ............................... $ 32 $ 116 $ 64
======= ======= =======
</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, 1997, aircraft and other related costs
utilized by Ronson Aviation in its charter operations and held for more than
one year were classified as property, plant and equipment. The term notes
payable secured by the above-mentioned aircraft were also classified as
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.
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 - The Company has adopted Statement
of Financial Accounting Standards ("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 $141,000, $134,000 and $135,000 for the years ended December
31, 1997, 1996 and 1995, respectively.
Advertising Costs - Costs of advertising are expensed as incurred and
amounted to approximately $446,000, $561,000 and $258,000 for the years ended
December 31, 1997, 1996 and 1995, respectively.
Income Taxes - In accordance with SFAS #109, "Accounting for Income
Taxes", in 1997, 1996 and 1995, the Company recorded net deferred income tax
assets of $225,000, $390,000 and $686,000, respectively.
Per Common Share Data - Basic Earnings (Loss) per Common Share was
computed by dividing earnings (loss) less cumulative preferred dividends by
the weighted average number of common shares outstanding.
Diluted Earnings (Loss) per Common Share was computed by dividing
earnings (loss) by the weighted average number of common shares outstanding,
including the assumed conversion of the preferred shares into common shares
and the dilutive effect of the outstanding stock options.
The weighted average number of shares used for these computations was
as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Average number of common shares:
Basic 2,957,995 1,791,535 1,719,867
Diluted (1) 3,130,093 2,641,160 2,613,577
</TABLE>
(1) The years ended December 31, 1996 and 1995, have been restated
to include the dilutive effect of outstanding stock options in
accordance with SFAS #128.
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.
Recent Accounting Pronouncements - In June 1997 the Financial
Accounting Standards Board issued SFAS #130, "Reporting Comprehensive
Income", and SFAS #131, "Disclosures about Segments of an Enterprise and
Related Information", both of which are effective for fiscal years beginning
after December 15, 1997. The Company will adopt SFAS #130 and SFAS #131 in
1998 as required. SFAS #130 and SFAS #131 will affect the Company's reporting
of the Unrecognized Net Loss on Pension Plans, the Cumulative Foreign
Currency Translation Adjustment, and information regarding the Company's
operating segments. Implementation of these statements will not have a
material effect on the Company's financial condition or results of
operations.
<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. The total costs and expenses related to terminating the Prometcor
operations, less the expected gain from the eventual sales of Prometcor's
assets, have been projected to be approximately $4,260,000. 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 1996, 1995, 1993, 1992,
1991 and 1990; the amounts of $1,370,000, $970,000, $625,000, $200,000,
$520,000 and $575,000, respectively, (which total $4,260,000) 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
1996 were due primarily to: costs incurred; previously projected costs
related to compliance with the New Jersey Department of Environmental
Protection ("NJDEP") requirements; NRC related activities; and 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, 1997, was considered adequate by the Company, based upon: the
results of testing completed; NJDEP and NRC comments; and reports to the
Company by its environmental counsel and environmental consultants.
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.
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.
The assets and liabilities of Prometcor are reflected in the
Consolidated Balance Sheets under assets and liabilities of discontinued
operations. At December 31, 1997, 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, 1997,
consisted principally of $902,000 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, 1997, the Company had, for federal income tax purposes,
net operating loss carryforwards of approximately $11,350,000, expiring as
follows: $4,000,000 in 1998; $2,800,000 in 1999; $800,000 in 2000 to 2001;
$1,750,000 in 2005 to 2007; and $2,000,000 in 2009 to 2012.
<PAGE>
In addition, the Company had approximately $63,000 of available
investment tax credit carryforwards expiring as follows: $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):
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Current:
Federal. . . . . . . . . . . . . . . . . $ -- $ -- $ --
State. . . . . . . . . . . . . . . . . . 141 (81) (79)
----- ----- -----
141 (81) (79)
----- ----- -----
Deferred:
Federal. . . . . . . . . . . . . . . . . 170 342 557
State. . . . . . . . . . . . . . . . . . 55 48 129
----- ----- -----
225 390 686
----- ----- -----
366 309 607
Allocated to discontinued operations. . . . . . 132 180 110
----- ----- -----
Income tax benefits-net. . . . . . . . . $ 234 $ 129 $ 497
===== ===== =====
</TABLE>
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):
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Tax expense amount computed using
statutory rate. . . . . . . . . . . . . . . . $(187) $ (70) $(341)
State taxes, net of federal benefit . . . . . . (93) (53) (52)
Operations outside the US . . . . . . . . . . . 2 4 100
Recognition of deferred income tax assets:
Federal . . . . . . . . . . . . . . . . . . . 170 162 447
State . . . . . . . . . . . . . . . . . . . . 55 48 129
Discontinued operations and other . . . . . . . 287 38 214
----- ----- -----
Income tax benefits-net . . . . . . . . . . . . $ 234 $ 129 $ 497
===== ===== =====
</TABLE>
<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):
<TABLE>
<CAPTION>
December 31,
1997 1996
------ ------
<S> <C> <C>
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. . . . . . . . . . . $ 167 $ 221
Compensated absences, principally due to accrual for
financial reporting purposes. . . . . . . . . . . . . 115 108
Compensation, principally due to accrual
for financial reporting purposes. . . . . . . . . . . 93 157
Accrual of discontinued operations costs, principally
related to compliance with NJDEP and NRC
requirements. . . . . . . . . . . . . . . . . . . . . 360 562
Net operating loss carryforwards. . . . . . . . . . . . 4,452 4,783
Investment tax credit carryforwards . . . . . . . . . . 63 83
Other . . . . . . . . . . . . . . . . . . . . . . . . . 187 125
------ ------
Total gross deferred income tax assets. . . . . . . . 5,437 6,039
Less valuation allowance. . . . . . . . . . . . . . . 3,059 4,035
------ ------
Net deferred income tax assets. . . . . . . . . . . . 2,378 2,004
------ ------
Deferred income tax liabilities:
Pension expense, due to contributions in excess of
net accruals. . . . . . . . . . . . . . . . . . . . . 570 542
Other . . . . . . . . . . . . . . . . . . . . . . . . . 153 32
------ ------
Total gross deferred income tax liabilities . . . . . 723 574
------ ------
Net deferred income taxes . . . . . . . . . . . . . . $1,655 $1,430
====== ======
</TABLE>
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 $2,378,000 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 $3,600,000 in the years prior to the
expiration of the net operating loss carryforwards in 2012. The amount of the
deferred income tax asset considered realizable, however, could be reduced in
<PAGE>
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 reduced from $4,035,000 at
December 31, 1996, to $3,059,000 at December 31, 1997, but was increased from
$3,902,000 at December 31, 1995, to $4,035,000 at December 31, 1996.
Of the net deferred income tax assets, approximately $269,000 were
classified as current and $1,386,000 were classified as non-current at
December 31, 1997.
Note 4. SHORT-TERM DEBT:
Composition (in thousands):
<TABLE>
<CAPTION>
December 31,
1997 1996
------- -------
<S> <C> <C>
Revolving loans (a). . . . . . . . . . . . . . . $ 2,170 $ 1,086
Notes payable, commercial finance companies (b). 543 998
------- -------
Total short-term debt. . . . . . . . . . . . . . $ 2,713 $ 2,084
======= =======
</TABLE>
(a) In January 1995 RCPC entered into an agreement with Summit Bank
("Summit") 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 $2,047,000 at December 31, 1997, provides a line of credit
up to $2,500,000 (an increase in 1997 of $500,000 from the prior $2,000,000)
to RCPC based on accounts receivable and inventory. The balance 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 (8.5% at December 31, 1997). 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, 1997, RCPC also had outstanding Letters of Credit of
$50,000. The Summit agreement also has restrictive covenants which, among
other things, limit the transfer of assets between the Company and its
subsidiaries.
In July 1997 RCPC and Summit amended the Revolving Loan agreement to
provide $400,000 in additional loan availability. The $400,000 additional
available loan is being reduced in monthly amounts of $14,583 from October
1997 to March 1998 and $20,833 from April 1998 to June 1999. The outstanding
amount under the agreement for the additional available loan of $356,000 as
of December 31, 1997, is included in the balance of the Revolving Loan in the
paragraph above.
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. In 1997
Ronson-Canada and CIBC extended Ronson-Canada's Revolving Loan to 1998. The
<PAGE>
extended agreement also amended certain other terms of the Revolving Loan
agreement. The Revolving Loan balance of $123,000 (C$176,000) at December 31,
1997, 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 and inventory. The
loan bears interest at the rate of 1.5% (down from the prior 2%) over the
CIBC prime rate (6% at December 31, 1997). 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, 1997, Ronson Consumer Products had
unused borrowings available at December 31, 1997, of about $60,000 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.)
(b) At December 31, 1997, the notes payable, commercial finance
companies, consisted of notes payable by Ronson Aviation as follows: 1)
$346,000 due to Raytheon Aircraft Credit Corp.; 2) $31,000 due to Cessna
Finance Corporation ("Cessna"); and 3) $166,000 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 1.75% 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
$650,000 at December 31, 1997, and the notes due to Cessna are guaranteed by
the Company.
On August 28, 1997, Ronson Aviation entered into an agreement with
Summit for a Revolving Loan and a Term Loan (refer to Note 5(b) below
regarding the Term Loan). The Revolving Loan, which had not yet been utilized
at December 31, 1997, provides a line of credit up to $400,000 to Ronson
Aviation based on the level of its accounts receivable. The Revolving Loan
currently bears interest at the rate of 1.5% above Summit's prime rate (8.5%
at December 31, 1997) and is payable on demand under an agreement which
expires August 31, 2000. The Revolving Loan and Term Loan are secured by the
accounts receivable, inventory and machinery and equipment of Ronson
Aviation, and the guarantees of the Company and RCPC. The Summit agreement
also contains restrictive covenants.
Ronson Aviation had no outstanding loans under the new Summit Revolving
Loan. Based on the level of accounts receivable, Ronson Aviation had unused
borrowings of about $270,000 under the Summit line of credit at December 31,
1997.
At December 31, 1997, the weighted average interest rate for the total
short-term debt was 9.89%.
<PAGE>
Note 5. LONG-TERM DEBT:
<TABLE>
<CAPTION>
Composition (in thousands): December 31,
1997 1996
------- -------
<S> <C> <C>
Mortgage loan payable, Summit (a) . . . . . . . $ 1,248 $ 1,276
Term notes payable, Summit (b). . . . . . . . . 296 100
Mortgage loan payable, BONY/NCD . . . . . . . . -- 348
Notes payable, bank (c) . . . . . . . . . . . . 2,385 1,076
Other . . . . . . . . . . . . . . . . . . . . . -- 150
------- -------
3,929 2,950
Less portion in current liabilities . . . . . . 368 598
------- -------
Balance of long-term debt . . . . . . . . . . . $ 3,561 $ 2,352
======= =======
</TABLE>
(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 $1,248,000 at December 31, 1997, is secured by a first
mortgage on the land, buildings and improvements of RCPC and is payable in
sixty monthly installments of $11,589, including interest, and a final
installment on December 1, 2000, of $1,155,000. 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 $25,000
at December 31, 1997, 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.)
In August 1997 Ronson Aviation entered into a Term Loan agreement with
Summit in the original amount of $285,000. The Term Loan with a balance of
$271,000 at December 31, 1997, is payable in twenty-four monthly installments
of $4,750 plus interest from October 1, 1997, and a final installment on
September 30, 1999, of $171,000. The Term Loan bears interest at the rate of
1.5% above Summit's prime rate. (Refer to Note 4(b) above.) The proceeds of
the Term Loan were used to repay the balance remaining of the prior mortgage
loan due from Ronson Aviation to Bank of New York/National Community Division
("BONY/NCD").
(c) The notes payable, bank, consisted of five 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 $3,110,000 at December 31, 1997, and are guaranteed by the Company. Two of
the notes in the amount of approximately $599,000 at December 31, 1997, are
payable in monthly installments totalling $6,375 plus interest through
October 2000 with a final payment of about $383,000 on October 5, 2000. The
other three notes in the amount of approximately $1,786,000 at December 31,
1997, are payable in monthly installments totalling $15,008 plus interest
through November 2002 with a final payment of about $900,000 on December 20,
2002.
At December 31, 1997, fixed assets with a net book value of $4,648,000
and accounts receivable and inventories of $5,009,000 are pledged as
collateral for the debt detailed in Notes 4 and 5 above.
<PAGE>
Net assets of consolidated subsidiaries, excluding intercompany
accounts, amounted to approximately $2,440,000 at December 31, 1997, of which
approximately $2,400,000 was restricted as to transfer to the Company and its
other subsidiaries due to various covenants of their debt agreements at
December 31, 1997.
Long-term debt matures during the next five years as follows: 1998,
$368,000; 1999, $502,000; 2000, $1,813,000; 2001, $180,000; and 2002,
$1,066,000.
Note 6. LEASE OBLIGATIONS:
Lease expenses in continuing operations, consisting principally of
office and warehouse rentals, totalled $476,000, $539,000 and $468,000 for
the years ended December 31, 1997, 1996 and 1995, respectively. Sublease
income amounted to $27,000, $168,000 and $142,000 for the same periods,
respectively.
At December 31, 1997, 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):
<TABLE>
<CAPTION>
Operating Capitalized
Total Leases Leases
------- -------- --------
<S> <C> <C> <C>
Year Ending December 31:
1998 . . . . . . . . . . . $ 421 $ 304 $ 117
1999 . . . . . . . . . . . 372 255 117
2000 . . . . . . . . . . . 316 231 85
2001 . . . . . . . . . . . 93 93 --
2002 . . . . . . . . . . . 1 1 --
------- -------- --------
Total Obligations. . . . . $ 1,203 $ 884 319
======= ========
Less: Amount representing
interest. . . . . . 45
--------
Present value of capitalized
lease obligations . . . $ 274
========
</TABLE>
Capitalized lease property included in the Consolidated Balance Sheets
is presented below (in thousands):
<TABLE>
<CAPTION>
December 31,
1997 1996
----- -----
<S> <C> <C>
Machinery and equipment . . . . . . . . $ 613 $ 574
Less accumulated amortization . . . . . 141 90
----- -----
$ 472 $ 484
===== =====
</TABLE>
<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):
<TABLE>
<CAPTION>
December 31,
1997 1996
------- -------
<S> <C> <C>
Accumulated benefit obligation, including vested
benefits of: 1997, $4,704; 1996, $4,596. . . $ 4,709 $ 4,599
Less plan assets at fair value . . . . . . 4,185 4,085
------- -------
Accumulated benefit obligation in excess of
plan assets . . . . . . . . . . . . (524) (514)
Unrecognized net obligation at 1/1/85 being
recognized over 15 to 18 years. . . . . . 156 193
Unrecognized prior service cost . . . . . . 164 164
Unrecognized net loss from past experience
different from that assumed and effects of
changes in assumptions . . . . . . . . 1,545 1,441
------- -------
Prepaid pension net recognized in the
Consolidated Balance Sheets. . . . . . . $ 1,341 $ 1,284
======= =======
</TABLE>
Plan assets primarily include widely-held common stocks, U.S. Treasury
Securities, 171,300 shares of common stock of the Company, and money market
funds.
Accounts corresponding to the additional minimum liability were
recorded in the Consolidated Balance Sheets as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1997 1996
------- -------
<S> <C> <C>
Intangible Pension Assets . . . . . . . $ 320 $ 357
Unrecognized Net Loss on Pension Plans. . . 1,545 1,441
------- -------
$ 1,865 $ 1,798
======= =======
</TABLE>
<PAGE>
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.
The Company's Consolidated Statements of Operations included pension
expense consisting of the following components (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Service cost. . . . . . $ 17 $ 18 $ 17
Interest cost . . . . . 333 339 350
Actual return on plan assets (177) (154) (467)
Net amortization and deferral 105 62 467
------- ------- -------
Net pension expense . . . $ 278 $ 265 $ 367
======= ======= =======
</TABLE>
The weighted average discount rates used in determining the actuarial
present value of the accumulated benefit obligation were 7%, 7.25% and 7.25%
in 1997, 1996 and 1995, respectively. The estimated long-term rates of return
on assets were 6.9%, 6.7% and 7.3% in 1997, 1996 and 1995, 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 about $70,000, $66,000 and $65,000
for this plan were recorded in 1997, 1996 and 1995, 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 net
proceeds of the sale of the property satisfied a substantial portion of a
1994 settlement with the United States Department of Labor ("DOL") and the
Internal Revenue Service ("IRS"). The $144,000 balance of the settlement was
paid by the Company in 1997.
Ronson Aviation is subject to the New Jersey Underground Storage Tank
Law which requires upgrades to existing underground storage tanks in 1998.
The Company expects the cost of upgrading or replacing Ronson Aviation's
fueling facilities to require expenditures of approximately $325,000.
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
<PAGE>
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 involved in various lawsuits and claims. While the
amounts claimed may be substantial, the ulitmate liability cannot now be
determined because of the considerable uncertainties that exist. Therefore,
it is possible that results of operations or liquidity in a particular period
could be materially affected by certain contingencies. However, based on
facts currently available including the insurance coverage that the Company
has in place, management believes that the outcome of these lawsuits and
claims will not have a material adverse effect on the Company's financial
position.
The Company has an employment contract with an officer. The contract
expires on December 3l, 2000. Base salaries in the years 1998, 1999 and 2000
are $494,773, $529,408 and $566,466, respectively, and the contract provides
for additional compensation and benefits, including a death benefit equal to
two years' salary.
<PAGE>
Note 9. STOCKHOLDERS' EQUITY:
A summary of activity within Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995 is as follows (dollar amounts in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------------------- -------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
---------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Preferred stock issued:
Balance at beginning of year ... 837,595 $ 8 847,308 $ 8 873,267 $ 9
Shares exchanged in Exchange
Offer for common stock .... (800,844) (8) -- -- -- --
Conversion of preferred stock
to common stock ........... (233) -- (9,713) -- (25,959) (1)
---------- --------- ---------- ---------- ---------- ----------
Balance at end of year ......... 36,518 -- 837,595 8 847,308 8
========== --------- ========== ---------- ========== ----------
Common stock issued:
Balance at beginning of year ... 1,863,939 1,864 1,820,893 1,821 1,767,934 1,768
Exercise of stock options ...... -- -- 33,333 33 27,000 27
Shares exchanged in Exchange
Offer for preferred stock . 1,361,435 1,362 -- -- -- --
Conversion of preferred stock
to common stock ........... 233 -- 9,713 10 25,959 26
---------- --------- ---------- ---------- ---------- ----------
Balance at end of year ......... 3,225,607 3,226 1,863,939 1,864 1,820,893 1,821
========== --------- ========== ---------- ========== ----------
Additional paid-in capital:
Balance at beginning of year ... 30,345 30,308 30,329
Exercise of stock options ...... -- 47 4
Shares exchanged in Exchange
Offer for common stock .... (1,354) -- --
Conversion of preferred stock
to common stock ........... -- (10) (25)
--------- ---------- ----------
Balance at end of year ......... 28,991 30,345 30,308
--------- ---------- ----------
Accumulated deficit:
Balance at beginning of year ... (27,936) (27,081) (27,721)
Net earnings (loss) ............ 783 (855) 640
--------- ---------- ----------
Balance at end of year ......... (27,153) (27,936) (27,081)
--------- ---------- ----------
Unrecognized net loss
on pension plans:
Balance at beginning of year ... (1,441) (1,403) (1,595)
Expensed during the year ....... 141 125 153
Unrecognized net gain (loss)
during the year ........... (245) (163) 39
--------- ---------- ----------
Balance at end of year ......... (1,545) (1,441) (1,403)
--------- ---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
------------------------- -------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
---------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cumulative foreign currency
translation adjustment:
Balance at beginning of year ... (36) (26) (26)
Loss on foreign currency
translation ................ (25) (10) --
--------- ---------- ----------
Balance at end of year ......... (61) (36) (26)
--------- ---------- ----------
Treasury stock (at cost):
Balance at beginning of year ... 62,105 (1,594) 62,087 (1,593) 62,035 (1,593)
Shares purchased ............... 227 -- 18 (1) 52 --
---------- --------- ---------- ---------- ----------- ----------
Balance at end of year ......... 62,332 (1,594) 62,105 (1,594) 62,087 (1,593)
========== --------- ========== ---------- =========== ----------
TOTAL STOCKHOLDERS' EQUITY ....... $ 1,864 $ 1,210 $ 2,034
========== ========= ==========
</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
($64,000 at December 31, 1997, 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. 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's Exchange Offer expired on
September 30, 1997. After the expiration of the Offer, the Company had
accepted 800,844 shares of preferred stock for exchange and had issued
1,361,435 shares of common stock under the Company's Exchange Offer.
Dividends in arrears at December 31, 1997, totalled $1.1025 per share
of preferred stock (twenty-one quarters at $0.0525 per share per quarter), or
approximately $40,000 in the aggregate. If the Company had not done the
Exchange Offer, the aggregate dividends in arrears would have been about
$923,000.
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 were
permitted to 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 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. No options were granted by the Company in 1997, and, therefore, no
estimated compensation would be applicable in 1997. In 1996 and 1995, 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, 1997, 1996 and 1995 were as follows (in thousands, except for earnings
(loss) per share information):
<TABLE>
<CAPTION>
Year Ended December 31,
1997(1) 1996 1995
------- ------- -------
<S> <C> <C> <C>
Pro forma Results of Operations:
Earnings from continuing operations..... $ 783 $ 210 $ 1,495
Loss from discontinued operations....... -- (1,190) (860)
------- ------- -------
Net earnings (loss).................. $ 783 $ (980) $ 635
======= ======= =======
Pro forma Earnings (Loss) per Common Share:
Basic:
Earnings from continuing operations... $ 0.26 $ 0.02 $ 0.77
Loss from discontinued operations..... -- (0.66) (0.50)
------- ------- -------
Net earnings (loss)................... $ 0.26 $ (0.64) $ 0.27
======= ======= =======
Diluted:
Earnings from continuing operations... $ 0.25 $ 0.02 $ 0.57
Loss from discontinued operations..... -- (0.66) (0.33)
------- ------- -------
Net earnings (loss)................... $ 0.25 $ (0.64) $ 0.24
======= ======= =======
</TABLE>
(1) Since no options were issued in 1997, no proforma adjustments have been
made above.
<PAGE>
A summary of the Company's stock option activity and related
information for the three years ended December 31, 1997, is as follows:
<TABLE>
<CAPTION>
Number of Weighted Average
Options Exercise Price
--------- ----------------
<S> <C> <C>
Outstanding at beginning of year 1995... 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
Expired............................... (750) 2.88
-------
Outstanding and Exercisable
at December 31, 1997................... 103,100 $ 2.58
======= ======
</TABLE>
Exercise prices for options outstanding as of December 31, 1997, ranged
as follows: 13,900 options at $1.20 per share, 15,500 options from $1.63 to
$2.25 per share and 73,700 options from $2.88 to $3.16 per share. The
weighted average contractual life of those options is 3 years.
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):
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash Payments for:
Interest . . . . . . . . . $ 508 $ 747 $ 478
Income taxes . . . . . . . . 45 85 1
Financing & Investing Activities
Not Affecting Cash:
Capital lease obligations incurred. 26 361 --
Note payable as deposit on equipment
to be leased . . . . . . . -- -- 118
</TABLE>
<PAGE>
Note 13. INDUSTRY SEGMENTS INFORMATION:
Financial information by industry segment is summarized below
(in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 * 1995 *
-------- -------- --------
<S> <C> <C> <C>
Net sales:
Consumer Products ............. $ 15,304 $ 16,534 $ 15,065
Aviation Services ............. 7,866 8,920 11,888
-------- -------- --------
Consolidated ......... $ 23,170 $ 25,454 $ 26,953
======== ======== ========
Earnings (loss) before
general corporate
expenses and other:
Consumer Products ............. $ 2,346 $ 2,837 $ 2,807
Aviation Services ............. 272 (7) 246
-------- -------- --------
Consolidated ......... 2,618 2,830 3,053
General corporate
expenses ...................... (1,439) (1,295) (1,341)
Interest expense ............... (523) (762) (541)
Other expense-net .............. (107) (567) (168)
-------- -------- --------
Earnings from continuing
operations before
income taxes .................. $ 549 $ 206 $ 1,003
======== ======== ========
Depreciation and
amortization expense
identified to segments:
Consumer Products ............. $ 240 $ 219 $ 201
Aviation Services ............. 233 318 331
-------- -------- --------
473 537 532
Corporate ..................... 17 14 12
-------- -------- --------
Consolidated .......... $ 490 $ 551 $ 544
======== ======== ========
Assets identified
to segments:
Consumer Products ............. $ 5,787 $ 5,306 $ 5,681
Aviation Services ............. 5,788 5,007 6,331
-------- -------- --------
11,575 10,313 12,012
Corporate ..................... 498 607 502
Discontinued Operations ....... 1,446 1,184 889
-------- -------- --------
Consolidated ......... $ 13,519 $ 12,104 $ 13,403
======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 * 1995 *
-------- -------- --------
<S> <C> <C> <C>
Capital additions
identified to segments:
Consumer Products ............. $ 134 $ 619 $ 229
Aviation Services ............. 2,028 204 262
-------- -------- --------
2,162 823 491
Corporate ..................... 2 42 3
-------- -------- --------
Consolidated .......... $ 2,164 $ 865 $ 494
======== ======== ========
</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 years ended December 31, 1997 and 1996, sales which
amounted to approximately 10% and 14%, respectively, 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 years ended December 31, 1997 and 1996. No customer
represented more than 10% of Consolidated Net Sales for the year ended
December 31, 1995.
<PAGE>
Note 14. CONCENTRATIONS:
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.
EXHIBIT 10(a)
SUMMARY OF MANAGEMENT INCENTIVE PLAN
The Company'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
Company'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) Year Ended December 31,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Basic:
Earnings from continuing operations ...................... $ 783 $ 335 $ 1,500
Less cumulative preferred dividends ...................... (8) (176) (178)
----------- ----------- -----------
Earnings from continuing operations
applicable to common stock ............................ $ 775 $ 159 $ 1,322
=========== =========== ===========
Weighted average number of common shares
outstanding ........................................... 2,957,995 1,791,535 1,719,867
----------- ----------- -----------
Earnings from continuing operations
per common share ...................................... $ 0.26 $ 0.09 $ 0.77
=========== =========== ===========
Loss from discontinued operations ........................ -- (1,190) (860)
----------- ----------- -----------
Loss from discontinued operations
per common share ...................................... $ -- $ (0.66) $ (0.50)
=========== =========== ===========
Net earnings (loss) ...................................... $ 783 $ (855) $ 640
Less cumulative preferred dividends ...................... (8) (176) (178)
----------- ----------- -----------
Net earnings (loss) applicable to common stock ........... $ 775 $ (1,031) $ 462
=========== =========== ===========
Net earnings (loss) per common share ..................... $ 0.26 $ (0.57) $ 0.27
=========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RONSON CORPORATION Exhibit 11
CALCULATION OF EARNINGS (LOSS) PER COMMON SHARE
(Dollars in thousands, except per common share data) (continued) Year Ended December 31,
1997 1996(2) 1995
----------- ----------- -----------
<S> <C> <C> <C>
Diluted (1):
Earnings from continuing operations ...................... $ 783 $ 335 $ 1,500
=========== =========== ===========
Weighted average number of common shares
outstanding ........................................... 2,957,995 1,791,535 1,719,867
Additional common shares outstanding
resulting from assumed conversion of
preferred stock to common stock ....................... 160,780 838,903 869,920
Additional common shares outstanding
resulting from exercise of
outstanding stock options ............................. 11,318 10,722 23,790
----------- ----------- -----------
Total .................................................... 3,130,093 2,641,160 2,613,577
=========== =========== ===========
Earnings from continuing operations
per common share ...................................... $ 0.25 $ 0.13 $ 0.57
=========== =========== ===========
Loss from discontinued operations ........................ $ -- $ (1,190) $ (860)
=========== =========== ===========
Loss from discontinued operations
per common share ...................................... $ -- $ (0.45) $ (0.33)
=========== =========== ===========
Net earnings (loss) ...................................... $ 783 $ (855) $ 640
=========== =========== ===========
Net earnings (loss) per common share ..................... $ 0.25 $ (0.32) $ 0.24
=========== =========== ===========
</TABLE>
(1) 1996 and 1995 restated to include the dilutive effect of outstanding
stock options in accordance with SFAS #128.
(2) Since the assumed conversion of the preferred shares to common shares and
the exercise of stock options were anti-dilutive for the year ended
December 31, 1996, they were excluded from the computation of earnings
(loss) per common share.
EXHIBIT 23
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 11, 1998, relating to the consolidated balance sheet,
statements of operations and cash flows of Ronson Corporation and
subsidiaries for the year ended December 31, 1997, which report appears
in the December 31, 1997 annual report on Form 10-K of Ronson
Corporation.
/s/DEMETRIUS & COMPANY, L.L.C.
------------------------------
DEMETRIUS & COMPANY, L.L.C.
Wayne, New Jersey
March 11, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 32
<SECURITIES> 0
<RECEIVABLES> 1,941
<ALLOWANCES> (76)
<INVENTORY> 3,017
<CURRENT-ASSETS> 5,828
<PP&E> 10,893
<DEPRECIATION> 5,424
<TOTAL-ASSETS> 13,519
<CURRENT-LIABILITIES> 7,433
<BONDS> 3,744
0
0
<COMMON> 3,226
<OTHER-SE> (1,362)
<TOTAL-LIABILITY-AND-EQUITY> 13,519
<SALES> 23,170
<TOTAL-REVENUES> 23,170
<CGS> 14,504
<TOTAL-COSTS> 14,504
<OTHER-EXPENSES> 7,571
<LOSS-PROVISION> 23
<INTEREST-EXPENSE> 523
<INCOME-PRETAX> 549
<INCOME-TAX> (234)
<INCOME-CONTINUING> 783
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 783
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.25
</TABLE>
