SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 13, 1998
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RONSON CORPORATION
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(Exact name of registrant as specified in its charter)
New Jersey 1-1031 22-0743290
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Corporate Park III, Campus Dr., P.O. Box 6707, Somerset, NJ 08875-6707
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (732) 469-8300
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RONSON CORPORATION
FORM 8-K INDEX
ITEM 5. OTHER EVENTS
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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Item 5. Other Events
On November 13, 1998, the Registrant, Ronson Corporation (the
"Company"), issued to its shareholders the Ronson Corporation Post Meeting
Report regarding the 1998 Annual Meeting of Shareholders, (the "Report"). The
Report is attached hereto as Exhibit 20.
Item 7. Financial Statements and Exhibits
a) Financial Statements: None.
b) Pro Forma Financial Information: None.
c) Exhibits:
20. Ronson Corporation Post Meeting Report-1998 Annual
Meeting of Shareholders.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Ronson Corporation
/s/Daryl K. Holcomb
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Daryl K. Holcomb
Vice President and
Chief Financial Officer,
Controller and Treasurer
Dated: November 13, 1998
RONSON CORPORATION
POST MEETING REPORT
1998 ANNUAL MEETING
OF SHAREHOLDERS
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November 2, 1998
TO THE SHAREHOLDERS:
The 1998 Annual Meeting of Shareholders of Ronson Corporation was held at the
Quality Inn, Somerset, New Jersey on October 27, 1998.
This Post Meeting Report on the 1998 Annual Meeting contains the Shareholder
Vote; the President's Remarks to Shareholders; and Discussions Following the
President's Remarks.
Sincerely,
/s/Louis V. Aronson II
Louis V. Aronson II
President and CEO
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I. SHAREHOLDER VOTE (1998 ANNUAL MEETING)
DIRECTORS: RONSON SHAREHOLDERS ELECTED MANAGEMENT'S SLATE OF FOUR DIRECTORS
WITHOUT OPPOSITION. Each member of management's slate was elected by
approximately 84% of the votes cast at the Meeting. Robert A. Aronson, Erwin M.
Ganz and Justin P. Walder were elected for three year terms and Albert G. Besser
was elected for a one year term.
AUDITORS: THE APPOINTMENT OF DEMETRIUS & COMPANY, L.L.C., AS INDEPENDENT
AUDITORS FOR 1998 WAS APPROVED by approximately 87% of the votes cast.
SHAREHOLDER PROPOSAL: THE PROPOSAL BY WARREN LICHTENSTEIN/STEEL PARTNERS II,
L.P. WAS REJECTED BY ABOUT 77% OF THE SHARES CAST AT THE MEETING. More than one
half of the shares voting for the Warren Lichtenstein/Steel Partners group's
proposal were shares owned by the group.
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II. REMARKS BY LOUIS V. ARONSON II AT THE OCTOBER 27, 1998 ANNUAL MEETING
Successful operational programs and sound financial management instituted over
the last two years are having their intended results.
First, I would like to talk about increased shareholder values.
* The market capitalization of the Company's outstanding common stock increased
from $8,300,000 as of September 30, 1997 to $11,590,000 as of September 30,
1998, an increase of 40%.
* The high and low closing bids for the third quarters of 1997 and 1996 and the
third quarter of 1998 show steady improvement.
Third Quarter Third Quarter Third Quarter
1998 1997 1996
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High Closing Stock Bid $3 15/16 $3 1/4 $2 7/8
Low Closing Stock Bid $3 3/8 $2 $2 3/8
* This increase in per share price occurred despite a 75% increase in the number
of Ronson common shares outstanding as the result of the successful exchange
offer issuing Ronson common stock for preferred stock.
* Ronson stock has, notably, outperformed both the NASDAQ and Russell "2000"
indexes over the past five years. In this regard, an investment of $100 in
Ronson common stock on December 31, 1992 would have been worth $683 at the end
of 1997. Extending the period to September 30, 1998, the value of the investment
would increase to $967. In comparison, $100 invested in the NASDAQ index would
be worth $240 at December 31, 1997, and in the Russell "2000" index, would be
worth $214 at the same date.
RECENT EVENTS
1) Preferred Stock Exchange Offer
The Company made an offer to holders of the Company's 12% Cumulative Convertible
Preferred
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Stock to exchange each share of preferred stock for 1.7 shares of common stock.
The exchange offer was successfully concluded on September 30, 1997. The
immediate beneficial effect of the exchange offer was the elimination of accrued
and unpaid preferred dividends of about $883,000. The elimination of these
liabilities for past accumulated and future preferred dividends strengthened the
Company's financial position.
2) Financing Arrangements
During 1997, the Company and its principal lender agreed to improve the terms of
its existing loan agreement with Ronson Consumer Products Corporation (RCPC) and
also agreed to a new financing arrangement with Ronson Aviation, Inc. (RAI). The
existing revolving loan with RCPC was extended by more than three years, and the
funds available were increased from $2,000,000 to $2,500,000 at a lower interest
rate of 1.5% over prime, previously 2% over prime. The new financing arrangement
for RAI includes a term loan in the amount of $285,000 and a revolving loan,
both bearing interest at 1.5% over prime. To date, RAI has not needed to draw on
the available line of credit. Recently, RAI and the Company's principal lender
agreed to extend RAI's term loan to June 30, 2000.
PROMETCOR, INC.
Environmental compliance with the New Jersey Department of Environmental
Protection (NJDEP) and the Nuclear Regulatory Commission (NRC) at Prometcor
(formerly Ronson Metals Corporation) has been a major cash drain. The
environmental cleanup arises from the discontinuance in December 1989 of flint
and mischmetal manufacturing at Prometcor. Significant progress has been made,
although more slowly than anticipated due to exacting Federal and State
requirements and procedures which continue to delay final completion.
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In November 1997, Prometcor completed the necessary radiological cleanup for one
of three parcels of the Newark, NJ property. As a result, the NRC amended its
license to release this portion of the Prometcor property. Furthermore, in
January 1998, the NJDEP provided a "no further action" letter releasing that
parcel from further state regulation. This parcel is now available for sale
without any further environmental clearances.
The full extent of the costs and the time required to complete compliance is not
yet determinable. When the environmental compliance has been completed, the
total costs, we believe, will amount to $4,250,000 which has been accrued and a
substantial portion of which has been expended.
Of significant importance, the final cleanup will bring to an end the large cash
drain on the Company's cash flow and net earnings, as well as eliminating the
distraction of management's time and efforts. Instead, cash generated by the
Company's continuing operations will be available for growth rather than being
dissipated by Prometcor, a discontinued operation incapable of producing sales
and profits.
RONSON CONSUMER PRODUCTS
CORPORATION
Ronson Consumer Products Corporation (RCPC) continues to make substantial
contributions to the Company's operating profits. RCPC's operating profits are
more than double the operating profits of four years ago.
The WINDII windproof lighter, fueled by RONSONOL and sparked with the Ronson
flint, was introduced in early 1997. It has been well received and is now a
significant part of our lighter line.
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New WINDII designs were recently developed and a new WINDII "slim" introduced.
The suggested retail price of the low cost RONII refillable butane lighters,
fueled by the Ronson MULTI-FILL butane gas, has been lowered on different
models. As a result, RONII store shelf prices have become competitive with name
brand disposable lighters such as Bic and Scripto. Improvement in RONII sales
should be achieved through competitive pricing and greater distribution. The
RONII, which is kept to be refilled and not thrown away, is more environmentally
sound than the Bic or the Scripto throwaways. While some people are concerned
about that, most care about the price and that the product works. The RONII does
work and the RONII most of all does something that we are very interested in and
that is to sell butane fuel and flints. The RONII being refillable uses Ronson
butane and Ronson flints.
RONSONOL lighter fuel, Ronson MULTI-FILL butane and Ronson Flints, collectively
referred to as "Flame Accessories," are a strong segment of our consumer
business and major contributors to profits. Further growth for Flame Accessories
is available.
We are interested in selling butane. We are interested in selling flints. We are
interested in selling RONSONOL. We are like Gillette with its blade. They are
interested in selling razors but more interested in selling blades. In that
regard, for another use of butane, we developed the Ronson VARAFLAME Ignitor for
fireplaces, barbecues and various other uses. Again, through studied planning,
we have just this past month significantly lowered the manufacturing costs of
our refillable VARAFLAME Ignitor Kit by changing our sourcing. I would hope
within six to nine months our lower costs will result in much greater
distribution of our Ignitor.
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A major potential market for Ronson's VARAFLAME Ignitors is the price clubs,
such as Costco, Sam's and BJ's, and other large volume stores such as Wal-Mart.
Breaking into this market is not easy. To succeed, it is necessary to offer real
value and low price. With this in mind, we have developed a new kit, specially
designed for this important market. This is the VARAFLAME Ignitor Twin Pack Kit,
featuring two Ignitors and Ronson MULTI-FILL butane. We attach a sticker to the
MULTI-FILL which states "Fuel in Kit Equals 14 Disposable Ignitors". Both
Scripto and Bic sell throwaway ignitors. The Twin Pack thus becomes a real
bargain for the consumer.
Management continues to focus on the Ronson brand name. New consumer products
are being developed which should come to market during the next year. We take
pride in our Product Development Program. With the maintenance of operating
profits and the development of new consumer products, the growth of the last
four years should be exceeded in the years ahead.
RONSON AVIATION, INC.
I will now turn to Ronson Aviation. The operations in 1997 for Ronson Aviation,
Inc. (RAI) produced a large positive turnaround from 1996 even though RAI's
sales were about 12% lower. Operating profits at RAI produced a positive swing
of $713,000 vs. the 1996 loss of $441,000 including restructuring charges. Cost
reductions by restructuring operations, including the closure of the
unprofitable flight school, contributed to this positive swing. Management's
attention was also focused on other segments of RAI's business, such as aircraft
fueling, service and maintenance, space rentals and avionics, resulting in
positive contributions. With the exception of the aircraft sales department,
other profit centers, such as charter, fueling, service and maintenance have
improved.
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The positive operating trend established in 1997 continues. With the addition of
the Citation II jet, placed into service in December 1997, aircraft charter
sales have been greatly enhanced, moving RAI into the jet charter business. The
Citation II jet was acquired through a financing arrangement which enabled us to
limit our cash investment to about $50,000. The new jet is expected to generate
revenue this year many times that amount. In a short period, the Citation II jet
has established itself as a profitable venture with encouraging expectations.
OUTLOOK
Ronson Corporation's overall profitability continues. We believe second half
operations will continue this profitability trend.
While we have been largely able to resolve many of the uncertainties and
financial burdens of prior years, the major one, the completion of the
environmental cleanup at Prometcor, continues to face us. Considerable progress
is being made, but the timing of the cleanup completion cannot be precisely
determined due to the exacting requirements and procedures of the government
agencies involved.
Once the environmental cleanup problems have been resolved, improvement in the
Company's cash flow will be immediate, allowing the cash generated by Company
operations to be assigned to positive uses. Along with this, the Company can
then look forward to accelerated development of new products and digestible
acquisitions that will benefit Ronson's operations. We are dedicated to these
tasks and our focus is beamed to that end. The footing is sound and we shall
build on it.
Moreover, recognizing that cash dividends are considered a desirable form of
return on investment for many of our Shareholders, the Board will also be in a
position to include in its deliberations a review of the Company's dividend
policy.
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III. DISCUSSION FOLLOWING
PRESIDENT'S REMARKS
There were present at the Annual Meeting two individuals who confirmed that they
represented Warren Lichtenstein/Steel Partners II, L.P. (WL/SP). Mr. Warren G.
Lichtenstein, who controls Steel Partners, was not present. There was also
present a number of other shareowners and representatives of the Company.
According to filings with the Securities and Exchange Commission (SEC), the
WL/SP Group owns 287,099 shares of Ronson Common Stock. Mr. Lichtenstein had
submitted his Shareholder Proposal, which is included in the Ronson proxy
material. Mr. Lichtenstein's Proposal was defeated by the vote of holders of
approximately 77% of the shares cast at the Meeting.
The two WL/SP representatives asked a series of questions intended to support
the WL/SP Group's continuing effort to take over direction of the Company's
future for the personal benefit of the monied investors in SP. Because their
questions were often repetitive and at times disjointed, the subjects discussed
are summarized below:
RONSON AVIATION, INC. (RAI): In response to questions relating to the
profitability of RAI and WL/SP's suggestion that the Company consider RAI's
sale, Mr. Aronson pointed out that, while there had been previous concerns about
RAI's operations, the recent restructuring of RAI has returned it to
profitability. Capital expenditures for RAI are primarily for aircraft and the
aircrafts' net investments are minimized by favorable financing arrangements and
aircraft sales from time to time. He assured those present that studies of RAI's
operations, as in the past, would continue.
PROMETCOR, INC.: In response to questions about the effects, timing and cost of
the completion of the environmental cleanup, Mr. Aronson repeated his
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earlier comments about Prometcor, a discontinued operation. He repeated that the
cleanup has been a major drain on the Company's cash flow and net earnings;
however, the cleanup is progressing. When completed, the environmental cleanup
will stop the drain on the Company's cash flow and will free funds for the
expansion of the Company's continuing operations. The cleanup is slow and beyond
the Company's control due to State and Federal governmental regulations and
processes. To date, the Company has accrued about $4,250,000. It was added that
all but less than $1,000,000 has been expended.
RESIGNATION OF DIRECTOR: In response to a question concerning the resignation of
Mr. Barton Ferris as a Director, Mr. Aronson emphasized that the resignation was
voluntary. The President further stated that he had acquired Mr. Ferris' shares,
who had previously indicated an interest in selling his Ronson shares.
"INDEPENDENT" DIRECTORS: The President pointed out that both Messrs. Weisman and
Besser do meet the definition of an "independent" Director. Mr. Aronson stated
that all of the Directors contribute and exercise their independent judgment.
AGREEMENTS WITH CARL DINGER: For several months, Messrs. Aronson and Dinger have
had ongoing discussions regarding the Company's business. As reported in a
filing with the SEC, the Company has entered into a consulting agreement with
Mr. Dinger, which provides that Mr. Dinger will render services to the Company
for a period of 18 months. In a separate transaction, Mr. Dinger has given the
Company an option to purchase his Ronson shares for a period of 18 months;
however, the Company is under no obligation to purchase the shares. Mr. Dinger
has further agreed to vote his shares with the recommendation of the Board of
Directors on all matters brought before the shareholders at large.
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MANAGEMENT TRANSITION PLANS: Mr. Aronson assured that the Company has transition
plans. He stated that, for confidential reasons, the details are not public.
RONSON STOCK PRICE: With respect to the limited number of Ronson stock trades in
just one day in 1995 at $5.00, the President indicated that the trades at that
price on that day were simply a "blip" which did not last for long. Over the
five year period, the Company's stock has outperformed both the NASDAQ and
Russell "2000" indexes.
EVALUATION OF CERTAIN INVESTMENTS OF LICHTENSTEIN/STEEL PARTNERS (WL/SP): WL/SP
has reported Ronson stock purchases as of the record date of about 9% of the
Company's shares. As a matter of due diligence, the Company reviewed, in certain
situations where WL/SP had acquired control of a company, the subsequent
experiences and resulting happenings. The President distributed a document
"Evaluation of Certain Investments of Warren Lichtenstein/Steel Partners
(WL/SP)" to provide Ronson shareholders with information about how WL/SP has
managed and operated certain companies they control. This evaluation was filed
with the Securities and Exchange Commission by the Company on a Form 8-K on
October 30, 1998.
One of the WL/SP representatives stated, "We return very strong returns to our
investors." This may be an accurate statement, but he missed completely the
thrust of Ronson's evaluation which focuses on the SHAREOWNERS of the companies
studied rather than the MONIED INVESTORS in Steel Partners II.
Ronson urges its shareowners to study the following evaluation which was derived
from publicly filed documents.
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EVALUATION OF CERTAIN
INVESTMENTS OF WARREN
LICHTENSTEIN/STEEL PARTNERS (WL/SP)
(All information in this analysis, which was distributed at the Annual Meeting,
was derived from publicly filed documents.)
1. FAILURE TO OPERATE WITHIN LAWS AND REGULATIONS
A. Legal Matters:
Kinark (KIN) - In October 1995, WL/SP admitted to violations of Section
16(b) of the Securities Exchange Act of 1934, after notice by Kinark.
WL/SP was forced to "disgorge" the profits to Kinark.
Auto Info (AUTO) - In 1995, Auto Info sued WL/SP and other large
shareholders for violating securities laws by, among other things, forming
an undisclosed group. As a result, one of those other large shareholders
entered into an agreement with Auto Info.
Medical Imaging Centers (MICA) - In January 1996, MICA sued WL/SP claiming
that WL/SP had violated securities laws by forming an undisclosed group.
In March 1996, the court ruled in favor of MICA.
B. Corporate Governance:
Gateway - No election for directors have been held since 1995.
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2. MANAGEMENT CAPABILITIES OF WL/SP
A. Gateway Industries:
Gateway had stockholders' equity as follows:
12/31/92 $8,672,000
12/31/93 $6,562,000 WL became a director 5/94
12/31/94 $3,293,000
12/31/95 $3,181,000
12/31/96 $5,688,000 Rights Offering netting $5,608,000
12/31/97 $5,349,000
From May 1994, as a director and later as C.E.O. (October 1995),
Lichtenstein presided over the dissipation of about $6,821,000 in
stockholders' equity (12/31/93 to 12/31/97). He did not provide
shareholder value.
As the Chairman of Gateway, Lichtenstein arranged for the acquisition of
Marsel Mirror in November 1995 for about $2.8 million. Through 1996,
Lichtenstein managed Gateway and Marsel. In December 1996, Lichtenstein
completed the sale of Marsel's assets and business for $1. Meanwhile,
Gateway remained liable for over $375,000 in Marsel liabilities. This
Lichtenstein-arranged acquisition of Marsel, managed by Lichtenstein,
resulted in losses of over $3 million to Gateway shareholders.
Since 1996, Lichtenstein has managed only cash, over $5,000,000, at
Gateway, resulting in losses before investment activities of $31,000 in
1997 and income of only $8,000 in the first half of 1998. Investment
losses in 1997 were $308,000.
Lichtenstein has accomplished at Gateway what he has proposed for Ronson -
the sale and liquidation of the company's original business. The proceeds
from that sale were used to purchase Marsel, the total investment in which
was lost. His plan (the same he appears to have for Ronson) delivered only
losses to the shareholders.
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2. (CONT.)
B. Rose's Holdings:
Lichtenstein became a director of Rose's in October 1996, and President on
December 2, 1997. In December 1997, Rose's sold its business for a net
loss of about $22,446,000, or over 60% of the July 1997 stockholders'
equity. Once again, WL/SP's plan (similar to the one he seems to have for
Ronson) resulted in a large loss.
As with Gateway, in the first half of 1998, Lichtenstein managed only
cash, about $13,000,000, at Rose's, and Rose's lost $112,000 in the
period.
3. RELATED PARTY TRANSACTIONS (SELF-ENRICHMENT BY LICHTENSTEIN)
A. Gateway Industries:
Lichtenstein was paid a fee of $175,000 to arrange the purchase by Gateway
of Marsel.
Gateway, publicly held, leased space in New York in 1998, even though
Gateway has no operations. Gateway subleased a portion of the space to
Lichtenstein's companies with Gateway absorbing a portion of the cost.
Annual lease costs to Gateway are $97,000 and the income from affiliates
is $65,000, for a net annual Gateway loss of $32,000.
Lichtenstein has charged Gateway's administrative expenses ($73,000 in
1997) even though Gateway has no operations.
B. Rose's Holdings:
Lichtenstein served as president of Rose's, a company with only cash
assets, but took stock options totalling 422,291 shares for nine months of
services as the C.E.O. Jack Howard, another affiliated official, took
options totalling 225,000 shares. This equates to over 7% of the company.
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4. RETURNS TO ALL SHAREHOLDERS OF GATEWAY INDUSTRIES AND ROSE'S HOLDINGS
Key Trading Data Comparisons
High Low
A. Gateway Industries (including Marsel Mirror):
Comparison of Price When Lichtenstein Became a Director of Gateway and the Most
Recently Reported Information
Second Fiscal Quarter, 1994 $5.63 $3.44
First Fiscal Quarter, 1998 2.50 1.5625
Comparison of Price When Lichtenstein Became Chairman of Gateway and the Most
Recently Reported Information
Fourth Fiscal Quarter, 1995 $4.25 $2.88
First Fiscal Quarter, 1998 2.50 1.5625
Comparison of Highest Trade Price Over Last 5 Years vs. Most Recently Reported
Information
First Fiscal Quarter, 1996 $9.00
First Fiscal Quarter, 1998 2.50 1.5625
(Similar basis as Lichtenstein's statements about Ronson's stock price
comparison)
B. Rose's Holdings:
(All time periods are based on fiscal years ending in January.)
Comparison of Price When LichtensteinBecame a Director of Rose's and the Most
Recently Reported Information
Third Fiscal Quarter, 1997 $1.844 $1.50
Fourth Fiscal Quarter, 1998 1.6875 1.4375
Comparison of Highest Trade Price Over Last 5 Years vs. Most Recently Reported
Information
Second Fiscal Quarter, 1996 $3.375
Fourth Fiscal Quarter, 1998 1.6875 1.4375
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4. (CONT.)
C. Summary of Key Trading Data:
Since Lichtenstein became a director, Gateway's share price has lost about
55% of its value, and Rose's has lost about 7% of its value. When using
the basis used by Lichtenstein in the analysis of Ronson's stock by
comparison with the highest trade since 1994, Gateway has lost 77% of its
value, and Rose's has lost about 54% of its value.
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RONSON CORPORATION
CORPORATE PARK III
CAMPUS DRIVE
P.O. BOX 6707
SOMERSET,
NEW JERSEY 08875-6707
