U.S. 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, 2001
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
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(Exact name of registrant as specified in its charter)
NEW JERSEY 22-0743290
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(State of incorporation) (I.R.S. Employer Identification No.)
CAMPUS DRIVE, P.O. BOX 6707, SOMERSET, N.J. 08875
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(Address of principal executive office) (Zip Code)
Registrant's telephone number:
(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 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 __
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of common equity held by non-affiliates of the
registrant was $3,100,000 as of February 28, 2002, computed by reference
to the average bid and asked price of such common equity.
As of February 28, 2002, there were 3,456,457 shares of the registrant's
common stock outstanding.
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.
7A. Quantitive and Qualitative Disclosures about Market Risk.
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 Registrant.
11. Executive Compensation.
12. Security Ownership of Certain Beneficial Owners and
Management.
13. Certain Relationships and Related Transactions.
Part IV
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Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
PART I
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Item 1 - DESCRIPTION OF BUSINESS
--------------------------------
(a) General Development of Business.
The Registrant, Ronson Corporation (the "Company"), is a company
incorporated in 1928.
The Company is engaged principally in the following businesses:
1. Consumer Products; and
2. Aviation-Fixed Wing Operations and Services and Helicopter
Services.
The Company's common shares are listed on the Nasdaq SmallCap Market,
and the Company's preferred shares are listed on the NASD Over-the-Counter
("OTC") Bulletin Board. The Company's common shares are quoted under the
symbol RONC and its preferred shares are quoted under the symbol RONCP.
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
completed termination of its United States Nuclear Regulatory Commission
("NRC") license. Compliance with ISRA and NRC requirements has continued
through 2001 and into 2002. In March 2002 Prometcor received a "No Further
Action" ("NFA") letter from the New Jersey Department of Environmental
Protection ("NJDEP") for all areas of concern (except groundwater)
releasing the property. (See Environmental Matters below and Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations.)
(b) Financial Information about Segments
Refer to Note 12 of the Notes to Consolidated Financial Statements
below.
(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. A subsidiary of
WalMart Stores, Inc. ("WalMart") is a significant distributor for the
consumer products segment and, as such, supplies Ronson's products to
numerous retailers. Management does not believe that this segment is
substantially dependent on WalMart or its distributor subsidiary because of
the presence of many other distributors which provide retailers with
Ronson's consumer products. Sales to various units of WalMart in 2001 and
2000 accounted for 10% of Consolidated Net Sales of the Company and 18% of
Net Sales of the segment, most of which were to WalMart's distributor
subsidiary.
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 and Canada. 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 four lighter products - the
"RONII" refillable butane lighter; the Ronson "WINDII" liquid fuel
windproof lighter; the Ronson "Varaflame Ignitor", used for lighting
fireplaces, barbecues, camping stoves and candles; and the "EURO LITE" blue
point flame butane lighter, excellent for pipes and cigars. The lighter
products are marketed in the United States, Canada and Mexico.
In 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 child resistant requirements
issued by the Consumer Product Safety Commission. The RONII is manufactured
for the Company in Spain and is sold through the Company's distribution
channels. The RONII is priced competitively but has strong competition from
several other brands of disposable lighters as well as much lower priced
unbranded imports from China and other Far Eastern countries.
In 1997 Ronson Consumer Products introduced a new lighter product, the
Ronson WINDII windproof lighter, in the United States and Canada. The
WINDII uses Ronson flints, Ronsonol lighter fuel and Ronson wicks. The
WINDII faces strong competition from another nationally distributed brand
and from unbranded imports.
The Ronson WINDII lighter and Varaflame Ignitor are manufactured in
China, both in accordance with the engineering and quality 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. The Varaflame Ignitor encounters strong competition from
imported disposable and refillable ignitors.
In late 1999 Ronson Consumer Products introduced the new EURO LITE
blue point flame butane lighter, in both the United States and Canada. The
EURO LITE uses Ronson Multi-Fill butane fuel injectors. It is manufactured
in China in accordance with the Company's engineering and quality
specifications. The EURO LITE faces strong competition from other
nationally distributed brands and unbranded imports.
During 2001 the Company developed a refillable ignitor called the
Ronson AmeroFlame Ignitor. The AmeroFlame Ignitor has a patented child
resistant/adult friendly mechanism. Its design includes a unique
see-through refillable fuel tank and is fueled by Ronson Multi-Fill butane
to light barbecues, fireplaces, candles, lanterns and has many other uses.
It is packaged and is sold as a single ignitor or in kit form with a 26
gram Ronson Multi-Fill Butane. In the first half of 2002, the AmeroFlame
Ignitor is replacing the Varaflame Ignitor.
(2) Aviation - Fixed Wing Operations and Services and Helicopter
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Services
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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, 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 58,500 gallon fuel storage complex (refer to Item
2-Description of Properties, (3) Trenton, New Jersey). In its passenger and
cargo services, Ronson Aviation operates a Citation II Jet airplane in
charter operations. Ronson Aviation is an FAA approved repair station for
major and minor airframe and engine service and an avionics repair station
for service 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, 2001, Ronson Aviation had orders to purchase two new
aircraft from Raytheon Aircraft Corporation, both of which are for resale.
The total sales value of these aircraft is approximately $1,780,000. The
orders are subject to cancellation by Ronson Aviation.
Ronson Aviation is subject to extensive competition in its air charter
activities, but Ronson Aviation is the only provider of aviation services
to the private, corporate and commercial flying public at Trenton-Mercer
Airport in Trenton, New Jersey.
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 New Jersey's "ISRA" law, operators of particular
facilities classified as industrial establishments are required to ensure
that their facility complies with environmental laws, including
implementation of remedial action, if necessary, before selling or closing
a facility.
In December 1989 the Company adopted a plan to discontinue the
operations in 1990 of one of its facilities, Prometcor, located in Newark,
New Jersey, and to comply with ISRA (formerly ECRA) and all other
applicable laws. In October 1994 Prometcor entered into a Memorandum of
Agreement with the NJDEP as to its NJDEP related environmental compliance
activities respecting its Newark facility. As the result of sampling and
the evaluation of the results by the Company's environmental consultants
and the NJDEP in 1996 and in the first quarter of 1997, areas of
contamination in the groundwater below a section of the property were
identified. Sampling and delineation have been undertaken and will be
continuing in this area of the property. The Company's plan to resolve the
groundwater issue has not yet been approved by the NJDEP. The Company
expects that long-term monitoring of groundwater will be required. The full
extent of the remaining costs related to groundwater is not determinable
until all testing and remediation have been completed and accepted by the
NJDEP.
In May 2001 Prometcor received termination of the NRC license held by
Prometcor. This action was taken by the NRC at Prometcor's request
following Prometcor's compliance with applicable requirements. In March
2002 Prometcor received an NFA letter from the NJDEP for all areas of
concern (except groundwater). With this NRC termination and the NJDEP NFA
letter, the NRC and NJDEP released the Prometcor property.
In October 2000 Ronson Aviation completed installation and initial
testing of monitoring wells in the area where Ronson Aviation had removed
and abandoned in place its former fuel tanks. Ronson Aviation's
environmental advisors believe that the preliminary results of the testing
indicate that no further testing should be required. The final extent of
costs cannot be determined until the results of testing have been completed
and accepted by the NJDEP. Therefore, the amount of additional costs, if
any, cannot be fully determined at this time, but management believes that
the effect will not be material.
The Company believes that compliance with environmental laws and
regulations will not have a material effect upon the Company's future
capital expenditures or competitive position.
PATENTS AND TRADEMARKS
----------------------
The Company maintains numerous patents and trademarks for varying
periods in the United States, Canada, Mexico and a limited number of other
countries. While both industry segments may benefit from the Company's name
as a registered trademark, the patents and trademarks which are held
principally benefit the consumer products segment of the Company's
business.
SEASONALITY AND METHODS OF COMPETITION
--------------------------------------
No material portion of the Company's business is seasonal. The Company
uses various methods of competition as appropriate in both of its industry
segments, such as price, service and product performance.
RESEARCH ACTIVITIES
-------------------
The Company's consumer products segment expensed approximately
$227,000, $288,000 and $232,000 during the fiscal years ended December 31,
2001, 2000 and 1999, 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, 2001, the Company and its subsidiaries employed a
total of 113 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
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2001 55% 45%
2000 57% 43%
1999 65% 35%
(d) Financial Information About Geographic Areas
Refer to Note 12 of the Notes to Consolidated Financial Statements.
Item 2 - DESCRIPTION OF PROPERTIES
----------------------------------
The following list sets forth the location and certain other
information concerning the Company's 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. 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.
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.
(1) Woodbridge, New Jersey
Facilities included in (a) and (b) below are owned subject to first
and second mortgages in favor of Fleet Capital Corporation.
(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) Somerset, New Jersey
One small facility for executive and consumer products offices. This
facility is subject to a lease which expires in June 2006. The facility is
constructed of metal, cinder block and cement.
(3) 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
3 (a) above.
(4) 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 2006.
This facility is constructed of brick and cinder block.
(5) Newark, New Jersey
One parcel of vacant land. Operations of these facilities have
terminated. The Company has entered into a contract for the sale of the
parcel upon completion of environmental clearance.
Item 3 - LEGAL PROCEEDINGS
--------------------------
The Company is involved in various product liability claims. The
claimants have claimed unspecified damages. 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 well within existing insurance coverage.
RONSON CORPORATION v. THE HOME INDEMNITY COMPANY, ET AL
-------------------------------------------------------
In the third quarter of 1999, the Company filed a lawsuit in the
Superior Court of New Jersey Law Division : Essex County against a number
of its former general liability insurance carriers seeking recovery for
environmental investigation and remediation costs incurred and anticipated
at various locations, primarily Prometcor. In 2000 and 2001 the Company
reached agreement with most of the carriers totalling approximately
$1,200,000. In March 2002 the Company reached settlement with the final
insurance carrier in the amount of $600,000. (Refer to Notes 2 and 16 of
the Notes to Consolidated Financial Statements.)
In September 1998 the Company received a "de minimis" settlement offer
("Settlement Offer") from the United States Environmental Protection Agency
("USEPA") related to waste disposed of prior to 1980 at a landfill in
Monterey Park, California, which the USEPA had designated as a Superfund
Site. The Company and the USEPA settled the matter in the fourth quarter of
2001. The settlement did not have a material effect on the Company's
financial condition or results of operations.
Gary & Margaret Minnich vs. Ronson Consumer Products Corporation and
--------------------------------------------------------------------
Walmart Stores East, Inc.
-------------------------
In March 2002 Ronson Consumer Products Corporation was advised that it
is the Defendant in a product liability lawsuit pending in the Circuit
Court for Washington County, Maryland, in which Plaintiffs seek damages for
an incident that allegedly occurred in February 1999, when a cigarette
lighter allegedly distributed by the Company allegedly ignited the clothing
of Gary Minnich. The case was filed in February 2002. The Plaintiffs seek
substantial damages and discovery has not begun. Claimants have not
submitted any information or evidence in support of any aspect of their
claim. Management believes that the claim is without merit and a loss, if
any, would be well within the limits of insurance coverage.
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
(a) At the Company's Annual Stockholders' Meeting (the "Meeting") on
November 27, 2001, the matters set forth in the Company's 2001 Notice of
Meeting and Proxy Statement, which is incorporated herein by reference,
were submitted to the Company's stockholders.
(b) Messrs. Robert A. Aronson, Erwin M. Ganz and Justin P. Walder were
elected as Class II directors for three-year terms by 85.4% or more of the
votes cast at the Meeting.
(c) The adoption of the Ronson Corporation 2001 Incentive Stock Option
Plan was approved by 84.6% of the votes cast at the Meeting.
(d) The appointment of Demetrius & Company, L.L.C., independent
auditors, to audit the consolidated financial statements of the Company for
the year 2001 was ratified by 88.9% of the votes cast at the Meeting.
The number of affirmative votes, negative votes and abstentions on
each matter is set forth in the Report of Inspectors of Election, a copy of
which is attached hereto as Exhibit 99(a).
PART II
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Item 5 - MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
----------------------------------------------------------
STOCKHOLDER MATTERS
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a) 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.
2001
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Quarter 1st 2nd 3rd 4th
--------------------------------------------------
High Bid $2.06 $1.88 $1.60 $1.76
Low Bid $1.38 $1.04 $ .90 $1.05
2000
--------------------------------------------------
Quarter 1st 2nd 3rd 4th
--------------------------------------------------
High Bid $2.50 $2.50 $2.13 $2.06
Low Bid $1.88 $1.94 $2.00 $1.06
b) At February 28, 2002, there were 2,409 stockholders of record of
the Company's common stock.
c) No dividends were declared or paid on the Company's common stock in
the two years ended December 31, 2001.
Item 6 - SELECTED FINANCIAL DATA
--------------------------------
The information required by this Item is filed with this report on
page 32 and is incorporated herein by reference.
Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
--------------------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS
---------------------
2001 Compared to 2000
The Company's Net Earnings in 2001, after non-recurring items, were
$531,000, an increase of 22% from $434,000 in 2000.
The Company's Net Sales increased by 4% to $29,020,000 in 2001
compared to $28,008,000 in 2000. The Net Sales in 2001 included sales of
$1,350,000 for two charter aircraft at Ronson Aviation.
The Company's Earnings from Continuing Operations before Interest,
Other Items, and Non-recurring Items were $1,733,000 in the year 2001, an
increase of $285,000 or 20%, over $1,448,000 in the year 2000.
The Company's Earnings from Continuing Operations before Income Taxes
and Non-recurring Items increased to $1,088,000 in the year 2001 from
$568,000 in 2000, an increase of 92%.
Ronson Consumer Products
------------------------
(in thousands)
Year Ended
December 31,
2001 2000
---- ----
Net sales $ 16,024 $ 16,081
Earnings before interest, other items,
intercompany charges, and taxes 1,952 1,967
Earnings before intercompany charges
and taxes 1,755 1,696
Net Sales of consumer products at Ronson Consumer Products were
nearly unchanged in 2001 compared to 2000. Cost of Sales, as a percentage
of Net Sales, at Ronson Consumer Products was unchanged at 54% in 2001 and
in 2000. Selling, Shipping and Advertising Expenses and General and
Administrative Expenses, as a percentage of Net Sales, were slightly lower
at 32% in 2001 from 33% in 2000.
Interest Expense at Ronson Consumer Products decreased by $77,000 to
$172,000 in 2001 from 2000 due to decreases in the prime rate of interest
and to lower average debt levels.
Ronson Aviation
---------------
(in thousands)
Year Ended
December 31,
2001 2000
---- ----
Net sales $ 12,996 $ 11,927
Earnings before interest, other items,
intercompany charges, and taxes 1,518 928
Earnings before intercompany charges
and taxes 1,316 587
Non-recurring income (loss) (232) 110
Net Sales at Ronson Aviation increased by 9% in 2001 from 2000,
primarily due to increased fuel sales and sales of $1,350,000 for two turbo
prop C-99 charter aircraft, offset by decreases in sales of other aircraft
and of C-99 charter services. The sale of the two C-99 aircraft reduced the
Company's long-term debt by $704,000 and fixed assets by $1,490,000 and
improved its working capital by about $720,000. The increased sales of
aviation fuel in 2001 were due primarily to increased fuel volume sold.
Ronson Aviation's Cost of Sales, as a percentage of Net Sales,
decreased to 77% in 2001 as compared to 81% in 2000. The decrease in the
Cost of Sales percentage in 2001 was primarily due to the change in mix of
products sold.
Ronson Aviation's Selling, Shipping and Advertising Expenses and
General and Administrative Expenses, as a percentage of Net Sales, were
unchanged at 8% in 2001 and 2000.
The non-recurring item in 2001 relates to the sale of Ronson
Aviation's two turbo prop C-99 charter aircraft and the related reduction
in personnel. Sales in the year 2001 included the proceeds of $1,350,000
from the sale of the two charter aircraft. The 2001 Non-recurring Loss of
$232,000 consisted of a loss on the two C-99 aircraft sales of $140,000 and
the related costs of $92,000. The Company will continue to operate its
Citation II Jet in its charter operations. Other than costs related to
ceasing use of the two C-99 aircraft and the aircraft sales in the fourth
quarter of 2001, management does not expect a material effect on the
Company's future results of operations.
Interest Expense at Ronson Aviation decreased by $131,000 to $198,000
in 2001 due to decreases in the prime rate of interest and to reduced debt.
Other Items
-----------
The General and Administrative Expenses of Corporate and Others were
higher in 2001 as compared to 2000 primarily due to higher pension expense
as the result of increased amortization related to pension asset reductions
in 2000.
Discontinued Operations
-----------------------
The Loss from Discontinued Operations included the costs recorded by
the Company related to the discontinuance of Prometcor, as follows (in
thousands):
Year Ended December 31,
2001 2000 1999
---- ---- ----
Insurance recovery income $ 175 $ 645 $ --
Discontinuance costs accrued 175 645 763
------ ------- -------
-- -- 763
Deferred income tax benefits -- -- (277)
------ ------- -------
Loss from discontinued operations $ -- $ -- $ 486
====== ======= =======
In 1990 the Company discontinued the operations of its wholly owned
subsidiary, Ronson Metals Corporation, subsequently renamed Prometcor, Inc.
("Prometcor"). Upon the cessation of operations in 1990, Prometcor began
its compliance with the environmental requirements of the New Jersey
Environmental Cleanup Responsibility Act ("ECRA"), now known as the
Industrial Site Recovery Act ("ISRA"), administered by the New Jersey
Department of Environmental Protection ("NJDEP") and other applicable laws
with the objective of selling the land and existing buildings previously
used in the discontinued operations. The discontinuance of operations also
required the termination of a United States Nuclear Regulatory Commission
("NRC") license.
In 2001 and to date in 2002, Prometcor made substantial progress in
the environmental clearance of its property in Newark, N.J. In May 2001 the
NRC released the last remaining parcel for unrestricted use. A similar
release of this parcel was received from the NJDEP in March 2002.
Prometcor's manufacturing buildings had stood on this site. The sale of
this final parcel of the property will be closed under the existing sales
contract for about $295,000. The sale of the property is expected to
proceed in the next few months with the Company retaining responsibility
for the groundwater-related activities.
The Company's plan to resolve groundwater issues has not yet been
approved by the NJDEP. Further testing completed in 2000 resulted in
increased estimates of the range of costs to be incurred. These costs will
be incurred over an extended number of years. In calculating and accruing
these costs, the Company has discounted the costs to the present value.
While making this progress to complete clearance of the property,
Prometcor incurred greater than anticipated costs primarily due to the
greater quantity of soil removed and disposed of at a licensed disposal
facility, and an extended period of time to satisfy all regulatory
requirements. Due to the increased costs incurred and anticipated,
Prometcor accrued additional costs of $175,000 in the fourth quarter of
2001, offset by the insurance recovery income.
Since the termination of Prometcor's business operations in 1990, the
total costs and expenses related to discontinued operations less the
expected gain from the eventual sale of Prometcor's assets, have been
estimated, based on the latest available information, to be about
$7,350,000. These estimated costs and expenses consist of: Prometcor's
expenses for the completion of compliance with the NJDEP and NRC
environmental regulations; the termination of Prometcor's business
operations; environmental consulting costs, legal and other professional
fees; and costs for the maintenance of the Prometcor property, including
insurance and taxes. These costs and expenses, net of deferred income tax
benefits, have been charged against the Company's Loss from Discontinued
Operations and Net Earnings (Loss) between the beginning of
1990 and year end 2001. The liability for these estimated costs and
expenses as recorded in the financial statements at December 31, 2001, was
based, in accordance with normal accounting practices, on the lower limit
of the range of costs as projected by the Company and its consultants. The
estimated upper limit of the range of costs is approximately $600,000 above
the lower limit.
The full extent of the costs and time required for completion of the
NJDEP environmental clearance is not determinable until the remediation and
confirmatory testing of the properties have been completed and accepted by
the NJDEP.
In the second half of 1999, the Company filed a lawsuit against
twelve of its former general liability insurance carriers seeking recovery
of environmental investigation and remediation costs incurred and
anticipated at various locations, primarily Prometcor. In 2000 and 2001 the
Company reached settlement agreements with eleven of the twelve insurance
carriers involved. These settlements totalled approximately $1,230,000.
Based on the settlements in 2001 and 2000, in the fourth quarter of 2001,
Prometcor recognized insurance recovery income in the amount of about
$175,000, net of related costs.
On March 6, 2002, the Company reached a settlement with the last
remaining insurance company in the above matter. This last settlement was
in the amount of $600,000. After related costs, the Company expects to
recognize Income From Discontinued Operations in the first quarter of 2002
of $285,000 before income taxes and $170,000 after income taxes due to this
settlement.
2000 Compared to 1999
The Company's Net Sales increased in 2000 by 13% to $28,008,000 from
$24,696,000 in 1999.
The Company's Earnings from Continuing Operations before Interest and
Other Items increased to $1,558,000 in 2000 as compared to $1,198,000 in
1999, an increase of $360,000 or 30%.
The Company's Earnings from Continuing Operations before Income Taxes
also increased substantially in 2000 to $678,000, an increase of 74% from
$390,000 in 1999.
The Company's Net Earnings of $434,000 in the year 2000 increased by
over $600,000 compared with the Net Loss of $194,000 in 1999, which
included a loss of $486,000 from Prometcor's discontinued operations.
Ronson Consumer Products
------------------------
(in thousands)
Year Ended
December 31,
2000 1999
---- ----
Net sales $ 16,081 $ 16,096
Earnings before interest, other items,
intercompany charges, and taxes 1,967 2,557
Earnings before intercompany charges
and taxes 1,696 2,326
Non-recurring charges -- (187)
Net Sales of consumer products at Ronson Consumer Products were
unchanged in 2000 compared to 1999. Cost of Sales, as a percentage of Net
Sales, at Ronson Consumer Products increased to 54% in 2000 compared
to 51% in 1999 primarily due to increases in 2000 in the cost of materials
primarily related to the Company's Ronsonol fuel and Multi-Fill butane
products due to rising oil prices, in research and development, and in
costs related to the ignitor utility lighter. Selling, Shipping and
Advertising Expenses and General and Administrative Expenses, as a
percentage of Net Sales, increased slightly to 33% in 2000 from 32% in 1999
primarily due to increases in selling expenses in 2000. The non-recurring
charge of $187,000 in 1999 was the adverse effect of the voluntary
short-term withdrawal of the ignitor from the Canadian market in 1999.
Interest Expense at Ronson Consumer Products increased by $43,000 to
$249,000 in 2000 primarily due to increases in the prime rate.
Ronson Aviation
---------------
(in thousands)
Year Ended
December 31,
2000 1999
---- ----
Net sales $ 11,927 $ 8,600
Earnings before interest, other items,
intercompany charges, and taxes 928 398
Earnings before intercompany charges
and taxes 587 52
Non-recurring income 110 --
Net Sales at Ronson Aviation increased by 39% in 2000 from 1999,
primarily due to increased aircraft sales, increased fuel sales, and
increased sales of charter services. The increased sales of aviation fuel
in 2000 was due both to increased fuel volume sold and to higher fuel
selling prices.
Ronson Aviation's Cost of Sales, as a percentage of Net Sales,
increased to 81% in 2000 as compared to 80% in 1999. The increase in the
Cost of Sales percentage in 2000 was primarily due to the change in mix of
products sold and to higher fuel costs.
Ronson Aviation's Selling, Shipping and Advertising Expenses and
General and Administrative Expenses, as a percentage of Net Sales, were
reduced to 8% in 2000 from 11% in 1999 primarily due to the increased sales
in 2000.
The non-recurring income of $110,000 at Ronson Aviation in 2000 was
due to settlement of an insurance claim related to a 1998 fuel spill. In
the third quarter of 2000, Ronson Aviation settled the claim for about
$144,000 and recorded income of $110,000, net of related costs. In 1998
Ronson Aviation had recognized costs of $135,000 related to the third
quarter 1998 fuel spill.
Other Items
-----------
The General and Administrative Expenses of Corporate and Others were
reduced in 2000 primarily due to lower legal expenses.
The Income Tax Provisions (Benefits)-Net increased by $146,000 from
1999 to 2000 primarily due to the Company's increased usage of prior net
operating loss carryforwards in 2000.
Discontinued Operations
-----------------------
In 2000 Prometcor made substantial progress in the environmental
clearance of its property in Newark, N.J. In February 2000 the NRC released
one of the two remaining parcels for unrestricted use. A similar release of
this parcel for unrestricted use was received from the NJDEP in August
2000. This parcel was sold under an existing sales contract for about
$200,000. In the fourth quarter of 2000 and January 2001, all remaining
radiologically contaminated soil was excavated and sent to a licensed
disposal site. In addition, the plan relating to non-radiological cleanup
and clearance of the soil was approved by the NJDEP.
While making this progress to complete clearance of the property,
Prometcor incurred greater than anticipated costs primarily due to the
greater quantities of soil removed and disposed of at a licensed disposal
facility, increased estimates of future groundwater-related activities, and
the extended period of time to complete clearance. Because of these
increases in costs incurred and anticipated, Prometcor took additional
accruals of $645,000 in 2000.
INCOME TAXES
In accordance with Statement of Financial Accounting Standards
("SFAS") #109, "Accounting for Income Taxes", in 2001, 2000 and 1999 the
Company recognized deferred income tax expenses of $320,000, $236,000, and
$53,000, respectively, related to continuing operations primarily due to
the Earnings from Continuing Operations before Taxes. The Company
recognized deferred income tax benefits related to discontinued operations
of $277,000 in 1999 as the result of the accruals of costs related to the
discontinued operations.
Current income taxes in the years ended December 31, 2001 and 2000,
of $322,000 and $375,000, respectively, were presented net of credits
arising from the utilization of available tax losses and loss carryforwards
in accordance with SFAS #109. In 2001, 2000, and 1999, current income tax
expenses were as follows (in thousands):
Year Ended December 31,
2001 2000 1999
---- ---- ----
Federal $ 5 $ -- $ --
State (11) 8 45
Foreign 11 -- --
---- ---- ----
Total $ 5 $ 8 $ 45
==== ==== ====
At December 31, 2001, the Company had net operating loss
carryforwards for federal income tax purposes of approximately $4,350,000
and alternative minimum tax credit carryforwards of $75,000. (Refer to Note
3 of the Notes to Consolidated Financial Statements.)
FINANCIAL CONDITION
-------------------
The Company's working capital was increased substantially to $233,000
at December 31, 2001, as compared to a deficiency in working capital of
$1,147,000 at December 31, 2000. The improvement of $1,380,000 in working
capital in 2001 was primarily due to the Company's Net Earnings and
$720,000 from the sale of two charter aircraft by Ronson Aviation described
in more detail above.
The Company's Stockholders' Equity was $2,872,000 at December 31,
2001, compared to $2,898,000 at December 31, 2000. The small change in 2001
Stockholders' Equity was primarily due to the Net Earnings in 2001 of
$531,000, substantially offset by a loss, net of related income tax
benefits, in the Minimum Pension Liability Adjustment component of
Accumulated Other Comprehensive Loss. This loss consisted of a loss on the
pension plan assets, an actuarial loss related to plan benefit experience,
and a loss due to a lower interest rate.
The Company's cash balances increased substantially in 2001 to
$689,000 from $81,000 in 2000, and the Company's short-term debt decreased
to $858,000 in 2001 from $1,697,000 in 2000. These improvements were both
primarily due to the Net Earnings in 2001, the sales by Ronson Aviation of
the two charter aircraft and the proceeds from the insurance settlements
related to the Prometcor groundwater costs.
The Increase in Cash from Changes in Inventories of $1,762,000 in
2001 was primarily due to the sale of the two C-99 charter aircraft by
Ronson Aviation, for a total of $1,350,000. The aircraft had been
transferred to inventory from fixed assets at the book value of $1,490,000.
In 2000 the Increase in Cash from Changes in Inventories and the Payments
of Short-Term Debt were primarily due to a decrease in aircraft inventory
at Ronson Aviation of $1,854,000. The Ronson Aviation aircraft inventory
had increased in the fourth quarter of 1999, and the increase was financed
with short-term debt.
Accounts payable were reduced by $574,000 to $1,593,000 at December
31, 2001, primarily due to the timing of purchases and payments and to the
usage of a portion of the proceeds from the sale of two Ronson Aviation
charter aircraft discussed above.
The Payments of Long-Term Debt in 2001 were $1,139,000 as compared to
$440,000 in 2000 primarily because $704,000 of the proceeds from the sales
of the two Ronson Aviation charter aircraft was utilized to pay the loans
financing the aircraft.
Based on the amount of the loans outstanding and the levels of
accounts receivable and inventory at December 31, 2001, Ronson Consumer
Products had unused borrowings available at December 31, 2001, of about
$718,000 under the Fleet Capital Corporation ("Fleet") and Canadian
Imperial Bank of Commerce lines of credit. Based on the level of accounts
receivable, Ronson Aviation had unused borrowings of about $247,000 under
the Fleet line of credit at December 31, 2001.
The decrease in Current Assets of Discontinued Operations in 2001 was
primarily due to the collection of receivables for the insurance recovery
discussed above. The decrease in Current Liabilities of Discontinued
Operations in 2001 was primarily due to the use of insurance proceeds to
pay for costs previously accrued as substantial progress was made in
completing environmental clearance of the Prometcor property. This was
partially offset by the accrual of $175,000 of additional expected
environmental costs at Prometcor, as described above.
In the third quarter of 2001, the Company settled for $100,000 a
Superfund Site matter with the United States Environmental Protection
Agency ("USEPA"). In September 1998 the Company received a "de minimis"
settlement offer ("Settlement Offer") from the USEPA related to waste
disposed of prior to 1980 at a landfill in Monterey Park, California, which
the USEPA had designated as a Superfund Site ("Site"). In August 1995 the
Company received a General Notice Letter from the USEPA notifying the
Company that the USEPA considered the Company one of about four thousand
Potentially Responsible Parties for waste disposed of prior
to 1980 at a landfill at the Site. The matter was settled in September
2001, and the settlement did not have a material effect on the Company's
results of operations or financial condition.
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, current and future borrowing availability under established
external financial arrangements, potential additional sources of financing
and existing cash balances.
The Company's revolving lines of credit between Fleet, RCPC and
Ronson Aviation are due to expire on June 30, 2002. The Company is
currently involved in discussions with Fleet to extend the lines of credit.
Management expects to extend the lines of credit for at least an additional
two years on terms comparable to or more favorable than are included in the
current loan agreements.
The Company's capital commitments including long-term debt and leases
are discussed more fully in Notes 5 and 6 of the Notes to Consolidated
Financial Statements. A summary of the maturities of contractual
obligations and other commitments is as follows (in thousands):
Payments Due by Period
---------------------------------------------------
Contractual Less than 2-3 4-5 After
Obligations Total 1 year years years 5 years
----------- ----- ------ ----- ----- -------
Long-term debt 3,003 347 2,544 56 56
Capital lease
obligations 126 41 74 11 --
Operating leases 1,213 315 539 359 --
Other long-term
obligations (1) 2,471 929 1,542 -- --
----- ----- ----- ----- -----
Total contractual
obligations 6,813 1,632 4,699 426 56
===== ===== ===== ===== =====
Pension obliga-
tions (2) 7 1,751 571 (2)
===== ===== =====
(1) Other long-term obligations include amounts due under employment
agreements, a consulting agreement and a stock option agreement.
(2) The payments of pension obligations assume necessary required
contributions are made annually and that the plan incurs no actuarial
or asset gains or losses. Any actuarial gains and losses cannot be
estimated at this time. An estimate of the pension obligations beyond
five years is not possible.
Other commercial commitments include outstanding letters of credit of
$49,000 for the importation of consumer products and of a $60,000 standby
letter of credit related to Ronson Aviation aircraft on order from Raytheon
Aircraft Corporation.
The Company has no off-balance sheet financing arrangements other
than the operating leases discussed above, no guarantees of the obligations
of others, and no unconsolidated subsidiaries or special purpose entities.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001 the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets". These Statements become effective for the
Company on January 1, 2002. In addition, in June 2001 the FASB issued SFAS
No. 143, "Accounting for Asset Retirement Obligations", effective for years
beginning after June 15, 2002, and in August 2001 SFAS No. 144, "Accounting
for Impairment or Disposal of Long-Lived Assets", effective for years
beginning after December 15, 2001. Management has reviewed the Statements
and does not believe the Statements will have a material effect on the
Company's financial position or results of operations.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Operations and other
sections of this report contain forward-looking statements that anticipate
results based on management's plans that are subject to uncertainty. The
use of the words "expects", "plans", "anticipates" and other similar words
in conjunction with discussions of future operations of financial
performance identifies these statements.
Forward-looking statements are based on current expectations of
future events. The Company cannot ensure that any forward-looking statement
will be accurate, although the Company believes that it has been reasonable
in its expectations and assumptions. Investors should realize that if
underlying assumptions prove inaccurate or that unknown risks or
uncertainties materialize, actual results could vary materially from our
projections. The Company assumes no obligation to update any
forward-looking statements as a result of future events or developments.
Investors are cautioned not to place undue reliance on such
statements that speak only as of the date made. Investors also should
understand that it is not possible to predict or identify all such factors
and should not consider this to be a complete statement of all potential
risks and uncertainties.
Item 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------
The Company is exposed to changes in prevailing market interest rates
affecting the return on its investments, but does not consider this
interest rate market risk exposure to be material to its financial
condition or results of operations. The Company invests primarily in highly
liquid debt instruments with strong credit ratings and very short-term
(less than 90 days) maturities. The carrying amount of these investments
approximates fair value.
All of the Company's short-term debt carries a variable rate of
interest, and, therefore, the carrying value of the short-term debt
approximates fair value. The Company's outstanding long-term debt as of
December 31, 2001, consisted of indebtedness in the amount of $1,229,000
with a variable rate of interest and $1,774,000 with a fixed rate of
interest which is not subject to change based upon changes in prevailing
market interest rates.
Under its current policies, the Company does not use derivative
financial instruments, derivative commodity instruments or other financial
instruments to manage its exposure to changes in interest rates, foreign
currency exchange rates, commodity prices or equity prices.
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, 2001, 2000, and 1999.
PART III
--------
Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY, COMPLIANCE
---------------------------------------------------------------------
WITH SECTION 16(a) OF THE EXCHANGE ACT
--------------------------------------
(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 79 1952- 2002 President & Chief
Present Executive Officer; Chairman
of Executive Committee;
Member of Nominating
Committee.
Robert A. Aronson 52 1993- 2004 Member of Audit Committee
Present through March 14, 2002;
Managing Member of Independence
Leather, L.L.C., Mountainside, NJ, the principal
business of which is the import of leather
products, 1996 to present; son of the President
& Chief Executive Officer of the Company.
Erwin M. Ganz 72 1976- 2004 Member of Executive
Present Committee and Nominating
Committee; Consultant
for the Company, 1994 to
present; Executive Vice- President-Industrial
Operations, 1975 to 1993; Chief Financial Officer,
1987 to 1993.
I. Leo Motiuk 56 December 2002 Member of Audit Committee
1999 - beginning March 14, 2002;
Present Attorney; Former partner
in Shanley Fisher, P.C.,
Attorneys at Law, Morris-
town, NJ.
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)
---------------- --- -------- ------- ----------------
Gerard J. Quinnan 73 1996- 2003 Member of Audit Committee;
Present Consultant for the Company,
1990 to present; Vice
President-General Manager of Ronson Consumer
Products Corporation, 1981 to 1990.
Justin P. Walder 66 1972- 2004 Secretary; Assistant Cor-
Present poration Counsel; Member of
Executive Committee and
Nominating Committee;
Principal in Walder, Hayden
& Brogan, P.A., Attorneys
at Law, Roseland, NJ.
Saul H. Weisman 76 1978- 2003 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 to 1997.
No director also serves as a director of another company registered
under the Securities Exchange Act of 1934.
(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, 2004:
Positions and Offices
Period Served with Company;
Name Age as Officer Family Relationships
---- --- ---------- --------------------
Louis V. Aronson II 79 1953- President & Chief Executive
Present Officer; Chairman of
Executive Committee; Director.
Daryl K. Holcomb 51 1996- Vice President & Chief Financial
Present Officer, Controller & Treasurer.
1993-1996 Chief Financial Officer, Controller
& Treasurer;
1988-1993 Controller & Treasurer; None.
Justin P. Walder 66 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, Hayden & 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.
Item 11 - EXECUTIVE COMPENSATION
--------------------------------
SUMMARY COMPENSATION TABLE
The Summary Compensation Table presents compensation information for
the years ended December 31, 2001, 2000, and 1999, for the Chief Executive
Officer and the other executive officer of the Company whose salary and
bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
--------------------------
Long-Term
Compensa- All
Annual Compensation tion Other
Name and ------------------- ---- Compen-
Principal Salary Bonus Options/ sation
Position Year ($) ($)(1) SARS (#) ($)(2)
-------- ---- --- ------ -------- ------
Louis V. Aronson II 2001 $606,119 $59,755 22,500 $14,305
President & Chief 2000 566,466 47,990 -- 13,150
Executive Officer 1999 529,408 42,484 7,500 12,950
Daryl K. Holcomb 2001 155,500 21,234 10,000 3,400
Vice President & 2000 148,500 17,293 -- 3,266
Chief Financial 1999 138,500 14,800 4,500 3,119
Officer, Controller
and Treasurer
Footnotes
---------
(1) The compensation included in the bonus column is an incentive payment
resulting from the attainment by the Company's operating subsidiaries
of certain levels of net sales and profits before taxes.
(2) In 2001 All Other Compensation included matching credits by the
Company under its Employees' Savings Plan (Mr. L.V. Aronson, $3,400;
Mr. Holcomb, $3,400;) and the cost of term life insurance included
in split-dollar life insurance policies (Mr. L.V. Aronson, $10,905).
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
Potential Realizable
Value of Assumed
Annual Rates of
Stock Price
Number of Percent of Appreciation for
Securities Total Options Options Term
Underlying Granted to Exercise ------------
Options Employees in Price Exp.
Name Granted Fiscal Year ($/sh) Date 5% 10%
---- ------- ----------- ------ ---- -- ---
L.V. Aronson II 22,500 36% $ 1.33 7/6/06 $4,822 $13,921
D.K. Holcomb 10,000 16% 1.21 7/6/06 3,343 7,387
AGGREGATED OPTION EXERCISES AND YEAR END OPTION VALUES
------------------------------------------------------
The following table summarizes, for each of the named executive
officers, options exercised during the year and the number of stock options
unexercised at December 31, 2001. "In-the-money" options are those where
the fair market value of the underlying securities exceeds the exercise
price of the options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
---------------------------------------------------
FISCAL YEAR END OPTION VALUES
-----------------------------
Value of
Number of In-the-Money
Number of Unexercised Options Options at
Shares at FY-End (5) FY-End (4)
Acquired ------------- ----------
on Value (1) Exercis- Unexercis- Exercis- Unexercis-
Name Exercise Realized able (2) able (3) able able
---- -------- -------- -------- -------- ---- ----
L.V. Aronson II -- $ -- 7,500 22,500 $ -- $ 10,575
D.K. Holcomb -- -- 4,500 10,000 -- 5,900
Footnotes
---------
(1) The value realized equals the market value of the common stock
acquired on the date of exercise minus the exercise price.
(2) The exercisable options held by the named executive officers at
December 31, 2001, are exercisable at any time and expire on December
7, 2004.
(3) The unexercisable options held by the named executive officers at
December 31, 2001, are exercisable at any time after January 6, 2002,
and expire on July 6, 2006.
(4) 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, 2001, to the option prices.
(5) The exercise prices of the options held at December 31, 2001, were as
follows:
Number Exercise Price
------ --------------
L.V. Aronson II 7,500 $ 2.68125
22,500 1.33
D.K. Holcomb 4,500 2.4375
10,000 1.21
LONG-TERM INCENTIVE PLANS
None.
COMPENSATION OF DIRECTORS
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. Mr. Ganz has a consulting agreement with the Company
for the period ending December 31, 2002, which is cancellable at any time
by either party with 180 days notice and provides compensation at the
annual rate of $87,500 plus participation in the Company's health and life
insurance plans and the use of an automobile. In the year ended December
31, 2001, Mr. Ganz was compensated $87,500 for his services. Mr. Quinnan
has a consulting agreement with the Company for the period ending December
31, 2003, 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 2001 Mr. Quinnan was compensated $45,375 for his services
and was provided the use of an automobile.
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, June 11, 1997, December 17, 1998, and September 19,
2001, provides for a term expiring December 31, 2004. 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. 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. In February
2002 Mr. L.V. Aronson offered and accepted a 5% reduction in his base
salary provided for by the terms of his employment contract. Previously,
Mr. L.V. Aronson had offered and accepted other reductions in his base
salary provided by the terms of his employment contract. 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,
waived a 7% salary increase due January 1, 1991, under the terms of the
contract. 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.
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:
Name and Address
of Beneficial Title of Beneficially Percent of
Owner Class Owned Class
----- ----- ----- -----
Louis V. Aronson II Common 893,299 (1)(2) 25.6% (1)(2)
Campus Drive
P.O. Box 6707
Somerset, New Jersey 08875
Ronson Corporation Retirement
Plan Common 171,300 (2) 5.0% (2)
Campus Drive
P.O. Box 6707
Somerset, New Jersey 08875
Carl W. Dinger III Common 413,666 (3) 12.0% (3)
55 Loantaka Lane North
Morristown, New Jersey 07960
Steel Partners II, L.P. Common 316,199 (4) 9.2% (4)
750 Lexington Avenue
27th Floor
New York, New York 10022
Howard M. Lorber Common 269,340 (5) 7.8% (5)
70 East Sunrise Highway
Valley Stream, New York 11581
(1) Includes 30,000 shares of unissued common stock issuable to Mr.
L.V. Aronson upon exercise of stock options held by Mr. L.V.
Aronson under the Ronson Corporation 1996 Incentive Stock Option
Plan.
(2) The Ronson Corporation Retirement Plan ("Retirement Plan") is the
beneficial owner of 171,300 common shares. The shares held by the
Retirement Plan are voted by the Retirement Plan's trustees,
Messrs. L.V. Aronson and Ganz. 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 1,064,599 shares,
or 30.5% 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 200,942 shares, or 5.8% of the class.
The Retirement Plan's holdings were reported in 1988 on Schedule
13G, as amended September 22, 1997.
(3) 413,666 common shares owned directly. This information was provided
to the Company by Mr. Dinger. Mr. Dinger has provided the Company's
Board of Directors with an irrevocable proxy to vote these shares
(refer to "Transactions with Management and Others" in Item 13
below).
(4) 316,199 common 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.
(5) 269,340 common shares owned directly by Mr. Lorber. This
information was obtained from a Schedule 13D filed with the SEC on
January 27, 2000, by Mr. Lorber.
(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:
Name of Individual or Amount and Nature of Percent of
Identity of Group Beneficial Ownership(2) Class
----------------- ----------------------- -----
Louis V. Aronson II 893,299 (3) 25.6%
Robert A. Aronson 6,995 (1)
Erwin M. Ganz 29,642 (3) (1)
I. Leo Motiuk 2,500 (1)
Gerard J. Quinnan 3,500 (1)
Justin P. Walder 50,003 1.4%
Saul H. Weisman 15,343 (1)
Daryl K. Holcomb 37,770 1.1%
All Directors and
Officers as a group
(nine (9) individuals
including those named
above) 1,040,252 29.7%
(1) Shares owned beneficially are less than 1% of total shares
outstanding.
(2) Shares listed as owned beneficially include 51,500 shares subject to
option under the Ronson Corporation 1996 Incentive Stock Option Plan
as follows:
Common Shares
Under Option
------------
Louis V. Aronson II 30,000
Justin P. Walder 7,000
Daryl K. Holcomb 14,500
All Directors and Officers
as a group (nine (9)
individuals including
those named above) 51,500
(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 and Ganz. 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 1,064,599 shares, or 30.5% 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 200,942 shares, or 5.8% 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
--------------------------------------------------------
(a) Transactions with management and others.
In October 1998 the Company entered into a consulting agreement with
Mr. Carl W. Dinger III, a greater than 5% shareholder of the Company. The
agreement provided that Mr. Dinger perform certain consulting services for
the Company for a period of 18 months expiring on April 7, 2000. On March
6, 2000, the Company and Mr. Dinger entered into a new consulting agreement
effective upon the expiration date of the original agreement. The new
agreement provides that Mr. Dinger continue to perform consulting services
for the Company for a period of 48 months at a fee of $7,000 per month.
During the year ended December 31, 2001, Mr. Dinger was compensated $84,000
under the agreement.
In October 1998 Mr. Dinger granted an option to the Company to purchase
the 186,166 shares of the Company's common stock held by Mr. Dinger. The
option was for a period of 18 months expiring on April 7, 2000, and the
exercise price of the option was $5.25 per share. On March 6, 2000, Mr.
Dinger granted a new option to the Company, to purchase the 413,666 shares
of the Company's common stock now held by Mr. Dinger. The option is for a
period of 48 months. The exercise price of the option is $5.25 per share
for the first two years, and the option price in the second two year period
is $7.50 per share. The cost of the option is $4,000 per month for the
period of the option or until exercised. As part of the new option
agreement, Mr. Dinger has granted the Board of Directors of the Company an
irrevocable proxy to vote the optioned shares during the term of the
option. In March 2000 Mr. Dinger purchased 227,500 shares of newly issued
restricted common stock of the Company at the price of $2.50 per share. The
Company incurred a cost for the option of $48,000 during the year ended
December 31, 2001.
(b) Certain business relationships.
During the year ended December 31, 2001, the Company, Ronson Consumer
Products, Ronson Aviation and Prometcor retained the firm of Walder, Hayden
& 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.
(c) Indebtedness of management.
None.
(d) Transactions with promoters.
Not applicable.
PART IV
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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 Fleet Capital
Corporation ("Fleet"), formerly 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 May 13, 1999, the Revolving Loan was further extended to
June 30, 2002. 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).
A July 1997 amendment was attached to the Company's September 30, 1997,
Form 10-Q as Exhibit 10(g). The May 1999 amendment was attached to the
Company's June 30, 1999, Form 10-Q as Exhibits 10(a) and 10(f).
On December 1, 1995, the Company and RCPC entered into a mortgage loan
agreement with Fleet. The agreement and note were attached to the Company's
1995 Form 10-K as Exhibits 10(a) and 10(b). On May 13, 1999, the Company
and RCPC refinanced the existing mortgage. The new mortgage loan was
attached to the Company's June 30, 1999, Form 10-Q as Exhibits 10(b)-10(e).
On August 28, 1997, Ronson Aviation entered into an agreement with
Fleet for a Revolving Loan and a Term Loan. On May 13, 1999, Ronson
Aviation and Fleet extended the Revolving Loan and Term Loan to June 30,
2002. 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). The May
1999 amendment agreements were attached to the Company's June 30, 1999,
Form 10-Q as Exhibits 10(g)-10(k).
For further information on the 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, 2001, filed with this report pursuant to Item 7, 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, June 11, 1997, December 17, 1998, and September 19, 2001. 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.
The amendment dated September 19, 2001, was attached to the Company's Form
8-K filed on October 23, 2001, as Exhibit 10.
(20) Other documents or statements to security holders.
The Ronson Corporation Notice of Meeting of Stockholders held on
November 27, 2001, and Proxy Statement was filed on October 25, 2001, and
is incorporated herein by reference.
(21) Subsidiaries of the Company.
The Company is the owner of 100% of the voting power of the following
subsidiaries, each of which is included in the consolidated financial
statements of the Company:
Wholly Owned Subsidiary State or Other Jurisdiction
and Business Name of Incorporation or Organization
----------------- --------------------------------
Domestic
Ronson Consumer Products Corporation New Jersey
Ronson Aviation, Inc. New Jersey
Prometcor, Inc. (formerly known as New Jersey
Ronson Metals Corporation)
Foreign
Ronson Corporation of Canada, Ltd. Canada
The Company also holds 100% of the voting power of four additional
subsidiaries which are included in its consolidated financial statements
and which, if considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.
(23) Consent of experts and counsel attached hereto as Exhibit
23(a).
(99) Additional exhibits.
(a) Report of Inspectors of Election from the Ronson
Corporation Annual Meeting of Stockholders on November 27, 2001.
(b) Reports on Form 8-K filed in the fourth quarter of 2001.
On October 23, 2001, the Company filed a report on Form 8-K with the
Securities and Exchange Commission providing information in response to
Item 5 of such report. No financial statements or pro forma financial
information was included in this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
RONSON CORPORATION
Dated: March 28, 2002 By: /s/Louis V. Aronson II
----------------------
Louis V. Aronson II, President and
Chief Executive Officer and Director
Dated: March 28, 2002 By: /s/Daryl K. Holcomb
----------------------
Daryl K. Holcomb, Vice President &
Chief Financial Officer, Controller
and Treasurer
Dated: March 28, 2002 By: /s/Justin P. Walder
----------------------
Justin P. Walder, Secretary and
Director
Dated: March 28, 2002 By: /s/Robert A. Aronson
----------------------
Robert A. Aronson, Director
Dated: March 28, 2002 By: /s/Erwin M. Ganz
----------------------
Erwin M. Ganz, Director
Dated: March 28, 2002 By: /s/I. Leo Motiuk
----------------------
I. Leo Motiuk, Director
Dated: March 28, 2002 By: /s/Gerard J. Quinnan
----------------------
Gerard J. Quinnan, Director
Dated: March 28, 2002 By: /s/Saul H. Weisman
----------------------
Saul H. Weisman, Director