Back to GetFilings.com
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
Commission File Number 1-1031
RONSON CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-0743290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Corporate Park III-Campus Drive, P.O. Box 6707, Somerset, NJ 08875
(Address of principal executive offices)
(732) 469-8300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
As of April 30, 2003, there were 3,842,168 shares of the registrant's common
stock outstanding.
RONSON CORPORATION
FORM 10-Q INDEX
PAGE
----
PART I - FINANCIAL INFORMATION:
ITEM 1 - FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS:
MARCH 31, 2003 AND DECEMBER 31, 2002 3
CONSOLIDATED STATEMENTS OF OPERATIONS:
QUARTER ENDED MARCH 31, 2003 and 2002 4
CONSOLIDATED STATEMENTS OF CASH FLOWS:
QUARTER ENDED MARCH 31, 2003 AND 2002 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 11
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 13
ITEM 4 - CONTROLS AND PROCEDURES 14
PART II - OTHER INFORMATION:
ITEM 1 - LEGAL PROCEEDINGS 14
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 14
EXHIBIT INDEX 16
SIGNATURES 17
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002 18
3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
March 31, December 31,
2003 2002
--------- ------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 514 $ 312
Accounts receivable, net 1,512 1,754
Inventories:
Finished goods 1,873 1,874
Work in process 61 103
Raw materials 619 360
-------- --------
2,553 2,337
Other current assets 939 935
Current assets of discontinued operations 214 214
-------- --------
TOTAL CURRENT ASSETS 5,732 5,552
-------- --------
Property, plant and equipment, at cost:
Land 19 19
Buildings and improvements 4,758 4,740
Machinery and equipment 6,997 6,938
Construction in progress 33 28
-------- --------
11,807 11,725
Less accumulated depreciation and amortization 7,610 7,435
-------- --------
4,197 4,290
Other assets 1,908 1,848
Other assets of discontinued operations 1,198 1,198
-------- --------
$ 13,035 $ 12,888
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 1,480 $ 1,654
Current portion of long-term debt and leases 319 317
Accounts payable 1,960 1,629
Accrued expenses 2,480 2,155
Current liabilities of discontinued operations 344 354
-------- --------
TOTAL CURRENT LIABILITIES 6,583 6,109
-------- --------
Long-term debt and leases 2,191 2,273
Other long-term liabilities 1,831 2,048
STOCKHOLDERS' EQUITY:
Common stock 3,912 3,912
Additional paid-in capital 29,237 29,250
Accumulated deficit (27,040) (26,966)
Accumulated other comprehensive loss (2,082) (2,141)
-------- --------
4,027 4,055
Less cost of treasury shares 1,597 1,597
-------- --------
TOTAL STOCKHOLDERS' EQUITY 2,430 2,458
-------- --------
$ 13,035 $ 12,888
======== ========
See notes to consolidated financial statements.
4
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except per share data) (unaudited)
Quarter Ended
March 31,
----------------------
2003 2002
---- ----
NET SALES $ 5,838 $ 5,761
------- -------
Cost and expenses:
Cost of sales 3,793 3,537
Selling, shipping and advertising 789 858
General and administrative 1,107 1,057
Depreciation and amortization 164 155
Non-recurring expenses 20 --
------- -------
5,873 5,607
------- -------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INTEREST AND OTHER ITEMS (35) 154
------- -------
Other expense:
Interest expense 87 90
Other-net 12 25
------- -------
99 115
------- -------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (134) 39
Income tax provision (benefit) (62) 26
------- -------
EARNINGS (LOSS) FROM CONTINUING OPERATIONS (72) 13
Earnings from discontinued operations
(net of tax provisions of $115) -- 170
------- -------
NET EARNINGS (LOSS) $ (72) $ 183
======= =======
EARNINGS (LOSS) PER COMMON SHARE:
Basic:
Earnings (loss) from continuing operations $ (0.02) $ 0.01
Earnings from discontinued operations -- 0.04
------- -------
Net earnings (loss) $ (0.02) $ 0.05
======= =======
Diluted:
Earnings (loss) from continuing operations $ (0.02) $ 0.01
Earnings from discontinued operations -- 0.04
------- -------
Net earnings (loss) $ (0.02) $ 0.05
======= =======
See notes to consolidated financial statements.
5
RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars, except per share data) (unaudited)
Quarter Ended
March 31,
-----------------------
2003 2002
---- ----
Cash Flows from Operating Activities:
Net earnings (loss) $ (72) $ 183
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization 164 155
Deferred income tax expense (benefit) (76) 140
Increase in cash from changes in current
assets and current liabilities 543 188
Net change in pension-related accounts 5 (15)
Discontinued operations (18) (357)
Other (6) 12
-------- --------
Net cash provided by operating activities 540 306
-------- --------
Cash Flows from Investing Activities:
Net cash used in investing activities,
capital expenditures (70) (596)
-------- --------
Cash Flows from Financing Activities:
Proceeds from short-term debt -- 202
Payments of short-term debt (174) --
Payments of long-term debt (71) (305)
Payments of long-term lease obligations (9) (7)
Other (14) (12)
-------- --------
Net cash used in financing activities (268) (122)
-------- --------
Net increase (decrease) in cash and cash equivalents 202 (412)
Cash and cash equivalents at beginning of period 312 689
-------- --------
Cash and cash equivalents at end of period $ 514 $ 277
======== ========
See notes to consolidated financial statements.
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED MARCH 31, 2003 (UNAUDITED)
Note 1: ACCOUNTING POLICIES
Basis of Financial Statement Presentation - The information as of and for
the three months ended March 31, 2003 and 2002, is unaudited. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of such interim periods have
been included.
Discontinued Operations - In December 1989 Ronson Corporation (the
"Company") adopted a plan to discontinue the operations in 1990 of one of its
New Jersey facilities, Ronson Metals Corporation, subsequently renamed
Prometcor, Inc. ("Prometcor"). As a result, the operations of Prometcor have
been classified as discontinued operations in the accompanying Consolidated
Statements of Operations and other related operating statement data.
This quarterly report should be read in conjunction with the Company's
Annual Report on Form 10-K.
Note 2: PER COMMON SHARE DATA
The calculation and reconciliation of Basic and Diluted Earnings (Loss)
per Common Share were as follows (in thousands except per share data):
Quarter Ended March 31,
--------------------------------------------------------------------------
2003 2002
---------------------------------- ---------------------------------
Per Per
Share Share
Loss Shares Amount Earnings Shares(2) Amount
--------- ------ ------ --------- --------- ------
Earnings (loss) from
continuing operations .. $ (72) $ 13
Less accrued dividends on
preferred stock ........ (2) (2)
-------- --------
Continuing operations .... (74) 3,842 $(0.02) 11 3,810 $ 0.01
Earnings from discontinued
operations ............. -- 3,842 -- 170 3,810 0.04
-------- ------ -------- ------
BASIC .................. $ (74) 3,842 $(0.02) $ 181 3,810 $ 0.05
======== ===== ====== ======== ===== ======
Effect of dilutive
securities (1):
Stock options .......... -- 13
Cumulative convertible
preferred stock ....... $ -- -- $ 2 38
-------- ----- -------- -----
Continuing operations .... (74) 3,842 $(0.02) 13 3,861 $ 0.01
Earnings from discontinued
operations ............. -- 3,842 -- 170 3,861 0.04
-------- ------ -------- ------
DILUTED ................ $ (74) 3,842 $(0.02) $ 183 3,861 $ 0.05
======== ===== ====== ======== ===== ======
7
(1) The assumed conversion of preferred shares to common shares and the
stock options were anti-dilutive for the quarter ended March 31,
2003, and, therefore, were excluded from the computation and
reconciliation of Diluted Earnings (Loss) per Common Share for that
period.
(2) Information as to the number of shares and per share amounts has
been retroactively adjusted to reflect the 5% stock dividend on
common stock declared March 18, 2003.
Note 3: SHORT-TERM DEBT
In 1995 Ronson Consumer Products Corporation ("RCPC") entered into an
agreement with Fleet Capital Corporation ("Fleet") for a Revolving Loan, now
expiring on June 30, 2005. The Revolving Loan of $993,000 at March 31, 2003,
provides a line of credit up to $2,500,000 to RCPC based on accounts receivable
and inventory.
In 1995 Ronson Corporation of Canada Ltd. ("Ronson-Canada") entered into
an agreement with Canadian Imperial Bank of Commerce ("CIBC") for a line of
credit of C$250,000. Ronson-Canada's line of credit is secured by its accounts
receivable and inventory. At March 31, 2003, Ronson-Canada utilized no
borrowings under the Revolving Loan.
In 1997 Ronson Aviation, Inc. ("Ronson Aviation") entered into an
agreement with Fleet for a Revolving Loan. The Revolving Loan provides a line of
credit up to $500,000 to Ronson Aviation based on the level of its accounts
receivable. At March 31, 2003, Ronson Aviation utilized no borrowings under the
Revolving Loan.
At March 31, 2003, Ronson Aviation had a note payable of $487,000 due to
Raytheon Aircraft Credit Corp. The note is collateralized by a specific aircraft
and is to be repaid from the proceeds from the sale of the aircraft.
Note 4: LONG-TERM DEBT
In May 1999 the Company, RCPC and Fleet entered into an agreement, in the
original amount of $1,760,000, which refinanced the existing Mortgage Loan
agreement on the RCPC property in Woodbridge, New Jersey. The Mortgage Loan
balance was $1,493,000 at March 31, 2003, and is payable in sixty monthly
installments of $17,218, including interest, and a final installment on May 1,
2004.
Ronson Aviation has two term loans payable to Fleet with balances at March
31, 2003, totalling approximately $931,000. The loans are collateralized by
specific aircraft and expire on June 30, 2005.
Note 5: CONTINGENCIES
In 1999 Ronson Aviation completed the installation of a new fueling
facility and ceased use of most of its former underground storage tanks. The
primary underground fuel storage tanks formerly used by Ronson Aviation were
removed in 1999 as required by the New Jersey Department of Environmental
Protection ("NJDEP"). Related contaminated soil was removed and remediated. In
2000
8
initial groundwater tests were completed. Ronson Aviation's environmental
consultants have advised the Company that preliminary results of that testing
indicate that no further actions should be required. The extent of groundwater
contamination cannot be determined until final testing has been completed and
accepted by the NJDEP. The Company intends to vigorously pursue its rights under
the leasehold and under the statutory and regulatory requirements. Since the
amount of additional costs, if any, and their ultimate allocation cannot be
fully determined at this time, the effect on the Company's financial position or
results of future operations cannot yet be determined, but management believes
that the effect will not be material.
In 2002 Prometcor completed the environmental clearance of its property in
Newark, N.J. The final parcel of the property was sold in May 2002 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. The liability for these estimated
costs and expenses as recorded in the financial statements 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.
The Company is involved in a State of New Jersey Gross Income Tax audit
for the years ended December 31, 1997 through December 31, 2000. The total
claimed by the State of New Jersey is $144,000, related to availability of net
operating loss carryforwards from 1995. The Company has appealed the
determination by the New Jersey Division of Taxation. Management believes that
the Company will not be liable for the assessment. The Company has accrued the
expected cost of defense in the matter.
The Company is involved in various lawsuits and claims. While the amounts
claimed may be substantial, the ultimate liability cannot now be determined
because of the considerable uncertainties that exist. Therefore, it is possible
that results of operations or liquidity in a particular period could be
materially affected by certain contingencies. However, based on facts currently
available including the insurance coverage that the Company has in place,
management believes that the outcome of these lawsuits and claims will not have
a material adverse effect on the Company's financial position.
Note 6: INDUSTRY SEGMENTS INFORMATION
The Company has two reportable segments: consumer products and aviation
services. The Company's reportable segments are strategic business units that
offer different products and services.
9
Financial information by industry segment is summarized below (in
thousands):
Quarter Ended March 31,
2003 2002
---- ----
Net sales:
Consumer Products $ 3,608 $ 3,724
Aviation Services 2,230 2,037
------- -------
Consolidated $ 5,838 $ 5,761
======= =======
Earnings (loss) from operations:
Consumer Products $ 318 $ 247
Aviation Services 219 391
------- -------
Total reportable segments 537 638
Corporate and others (552) (484)
Non-recurring expense (20) --
------- -------
Consolidated $ (35) $ 154
======= =======
Earnings (loss) from continuing operations
before intercompany charges and
income taxes:
Consumer Products $ 293 $ 215
Aviation Services 197 370
------- -------
Total reportable segments 490 585
Corporate and others (604) (546)
Non-recurring expense (20) --
------- -------
Consolidated $ (134) $ 39
======= =======
Note 7: COMPREHENSIVE INCOME
Comprehensive Income is the change in equity during a period from
transactions and other events from nonowner sources. The Company is required to
classify items of other comprehensive income in financial statements and to
display the accumulated balance of other comprehensive income (loss) separately
in the equity section of the Consolidated Balance Sheets.
10
Changes in the components of Other Comprehensive Income (Loss) and in
Accumulated Other Comprehensive Loss were as follows (in thousands):
Quarter Ended March 31, 2003 and 2002
-------------------------------------
Foreign Currency Minimum Pension Accumulated
Translation Liability Other Comprehensive
Adjustment (1) Adjustment (2) Loss
-------------- -------------- ------------------
Balance at
December 31, 2002 $ (70) $ (2,071) $ (2,141)
Change during first
quarter 2003 15 44 59
---------- --------- ---------
Balance at
March 31, 2003 $ (55) $ (2,027) $ (2,082)
========== ========= =========
Balance at
December 31, 2001 $ (70) $ (1,532) $ (1,602)
Change during first
quarter 2002 (1) 32 31
---------- --------- ---------
Balance at
March 31, 2002 $ (71) $ (1,500) $ (1,571)
========== ========= =========
(1) The foreign currency translation adjustment component of Accumulated
Other Comprehensive Loss is presented above net of related tax
benefits of $37,000 and $47,000 as of March 31, 2003 and 2002,
respectively, and $46,000 and $47,000 as of December 31, 2002 and
2001, respectively. For the quarter ended March 31, 2003, the change
in the foreign currency translation component is presented above net
of a related tax provision of $9,000.
(2) The minimum pension liability component of Accumulated Other
Comprehensive Loss is presented above net of related tax benefits of
$1,348,000 and $998,000 as of March 31, 2003 and 2002, respectively,
and $1,377,000 and $1,019,000 as of December 31, 2002 and 2001,
respectively. For the quarters ended March 31, 2003 and 2002, the
changes in the minimum pension liability component are presented
above net of related tax provisions of $29,000 and $21,000,
respectively.
Note 8: STATEMENTS OF CASH FLOWS
Certificates of deposit that have a maturity of less than 90 days are
considered cash equivalents for purposes of the accompanying Consolidated
Statements of Cash Flows.
Supplemental disclosures of cash flow information are as follows (in
thousands):
Quarter Ended
March 31,
-----------------
2003 2002
---- ----
Cash payments for interest $ 75 $ 84
11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
First Quarter 2003 Compared to First Quarter 2002.
The Company's Net Sales increased to $5,838,000 in the first quarter of
2003 from $5,761,000 in the first quarter of 2002.
The Company's Loss from Continuing Operations was $72,000 in the first
quarter of 2003 as compared to Earnings from Continuing Operations of $13,000 in
the first quarter of 2002. The Company's Net Loss in the first quarter of 2003
was $72,000 as compared to Net Earnings of $183,000 in the first quarter of
2002. The Net Earnings in the first quarter of 2002 included Earnings from
Discontinued Operations of $170,000 due to income from an environmental
insurance settlement.
Ronson Consumer Products
(in thousands)
Quarter Ended
March 31,
-------------------
2003 2002
---- ----
Net sales $ 3,608 $ 3,724
Earnings from operations 318 247
Earnings before income taxes and
intercompany charges 293 215
Net Sales of consumer products at Ronson Consumer Products Corporation
("RCPC"), Woodbridge, New Jersey, and Ronson Corporation of Canada Ltd.
("Ronson-Canada"), Mississauga, Ontario, (together "Ronson Consumer Products")
decreased by 3% in the first quarter of 2003 compared to the first quarter of
2002 primarily due to lower sales of flame accessory and lighter products.
Cost of Sales, as a percentage of Net Sales, at Ronson Consumer Products
decreased to 59% in the first quarter of 2003 from 60% in the first quarter of
2002. This decrease in the Cost of Sales percentage was due primarily to
improved gross profit margins on the Company's flame accessory products.
Selling, Shipping and Advertising Expenses at Ronson Consumer Products, as
a percentage of Net Sales, decreased to 22% in the first quarter of 2003 from
23% in the first quarter of 2002 primarily due to the reduction in
personnel-related costs. General and Administrative Expenses, as a percentage of
Net Sales, were unchanged at 9% in the first quarters of 2003 and 2002.
Ronson Aviation
(in thousands)
Quarter Ended
March 31,
--------------------
2003 2002
---- ----
Net sales $ 2,230 $ 2,037
Earnings from operations 219 391
Earnings before income taxes and
intercompany charges 197 370
12
Net Sales at Ronson Aviation, Inc. ("Ronson Aviation"), Trenton, New
Jersey, increased by 9% in the first quarter of 2003 from the first quarter of
2002 primarily due to increased sales of aircraft maintenance services.
Ronson Aviation's Cost of Sales, as a percentage of Net Sales, increased
to 75% in the first quarter of 2003 from 64% in the first quarter of 2002. The
increase in the Cost of Sales percentage in 2003 was primarily due to higher
fuel prices and to a change in the mix of products sold.
Ronson Aviation's Selling, Shipping and Advertising Expenses and General
and Administrative Expenses were reduced to 11% in the first quarter of 2003
compared to 13% in the first quarter of 2002 primarily due to the increased
sales in 2003.
Other Items
The General and Administrative Expenses of Corporate and Other were higher
in the first quarter of 2003 as compared to the first quarter of 2002 primarily
due to increased legal fees and to significantly higher pension expense as the
result of increased amortization related to the lower valuation of pension
assets in 2002.
The Non-recurring expenses in the first quarter of 2003 were the legal fees
incurred in March 2003 as a result of the derivative action filed by a
stockholder. (Refer to Item 3 of the Company's Annual Report on Form 10-K for
the year ended December 31, 2002.)
Discontinued Operations
In March 2002 the Company reached settlement with the last insurance
carrier in the Company's 1999 lawsuit to recover incurred and anticipated
environmental cleanup costs, primarily relating to the Company's discontinued
Prometcor operations. The Company had settled with the other insurance carriers
in 2000 and 2001. This last settlement amounted to $600,000, bringing total
recoveries to over $1.8 million. As a result of this final settlement, the
Company had Earnings from Discontinued Operations of $285,000 after related
expenses and before income taxes ($170,000 after taxes) in the first quarter of
2002.
FINANCIAL CONDITION
The Company's Stockholders' Equity declined slightly to $2,430,000 at
March 31, 2003, from $2,458,000 at December 31, 2002. The reduction of $28,000
in Stockholders' Equity was primarily due to the Net Loss in the first quarter
of 2003. The Company had a deficiency in working capital of $851,000 at March
31, 2003, as compared to $557,000 at December 31, 2002. The decline in working
capital was primarily due to a reduction in the long-term pension obligation by
$248,000.
The Increase in Cash from Changes in Current Assets and Current
Liabilities is higher in the first quarter of 2003 than in the first quarter of
2002 due to reduced accounts receivable at Ronson Consumer Products at March 31,
2003, and to differences in timing of payments of accrued expenses.
The cash used in discontinued operations was substantially reduced to
$18,000 in the first quarter of 2003 from $357,000 in 2002. In the first quarter
13
of 2002, the environmental clearance of the Prometcor property was completed and
the remaining costs of compliance to be paid in 2003 have been very low.
The cash used for capital expenditures was significantly lower in the
first quarter of 2003 as compared to the first quarter of 2002 primarily because
the first quarter of 2002 included Ronson Aviation's replacement of an engine on
its Citation II charter aircraft at a cost of about $400,000.
The Company's cash flows related to short-term debt was reduced in the
first quarter of 2003 from the first quarter of 2002 primarily because the
unused borrowings available under the Ronson Consumer Products lines of credit
were higher at December 31, 2001, as compared to December 31, 2002. This higher
availability at December 31, 2001, was utilized in the first quarter of 2002 to
provide the cash required by discontinued operations discussed above.
The Company's payments of long-term debt were lower in the first quarter
of 2003 as compared to the first quarter of 2002 because of Ronson Aviation's
first quarter 2002 repayment of long-term debt to Texaco Refining and Marketing,
Inc.
The Company has continued to meet its obligations as they have matured and
management believes that the Company will continue to meet its obligations
through internally generated funds from future net earnings and depreciation,
established external financial arrangements, potential additional sources of
financing and existing cash balances.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other sections of this report contain forward-looking
statements that involve risks and uncertainties, as well as assumptions that, if
they never materialize or prove incorrect, could cause the results of the
Company to differ materially from those expressed or implied by such
forward-looking statements. All statements other than statements of historical
fact are statements that could be deemed forward-looking statements, including
any projections of earnings, revenue, margins, costs or other financial items;
any statements of the plans, strategies and objectives of management for future
operations; any statement concerning new products, services or developments; any
statements regarding future economic conditions or performance; any statements
of belief; and any statements of assumptions underlying any of the foregoing.
The risks, uncertainties and assumptions referred to above include the success
of new products; competition; prices of key materials, such as petroleum
products; the challenge of managing asset levels, including inventory; the
difficulty of aligning expense levels with revenue changes; assumptions relating
to pension costs; and other risks that are described herein and that are
otherwise described from time to time in the Company's Securities and Exchange
Commission reports. The Company assumes no obligation and does not intend to
update these forward-looking statements.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no significant change in the Company's exposure to market
risk during the first three months of 2003. For discussion of the Company's
exposure to market risk, refer to Item 7A, Quantitative and Qualitative
14
Disclosure about Market Risk, contained in the Company's Annual Report on Form
10-K for the year ended December 31, 2002, incorporated herein by reference.
ITEM 4 - CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. The Company's Chief
Executive Officer and Chief Financial Officer, after the evaluation of the
effectiveness of the Company's "disclosure controls and procedures" (as defined
in Rules 13a-4(c) and 15-14(c) under the Securities Exchange Act of 1934) as of
a date (the "Evaluation Date") within 90 days before the filing date of this
quarterly report, have concluded that, as of the Evaluation Date, the Company's
disclosure controls and procedures were adequate and designed to ensure that
material information related to the Company and its consolidated subsidiaries
would be made known to them.
(b) Changes in Internal Controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Steel Partners II, L.P., et al vs. Louis V. Aronson II, Robert A. Aronson, Erwin
- --------------------------------------------------------------------------------
M. Ganz, I. Leo Motiuk, Gerard J. Quinnan, Justin P. Walder, Saul H. Weisman,
- -----------------------------------------------------------------------------
Carl W. Dinger III, and Ronson Corporation
- ------------------------------------------
In an amended Statement on Schedule 13D/A filed with the Securities and
Exchange Commission on March 26, 2003, Steel Partners II, L.P. and Warren G.
Lichtenstein reported the filing with the Superior Court of New Jersey, Chancery
Division, Essex County, of a shareholder derivative suit against the Company's
directors. The suit alleges, among other matters, breach of fiduciary duty and
an absence of disinterestedness by the defendants and use of corporate control
to advance their own interests. The complaint requests the court to invalidate
the Company's shareholders rights agreement and certain consulting agreements,
to enjoin performance of certain agreements with the directors and to require
the President and CEO to divest those shares acquired, and not to acquire
additional shares, while the shareholders rights agreement has been or remains
in place. The Company is reviewing the complaint and will vigorously defend
these matters and take all such action as it deems appropriate.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
(99)(a) Certification of Louis V. Aronson II, the Principal
Executive Officer of the Company, and Daryl K. Holcomb, the Principal Financial
Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
15
(b) Reports on Form 8-K.
On March 27, 2003, the Company filed a report on Form 8-K with
the Securities and Exchange Commission in response to Item 5 of such report. No
financial statements or pro forma financial information was included in this
report.
16
EXHIBIT INDEX
QUARTERLY REPORT ON FORM 10-Q
Exhibit
No. Description
- ------- -----------
99(a) Certification of Louis V. Aronson, II, the Principal Executive
Officer of the Company, and Daryl K. Holcomb, the Principal
Financial Officer of the Company, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RONSON CORPORATION
Date: May 14, 2003 /s/ Louis V. Aronson II
---------------------------------
Louis V. Aronson II, President
& Chief Executive Officer
(Signing as Duly Authorized
Officer of the Registrant)
Date: May 14, 2003 /s/ Daryl K. Holcomb
---------------------------------
Daryl K. Holcomb, Vice President
& Chief Financial Officer,
Controller and Treasurer
(Signing as Chief Financial
Officer of the Registrant)
18
CERTIFICATION
I, Louis V. Aronson II, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ronson Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report fairly present in all
material respects the financial condition, results of operations, and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a. Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
19
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 14, 2003 /s/ Louis V. Aronson II
---------------------------
Louis V. Aronson II
President and C.E.O.
20
CERTIFICATION
I, Daryl K. Holcomb, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ronson Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report fairly present in all
material respects the financial condition, results of operations, and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a. Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
21
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 14, 2003 /s/ Daryl K. Holcomb
---------------------------
Daryl K. Holcomb
Vice President and C.F.O.