-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, W1Ch7P0EGcp8MWyyXJT7PZNCA/1XFSCrZYjf92pZMF73fSzns47aalh+m7tzAd/5 CMjhQp/xpXvl1XbVVR5gRw== 0000914317-03-001589.txt : 20030515 0000914317-03-001589.hdr.sgml : 20030515 20030515164235 ACCESSION NUMBER: 0000914317-03-001589 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030515 FILED AS OF DATE: 20030515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RONSON CORP CENTRAL INDEX KEY: 0000084919 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 220743290 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01031 FILM NUMBER: 03705542 BUSINESS ADDRESS: STREET 1: CORPORATE PARK III CAMPUS DR STREET 2: PO BOX 6707 CITY: SOMERSET STATE: NJ ZIP: 08875-6707 BUSINESS PHONE: 7324698300 FORMER COMPANY: FORMER CONFORMED NAME: ART METAL WORKS INC DATE OF NAME CHANGE: 19680429 10-Q 1 form10q52077ronson.txt 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. EX-99.A 3 ex99-a.txt 22 EXHIBIT 99(a) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Ronson Corporation (the "Company"), certifies that: (1) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78 m or 78 o(d); and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 14, 2003 /s/ Louis V. Aronson II ------------------------------------------ Louis V. Aronson II President and Chief Executive Officer Dated: May 14, 2003 /s/ Daryl K. Holcomb ------------------------------------------ Daryl K. Holcomb Vice President and Chief Financial Officer This certification is made solely for the purposes of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose. -----END PRIVACY-ENHANCED MESSAGE-----