-----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, LJWwCvxv7pt5pk7o5zJkf57kVgkLLyhwUf2AjajOheGqllq5e0EpImQUqAzwCz1/ 9/ujkwGNdgq3pS4I+/Q8tQ== 0000914317-06-002355.txt : 20060814 0000914317-06-002355.hdr.sgml : 20060814 20060814165942 ACCESSION NUMBER: 0000914317-06-002355 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060814 DATE AS OF CHANGE: 20060814 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: 061031640 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 form10q-76869_ronc.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 June 30, 2006 ------------- 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 --- --- Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- --- As of June 30, 2006, there were 4,554,000 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: JUNE 30, 2006 AND DECEMBER 31, 2005 3 CONSOLIDATED STATEMENTS OF OPERATIONS: QUARTER ENDED JUNE 30, 2006 AND 2005 4 SIX MONTHS ENDED JUNE 30, 2006 AND 2005 5 CONSOLIDATED STATEMENTS OF CASH FLOWS: SIX MONTHS ENDED JUNE 30, 2006 AND 2005 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13 ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 18 ITEM 4 - CONTROLS AND PROCEDURES 18 PART II - OTHER INFORMATION: ITEM 1 - LEGAL PROCEEDINGS 18 ITEM 6 - EXHIBITS 21 SIGNATURES 22 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES CONSOLIDATED BALANCE SHEETS --------------------------- (in thousands of dollars) June 30, December 31, 2006 2005 ------------ ------------ (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 664 $ 414 Accounts receivable, net 1,916 1,832 Inventories: Finished goods 1,877 1,625 Work in process 116 22 Raw materials 1,168 908 ------------ ------------ 3,161 2,555 Other current assets 1,271 1,072 ------------ ------------ TOTAL CURRENT ASSETS 7,012 5,873 ------------ ------------ Property, plant and equipment, at cost: Land 6 6 Buildings and improvements 5,449 5,374 Machinery and equipment 6,647 6,515 Construction in progress 1,092 555 ------------ ------------ 13,194 12,450 Less accumulated depreciation and amortization 8,610 8,335 ------------ ------------ 4,584 4,115 Other assets 2,512 2,666 ------------ ------------ $ 14,108 $ 12,654 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt $ 1,568 $ 1,500 Current portion of long-term debt and leases 1,505 407 Accounts payable 3,680 2,134 Accrued expenses 2,524 2,592 ------------ ------------ TOTAL CURRENT LIABILITIES 9,277 6,633 ------------ ------------ Long-term debt and leases 1,094 2,468 Other long-term liabilities 245 249 STOCKHOLDERS' EQUITY: Common stock 4,648 4,617 Additional paid-in capital 29,697 29,724 Accumulated deficit (27,792) (27,895) Accumulated other comprehensive loss (1,464) (1,545) ------------ ------------ 5,089 4,901 Less cost of treasury shares 1,597 1,597 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 3,492 3,304 ------------ ------------ $ 14,108 $ 12,654 ============ ============ See notes to consolidated financial statements. 3 RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (in thousands of dollars, except per share data) (Unaudited) Quarter Ended June 30, ---------------------- 2006 2005 --------- --------- NET SALES $ 7,841 $ 6,069 --------- --------- Cost and expenses: Cost of sales 5,341 3,998 Selling, shipping and advertising 985 876 General and administrative 1,036 972 Depreciation and amortization 151 199 Other charges 40 55 --------- --------- 7,553 6,100 --------- --------- EARNINGS (LOSS) FROM OPERATIONS 288 (31) --------- --------- Other expense: Interest expense 103 103 Other-net 152 435 --------- --------- 255 538 --------- --------- EARNINGS (LOSS) BEFORE INCOME TAXES 33 (569) Income tax provision (benefit) 8 (244) --------- --------- NET EARNINGS (LOSS) $ 25 $ (325) ========= ========= EARNINGS (LOSS) PER COMMON SHARE: Basic $ 0.01 $ (0.07) ========= ========= Diluted $ 0.01 $ (0.07) ========= ========= 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) Six Months Ended June 30, ---------------------- 2006 2005 --------- --------- NET SALES $ 15,183 $ 12,506 --------- --------- Cost and expenses: Cost of sales 10,329 8,288 Selling, shipping and advertising 1,903 1,788 General and administrative 1,999 2,009 Depreciation and amortization 304 418 Other charges 70 55 --------- --------- 14,605 12,558 --------- --------- EARNINGS (LOSS) FROM OPERATIONS 578 (52) --------- --------- Other expense: Interest expense 204 202 Other-net 210 456 --------- --------- 414 658 --------- --------- EARNINGS (LOSS) BEFORE INCOME TAXES 164 (710) Income tax provision (benefit) 61 (297) --------- --------- NET EARNINGS (LOSS) $ 103 $ (413) ========= ========= EARNINGS (LOSS) PER COMMON SHARE: Basic $ 0.02 $ (0.09) ========= ========= Diluted $ 0.02 $ (0.09) ========= ========= See notes to consolidated financial statements. 5 RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (in thousands of dollars) (Unaudited)
Six months ended June 30, ---------------------- 2006 2005 --------- --------- Cash Flows from Operating Activities: Net earnings (loss) $ 103 $ (413) Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 304 418 Deferred income tax benefits (39) (326) Reduction in carrying value of asset held for sale -- 97 Increase (decrease) in cash from changes in: Current assets and current liabilities 1,036 641 Other non-current assets and other long-term liabilities 136 (290) Net change in pension-related accounts (317) (312) Effect of exchange rate changes (5) (8) --------- --------- Net cash provided by (used in) operating activities 1,218 (193) --------- --------- Cash Flows from Investing Activities: Capital expenditures (701) (351) Proceeds from disposal of property, plant & equipment 11 -- --------- --------- Net cash used in investing activities (690) (351) --------- --------- Cash Flows from Financing Activities: Proceeds from short-term debt 368 889 Payments of short-term debt (300) (339) Payments of long-term debt (226) (170) Payments of long-term lease obligations (124) (116) Stock options exercised 28 -- Payment of dividends -- (84) Cost of stock option agreement (24) (24) --------- --------- Net cash provided by (used in) financing activities (278) 156 --------- --------- Net increase (decrease) in cash and cash equivalents 250 (388) Cash and cash equivalents at beginning of period 414 599 --------- --------- Cash and cash equivalents at end of period $ 664 $ 211 ========= =========
See notes to consolidated financial statements. 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ FOR THE QUARTER ENDED JUNE 30, 2006 (UNAUDITED) ----------------------------------------------- Note 1: ACCOUNTING POLICIES ------------------- Basis of Financial Statement Presentation - The information as of and for the three and six month periods ended June 30, 2006 and 2005, 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. This quarterly report should be read in conjunction with the Company's Annual Report on Form 10-K. Reclassifications of prior year's amounts have been made to conform with the current year's presentation. New Authoritative Accounting Pronouncements - The Company does not anticipate the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flows. 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 June 30, -------------------------------------------------------------- 2006 2005 ----------------------------- ------------------------------ Per Per Share Share Earnings Shares Amount Loss Shares(2) Amount -------- ------ ------ ---- --------- ------ BASIC $ 25 4,554 $ .01 $ (325) 4,536 $ (.07) ========= ======= ======= ======= ========= ======= Effect of dilutive securities: Stock options (1)..... 50 -- ------- --------- DILUTED $ 25 4,604 $ .01 $ (325) 4,536 $ (.07) ========= ======= ======= ======= ========= ======= Six Months Ended June 30, -------------------------------------------------------------- 2006 2005 ----------------------------- ------------------------------ Per Per Share Share Earnings Shares Amount Loss Shares(2) Amount -------- ------ ------ ---- --------- ------ BASIC $ 103 4,545 $ .02 $ (413) 4,536 $ (.09) ========= ======= ======= ======= ========= ======= Effect of dilutive securities: Stock options (1)..... 50 -- ------- --------- DILUTED $ 103 4,595 $ .02 $ (413) 4,536 $ (.09) ========= ======= ======= ======= ========= =======
7 (1) Stock options were anti-dilutive for the quarter and six months ended June 30, 2005, and, therefore, were excluded from the computation and reconciliation of Diluted Earnings (Loss) per Common Share for those periods. (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 February 23, 2006. Note 3: SHORT-TERM DEBT --------------- In 1995 Ronson Consumer Products Corporation ("RCPC") entered into an agreement with Bank of America for a Revolving Loan, now extended to January 31, 2007. The Revolving Loan with a balance of $1,550,000 at June 30, 2006, provided a line of credit up to $2,500,000 to RCPC based on accounts receivable and inventory. The revolving loan was repaid and the agreement terminated on July 31, 2006. 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 was secured by its accounts receivable and inventory. At June 30, 2006, Ronson-Canada had utilized about C$20,000 (US$ 18,000) under the Revolving Loan. The agreement with CIBC was terminated on July 31, 2006. In 1997 Ronson Aviation, Inc. ("Ronson Aviation") entered into an agreement with Bank of America for a Revolving Loan. The Revolving Loan provided a line of credit up to $500,000 to Ronson Aviation based on the level of its accounts receivable. At June 30, 2006, Ronson Aviation utilized no borrowings under the Revolving Loan. The agreement was terminated on July 31, 2006. On July 31, 2006, the Company, RCPC, Ronson-Canada, and Ronson Aviation entered into a financing agreement (the "Financing Agreement") with CIT Group/Commercial Services, Inc. ("CIT"). The financing facility totals $3,945,000 and is composed of a revolving line of credit of $3,000,000 and two term loans in the amounts of $195,000 and $750,000, respectively, both to be repaid evenly over five years. The amount available to be borrowed under the revolving line of credit is determined by reference to a "borrowing base", which is calculated based on the levels of accounts receivable and inventories of the Company's subsidiaries. Amounts advanced under the Financing Agreement are secured by substantially all of the assets of the Company and its subsidiaries, other than (1) the real property owned by Ronson Consumer Products Corporation in Woodbridge, New Jersey and (2) 34% of the Company's interest in Ronson. The Financing Agreement includes covenants and other terms and provisions typical for agreements of its kind. The revolving line of credit is for a period of three years. In conjunction with the new CIT loan in the amount of $750,000, Mr. Louis V. Aronson II, the Company's President and CEO provided a secured limited personal guaranty of $250,000 to CIT. The proceeds from the CIT revolving loan and term loans were utilized to repay all amounts outstanding to the Bank of America under the Company's prior revolving loan and mortgage loan agreements. The new CIT financing also provided additional loan availability to the Company of about $600,000. 8 Note 4: LONG-TERM DEBT -------------- On December 1, 2003, the Company, RCPC and Bank of America amended the Company's Mortgage Loan, extending the expiration to December 1, 2008. On January 11, 2006, the Company, RCPC and Bank of America amended the mortgage loan to expire January 31, 2007. The Mortgage Loan balance was $1,193,000 at June 30, 2006. The Mortgage Loan agreement was secured by a first mortgage on the land, buildings and improvements of RCPC, and was payable in monthly installments of $7,951, plus interest, with a final installment on January 31, 2007, of approximately $1,137,000. The mortgage loan was repaid on July 31, 2006 (refer to Note 3 above). In March 2004 a lease agreement became effective for a warehouse facility utilized by RCPC for finished goods storage and product shipments. In connection with the lease, the landlord provided improvements totaling $440,000. The landlord provided RCPC with a long-term loan for the improvements, bearing interest at 8.25%, payable at $4,800 per month, including interest, with the final payment due at the end of the initial nine-year term. At June 30, 2006, the total balance payable on this lease agreement was $234,000. Note 5: CONTINGENCIES ------------- In December 1989 the Company adopted a plan to discontinue the operations of its wholly owned subsidiary, Ronson Metals Corporation, subsequently renamed Prometcor, Inc. ("Prometcor"). Upon the cessation of operations, Prometcor began its compliance with the environmental requirements of all applicable laws with the objective of selling the property previously used in the discontinued operations. The full extent of the costs and the time required for the completion is not determinable until the remediation, if any is required, and confirmatory testing related to the remaining groundwater matter have been completed and accepted by the New Jersey Department of Environmental Protection ("NJDEP"). The liability for these estimated costs and expenses as recorded in the financial statements at June 30, 2006 and December 31, 2005 was approximately $500,000 based 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 discounted at approximately $600,000 above the lower limit. 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 initial groundwater tests were completed. Ronson Aviation's environmental consultants have advised the Company that the preliminary results of that testing indicated 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. The Company is involved in a shareholder derivative lawsuit filed in 2003 and a second lawsuit against the Company's directors and chief financial officer filed 9 in April 2005, both filed by the same shareholder. The Company has incurred a total of approximately $770,000 in net legal costs related to the matter in 2003, 2004, 2005, and in the six months ended June 30, 2006. These costs are net of the associated insurance reimbursements. The Company believes that its directors' and officers' liability insurance coverage is adequate to meet the future direct costs of the litigation, however, the Company is not able to estimate, at this time, the extent to which it will incur additional legal or other expenses, which may be substantial, in connection with these proceedings. The Company is involved in various other 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. Financial information by industry segment is summarized below (in thousands): Quarter Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2006 2005 2006 2005 -------- -------- -------- -------- Net sales: Consumer Products $ 5,073 $ 3,466 $ 9,249 $ 7,381 Aviation Services 2,768 2,603 5,934 5,125 -------- -------- -------- -------- Consolidated $ 7,841 $ 6,069 $ 15,183 $ 12,506 ======== ======== ======== ======== Earnings (loss) from operations: Consumer Products $ 349 $ 165 $ 732 $ 409 Aviation Services 418 364 774 617 -------- -------- -------- -------- Total reportable segments 767 529 1,506 1,026 Corporate and others (439) (505) (858) (1,023) Other charges (40) (55) (70) (55) -------- -------- -------- -------- Consolidated $ 288 $ (31) $ 578 $ (52) ======== ======== ======== ======== Earnings (loss) before intercompany charges and income taxes: Consumer Products $ 228 $ 120 $ 568 $ 309 Aviation Services 395 347 752 591 -------- -------- -------- -------- Total reportable segments 623 467 1,320 900 Corporate and others (550) (560) (1,086) (1,134) Other charges (40) (55) (70) (55) Nonrecurring loss on sale of charter aircraft -- (421) -- (421) -------- -------- -------- -------- Consolidated $ 33 $ (569) $ 164 $ (710) ======== ======== ======== ======== 10 Note 7: COMPREHENSIVE INCOME -------------------- Comprehensive Income is the change in equity during a period from transactions and other events from non-owner 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. Changes in the components of Other Comprehensive (Income) Loss and in Accumulated Other Comprehensive Loss were as follows (in thousands):
Quarter Ended June 30, 2006 and 2005 ------------------------------------ Foreign Currency Minimum Pension Cash Flow Hedging Accumulated Other ---------------- --------------- ----------------- ----------------- Translation Adjustments Liability Adjustments Comprehensive Loss ----------------------- --------- ----------- ------------------ Balance at March 31, 2006 $ (43) $ 1,581 $ (19) $ 1,519 Current period change (21) (64) (5) (90) Income tax expense 8 25 2 35 Balance at June 30, 2006 $ (56) $ 1,542 $ (22) $ 1,464 ======== ======= ======== ======= Balance at March 31, 2006 $ (47) $ 1,448 $ (7) $ 1,394 Current period change 7 (55) 14 (34) Income tax expense (3) 22 (5) 14 -------- ------- -------- ------- Balance at June 30, 2005 $ (43) $ 1,415 $ 2 $ 1,374 ======== ======= ======= ======= Six Months Ended June 30, 2006 and 2005 --------------------------------------- Foreign Currency Minimum Pension Cash Flow Hedging Accumulated Other ---------------- --------------- ----------------- ----------------- Translation Adjustments Liability Adjustments Comprehensive Loss ----------------------- --------- ----------- ------------------ Balance at December 31, 2005 $ (61) $ 1,619 $ (13) $ 1,545 Current period change 9 (128) (15) (134) Income tax expense (4) 51 6 53 ------- ------- ------- ------- Balance at June 30, 2006 $ (56) $ 1,542 $ (22) $ 1,464 ======= ======= ======== ======= Balance at December 31, 2004 $ (51) $ 1,482 $ 10 $ 1,441 Current period change 13 (111) (13) (111) Income tax expense (5) 44 5 44 ------- ------- ------- ------- Balance at June 30, 2005 $ (43) $ 1,415 $ 2 $ 1,374 ======= ======= ======= =======
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. 11 Supplemental disclosures of cash flow information are as follows (in thousands): Six Months Ended June 30, ---------------- 2006 2005 ------ ------ Cash Payments for: Interest $ 192 $ 186 Income Taxes 87 4 Financing & Investing Activities Not Affecting Cash: Capital lease obligations incurred 33 64 Equipment purchases financed by seller 60 40 Note 9: RETIREMENT PLANS ---------------- The Company's Consolidated Statements of Operations included pension expense consisting of the following components (in thousands):
Quarter Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2006 2005 2006 2005 -------- -------- -------- -------- Service cost $ 6 $ 8 $ 12 $ 16 Interest cost 66 66 132 133 Expected return on plan assets (51) (48) (102) (96) Recognized actuarial losses 64 56 128 112 Recognized prior service cost 1 2 3 3 -------- -------- -------- -------- Net pension expense $ 86 $ 84 $ 173 $ 168 ======== ======== ======== ========
Contributions to the pension plan during 2006 are expected as follows (in thousands): Paid in the six months ended June 30, 2006 $ 489 Expected to be paid in the balance of 2006 251 ----- Total expected to be paid in the year ending December 31, 2006 $ 740 ===== Note 10: FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS ---------------------------------------------- In December 2003 the Company entered into an interest rate swap agreement in order to manage interest rate exposure. Effectively, the Company converted its Mortgage Loan payable of variable-rate debt to fixed-rate debt with an effective interest rate of 7.45%. The interest rate swap is considered a cash flow hedge and is 100% effective. As a result, the mark-to-market value of both the fair value hedging instrument and the underlying debt obligation are recorded as equal and offsetting gains or losses in other expense. At June 30, 2006, the interest 12 rate swap had a fair value of $37,000 recorded in Other Assets with the corresponding adjustment to Accumulated Other Comprehensive Loss. The fair value of the interest rate swap agreement, obtained from the financial institution, is based on current rates of interest and is computed as the net present value of the remaining exchange obligations under the terms of the contract. The interest rate swap agreement was terminated when the Mortgage Loan was repaid on July 31, 2006. Mr. Carl W. Dinger III has granted an option to the Company to purchase the 535,222 shares now held by Mr. Dinger at an exercise price of $5.90 per share. The cost of the option is $4,000 per month for the period of the option or until exercised. At June 30, 2006, the fair value of the option was approximately $51,000 using the Black-Scholes option pricing model. Key assumptions included: a risk-free interest rate of 5.09%, a dividend yield of 0.00%, volatility of 66.45%, and the option life of 1.00 year. The fair value of $51,000 compares to $46,000, the present value of the 12 remaining payments under the contract, discounted at the Company's incremental borrowing rate of 8.5%. (Refer to Note 14 of Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2005.) ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS ------------- RESULTS OF OPERATIONS - --------------------- Second Quarter 2006 Compared to Second Quarter 2005 and First Half 2006 Compared to First Half 2005. The Company's Net Sales in the first half of 2006 increased by 21% to $15,183,000 in comparison with $12,506,000 in the first half of 2005. Net Sales in the second quarter 2006 increased by 29% to $7,841,000 as compared to $6,069,000 in 2005. The sales increase in the first half of 2006 was attributable to new Ronson consumer products and the broader distribution of these in the United States and Canada, as well as a large second quarter sale of $957,000 to a customer in the People's Republic of China, of Ronsonol and Ronson Multi-Fill butane. The new products include the new Jet Lite butane lighter. The Jet Lite is now sold by Wal-Mart in its 2,800 stores throughout the USA and, more recently, Canada. Earlier this year, Ace Hardware accepted the new Ronson Tech Torch and Aero Torch for warehousing and making these products available for sale in 4,800 Ace stores nationwide. Also this year, CVS, a national retail chain of 5,100 stores, ordered our Jet Lite and Comet refillable butane lighters. Recently Rite-Aid, a national retail chain of about 3,350 stores, ordered the Jet Lite along with Ronson Multi-Fill butane. The Company's Earnings from Operations improved to $288,000 in the second quarter 2006, an improvement of $319,000 from a Loss from Operations of $(31,000) in the second quarter 2005. The improvement in operating earnings would have been greater if Bank of America had not charged $70,000 in fees in the quarter - refer to Other Items below. The Company's Earnings from Operations improved to $578,000 in the first half of 2006, an improvement of $630,000 from the Loss from Operations of $(52,000) in the first half of 2005. The improvement in operating earnings would have been greater if Bank of America had not charged $90,000 in fees in the first half of 2006. There were no such charges in 2005. 13 The Company's Earnings before Income Taxes were $164,000 in the first half of 2006 compared to a Loss before Income Taxes of $(710,000) in the first half of 2005. The Company's second quarter 2006 Earnings before Income Taxes were $33,000 compared to a Loss before Income Taxes of $(569,000) in the second quarter of 2005. The second quarter loss before Income Taxes in 2005 included a nonrecurring loss of $(421,000) related to the sale of Ronson Aviation, Inc.'s Citation II charter jet and its charter business. In the first half of 2006, the Company reported Net Earnings of $103,000 as compared to a Net Loss in the first half of 2005 of $(413,000), an improvement of $516,000. In the second quarter 2006, the Company had Net Earnings of $25,000 compared to a Net Loss in the second quarter of 2005 of $(325,000), an improvement of $350,000. Ronson Consumer Products - ------------------------ (in thousands) Quarter Ended Six Months Ended June 30, June 30, -------------- ---------------- 2006 2005 2006 2005 ------ ------ ------- ------- Net sales $5,073 $3,466 $ 9,249 $ 7,381 Earnings from operations 349 165 732 409 Earnings before income taxes and intercompany charges 228 120 568 309 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") increased by 46% in the second quarter of 2006 compared to the second quarter of 2005 and by 25% in the first half of 2006 compared to the first half of 2005. The increases of 46% in Net Sales in the second quarter of 2006 and of 25% in the first half of 2006 were due primarily to the sale to the customer in China and to increased sales of the Jet Lite and torches. The increase of 46% in the second quarter of 2006 consisted of an increase of about 60% due to higher volume of products sold partially offset by a reduction of about 14% due to lower average net selling prices. The increase of 25% in the first half consisted of an increase of about 34% due to higher volume of products sold partially offset by a reduction of about 9% due to lower average net selling prices. The lower average net selling prices in the second quarter and first half of 2006 were due primarily to reduced selling prices on the sale to the customer in China. At Ronson Consumer Products, Cost of Sales, as a percentage of Net Sales, increased to 65% in the second quarter of 2006 from 59% in the second quarter of 2005 and increased to 63% in the first half of 2006 from 60% in the first half of 2005. The increase in the Cost of Sales percentage in the second quarter and first half of 2006 were primarily due to a higher Cost of Sales percentage on the sale to the customer in China and to increased material costs due to large increases in the price of oil, used in fuels for butane refills and Ronsonol as well as other purchased components. The amount of the Cost of Sales at Ronson Consumer Products increased by 62% in the second quarter of 2006 from the second quarter 2005 and increased in the first half of 2006 from the first half of 2005 by 31%. These increases in the amount of Cost of Sales were composed of the following: 14
Quarter Ended Six Months Ended June 30, 2006 June 30, 2006 ------------------ ------------------- Increased volume of products sold 55% 29% Decreased manufacturing costs (5) (3) Increase in unit costs of products sold 12 5 ----- ------ Total increase (%) in amount of Cost of Sales 62% 31% ===== ======
The increase in unit costs of product sold is due primarily to increased prices of oil as discussed above. Ronson Consumer Products Selling, Shipping and Advertising Expenses, as a percentage of Net Sales, decreased to 19% in the second quarter of 2006 from 25% in the second quarter of 2005 and decreased to 21% in the first half of 2006 from 24% in the first half of 2005. These decreases in the Selling, Shipping, and Advertising percentages in 2006 were primarily due to higher Net Sales in 2006. General and Administrative Expenses, as a percentage of Net Sales, were lower at 7% in the first half of 2006 from 8% in the first half of 2005 primarily because of the increased Net Sales. The Earnings before Income Taxes and Intercompany Charges at Ronson Consumer Products increased to $228,000 in the second quarter of 2006 from $120,000 in the second quarter of 2005 and increased to $568,000 in the first half of 2006 from $309,000 in the first half of 2005. The Earnings before Income Taxes and Intercompany Charges were after expenses of $50,000 and $70,000 in the second quarter and first half of 2006, respectively, (none in 2005) due to fees charged by Bank of America.
Ronson Aviation - --------------- Quarter Ended Six Months Ended (in thousands) June 30, June 30, ------------------ ------------------ 2006 2005 2006 2005 -------- -------- -------- -------- Net sales $ 2,768 $ 2,603 $ 5,934 $ 5,125 Earnings from operations 418 364 774 617 Earnings before income taxes and intercompany charges 395 347 752 591 Nonrecurring loss - sale of charter aircraft -- (421) -- (421)
Net Sales at Ronson Aviation, Inc. ("Ronson Aviation"), Trenton, New Jersey, increased by 6% in the second quarter of 2006 from the second quarter of 2005 and by 16% in the first half of 2006 from the first half of 2005. The increase in the second quarter of 2006 was primarily due to increased sales of aircraft fuel due to higher aviation fuel prices caused by large increases in the price of oil. The increase in sales in the first half of 2006 was primarily due to the sale of an aircraft in the first quarter of 2006 (none in 2005) and to increased sales of aircraft fuel due to higher aviation fuel prices. Ronson Aviation's Cost of Sales, as a percentage of Net Sales, decreased to 73% in the second quarter of 2006 from 75% in the second quarter of 2005. The lower Cost of Sales percentage in the second quarter of 2006 was primarily due to changes in the mix of products and services sold. The Cost of Sales percentage was higher 15 in the first half of 2006 at 77% as compared to 76% in the first half of 2005. The increase was primarily due to a change in the mix of products sold because of the aircraft sale in the first half of 2006. Ronson Aviation's Selling, Shipping and Advertising Expenses and General and Administrative Expenses, as a percentage of Net Sales, increased to 10% in the second quarter of 2006 from 7% in the second quarter of 2005 and to 9% in the first half of 2006 from 8% in the first half of 2005 primarily due to increased personnel costs in 2006. Ronson Aviation's Earnings before Taxes and Intercompany Charges in the second quarter and first half of 2006 was after expenses of $20,000 due to fees charged by Bank of America. The Nonrecurring Loss of $421,000 in the second quarter of 2005 was due to the expected sale of Ronson Aviation's Citation II charter aircraft, and Ronson Aviation's charter business. In the second quarter of 2005, the Company reached an agreement for the sale of the charter aircraft and business for $1.6 million in cash; however, the closing on the sale was completed on September 30th 2005. In the first half of 2005, the charter business had revenues of $348,000 and an operating loss of $96,000. Other Items - ----------- The Other-Net in the second quarter and first half of 2006 consisted of legal fees incurred related to stockholder litigation (refer to Item 1 of Part II of this Form 10-Q) and of fees charged by Bank of America of $70,000 in the second quarter of 2006 and $90,000 in the first half of 2006 (none in 2005). These fees charged by Bank of America were due to terms of a loan agreement dated January 11, 2006 (which extended the loan to January 31, 2007). Under the terms of the extension, fees were due to Bank of America, beginning on February 28, 2006, at the end of each month in which the Bank of America loans had not been repaid. The Bank of America loans were repaid on July 31, 2006. The Other-Net in the second quarter and first half of 2005 were the Nonrecurring Loss related to the sale of the charter aircraft (discussed above) and the legal fees incurred related to stockholder litigation. FINANCIAL CONDITION The Company's Stockholders' Equity increased to $3,492,000 at June 30, 2006, from $3,304,000 at December 31, 2005. The increase of $188,000 in Stockholders' Equity was primarily due to the Net Earnings in the first half of 2006. The Company had a deficiency in working capital of $2,265,000 at June 30, 2006, as compared to a deficiency of $760,000 at December 31, 2005. The decline in working capital was primarily due to the classification as Current Portion of Long-term Debt of $1,145,000 from Long-term Debt at June 30, 2006, because of the January 31, 2007 due date of RCPC's mortgage loan with Bank of America, and to capital expenditures of $701,000 primarily at Ronson Aviation in the first half of 2006. On July 31, 2006, the Company, RCPC, Ronson-Canada and Ronson Aviation entered into a financing agreement with CIT Group/Commercial Services, Inc. ("CIT"). The financing totals $3,945,000 and is composed of a revolving line of credit of $3,000,000 and two term loans in the amounts of $195,000 and $750,000, respectively, both to be repaid evenly over five years. The amount available to be 16 borrowed under the revolving line of credit is determined by reference to a "borrowing base", which is calculated based on the levels of accounts receivable and inventories of the Company's subsidiaries. Amounts advanced under the Financing Agreement are secured by substantially all of the assets of the Company and its subsidiaries, other than (1) the real property owned by RCPC in Woodbridge, New Jersey and (2) 34% of the Company's interest in Ronson-Canada. The Financing Agreement includes covenants and other terms and provisions typical for agreements of its kind. The revolving line of credit is for a period of three years. The proceeds from the CIT revolving loan and term loans were utilized to repay all amounts outstanding to the Bank of America under the Company's prior revolving loan and mortgage loan agreements. The proceeds from the two term loans improve working capital by about $750,000. The new CIT financing also provided additional loan availability to the Company of about $600,000. The Company's Inventories increased in the first half of 2006 primarily due to increases in inventories of the Company's imported consumer products, its new lighters and new torches, in preparation for and to start filling the new distribution channels. The Company's Accounts Payable increased in the first half of 2006 due to increases in Inventory at Ronson Consumer Products, to a customer deposit on an aircraft expected to be sold in the third quarter of 2006, to capital expenditures, and to required pension contributions. The Company's Construction in Progress increased to $1,092,000 at June 30, 2006, due to amounts expended on construction of the new hangar facility at Ronson Aviation. The remaining costs of the hangar construction are expected to be financed by the proceeds from a new mortgage loan on the Ronson Consumer Products Corporation property in Woodbridge, New Jersey. The prior Bank of America mortgage loan of about $1,180,000 was repaid by the proceeds from the CIT loan. The Company is in discussions with certain banks and expects a new mortgage loan to be completed in the third quarter of 2006 for about $2,000,000. On February 23, 2006, the Company's Board of Directors declared a 5% stock dividend on the Company's common stock. The 5% stock dividend was issued on April 15, 2006, to stockholders of record April 1, 2006. Information as to the number of shares and per share amounts has been retroactively adjusted to reflect this stock dividend. 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, 17 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 six months of 2006. For discussion of the Company's exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosure about Market Risk, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2005, 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 the end of the period covered by this quarterly report, have concluded that, as of the end of the period covered by this quarterly report, the Company's disclosure controls and procedures were adequate, are designed to ensure that material information related to the Company and its consolidated subsidiaries would be made known to the above officers, are effective and provide reasonable assurance that they will meet their objectives. (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 ----------------- 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. 18 Steel Partners II, L.P., et al v. 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 - ---------------------------------------------------------- On March 25, 2003, a derivative lawsuit was filed against the directors of Ronson in the Superior Court of New Jersey, Chancery Division, Essex County by Steel Partners II, L.P. and Warren G. Lichtenstein. The lawsuit 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 lawsuit seeks monetary damages on behalf of Ronson as well as equitable relief to invalidate the Company's shareholder rights agreement and certain consulting agreements, to enjoin performance of agreements with certain directors and to require the Company's President and C.E.O. to divest those shares acquired, and not to acquire additional shares while the shareholder rights agreement has been or remains in place. A special committee of two independent directors was created by the Board of Directors of the Company to investigate and evaluate the allegations made in the lawsuit. The committee concluded that none of the directors breached any fiduciary duty owed to the Company or its shareholders, that it is not in the best interests of the Company or its shareholders to continue legal action against the directors on any of the claims asserted in the derivative complaint and that the Company seek to dismiss the derivative action. The Company's directors have vigorously denied the claims and moved to have the complaint dismissed. That motion to dismiss was denied in February 2004. The Company's directors will continue to contest and to vigorously defend against the claims. On June 21, 2004, the Superior Court of New Jersey granted the motion of the Ronson directors, over the objection of Steel Partners II, L.P., to bifurcate the case. As a result, trial of all claims and defenses in the derivative suit, other than the defense based upon the report and findings of the Special Litigation Committee, will be held in abeyance pending trial of the Special Litigation Committee defense. The trial of the Special Litigation Committee defense was conducted in March 2005. In April 2005, the parties submitted post-trial memoranda. On July 23, 2004, Ronson Corporation and certain of its directors filed a Counterclaim and Third-Party Complaint against Steel Partners II, L.P., Warren G. Lichtenstein and certain close associates -- namely, Jack Howard, Howard M. Lorber and Ronald Hayes. The Counterclaim and Third-Party Complaint is based upon the New Jersey Shareholders Protection Act, and seeks compensatory and punitive damages, costs of suit and interest, as well as entry of a judgment directing the public disclosure of all limited partners of Steel Partners II, L.P., and persons acting directly or indirectly in concert with them in connection with the acquisition or attempted acquisition of stock in, or control of, Ronson Corporation. The court directed that all discovery and other proceedings in connection with the Counterclaim and Third-Party Complaint are to be held in abeyance pending the Court's decision on the Special Litigation Committee defense. By written opinion and Order dated March 30, 2006, the Superior Court of New Jersey denied in whole or in part the Special Litigation Committee defense. The Company's directors filed a motion seeking clarification or, alternatively, modification of the Opinion and Order. 19 By Order dated June 19, 2006, the Superior Court of New Jersey granted the motion of the Company's directors, ruling that: 1. The Special Litigation Committee of Ronson Corporation was independent. 2. By virtue of the Special Litigation Committee defense, the First, Second, Third, Fourth and Fifth Claims of Steel Partners' Complaint is dismissed, to the extent said Claims are based upon Ronson Corporation's Preferred Shares Rights Agreement dated December 8, 1998, as amended. With respect to the application of the Special Litigation Committee defense to the remaining claims within Steel Partners' Complaint, the application to dismiss said claims is denied. By Notice of Motion dated July 21, 2006, Steel Partners has sought permission of the Superior Court to file an Amended and Supplemental Complaint. The Company's directors shall oppose this motion, and will continue to contest and to vigorously defend against the claims asserted by Steel Partners. Steel Partners II, L.P. v. Louis V. Aronson II, Robert A. Aronson, Barbara L. - ----------------------------------------------------------------------------- Collins, Carl W. Dinger III, Paul H. Einhorn, Erwin M. Ganz, Daryl K. Holcomb, - ------------------------------------------------------------------------------ I. Leo Motiuk, Gerard J. Quinnan, Justin P. Walder, and Saul H. Weisman - ----------------------------------------------------------------------- On or about April 14, 2005, Steel Partners II, L.P. commenced an action, on its own behalf as a shareholder of the Company, in the United States District Court for the District of New Jersey, against the current directors (other than Dr. David) of the Company, as well as Daryl K. Holcomb, the Company's chief financial officer, and Carl W. Dinger, a shareholder of and consultant to the Company. The Complaint alleges, among other things, that defendants should be treated collectively as an "Acquiring Person" under the Company's Shareholder Rights Agreement, and that their acquisition and ownership of more than 12% of the outstanding stock of the Company has triggered the provisions of the Shareholder Rights Agreement with respect to the offering of rights to shareholders, including Steel Partners II (notwithstanding that in its derivative action in the Superior Court of New Jersey, Steel Partners has challenged the legality and enforceability of the Company's Shareholder Rights Agreement). The Complaint alleges further that the defendants have violated reporting requirements under Section 13(d) of the Securities Exchange Act and Rule 13-d promulgated by the Securities Exchange Commission by failing to disclose an alleged agreement to coordinate their purchases of the Company's stock for the purposes of placing voting control in the hands of Louis V. Aronson II and for other undisclosed purposes. The Company's directors and its chief financial officer intend to contest the allegations of this second complaint filed by Steel Partners and vigorously defend the action. The Company's directors and its chief financial officer filed a motion to dismiss Steel Partners federal court complaint in July 2005. We await determination of the motion. By order dated April 13, 2006, and accompanying written Opinion of the same date, the United States District Court denied the motion to dismiss filed by the Company's directors and its chief financial officer. The Company's directors and chief financial officer have filed a motion seeking certification of the Order by 20 the United States District Court, so that a petition seeking permission to appeal to the Third Circuit Court of Appeals may be filed. The parties await consideration and determination by the United States District Court. Juraj Kosco and Maria Kosco vs. Ronson Consumer Products Corporation, Ronson - ---------------------------------------------------------------------------- Corporation, Industrial Waste Management, Inc., Cuno Incorporated, XYZ - ---------------------------------------------------------------------- Corporations #1-10 (fictitious parties), John and/or Jane Does #1-10 (fictitious - -------------------------------------------------------------------------------- individuals) - ------------ The plaintiffs, a former employee and his spouse, claim damages for burns and other injuries allegedly received in an accident occurring during the employee's performance of his job. The lawsuit was filed in the Superior Court of New Jersey, Law Division, Middlesex County, on February 10, 2005, and claims damages totaling $10,000,000. The claimant has received, and is receiving, workers' compensation benefits related to the incident. Counsel has advised that it believes that the claim is barred by the exclusive remedy of the Workers' Compensation Act. Management believes that damages, if any, awarded in addition to the statutory workers' compensation benefits, will be well within the Company's insurance coverage. David Pelous and Mary Pelous, his wife vs. Behr Process Corporation, et al. - --------------------------------------------------------------------------- On January 26, 2006, Ronson Corporation of Delaware, a former subsidiary of the Company, was notified it was named as one of at least forty-one defendants in the above matter. The plaintiffs claim damages from illness as a result of exposure to benzene and benzene-containing products. In the second quarter of 2006, the Company was notified that it is no longer a defendant in the case. ITEM 6 - EXHIBITS -------- a. Exhibits. 31.1(a) and (b) Rule 13a-14(a)/15d-14(a) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Section 1350 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished but not filed for purposes of the Securities Exchange Act of 1934). 21 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: August 11, 2006 /s/ Louis V. Aronson II ------------------------------------ Louis V. Aronson II, President & Chief Executive Officer (Signing as Duly Authorized Officer of the Registrant) Date: August 11, 2006 /s/ Daryl K. Holcomb ------------------------------------ Daryl K. Holcomb, Vice President, Chief Financial Officer and Controller (Signing as Chief Financial Officer of the Registrant) 22 EX-31.1 2 ex31-1.txt Exhibit 31.1(a) 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 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 11, 2006 /s/ Louis V. Aronson II ---------------------------- Louis V. Aronson II President and C.E.O. 23 EX-31.2 3 ex31-2.txt Exhibit 31.1(b) 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 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 11, 2006 /s/ Daryl K. Holcomb -------------------------- Daryl K. Holcomb Vice President and C.F.O. 24 EX-32.1 4 ex32-1.txt Exhibit 32.1 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 June 30, 2006 (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: August 11, 2006 /s/ Louis V. Aronson II ------------------------------------------------ Louis V. Aronson II President and Chief Executive Officer Dated: August 11, 2006 /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. 25 -----END PRIVACY-ENHANCED MESSAGE-----