-----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, TLukU2cURGa7eIN//3EfTmCjImMtWY5LUVvn4aYhRTZxjmzJtILBd1+WxGT/wT9s LTckn7ZlrlHNlA82pI1zgA== 0000914317-07-001416.txt : 20070515 0000914317-07-001416.hdr.sgml : 20070515 20070515150533 ACCESSION NUMBER: 0000914317-07-001416 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20070331 FILED AS OF DATE: 20070515 DATE AS OF CHANGE: 20070515 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: 07852390 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-83332_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 March 31, 2007 -------------- 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 a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act). Large accelerated filer [_] Accelerated filer [_] Non-accelerated filer [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 March 31, 2007, there were 4,815,295 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, 2007 AND DECEMBER 31, 2006 3 CONSOLIDATED STATEMENTS OF OPERATIONS: QUARTER ENDED MARCH 31, 2007 AND 2006 4 CONSOLIDATED STATEMENTS OF CASH FLOWS: QUARTER ENDED MARCH 31, 2007 AND 2006 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 1A- RISK FACTORS 16 ITEM 6 - EXHIBITS 16 SIGNATURES 17 2 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, 2007 2006 ------------- ------------- (unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 46 $ 294 Accounts receivable, net 1,786 1,876 Inventories: Finished goods 1,956 1,820 Work in process 76 15 Raw materials 784 960 ------------- ------------- 2,816 2,795 Other current assets 1,488 1,231 ------------- ------------- TOTAL CURRENT ASSETS 6,136 6,196 ------------- ------------- Property, plant and equipment, at cost: Land 6 6 Buildings and improvements 5,491 5,479 Machinery and equipment 6,749 6,718 Construction in progress 2,767 2,454 ------------- ------------- 15,013 14,657 Less accumulated depreciation and amortization 9,026 8,885 ------------- ------------- 5,987 5,772 Other assets 2,893 2,752 ------------- ------------- $ 15,016 $ 14,720 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt $ 2,465 $ 2,143 Current portion of long-term debt and leases 552 561 Accounts payable 2,576 2,360 Accrued expenses 1,976 2,010 ------------- ------------- TOTAL CURRENT LIABILITIES 7,569 7,074 ------------- ------------- Long-term debt and leases 3,638 3,769 Other long-term liabilities 246 251 STOCKHOLDERS' EQUITY: Common stock 4,900 4,900 Additional paid-in capital 29,874 29,878 Accumulated deficit (28,358) (28,266) Accumulated other comprehensive loss (1,256) (1,289) ------------- ------------- 5,160 5,223 Less cost of treasury shares 1,597 1,597 ------------- ------------- TOTAL STOCKHOLDERS' EQUITY 3,563 3,626 ------------- ------------- $ 15,016 $ 14,720 ============= ============= 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)
Three Months Ended March 31, ---------------------------- 2007 2006 ------------ ------------ NET SALES $ 6,097 $ 7,342 ------------ ------------ Cost and expenses: Cost of sales 4,048 4,988 Selling, shipping and advertising 925 918 General and administrative 926 963 Depreciation and amortization 146 153 Other (earnings) charges (35) 30 ------------ ------------ 6,010 7,052 ------------ ------------ EARNINGS FROM OPERATIONS 87 290 ------------ ------------ Other expense: Interest expense 131 101 Other-net 90 58 ------------ ------------ 221 159 ------------ ------------ EARNINGS (LOSS) BEFORE INCOME TAXES (134) 131 Income tax provision (benefit) (42) 53 ------------ ------------ NET EARNINGS (LOSS) $ (92) $ 78 ============ ============ EARNINGS (LOSS) PER COMMON SHARE: Basic $ (0.02) $ 0.02 ============ ============ Diluted $ (0.02) $ 0.02 ============ ============
See notes to consolidated financial statements. 4 RONSON CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (in thousands of dollars) (Unaudited)
Three Months Ended March 31, ------------------------ 2007 2006 ---------- ---------- Cash Flows from Operating Activities: Net earnings (loss) $ (92) $ 78 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 188 153 Stock option expense 6 -- Deferred income tax expense (benefit) (63) 16 Increase (decrease) in cash from changes in: Current assets and current liabilities (6) 487 Other non-current assets and other long-term liabilities (28) (19) Net change in pension-related accounts (71) (203) Effect of exchange rate changes 4 (18) ---------- ---------- Net cash provided by (used in) operating activities (62) 494 ---------- ---------- Cash Flows from Investing Activities: Capital expenditures (356) (147) ---------- ---------- Net cash used in investing activities (356) (147) ---------- ---------- Cash Flows from Financing Activities: Proceeds from short-term debt 514 250 Payments of short-term debt (192) (200) Payments of long-term debt (72) (39) Payments of long-term lease obligations (68) (63) Cost of stock option agreement (12) (12) ---------- ---------- Net cash provided by (used in) financing activities 170 (64) ---------- ---------- Net increase (decrease) in cash and cash equivalents (248) 283 Cash and cash equivalents at beginning of period 294 414 ---------- ---------- Cash and cash equivalents at end of period $ 46 $ 697 ========== ==========
See notes to consolidated financial statements. 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ FOR THE QUARTER ENDED MARCH 31, 2007 (UNAUDITED) ------------------------------------------------ Note 1: ACCOUNTING POLICIES ------------------- Basis of Financial Statement Presentation - The information as of and for the three months ended March 31, 2007 and 2006, 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. 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 March 31, ----------------------------------------------------- 2007 2006 ------------------------- ------------------------- Per Per Share Shares Share Loss Shares Amount Earnings (2) Amount ------ ------ ------ -------- ------ ------ BASIC $ (92) 4,815 $ (.02) $ 78 4,763 $ .02 ====== ====== ====== ====== ====== ====== Effect of dilutive securities, Stock options (1) -- 54 ------ ------ DILUTED $ (92) 4,815 $ (.02) $ 78 4,817 $ .02 ====== ====== ====== ====== ====== ======
(1) Stock options were anti-dilutive for the three months ended March 31, 2007, 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 February 1, 2007. Note 3: SHORT-TERM DEBT --------------- On July 31, 2006, the Company, Ronson Consumer Products Corporation ("RCPC"), Ronson Corporation of Canada Ltd.("Ronson-Canada"), and Ronson Aviation, Inc. ("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 original amounts of $195,000 and $750,000, respectively, both to be repaid evenly over five years. The revolving line of credit carries an interest rate of prime plus one half (8.75% in the U.S. and 6 6.50% in Canada at March 31, 2007) and the two term loans carry interest at the rate of prime plus 3% (currently 11.25%). 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. At March 31, 2007, CIT provided the Company with a waiver of a covenant violation due to failure by the Company to meet a fixed charge coverage ratio for the nine months ended March 31, 2007. Note 4: LONG-TERM DEBT -------------- On September 27, 2006, RCPC entered into a mortgage loan agreement with North Fork Bank ("North Fork")for $2,200,000. The mortgage loan had a balance of $2,186,000 at March 31, 2007 and is secured by a first mortgage on the property of RCPC at 3 and 6 Ronson Road, Woodbridge, NJ and the guarantees of the Company and Ronson Aviation. The loan bears interest at the rate of 6.81% and is payable in monthly installments of $15,422, including interest, with a final installment of approximately $1,697,000, plus interest, on November 1, 2016. The Equipment and Trademark term loan balances with CIT, referred to in Note 3 above, were $172,000 and $663,000, respectively, at March 31, 2007. 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 March 31, 2007, the total balance payable on this lease agreement was $210,000. 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 March 31, 2007, and December 31, 2006, 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 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 7 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 in April 2005, both filed by the same shareholder. 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 March 31, ------------------------ 2007 2006 ---------- ---------- Net sales: Consumer Products $ 3,558 $ 4,176 Aviation Services 2,539 3,166 ---------- ---------- Consolidated $ 6,097 $ 7,342 ========== ========== Earnings from operations: Consumer Products $ 137 $ 383 Aviation Services 390 356 ---------- ---------- Total reportable segments 527 739 Corporate and others (475) (419) Other (charges) earnings 35 (30) ---------- ---------- Consolidated $ 87 $ 290 ========== ========== 8 Earnings (loss) before intercompany charges and income taxes: Consumer Products $ (5) $ 340 Aviation Services 382 357 ---------- ---------- Total reportable segments 377 697 Corporate and others (546) (536) Other (charges) earnings 35 (30) ---------- ---------- Consolidated $ (134) $ 131 ========== ========== 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 March 31, 2007 and 2006 ------------------------------------- Cash Accumulated Foreign Unrecog- Flow Other Currency nized Prior Hedging Compre- Translation Pension Service Adjust- hensive Adjustments Loss Cost ments Loss ------------ ------------ ------------ ------------ ------------ Balance at December 31, 2006 $ (13) $ 1,263 $ 39 $ -- $ 1,289 Current period change (4) (52) -- -- (56) Income tax expense 2 21 -- -- 23 ------------ ------------ ------------ ------------ ------------ Balance at March 31, 2007 $ (15) $ 1,232 $ 39 $ -- $ 1,256 ============ ============ ============ ============ ============ Balance at December 31, 2005 $ (61) $ 1,619 $-- $ (13) $ 1,545 Current period change 30 (64) -- (10) (44) Income tax expense (12) 26 -- 4 18 ------------ ------------ ------------ ------------ ------------ Balance at March 31, 2006 $ (43) $ 1,581 $-- $ (19) $ 1,519 ============ ============ ============ ============ ============
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. 9 Supplemental disclosures of cash flow information are as follows (in thousands): Quarter Ended March 31, ------------------- 2007 2006 -------- -------- Cash Payments for: Interest $ 154 $ 92 Income Taxes -- -- Financing & Investing Activities Not Affecting Cash: None Note 9: RETIREMENT PLANS ---------------- The Company's Consolidating Statements of Operations included pension expense consisting of the following components (in thousands): Quarter Ended March 31, ---------------- 2007 2006 ------ ------ Service cost $ 6 $ 8 Interest cost 64 66 Expected return on plan assets (68) (48) Recognized actuarial losses 53 64 Recognized prior service cost 1 2 ------ ------ Net pension expense $ 56 $ 92 ====== ====== Contributions to the pension plan during 2007 are expected to be as follows (in thousands): Paid in the three months ended March 31, 2007 $127 Expected to be paid in the balance of 2007 111 ---- Total expected to be paid in the year ending December 31, 2007 $238 ==== Note 10: FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS ---------------------------------------------- Mr. Carl W. Dinger III has granted an option to the Company to purchase the 561,983 shares now held by Mr. Dinger at an exercise price of $5.62 per share. The cost of the option is $4,000 per month for the period of the option or until exercised. At March 31, 2007, the fair value of the option was approximately zero using the Black-Scholes option pricing model. Key assumptions included: a risk-free interest rate of 4.86%, a dividend yield of 0.00%, volatility of 62.84%, and the option life of three months. The fair value of zero compares to $12,000, the present value of the three remaining payments under the contract, discounted at the Company's incremental borrowing rate of 8.75%. (Refer to Note 3 of Notes to Consolidated Financial Statements above.) 10 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS ------------- RESULTS OF OPERATIONS - --------------------- First Quarter 2007 compared to First Quarter 2006. The Company's Net Sales declined to $6,097,000 in the first quarter of 2007 as compared to $7,342,000 in the first quarter of 2006. In the first quarter of 2007, the Company's Earnings from Operations were $87,000 as compared to $290,000 in the first quarter of 2006. The Company reported a Net Loss of $92,000 in the first quarter of 2007 as compared to Net Earnings of $78,000 in the first quarter of 2006. Ronson Consumer Products - ------------------------ (in thousands) Quarter Ended March 31, ------------------ 2007 2006 ------- ------- Net sales $ 3,558 $ 4,176 Earnings from operations 137 383 Earnings (loss) before income taxes and intercompany charges (5) 340 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 15% in the first quarter of 2007 as compared to the first quarter of 2006, primarily due to reduced sales of the Company's flame accessory products. This decrease of 15% consisted of a decrease of about 17% due to lower volume of products sold, partially offset by an increase of about 2% due to increased average net selling prices. Cost of Sales as a percentage of Net Sales, at Ronson Consumer Products increased to 62% in the first quarter of 2007 from 59% in the first quarter of 2006 due primarily to lower volume of products sold. The amount of the Cost of Sales decreased by about 10% due almost entirely to lower sales volume. Selling, Shipping and Advertising Expense at Ronson Consumer Products, as a percentage of Net Sales, increased to 26% in the first quarter of 2007 from 22% in the first quarter of 2006 primarily due to the lower sales in the first quarter of 2007. General and Administrative Expenses, as a percentage of Net Sales, were lower at 6% in the first quarter of 2007 as compared to 8% in the first quarter of 2006, primarily due to reduced personnel costs and to reduced bad debt expenses because of the collection of previously reserved delinquent accounts in the first quarter of 2007. Interest Expenses at Ronson Consumer Products increased to $109,000 in the first quarter of 2007 from $56,000 in the first quarter of 2006 due to the higher levels of debt as a result of the CIT and North Fork financing. 11 Ronson Aviation - --------------- (in thousands) Quarter Ended March 31, --------------- 2007 2006 ------ ------ Net sales $2,539 $3,166 Earnings from operations 390 356 Earnings before income taxes and intercompany charges 382 357 Net Sales at Ronson Aviation, Inc. ("Ronson Aviation"), Trenton, New Jersey, decreased by 20% in the first quarter of 2007 from the first quarter of 2006 primarily due to the sale of an aircraft in the first quarter of 2006 (none in the first quarter of 2007). Ronson Aviation's Cost of Sales, as a percentage of Net Sales, decreased to 73% in the first quarter of 2007 from 80% in the first quarter of 2006. The decrease in the Cost of Sales percentage in 2007 was primarily due to the aircraft sales in 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 first quarter of 2007 compared to 8% in the first quarter of 2006, primarily due to the decreased sales in 2007. Other Items - ----------- The Other Earnings in the first quarter of 2007 of $35,000 were the insurance proceeds, in excess of the legal fees incurred in the quarter, related to stockholder litigation. The Other (Charges) in the first quarter of 2006 of $30,000 were the legal fees incurred related to litigation by one stockholder. (Refer to Item 1 of Part II of this Form 10-Q). The General and Administrative Expenses of Corporate and Others increased to $475,000 in the first quarter of 2007 from $419,000 in the first quarter of 2006 primarily due to increased professional fees, increased personnel costs, and increased stockholder related expenses. Other-net increased in the first quarter of 2007 from the first quarter of 2006 primarily due to the increased amortization of deferred loan costs related to the CIT and North Fork financing. FINANCIAL CONDITION The Company's Stockholders' Equity decreased to $3,563,000 at March 31, 2007 from $3,626,000 at December 31, 2006. The decrease of $63,000 in Stockholders' Equity was primarily due to the Net Loss in the first quarter of 2007. The Company had a deficiency in working capital of $1,433,000 at March 31, 2007, as compared to $878,000 at December 31, 2006. The decline in working capital was primarily due to the Capital Expenditures of $356,000, mostly at Ronson Aviation, in the first quarter of 2007, and to the Net Loss in the first quarter of 2007. 12 At March 31, 2007, CIT provided the Company with a waiver of a covenant violation because the Company did not meet a fixed charge coverage ratio for the nine months ended March 31, 2007. Based on the amount of the loans outstanding and the levels of accounts receivable and inventory at March 31, 2007, the Company's subsidiaries had unused borrowings available at March 31, 2007 of about $477,000 under the CIT line of credit. The Company's Capital Expenditures increased to $356,000 in the first quarter of 2007 primarily at Ronson Aviation for the construction of its new 19,200 sq. ft. hangar. As of March 31, 2007, Ronson Aviation had expended approximately $2,650,000 on the improvements. Ronson Aviation expects that, as of March 31, 2007, the additional cost to complete the hangar is approximately $500,000. On February 1, 2007, 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 16, 2007, to stockholders of record March 30, 2007. 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 and will complete the construction of the Ronson Aviation hangar 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 2007. 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, 2006, incorporated herein by reference. 13 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. 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 (ESX-C-101-03). - ------------------------------------------------------------------ On March 25, 2003, a derivative lawsuit was filed against the directors of the Company 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 the Company as well as equitable relief to invalidate the Company's preferred shares rights agreement and certain consulting agreements, to enjoin performance of agreements 14 with certain directors and to require the Company's President and Chief Executive Officer to divest those shares acquired, and not to acquire additional shares while the preferred shares rights agreement has been or remains in place. A special litigation 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 interest 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. On June 19, 2006, the court granted the motion of the Company's directors, ruling that the special litigation committee was independent, that by virtue of the special litigation committee defense all claims to the extent based upon the preferred shares rights agreement were dismissed, and that the application to dismiss the remaining claims was denied. On July 21, 2006, the court denied plaintiffs' motion to file an amended and supplemental complaint. 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, the Company's preferred shares rights plan, tortious interference with prospective business advantage and negligently caused economic loss, 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, the Company, and divestiture by defendants of shares of Common Stock acquired subsequent to the initial filing on Schedule 13D by Steel Partners II, L.P. A motion to dismiss by Steel Partners, Warren Lichtenstein and Jack Howard dated November 21, 2006 has been granted by the court as to the allegations of prima facie tort and denied as to all other counts, and motions to dismiss by Howard Lorber dated October 6, 2006 and by Ronald Hayes, dated November 8, 2006, respectively, have been granted as to the allegations of unfair competition and prima facie tort and in all other respects denied. Discovery is now proceeding in this lawsuit, with a trial date for September 2007. The Company's directors will continue to contest and to vigorously defend against the claims asserted by plaintiffs. 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 - ------------------------------------------------------------------------------- (DMC-MF). - --------- 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 of the Company (other than Edward E. David, Jr.), 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 action alleges, among other things, that defendants should be treated collectively as an "Acquiring Person" under the Company's preferred shares 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 preferred shares rights agreement with respect to the offering of rights to shareholders, including plaintiff (notwithstanding that in 15 its derivative action in the Superior Court of New Jersey, Steel Partners has challenged the legality and enforceability of the Company's preferred shares rights agreement). The action alleges further that the defendants as a group have become an "interested shareholder" under the New Jersey Shareholder Protection Act, and that the defendants have violated reporting requirements under Section 13(d) of the Securities Exchange Act of 1934 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. On April 13, 2006, the court denied the motion to dismiss filed by the Company's directors and its chief financial officer in July 2005. The motion filed by the Company's directors and chief financial officer seeking certification of the order by the court, so that a petition seeking permission to appeal to the U.S. Court of Appeals for the Third Circuit may be filed, was denied on December 22, 2006. The Company's directors and its chief financial officer contest the allegations of this action filed by plaintiff, and intend to vigorously defend the action. The court has established a discovery schedule, and the action is proceeding through pretrial discovery. 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. ITEM 1A - RISK FACTORS ------------ There were no material changes in the three months ended March 31, 2007, in the risk factors as previously disclosed in the Company's Form 10-K for the year ended December 31, 2006. 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). 16 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 15, 2007 /s/ Louis V. Aronson II ------------------------------------- Louis V. Aronson II, President & Chief Executive Officer (Signing as Duly Authorized Officer of the Registrant) Date: May 15, 2007 /s/ Daryl K. Holcomb ------------------------------------- Daryl K. Holcomb, Vice President, Chief Financial Officer and Controller (Signing as Chief Financial Officer of the Registrant) 17 EX-31.1A 2 ex31-1a.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: May 15, 2007 /s/ Louis V. Aronson II ---------------------------- Louis V. Aronson II President and C.E.O. 18 EX-31.1B 3 ex31-1b.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: May 15, 2007 /s/ Daryl K. Holcomb ------------------------------- Daryl K. Holcomb Vice President and C.F.O. 19 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 March 31, 2007 (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. Date: May 15, 2007 /s/ Louis V. Aronson II ----------------------------------------------- Louis V. Aronson II President and Chief Executive Officer Date: May 15, 2007 /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. 20 -----END PRIVACY-ENHANCED MESSAGE-----