form8k-110494_rclc.htm

This Current Report on Form 8-K contains forward-looking statements based on management’s plans and expectations that are subject to uncertainty. Forward-looking statements are based on current expectations of future events. The Company cannot assure that any forward-looking statement will be accurate. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual events could vary materially from those anticipated. Investors should understand that it is not possible to predict or identify all such factors and should not consider this to be a complete statement of all potential risks and uncertainties. The Company assumes no obligation to update any forward-looking statements as a result of future events or developments.

On October 15, 2010 (the “Closing Date”), RCLC, Inc. (the “Company”) and its wholly-owned subsidiaries, RCPC Liquidating Corp. (“RCPC”), RCC, Inc. (“RCC”), and Ronson Aviation, Inc. (“Ronson Aviation”), (together, the “borrowers”) repaid all amounts due to Wells Fargo Bank, National Association (“Wells Fargo”) from the proceeds of the sale of substantially all of the assets of the Company’s aviation business, more fully described in Item 2.01 below. The Wells Fargo loan agreement and DIP finance agreement were terminated with the repayment. The repayment totaled approximately $6,447,000; composed of principal and interest of about $3,485,000, fees to Wells Fargo’s attorneys of about $399,000, the DIP financing fee of $10,000, the restoration of custodial funds of RCPC of about $2,528,000, and a reserve of $25,000 to be held by Wells Fargo for 60 days.. The RCPC custodial funds were subsequently remitted by Wells Fargo to RCPC.

As previously reported, on September 30, 2010, the Company entered into an Amended and Restated Asset Purchase Agreement with Trenton Aviation, LLC, (“Trenton Aviation”), a wholly-owned subsidiary of Ross Aviation, LLC, for the sale of substantially all of the assets of the Company’s aviation business (other than certain excluded assets including cash and cash equivalents and accounts receivable) for a purchase price of $10.7 million in cash (of which $500,000 is being held in escrow in connection with environmental matters) plus the assumption of certain liabilities by Trenton Aviation as described in the Amended Asset Purchase Agreement.

Pursuant to the terms and conditions of the Amended Asset Purchase Agreement, on October 15, 2010, the Company completed the sale of the Company’s aviation business to Trenton Aviation for a purchase price of $10,700,000 in cash (of which $500,000 is being held in escrow in connection with environmental matters) and the assumption of liabilities of approximately $341,000. In connection with the transaction, Ronson Aviation changed its name to RA Liquidating Corp.

The proceeds were utilized to repay all indebtedness to creditors secured by the assets of the aviation business and to pay certain transaction and advisory fees and expenses. The remaining proceeds will be utilized to pay unsecured liabilities in accordance with applicable law and certain advisors’ fees and expenses. The Company does not expect that there will be any proceeds available for shareholders of the Company.

The following unaudited pro forma condensed consolidated financial information sets forth the pro forma condensed consolidated results of operations of the Company for the year ended December 31, 2009 and the six months ended June 30, 2010 and the pro forma condensed consolidated financial position of the Company as of December 31, 2009 and June 30, 2010.

The unaudited pro forma condensed consolidated results of operations for the year ended December 31, 2009 and the six months ended June 30, 2010 and the unaudited pro forma condensed consolidated balance sheets as of December 31, 2009, and as of June 30, 2010 have been derived from the Company’s historical consolidated financial information and give effect to the sale of substantially all of the assets of the Company’s aviation division to Trenton Aviation, in exchange for $10.7 million in cash and assumption of certain liabilities, and as if the amounts held in escrow in connection with certain environmental matters will ultimately be released to the Company. There can be no assurance that the full amount held in escrow will ultimately be released to the Company. The unaudited pro forma condensed consolidated results of operations for the year ended December 31, 2009 and the six months ended June 30, 2010, assume the sale occurred on January 1, 2009. The unaudited pro forma condensed consolidated balance sheets as of December 31, 2009, and as of June 30, 2010, assume the sale occurred on the respective dates of the balance sheets.

The unaudited pro forma financial information has been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the Company’s historical audited consolidated financial statements and unaudited interim consolidated financial statements included in the Company’s periodic reports filed with the Securities and Exchange Commission. This information is based on the assumptions and adjustments described in the accompanying notes and does not reflect any adjustments for non-recurring items or changes in operating strategies arising as a result of the transaction. These unaudited pro forma condensed consolidated financial statements include no assumptions regarding the use of proceeds (other than to repay secured indebtedness and pay certain financial, legal and accounting advisors’ fees and expenses and transaction related expenses), which are presented as additional cash on the unaudited pro forma condensed consolidated balance sheets. Accordingly, the actual effect of the transaction, due to this and other factors, could differ from the pro forma adjustments presented herein. Management believes that the assumptions used and the adjustments made are reasonable under the circumstances and given the information available.

These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results or the financial position that would have been achieved had the transaction been consummated as of the dates indicated or of the results that may be obtained in the future.

RCLC, INC. AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2009
(in thousands of dollars)


	HISTORICAL			PRO FORMA			PRO FORMA
	December 31, 2009			ADJUSTMENTS			December 31, 2009

ASSETS
CURRENT ASSETS:
Cash and cash equivalents		-			1,847	(c)		1,847
Other current assets		329						329
Other current assets of discontinued operations		6,419			(84	)(a,c)		6,335
Total Current Assets		6,748			1,763			8,511

PROPERTY, PLANT AND EQUIPMENT:
Buildings and improvements		-						-
Machinery and equipment		121						121
		121			-			121

Less accumulated depreciation and amortization		111						111
		10			-			10

OTHER ASSETS		1,626						1,626
OTHER ASSETS OF DISCONTINUED OPERATIONS		8,836			(5,308	)(a)		3,528
	$	17,220		$	(3,545	)	$	13,675


LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITES:
Short-term debt	$	300		$			$	300
Current portion of long-term debt and leases		-						-
Accounts payable		2,394						2,394
Accrued expenses		2,010						2,010
Current liabilites of discontinued operations		14,693			(7,141	)( c)		7,552
Total Current Liabilities		19,397			(7,141	)		12,256

LONG-TERM DEBT		-						-
OTHER LONG-TERM LIABILITIES		2,136						2,136
OTHER LONG-TERM LIABILITIES OF DISCONTINUED
OPERATIONS		476			(3	)(a)		473
COMMITMENTS AND CONTINGENCIES		-						-

STOCKHOLDERS' DEFICIENCY:
Common stock, par value $1		5,173						5,173
Additional paid-in capital		30,007						30,007
Accumulated income (deficit)		(35,606	)		3,599	(b)		(32,007	)
Accumulated other comprehensive loss		(2,766	)					(2,766	)
		(3,192	)		3,599			407
Less cost of treasury shares		1,597			-			1,597
TOTAL STOCKHOLDERS' DEFICIENCY		(4,789	)		3,599			(1,190	)
	$	17,220		$	(3,545	)	$	13,675

RCLC, INC. AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2010
(in thousands of dollars)


	HISTORICAL			PRO FORMA			PRO FORMA
	June 30, 2010			ADJUSTMENTS			June 30, 2010

ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	15		$	4,460	(c)	$	4,475
Other current assets		454						454
Other current assets of discontinued operations		2,994			(658	)(a)		2,336
Total Current Assets		3,463			3,802			7,265

PROPERTY, PLANT AND EQUIPMENT:
Buildings and improvements		-						-
Machinery and equipment		-						-
		-			-			-

Less accumulated depreciation and amortization		-						-
		-			-			-

OTHER ASSETS		2,040			(1,097	)		943
OTHER ASSETS OF DISCONTINUED OPERATIONS		5,437			(4,320	)(a)		1,117
	$	10,940		$	(1,615	)	$	9,325


LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITES:
Short-term debt	$	300		$			$	300
Current portion of long-term debt and leases		-						-
Accounts payable		2,701						2,701
Accrued expenses		1,475						1,475
Settlement with Pension Benefit Guaranty Corporation		4,410						4,410
Current liabilites of discontinued operations		5,939			(5,328	)(c)		611
Total Current Liabilities		14,825			(5,328	)		9,497

LONG-TERM DEBT		-						-
OTHER LONG-TERM LIABILITIES		-						-
OTHER LONG-TERM LIABILITIES OF DISCONTINUED
OPERATIONS		305						305
COMMITMENTS AND CONTINGENCIES		-						-

STOCKHOLDERS' DEFICIENCY:
Common stock, par value $1		5,173						5,173
Additional paid-in capital		30,007						30,007
Accumulated income(deficit)		(37,786	)		3,713	(b)		(34,073	)
Accumulated other comprehensive income		13						13
		(2,593	)		3,713			1,120
Less cost of treasury shares		1,597						1,597
TOTAL STOCKHOLDERS' DEFICIENCY		(4,190	)		3,713			(477	)
	$	10,940		$	(1,615	)	$	9,325

RCLC, INC. AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
December 31, 2009
(in thousands of dollars, except per share data)
(unaudited)


	HISTORICAL			PRO FORMA			PRO FORMA
	December 31, 2009			ADJUSTMENTS			December 31, 2009


NET SALES	$	-		$			$	-

Cost and expenses:
General and administrative		1,323						1,323
Depreciation and amortization		47						47
		1,370			-			1,370

LOSS FROM CONTINUING OPERATIONS
BEFORE INTEREST AND OTHER ITEMS		(1,370	)		-			(1,370	)

Other expense:
Interest expense		57						57
Nonrecurring loss on termination of
retirement plan		-						-
Other-net		536						536
		593			-			593

LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		(1,963	)		-			(1,963	)

Income tax benefits		(552	)					(552	)

LOSS FROM CONTINUING OPERATIONS		(1,411	)		-			(1,411	)

Gain on sale of discontinued operation
(net of tax provision)		-			3,529	(b)		3,529

Loss from discontinued operations
(net of tax benefits)		(3,302	)		1,804	(d,e)		(1,498	)

NET EARNINGS (LOSS)		(4,713	)		5,333			620

RCLC, INC. AND ITS WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
June 30, 2010
(in thousands of dollars, except per share data)
(unaudited)



	HISTORICAL			PRO FORMA			PRO FORMA
	June 30, 2010			ADJUSTMENTS			June 30, 2010


NET SALES	$	-					$	-

Cost and expenses:
General and administrative		972						972
Depreciation and amortization		5						5
		977			-			977

LOSS FROM CONTINUING OPERATIONS
BEFORE INTEREST AND OTHER ITEMS		(977	)		-			(977	)

Other expense:
Interest expense		19						19
Nonrecurring loss on termination of								-
retirement plan		6,046						6,046
Other-net		223						223
		6,288			-			6,288

LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		(7,265	)		-			(7,265	)

Income tax benefits		(2,901	)					(2,901	)

LOSS FROM CONTINUING OPERATIONS		(4,364	)		-			(4,364	)

Gain on sale of discontinued operation
(net of tax provision)		3,148						3,148

Loss from discontinued operations
(net of taxeffects)		(964	)		532	(d,e)		(432	)

NET LOSS		(2,180	)		532			(1,648	)

The unaudited pro forma condensed consolidated financial information gives effect to the sale of substantially all of the assets to and assumption of liabilities of the Company’s aviation division by Trenton Aviation in exchange for approximately $10.7 million in cash ($.5 million of which is held in escrow for a period of three years or more after the closing to secure the Company’s environmental compliance obligations). The Company expects to account for the disposition as discontinued operations in its consolidated financial statements in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, if shareholder approval of the transaction is obtained.

During the periods presented, the aviation division was operated as an operating segment within the Company. As such, the Company did not maintain separate, stand-alone financial statements for the aviation division. Accordingly, the financial information of the aviation division has been prepared from the historical accounting records of the Company and does not purport to reflect a balance sheet and statement of operations that would have resulted if the aviation division had been a separate, stand-alone company. As an operating segment of the Company, the aviation division is dependent upon the Company for all of its working capital and financing requirements.

	January 1, 2009		December 31, 2009		June 30, 2010
Inventories	$	272	$	357	$	257
Other current assets		49		67		88
Property and equipment, net		3,562		3,373		3,278
Other assets		2		2		2
Assets	$	3,885	$	3,799	$	3,625
Accounts payable and accrued expenses		360		360		360
Lease obligations		12		8		5
Liabilities	$	372	$	368	$	365
Book value	$	3,513	$	3,431	$	3,260

	January 1, 2009		December 31, 2009		June 30, 2010
Gross sale price, including liabilities assumed by buyer	$	11,072	$	11,068	$	11,065
Less liabilities assumed by buyer		372		368		365
Less prorated revenues and costs		36		36		36
Less transaction costs		1,118		1,118		1,118
Proceeds, net of expenses		9,546		9,546		9,546
Book value of assets sold		3,513		3,431		3,260
Unamortized loan costs, previously deferred		157		121		103
Gain on sale of assets, prior to income tax effect		5,876		5,994		6,183
Income tax expense		2,347		2,395		2,470
Gain on sale of assets, net of income taxes	$	3,529	$	3,599	$	3,713

	January 1, 2009		December 31, 2009		June 30, 2010
Gross sale price, including liabilities assumed by buyer	$	11,072	$	11,068	$	11,065
Less liabilities assumed by buyer		372		368		365
Less amount held in escrow		500		500		500
Less transaction costs and other sale-related costs to be paid at closing		388		388		388
Less income taxes related to the sale		587		463		316
Less other payments at closing:
Secured lenders		5,042		6,136		3,116
Other secured liabilities		-		1,406		1,972
Other liabilities		-		-		-
	$	4,183	$	1,807	$	4,408

	December 31, 2009		June 30, 2010
General and administrative expenses, professional fees incurred related to the Company's financing agreements	$	1,116	$	286

Interest expenses, assuming the secured lenders were repaid as of January 1, 2009		215		24

Other expenses, other financing costs related to the secured credit agreements to be repaid, including the forbearance fee		356		2
	$	1,687	$	312
Income tax expenses		674		125
Discontinued operations	$	1,013	$	187

	December 31, 2009			June 30, 2010
Net sales	$	7,769		$	4,116
Cost and expenses:
Cost of sales		5,689			3,117
Selling, shipping and advertising		4			-
General and administrative		2,075			1,321
Depreciation and amortization		194			95
		7,962			4,533
		( 193	)		( 417	)

Other expenses:
Interest expenses		223			127
Other, net		312			27
		535			154
		( 728	)		(571	)
Income tax benefits		63			(226	)
Discontinued operations	$	( 791	)	$	(345	)

New Jersey	001-01031	22-0743290
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1480 Route 9, North. Suite 301, Woodbridge, New Jersey	07095
(Address of principal executive offices)	(Zip Code)

ITEM	PAGE

ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT	1

ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS	1

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS	1

No.		Description

99.1		Press Release issued October 19, 2010 “Ronson Corporation (n/k/a RCLC, Inc.) Announces Completion of the Sale of its Aviation Business.”


	RCLC INC.

Date: October 21, 2010	By:	/s/ Daryl K. Holcomb
	Name: Daryl K. Holcomb
	Title: Vice President, Chief Financial Officer and Controller