|Traded as||NASDAQ: AAON|
|Industry||Heating, Ventilating and Air Conditioning (HVAC) Systems|
AAON (NASDAQ: AAON) designs, manufactures and sells semi-custom heating, ventilation and air conditioning equipment (HVAC) for commercial and residential use. Its subsidiary, AAON Coil Products manufactures a variety of heating/cooling products, as well as, coils used in the heating, ventilation, and air conditioning (HVAC) industry and provides coils to AAON as well as to other customers.
The roots of AAON can be traced to 1928 when the John Zink Company (JZC) was started in Tulsa, Oklahoma to produce equipment for the oil industry. John Zink decided to diversify his firm's operations by making, installing, and servicing heating and, especially, air conditioning equipment for the mansions of Tulsa's wealthy oil men. Then in 1968 JZC's Heating, Ventilation and Air-Conditioning (HVAC) division began producing rooftop heating and air conditioning equipment for commercial customers.
After founder John Zink died, his son negotiated the acquisition of JZC in 1972 by the Sunbeam Corporation. In 1981 the Sunbeam Corporation in turn was purchased by Allegheny International, Inc. Then in June 1987 Lone Star Technologies, Inc. purchased JZC, but its leaders decided to get out of the HVAC industry, because that division was doing only about $16 million in annual sales, while the rest of JZC was running about $100 million in annual sales.
AAON, Inc., an Oklahoma corporation ("AAON-Oklahoma"), was incorporated on August 15, 1988, for the purpose of acquiring the assets, subject to certain liabilities, of the HVAC Division of John Zink Company in Tulsa, Oklahoma. AAON paid $9,219,000 for that acquisition, including $7,035,000 cash and the assumption of liabilities worth $2,184,000. The corporate name AAON has no particular meaning; it was chosen so the company would be listed at the beginning of listings and directories. It was pronounced "aye-on."
AAON, Inc., formerly Diamond Head Resources, Inc., a Nevada corporation ("AAON-Nevada"), was incorporated on August 18, 1987. In early 1988, Diamond Head Resources, Inc., a shell company, made a public offering of its stock in furtherance of the objective of seeking and acquiring an interest in a prospective business opportunity. AAON-Oklahoma's purchase of the HVAC business was consummated on September 30, 1988, at which time AAON-Nevada made a loan of virtually all of its assets ($580,000) to AAON-Oklahoma to partially finance the purchase. An integral part of that transaction was a Conversion/Exchange Agreement by and among AAON-Nevada, AAON-Oklahoma and the stockholders of AAON-Oklahoma, which was "triggered" on June 16, 1989. As a result, the $580,000 loan was converted to equity, the former stockholders of AAON-Oklahoma became the owners of 80% of the outstanding stock of AAON-Nevada and AAON-Oklahoma became a wholly owned subsidiary of AAON-Nevada.
AAON bought its Tulsa manufacturing plant and offices in late 1988 for $650,000. After extensive changes costing almost $1.9 million, the company began using the refurbished facilities in early 1989. The heavy industrial manufacturing and warehouse spaces totaled 172,000 square feet (16,000 m2), and the offices were situated in an additional 12,000 square feet (1,100 m2). The plant, located on 12 acres at 2425 South Yukon, featured two main assembly lines.
In its first year of operations, AAON faced a major challenge. The firm that supplied its coils did not have enough capacity to meet the growing requirements of AAON, leaving many machines half finished at the Tulsa plant. AAON was able to survive with the help of the Bank of Oklahoma, which increased its loan to the struggling new company from $5 million to $9 million.
Initial Officers and Directors
The first officers and directors of AAON included the following men:
- Norman H. Asbjornson, a professional engineer educated at Montana State University and the University of Nebraska, was the firm's president, treasurer, and director. He had worked for the Commercial Air-Conditioning Division of American Standard from 1960 to 1972, Singer Corporation's Climate Control Division from 1972 to 1977, Nortek (a heating/air conditioner maker) from 1977 to 1987, and then the John Zink Company's HVAC Division until it was acquired by AAON. He was the key person who alerted others that the John Zink HVAC division was up for sale.
- Robert G. Fergus, a professional engineer who worked for JZC from 1980 to 1988, joined AAON as its vice-president when it was first organized.
- William A. Bowen, who had worked for a North Carolina bank from 1955 to 1979, and then became the president, CEO, and board chairman of Tulsa's First National Bank and Trust Company. While serving as the president of the Tulsa Economic Development Foundation in 1987 and 1988, Bowen was instrumental in organizing investors to start AAON. He became the new firm's vice-president of finance and a director.
Other founders of AAON included Secretary/Director John B. Johnson, Jr., a Tulsa attorney since 1961; Director Richard E. Minshall, president of Tulsa's Capital Advisors, Inc. since 1978; and Anthony Pantaleoni, a partner in the law firm of Fulbright Jaworski & Reavis McGrath in New York City.
In December 1991, AAON, Inc. of Nevada created a new subsidiary called CP/AAON, a Texas corporation, to acquire most of the assets of Coils Plus, Inc. of Longview, Texas. Coils Plus had been founded in 1984 to design and make new and replacement coils for the HVAC industry. AAON acquired this Texas company to have better control over the expenses and availability of coils required for its units. In January 1993, AAON Coil Products, the new subsidiary of AAON, purchased a 110,000-square-foot (10,000 m2) facility near its former plant in Longview, Texas, and moved into the newly renovated plant a couple months later.
The company announced in November 1993 that its common stock would be traded on the NASDAQ National Market under the symbol AAON. NASDAQ's system of several competing dealers or market makers for the same stocks helped AAON stock become more visible and liquid. Other 1993 developments included starting a cross-training program to increase worker flexibility, spending about $1 million for replacement coils for units under warranty and completing a one-for-four reverse stock split, which retired almost $2 million of the firm's subordinated debt.
In January 1995 AAON introduced a new product, a desiccant heat recovery wheel called AAONAIRE. This AAONAIRE technology increased the capacity of AAON rooftop units by as much as 50 percent without any additional energy costs. AAONAIRE was created to meet the requirements of the 1990 U.S. Clean Air Act for better air quality in commercial buildings. That legislation resulted from so-called "sick-building syndrome," characterized by a cluster of symptoms such as headaches, colds, and eye and respiratory tract problems first reported in the 1970s.
AAON employed more individuals as the 1990s continued; on March 1, 1994 the firm had 369 employees and 120 temporary workers. In March 1995, AAON Coil Products expanded with the purchase of property and a 26,000-square-foot (2,400 m2) building next to its plant in Texas. The Tulsa plant also was enlarged to 332,000 square feet (30,800 m2) in 1995. These expansions allowed the employee count to grow to 480 full and 94 temporary employees by March 1, 1996 and then to 556 employees and 157 temporary employees by March 1, 1997.
Although AAON knew of no particular hostile takeover attempt aimed at its assets, the firm's board of directors decided in 1997 to prepare for such a possibility. It unanimously approved an amendment to its Articles of Incorporation that required holders of two-thirds of outstanding shares to approve of any major changes, if the majority of the board did not agree to such changes. Nevada law required a majority vote of shares to make substantial changes in a company, so this proposal made it more difficult for someone to attempt a merger or other major changes.
AAON made these changes realizing that their competitors in the HVAC industry were much larger companies. For example, Carrier Corporation, a subsidiary of United Technologies, in 1991 had sales of $3.8 billion, 37 percent of the HVAC industry, and employed almost 30,000 persons. Other major players in this industry included Trane; Lennox International Industries; and York International.
On May 5, 2004 AAON announced its acquisition of Air Wise Inc., of Mississauga, Ontario, Canada. Air Wise was engaged in the engineering, manufacturing and sale of custom air-handling units, makeup air units and packaged rooftop units for commercial and industrial buildings. After struggling to keep its Canadian branch profitable, Tulsa-based AAON closed its plant five years later on July 23, 2009.
- "Aaon: When Cool Heads Prevail". BusinessWeek. Archived from the original on 10 June 2001. Retrieved 11 June 2001.
- "AAON History". Funding Universe.
- "USPTO database". USPTO.
- "SEC Info". SEC. Retrieved 11 March 2011.
- "AHRI Certification Directory". AHRI. Retrieved 11 March 2011.
- "America's 100 Best Small Companies". Forbes.