FORM 10-K/A
Amendment No. 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number: 33-18336-LA
AAON, INC.
(Exact name of Registrant as specified in its charter)
Nevada 87-0448736
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2425 South Yukon, Tulsa, Oklahoma 74107
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918)583-2266
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.004
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(Title of Class)
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
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of Registrant's voting stock held by
non-affiliates computed by reference to the average bid and asked
prices of such stock on March 1, 1997, was approximately
$30,296,000. For purposes of this computation, all officers,
directors and 5% beneficial owners of Registrant are deemed to be
affiliates.
As of March 1, 1997, Registrant had outstanding a total of
6,128,574 shares of its $.004 par value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's definitive Proxy Statement to be filed
in connection with the Annual Meeting of Stockholders to be held
May 29, 1997, are incorporated into Part III.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Set forth below is income statement information with respect to
the Company for years 1996, 1995 and 1994:
Years ended December 31,
1996 1995 1994
(In thousands)
Net sales $62,845 $67,346 $79,542
Cost of sales 51,797 56,528 61,664
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Gross profit 11,048 10,818 17,878
Selling, general and
administrative expenses 6,413 6,318 7,921
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Income from operations 4,635 4,500 9,957
Interest expense 838 815 806
Other expense 406 452 445
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Income before income taxes 3,391 3,233 8,706
Income tax provision 1,316 1,164 3,605
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Net income $2,075 $2,069 $5,101
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RESULTS OF OPERATIONS
Net sales decreased by approximately 7% in 1996 as compared to
1995, and 1995 sales were 15% less than in 1994. The reductions
in sales in 1996 and 1995 were primarily attributable to a drop
in sales to two of the Company's largest customers. The outlook
for 1997 is for increased sales to its entire customer base.
Gross profit increased in 1996 to 17.6% compared to 16.1% in
1995, but was less than the 22.5% margin in 1994. The 1.5%
increase in margin in 1996 compared to 1995 resulted primarily
from higher selling prices, whereas the lower margin in 1995
compared to 1994 mainly reflected substantial increases in copper
and aluminum prices. The Company expects to realize another
modest increase in gross profit in 1997.
While SG&A expenses increased slightly in 1996 compared to 1995,
such expenses were considerably higher in 1994 primarily because
of the greater volume of business, i.e., warranty and selling
costs.
Interest expense has remained at approximately the same level for
three years, despite substantial capital expenditures in 1995 and
the significant increase in sales in 1994. Profits in years 1994-
1996 also helped to contain borrowings, as did effective control
of inventories.
Income before income taxes were comparable the last two years,
whereas such income in 1995 decreased 63% compared to 1994
primarily due to cost increases exceeding selling price
increases.
FINANCIAL CONDITION AND LIQUIDITY
The $3.7 million increase in accounts receivable at December 31,
1996, compared to year end 1995, was primarily attributable to
slower collections and, to a lesser extent, to increased sales in
the fourth quarter of 1996. Accounts receivable in 1995 were
comparable to 1994 as a percentage of sales. Inventories at
December 31, 1996 and 1995 were at approximately the same level,
but were higher at year end 1994 due to greater sales.
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Property, Plant and Equipment at December 31, 1996 and 1995 were
approximately the same amount, with depreciation being only
slightly more than additions during 1996. There was a $2 million
increase in PP&E in 1995, net of depreciation, which was
attributable to major expansions of the Company's Tulsa and
Longview, Texas, manufacturing facilities. All capital
expenditures in 1995 were financed out of that year's cash flow
and a minor amount of borrowings under the Company's revolving
credit bank loan, except for the Longview land and improvements
purchases which were financed by a bank term loan.
The size of accounts payable at December 31, 1996 and 1995
primarily reflect the inventories and sales volumes in each of
those years and the timing of payments to creditors.
Also, accrued liabilities at year-end 1996 and 1995 reflect the
amount of reserves (warranty and commissions) related to sales
and the timing of estimated income tax payments.
The capital needs of the Company are met primarily by its bank
revolving credit facility. Management believes this bank debt
(or comparable financing), term loans and projected profits from
operations will provide the necessary liquidity and capital
resources to the Company for at least the next five years. The
Company's belief that it will have the necessary liquidity and
capital resources is based upon its knowledge of the HVAC
industry and its place in that industry, its ability to limit the
growth of its business if necessary and its relationship with its
existing bank lender.
The Company's revolving credit line (which currently extends to
June 30, 1998) provides for maximum borrowings of $12,150,000.
Interest on this line is payable monthly at the Wall Street
Journal prime rate or LIBOR plus 1.85%, at the election of the
Company. This loan is collateralized by the accounts receivable,
inventory and general intangibles of the Company's two operating
subsidiaries.
FORWARD-LOOKING STATEMENTS
The outlook/expectation for increases in sales and gross profit
in 1997 expressed under Results of Operations above constitute
forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company believes that these forecasts
are based on reasonable assumptions. No assurances, however, can
be given that these goals will be achieved. Important factors
that could cause actual results to differ materially from those
in the forward-looking statements include (1) the timing and
extent of changes in material prices, (2) the effects of
fluctuations in the commercial/industrial new construction
market, and (3) the timing and extent of changes in interest
rates, as well as other competitive factors during the year.
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SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
AAON, INC.
Dated: April 3, 1997 By: /s/ Norman H. Asbjornson
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Norman H. Asbjornson, President
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Dated: April 3, 1997 /s/ Norman H. Asbjornson
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Norman H. Asbjornson
President and Director
(principal executive officer)
Dated: April 3, 1997 /s/ William A. Bowen
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William A. Bowen
Vice President-Finance and Director
(principal financial officer
and principal accounting officer)
Dated: April 3, 1997 /s/ John B. Johnson, Jr.
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John B. Johnson, Jr.
Director
Dated: April 3, 1997 /s/ Richard E. Minshall
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Richard E. Minshall
Director
