Investing in the Future
Growing Success
2016 ANNUAL REPORT
Norm Asbjornson | CEO Gary Fields | President
In 2016, we continued to build the foundation for future growth while achieving record sales and consistent profitability. Net
sales and net income were both record highs at $384 million and
$53.4 million, respectively. This year we expanded our product
offering to include mass-produced small packaged water-source
heat pumps manufactured on a state-of-the-art assembly line. We
also expanded our engineering department with a renewed focus on
product research and development. Most importantly, we expanded
the senior management team with our new president, Gary Fields.
Company Profile
AAON is engaged in the engineering, manufacturing, marketing and sale of air conditioning
and heating equipment consisting of standard, semi-custom and custom rooftop units, chillers,
packaged outdoor mechanical rooms, air handling units, condensing units, makeup air units,
energy recovery units, geothermal/water-source heat pumps and coils. Since the founding of
AAON in 1988, AAON has maintained a commitment to design, develop, manufacture and deliver
heating and cooling products to perform beyond all expectations and demonstrate the value of
AAON to our customers.
2425 S. Yukon Ave. • Tulsa, OK 74107-2728 • www.AAON.com
ROOFTOP U NIT S OUT D OOR AIR
HANDL ING UNIT S
C OND ENS ING U NIT S
PAC KA G E D OU T D OOR M E C HANICAL ROOMS
UNI T S
C OI L S
IND OOR AIR HANDL ING U NIT S
SA SERIES
SB SERIES
BOOSTER,
HYDRONIC,
& DX
RN SERIES
RQ SERIES
CB SERIES
CF SERIES
CN SERIES
CL SERIES
F1 SERIES V3 SERIES
SA SERIES
H3 SERIES
M2 SERIES M3 SERIES
M2 SERIES SA SERIES
SB SERIES
RQ SERIES
M2 SERIES
RN SERIES
RZ/RL SERIES
VERTICAL &
HORIZONTAL
WSHP
(2-240 tons)
(4-540 tons) (3-70 tons)
(800 - 100,000 + cfm)
(2-230 tons)
(800 - 100,000 + cfm)
(½ - 230 tons)
RZ/RL SERIES
RZ/RL SERIES RN SERIES RQ SERIES
BOILER MECHANICAL
ROOM
LF SERIES
LN SERIES
FLUID COOLER LZ SERIES
2016 Financial Highlights
2016 2015 2014 2013 2012
Income Data ($000 except per share data)
Net Sale
Gross Profit
Operating Income
Interest Income (Expense), Net
Depreciation
Pre-Tax Income
Net Income
Earnings per Share
Basic1
Diluted1
Balance Sheet ($000 except per share data)
Working Capital3
Current Assets3
Net Fixed Assets
Accumulated Depreciation
Cash & Cash Equivalents
Total Assets3
Current Liabilities
Long-Term Debt
Stockholders’ Equity
Stockholders’ Equity per Diluted Share1
Funds Flow Data ($000)
Operations
Investments
Financing
Net Increase (Decrease) in Cash
Ratio Analysis
Return on Average Equity
Return on Average Assets
Pre-Tax Income on Sales
Net Income of Sales
Total Liabilities to Equity
Quick Ratio2
Current Ratio
Year-End Price Earnings Ratio1
1 = Reflects 3-for-2 stock splits in July 2014 and July 2013
2 = (Cash & cash equivalents + investments + receivables)/current liabilities
358,632
108,681
71,302
161
11,741
71,339
45,728
356,322
108,263
68,006
276
11,553
68,246
44,158
321,140
89,792
55,825
221
12,312
56,294
37,547
303,114
70,499
44,234
42
13,407
44,317
27,449
0.85
0.84
0.81
0.80
0.68
0.68
0.50
0.49
80,800
124,213
101,061
124,348
7,908
232,854
43,413
-
178,918
3.28
82,227
124,940
91,922
113,605
21,952
226,974
42,713
-
174,059
3.14
72,515
108,844
87,283
105,142
12,085
210,665
36,329
-
164,106
2.95
47,428
87,053
90,695
96,929
3,159
189,000
39,625
-
138,136
2.49
55,355
(23,194)
(46,205)
(14,044)
53,518
(6,029)
(37,622)
9,867
53,592
(31,326)
(13,340)
8,926
51,167
(30,335)
(17,686)
3,146
25.9%
19.9%
19.9%
12.8%
0.3
2.1
2.9
28
26.1%
20.2%
19.2%
12.4%
0.3
2.2
2.9
28
24.8%
18.8%
17.5%
11.7%
0.3
2.5
3.0
31
21.1%
15.1%
14.6%
9.1%
0.4
1.6
2.2
19
3 = Reflects retrospective adoption of ASU 2015-17
383,977
118,080
79,594
292
13,035
79,991
53,376
1.01
1.00
101,939
140,981
114,892
137,146
24,153
256,530
39,042
-
205,898
3.85
63,923
(16,925)
(30,753)
16,245
27.7%
21.8%
20.8%
13.9%
0.2
2.4
3.6
33
Dear Fellow Stockholder,
Letter from the CEO
Norm Asbjornson | CEO
I am pleased to report the Company achieved record sales and earnings for the year ended
December 31, 2016. This strong performance
was earned despite the lethargic atmosphere
surrounding both commercial and residential
construct ion. We witnessed f i rm demand
from the new construction market, while our
replacement unit business was virtually flat
with the prior year.
This past year we made significant capital
and pe r sonne l expend i t u r e s wh i l e
expanding our product offerings and enlarging
ou r eng inee r i ng depa r tmen t . We made
these investments in our future to solidify
ou r r epu t a t i on a s one o f t he mos t
technological ly innovative leaders in the
HVAC indus t ry and t o de l i ve r g r ea t e r
long-term value to our stockholders.
S A L E S A N D E A R N I N G S
Net sa les fo r 2016 ga ined 7 .1% to a r ecord
$384.0 million compared with $358.6 million a
year ago. We witnessed a 12.5% increase in the
number of units sold but continued to experience
a shift (which began in 2015) throughout the year
to smaller tonnage, lower priced product lines,
tempering our revenue growth.
We con t i nued t o c l o se ly con t ro l bo th ou r
manufacturing and raw material costs. Our gross
profit increased to $118.1 million (30.8% of sales)
as compared to $108.7 million (30.3% of sales).
An improvement in manufacturing productivity
helped our margin and reduced the impact of the
shift to smaller tonnage, lower priced products.
Decl in ing warranty expenses had a pos i t ive
impact on total SG&A expenses, which increased
by only 2.9% to $38.5 million (10.0% of sales)
from $37.4 million (10.4% of sales) a year ago.
Income from operations benefitted from these
moderating expenses, and gained 11.6% to $79.6
mil l ion (20.7% of sa les) f rom $71.3 mil l ion
(19.9% of sales). Net income was impacted by
a lower effect ive tax rate (33.3% vs. 35.9%)
and increased 16.7% to $53.4 mill ion (13.9%
of sales) or $1.00 per diluted share, from $45.7
million (12.8% of sales) or $0.84 per diluted share.
The fully diluted earnings per share calculations
were based upon 53.4 million shares in 2016 and
54.5 million shares in 2015.
S T R O N G F I N A N C I A L C O N D I T I O N
At December 31, 2016 our financial condition
r ema ined qu i t e s t r ong . The cu r r en t r a t i o
was 3 .6 :1 inc lud ing cash , ca sh equ iva len t s
and investments of $43.7 million. Our capital
expenditures in the past year were $26.6 million and
we paid cash dividends of $12.7 million during 2016.
In November 2016, the Board of Directors increased
the regular semi-annual cash dividend to $0.13 per
share (or $0.26 annually), which represented an 18.2%
increase from the previous $0.11 per share (or
$0.22 annually).
During the past five years (as reflected in the chart
below) we have made total capital expenditures of
$86.8 million and total dividend payouts of $50.5
million. Our cash flow generation combined with
a strong capital position enabled the Company
to accommodate these expenses while providing
sufficient free cash flow to repurchase $101.40
million of stock during the same period.
During 2016 under our stock repurchase plan,
we bought approximate ly 166,000 shares of
our common s tock on the open market a t an
average price of $26.82 per share. In addition,
we purchased AAON stock from our employees’
2016 2015 2014 2013 2012
Net Income 53.4 45.7 44.2 37.5 27.4
Depreciation 13.0 11.7 11.6 12.3 13.4
Total Cash Flow 66.4 57.4 55.8 49.8 40.8
Capital Expenditures (26.6) (21.0) (16.1) (9.0) (14.1)
Dividend Payouts (12.7) (11.9) (9.7) (7.4) (8.8)
Free Cash Flow 27.1 24.5 30.0 33.4 17.9
Stock Repurchases (20.1) (37.1) (29.3) (8.2) (6.7)
We expect the laboratory will be completed by
mid -yea r 2018 w i th a t o t a l f i na l co s t o f
approximately $30 million.
Furthermore, our capital expenditures in 2016
re la ted to cons t ruc t ing the Company’s f i r s t
wate r- sou rce hea t pump p roduc t i on l i ne
were $6.7 million and for the current year, we
expect to spend an additional $6.0 mill ion to
complete the initial phase of this project. The
remainder of our capital expenditures will be directed
to a new sheet metal production line, electrical
improvemen t s , IT equ ipmen t and me ta l
fabrication machinery.
WAT E R - S O U R C E H E AT P U M P
In August 2015, AAON init iated i ts new
innovative Water-Source Heat Pump (WSHP)
pro jec t . The Company u t i l i zes a un ique
p r o du c t i o n me t h odo l o gy f o r i t s WSHP
products which allows for the integration of
mass production with mass customization.
Th i s manufac tu r ing p roces s i s
quite complex due to the need to
integrate software automation with
the fabrication of sheet metal and
copper as well as the insulation
of the cabinet and the storage
of product inventory. In order
to meet customer expectat ions
regarding the quality and delivery
of the WSHP products, we are
closely monitoring the incoming
order rate as well as production
levels as we implement our new production
methodology.
We be l i eve t ha t we w i l l be ab l e t o
accelerate both production and sales of our WSHP
products in the final half of this year and into
401(k) plan amounting to approximately $14.9
million during the same period. Over the past
five years (2012-2016) we have spent more than
$101 million on stock repurchases. We continue
to operate free of debt. Total shareholders’ equity
was $205.9 million or $3.85 per diluted share.
Our return on average stockholders’ equity was
27.7% in 2016 compared with 25.9% a year earlier.
C A P I TA L E X P E N D I T U R E S A N D
C A S H F L O W S
We have been and will remain firmly committed
to expending the financial capital and deploying
the human capi tal necessary to maintain our
strong competitive position as well as enhancing
our reputation as a leading manufacturer of the
highest quality, most innovative products in the
industry.
For 2017, we are budgeting approximately $42
million of capital expenditures, the highest level
in the Company’s history.
In Feb rua ry 2016 , AAON b roke
g round on a new eng inee r i ng
research and development laboratory
located at the Tulsa manufacturing
fac i l i ty. The three-s tory, 162,000
total square foot facility will be both
an acous t i c a l and pe r fo rmance
measu r ing l abo ra to ry and w i l l
enable AAON to meet and maintain
AHRI (Air Conditioning, Heating and
Ref r ige ra t ion Ins t i t u t e ) and DOE
(Department of Energy) certification.
In 2016 we spent $12.0 million devoted to the
bu i l d ing o f t he l abo ra to ry and fo r t he
current year we estimate additional construction
expenses will be approximately $14.0 million.
2018 as we gain a firm grasp on the cutting-edge
production methodology.
We estimate the total size of the WSHP
market to be in the vicinity of $550-
600 million annually. The majority
of WSHP sales are directed
t oward commerc ia l and
industrial multiple-room
bui ldings such as motels ,
schools and office buildings
wi th app rox ima te ly 50% o f
total sales derived from the replacement
market. We believe our new, highly innovative
WSHP product line will be very well received
in the marketplace and will enable AAON to
garner a sizeable portion of the total WSHP
market over the next several years.
R E S E A R C H A N D D E V E L O P M E N T
We understand the importance of maintaining
our industry position as a technological leader,
and recognize we must remain devoted and
fu l l y commi t t ed t o ou r r e s ea r ch and
development efforts in order to do so. In 2016, we
incurred research and development costs of $12.0
mi l l i on and fo r t he pa s t f i ve yea r s
(2012-2016), we had total research and
development costs of $34.6 million.
The commitment of capital to our research
and development efforts is not the only step
necessary to attain success. In the past
yea r we s ign i f i can t ly acce le ra t ed our
recruitment of degreed engineering personnel,
increasing the total number by approximately
40%. For the current year we anticipate our
research and development costs will increase.
R E C O G N I T I O N A N D AWA R D S
AAON was recognized for excellence in product
design in the 13th annual Dealer Design Awards
Program sponsored by The Air Conditioning
Hea t ing & Ref r igera t ion News magaz ine .
An independent panel of contractors acted
as judges in the contest that had 88 entries.
The Company’s LZ Se r i e s Ch i l l e r and
Outdoor Mechanical Room was the Gold Award
Winner in the HVAC Commercial Equipment
category in the July 18, 2016 issue of The ACHR
News, which is the leading trade magazine in
the heating, ventilating, air conditioning, and
r e f r i ge r a t i on i ndus t r i e s , w i th na t i ona l
distribution to over 33,000 HVACR contractors,
wholesalers and other industry professionals.
AAON was also pleased to have each of its LZ
Series Chiller and Packaged Outdoor Mechanical
Room and RN Series Horizontal Configuration
Rooftop Unit be named 2016 Product of the Year-
Gold by the readers of Consulting-Specifying
Engineer. Consulting-Specifying Engineer is a
monthly publication with a circulation of over
47,000 mechanical , e lect r ical and plumbing
engineers.
B O A R D O F D I R E C T O R S A N D
E X E C U T I V E L E A D E R S H I P C H A N G E S
The Company has recently experienced healthy
Boa rd and execu t i ve o f f i c e r r e f r e shmen t .
Angela E. Kouplen was elected to AAON’s Board
of Directors on May 24,
2016 . Ms . Koup len
has ove r 20
years of experience at
mu l t i p l e ene rgy
companies with emphases on
information technology, contract
management, sourcing vendor relations,
human resource management strategy and
governance. In 2012 Ms. Kouplen joined WPX
Energy, a Tulsa-based publicly-traded energy
company, previously part of the Williams Companies.
From 2012 through 2014 Ms. Kouplen served WPX
as t he D i r ec to r o f Ta l en t Acqu i s i t i on and
Leadership and since 2015 she has served as Vice
President of Information Technology. Ms. Kouplen’s
extensive experience in IT rela ted posi t ions
provides the Board with valuable insight and
enhanced knowledge on IT matters which are
increasingly vital to the Company’s operations
and success as wel l as i ts future growth and
profitability.
I n November 2016 , AAON’s Boa rd o f
Directors appointed Gary D. Fields as President
of the company. Mr. Fields has been a member of
AAON’s Board of Direc tors s ince 2015 and
continues to serve on the Board in addition to his
new role as President. Mr. Fields has more than
36 years of HVAC industry experience and was
a principal with Texas AirSystems. Mr. Fields
sold his interest in Texas AirSystems in 2012,
having seen it grow to a company with over $200
million in annual sales. For the past several years
Texas AirSystems has been among AAON’s top
performing independent sales representat ive
organ iza t ions . In h i s new ro le a s P res iden t
of AAON, Mr. Fields is init ially focusing his
attention on the sales and marketing efforts of
AAON’s entire product line.
The Boa rd o f D i r ec to r s o f
AAON recently nominated Steve
LeClair for election to the Board
at our 2017 Annual Meeting of
S tockholders . Mr. LeCla i r has
25 years of experience in various
executive, manufacturing, finance,
s a l e s and ope ra t i ona l pos i t i ons . Mr.
LeClair currently serves as President of HD
Supply Waterworks (a position he has held since
2012), and in such role is responsible for leading
the nation’s largest distributor of water, sewer,
storm and fire protection products. Prior to his
current role, he served as Chief Operating Officer
of HD Supply Waterworks from 2008 to 2011,
and P re s iden t o f HD Supp ly Lumber and
Building Mater ials f rom Apri l 2007 unt i l i ts
divestiture to ProBuild Holdings in 2008. Mr.
LeCla i r j o ined HD Supp ly i n 2005 a s
Sen io r D i r ec to r o f Ope ra t i ons . P r i o r t o
joining HD Supply, Mr. LeClair was a Senior
Vice P re s iden t a t Gene ra l E l ec t r i c (GE)
Cap i t a l Equ ipmen t Se rv i ce s f r om 2002
t o 2006 , and f rom 1992 t o 2002 he ld
va r i ous ro l e s a t GE App l i ances and
Power Gene ra t i on i n d i s t r i bu t i on ,
manufac tur ing and sa les . Mr. LeCla i r i s a
g r adua t e o f GE Power Gene ra t i on ’s
Manufacturing Management Program.
Mr. LeClair will replace Jerry R. Levine, whose
tenure on AAON’s Board of Directors will end
immediately following the 2017 Annual Meeting.
Mr. Levine has faithfully served AAON since
1999, and has provided extremely valuable
service as a member of
the Board of Directors
since 2008. I am very
pleased to report that
Jerry will be retained in
a consulting capacity
to provide inves tor
relations services to
the company after its
Annua l Mee t ing o f
Stockholders on May
16, 2017.
Additionally, the Board of Directors recenty
promoted Mikel D. Crews to the posit ion of
Vice President of Operations. Mr. Crews has
been with AAON since i ts founding and has
served the company in numerous operational,
p roduc t i on and i nven to ry managemen t
r o l e s du r ing h i s nea r l y 30 yea r s w i th t he
company. Mr. Crews’ vast knowledge of AAON’s
operations will be better leveraged through this
new position and having him oversee the day-
to-day operations of our Tulsa facilities allows
our President, Gary Fields, and myself to focus
on the Company’s long-term strategic goals.
S A L E S R E P R E S E N TAT I V E S '
P E R F O R M A N C E
Our manufacturer ’s representative network is
comprised of approximately 76 independent
representat ive organizat ions which operate
115 offices in al l 50 states, Canada and one
international office.
In 2014 we revised our regional sales managerial
structure which allowed for closer interaction
between internal regional managers and the
outside representatives and their customers.
This restructuring has proven
to be quite successful and
we continue our policy of
replacing underperforming
sa les off ices . Dur ing the
past year our independent
sales representative network
con t r ibu ted over 90% of
total sales.
The new WSHP p roduc t
l ine should s igni f icant ly
augment the representatives’
sales efforts by opening new markets to AAON
products. Furthermore, once completed in 2018,
our new laboratory will have a witness test area
which will allow customers the opportunity to
view product testing. This should greatly aid
the representatives’ sales and marketing efforts.
Our independent sales representatives have been
a significant contributor to the growth we’ve
experienced to date, and we continue working
to ensure they are well-positioned to contribute
to our future growth.
O U R E M P L O Y E E S
AAON strives to be the employer of choice
by bu i l d ing a cu l t u r e o f mu tua l t r u s t ,
promotion of the entrepreneurial spirit and the
recognition of talent and hard work. AAON
a t t r a c t s and r e t a in s a t a l en t ed work fo rce
using a mixture of compensation components,
including base salary, incentive pay, whether in the
form of cash or non-cash awards, and employee
benefits. We provide a non-discriminatory and
competitive total compensation package that rewards
employees who drive for results, commit to
continual improvement, save for the future,
take care of their health, and are interested in
the long-term well-being of AAON.
Dur ing t he pa s t yea r, AAON con t i nued
expanding the use of equity as a component
of compensat ion for a l l employees . AAON
bel ieves that , by doing so, i t wil l a l ign the
goals of the employees with the goals of the
stockholders. This will incentivize employees
to help AAON grow and succeed in the market
because they will see a direct connection to
their own personal wealth. AAON employees
have long understood the concept of succeeding
through the company’s growth as a result of the
AAON discretionary quarterly profit-sharing
program, which distributes 10% of AAON’s
pre-tax profits equally to nearly all personnel.
AAON is proud of the broad cultural diversity
of its employee base. Over 64% of the AAON
employee population is comprised of minorities
and ove r 26% a r e f ema le . A t bo th o f ou r
facilities, AAON employs people from over 30
countries worldwide. All employees are provided
with equal opportunities to grow and succeed
without regard to gender, race, ethnicity, national
origin, citizenship, disability, age, veteran status
or any other classification protected by law.
We va lue t he succe s s o f ou r emp loyees
which is evidenced by our generous tuition
reimbursement program, whereby we encourage
employees to explore learning opportunities.
We also provide in-house training and have
taken large strides to educate our employees
by implementing an on-line training program
for employees that al lows them to identify
t r a i n ing needs and mee t t hose needs a s
quickly and easily as possible. Based upon the
favorable responses and feedback we received
from the 2016 Employee Engagement Survey,
which demonstrates that the majority of our
employees are “engaged” or “highly engaged”
in their jobs at AAON, we believe our efforts
have been fruitful.
We use a performance matrix that is designed to
award employees based upon their performance
and impact to AAON. Employees are also
eva lua t ed ba sed upon t he i r adhe rence t o
the AAON core values of: integrity; mutual
trust and respect; quality; empowerment; and
innovation. Through our talent development
efforts, we are grooming the next generation
of AAON leadership.
O U T L O O K
We will continue to pursue our future growth
by remaining fully committed to increasing our
capital expenditures and research and development
efforts as well as expanding our recruitment of
skilled personnel.
Our h i s to ry o f sa le s and ea rn ings g rowth has
been exce l l en t and t he con t i nued suppo r t
and coope ra t i on o f ou r cu s tomer s , s a l e s
representatives and stockholders, coupled with the
total commitment of our employees, all of whose
names appear at the end of this report, will allow
us to sustain and accelerate our growth well into
the future.
We are truly honored to have you with us as we
continue investing in our future!
Sincerely,
Norman H. Asbjornson
Chief Executive Officer and Founder
March 20, 2017
1988
Company Timeline
AAON, an Oklahoma
corporation, was founded.
August
1989 1990 1991
1996 1997 1998 1999
Purchase of John Zink Air
Conditioning Division.
September
AAON purchased,
renovated and moved into a
184,000 square foot plant in
Tulsa, Oklahoma.
Introduced a new product line
of rooftop heating and air
conditioning units 2-140 tons.
Spring
Became a publicly traded
company with the reverse
acquisition of Diamond Head
Resources (now “AAON, Inc.),
a Nevada corporation.
Summer
Listed on NASDAQ Small Cap
- Symbol “AAON”.
December
Formed AAON Coil
Products, a Texas
Corporation, as a subsidiary
to AAON, Inc. (Nevada) and
purchase coil making assets of
Coil Plus.
December
Purchased 40 acres with
457,000 square foot plant and
22,000 square foot office space
located across from Tulsa
facility.
December
AAON received U.S. patent for
Blower Housing assembly.
April
U.S. patent granted to AAON
for air conditioner with energy
recovery heat wheel.
October
AAON yearly shipments
exceed $100 million.
Received U.S. patent for
Dimple Heat Exchanger Tube.
November
Completed Tulsa,
Oklahoma and Longview,
Texas plant additions
yielding a total exceeding one
million square feet.
Spring
1992 1993 1994 1995
2000 2001 2002 2003
AAON Coil Products
purchased, renovated and
moved into a 110,000 square
foot plant in Longview, Texas.
Spring
One-for-four reverse stock
split. Retired $1,927,000 of
subordinated debt.
September
Listed on the NASDAQ
National Market System.
November
Introduced a desiccant heat
recovery wheel option available
on all AAON rooftop units.
January
Purchased property with
26,000 square foot building
adjact to AAON Coil Products
plant in Longview, Texas.
Issued a 10% stock dividend.
March
Completed expansion of
the Tulsa facility to 332,000
square feet.
September
AAON added as a member of
the Russell 2000® Index
July
Expanded rooftop product line
to 230 tons.
Introduced evaporative-cooled
condensing energy savings
feature
Fall
3-for-2 stock split
September
AAON listed in Forbes’
200 Best Small Companies
October
3-for-2 stock split
June
Industry introduction of the
modular air handler and
chiller products.
Fall
AAON listed in Forbes’
Magazine’s “Hot Shots 200
Up & Comers.”
AAON listed in Forbes’ 200
Best Small Companies.
October
Purchased the assets of Air
Wise, of Mississauga, Ontario,
Canada.
May
Started production of
polyurethane foam-filled
double-wall construction
panels for rooftop and
chiller products using newly
purchased manufacturing
equipment.
July
AAON listed in Forbes’
200 Best Small Companies.
October
2004
AAON received U.S. Patent for
the De-Superheater for
Evaporative-Cooled
Conditioning
April
2005 2006 2007
2012 2013 2014 2015
AAON received U.S. Patent for
DPAC.
September
Introduction of light
commercial/residential
product lines.
November
AAON received U.S. Patent for
Plenum Fan Banding.
August
AAON introduced factory
engineered and assembled
packaged mechanical room,
which includes a boiler and
all piping and pumping
accessories.
April
Initiation of a semi-annual
cash dividend for AAON
shareholders.
June
Modular Air Handler
products extended to
50,000 cfm.
March
3-for-2 stock split.
August
AAON Listed in Forbes’ 200
Best Small Companies.
October
AAON rings closing bell
at NASDAQ.
December
Industry introduction of light
commercial geothermal heat
pump self-contained unit
product line.
Spring
AAON SB Series Self-
Contained Unit Wins ACHR
News Dealer Design
Award - Gold
July
Consulting-Specifying
Engineer magazine awarded
RN Series E-Cabinet Product
of the Year - Bronze.
September
AAON yearly shipments
exceed $300 million.
December
Opening of AAON Parts &
Supply Store.
3-for-2 stock split
AAON increases dividend
payment by 25%
May
25th Anniversary
Consulting-Specifying
Engineer magazine awarded
SB Series Product of the Year
- Bronze.
AAON rings opening bell
at NASDAQ.
September
AAON named top Tulsa area
stock value.
December
3-for-2 stock split
June
AAON LN Series Chiller wins
ACHR New Dealer Design
Award - Bronze
July
AAON donates $3 Million to A
Gathering Place for Tulsa.
September
AAON increases dividend
payment by 20%
May
AAON receives Gold
Dealer Design Award in
the Ventilation category.
June
AAON Low Leakage Dampers
voted “Product of the Year”
by Consulting-Specifying
Engineer magazine.
September
2008 2009 2010 2011
2016
Company Timeline
AAON rings opening bell
at NASDAQ.
AAON voted “Most Valuable
Product” and “Product of the
Year” by Consulting-Specifying
Engineer Magazine.
AAON listed in Forbes’
200 Best Small Companies.
October
AAON increased dividend
payment by 13%.
Summer
AAON named to the Fortune
40 : Best Stocks to Retire On.
AAON added to Standard &
Poor’s Small Cap 600 Index.
AAON listed in Forbes’
200 Best Small Companies.
National Society of Professional
Engineers Award AAON 2009
Product of the Year.
AAON products received
Dealer Design Awards from
ACHR News.
Fall
AAON RQ Series win ACHR
News Dealer
Design award.
July
AAON RN Series rooftop unit
named 2010 Product of
the Year - Silver by
Consulting-Specifying
Engineer Magazine.
AAON LC Series Chiller
product named 2010
Product of the Year - Bronze
by Consulting-Specifying
Engineer Magazine.
AAON Listed in Forbes’ 200
Best Small Companies
October
National Society of
Professional Engineers
awarded RQ Series High
Efficiency Rootop Unit “ -
Product of the Year.”
3-for-2 stock split.
AAON Geothermal RQ Series
wins Silver in ACHR News
Dealer Design Competition.
Single Zone VAV rooftop units
win Honorable Mention in
ACHR News Dealer Deisgn
Competition.
Summer
AAON Geothermal RQ Series
product named 2011 Product
of the Year - Silver by
Consulting-Specifying
Engineer magazine.
October
AAON received U.S.
Patent for the Low
Leakage Dampers
January
AAON Breaks Ground on New
Engineering R&D Lab
February
AAON LZ Series Packaged
Outdoor Mechanical Room
wins ACHR News Dealer
Design Award- Gold
July
Consulting-Specifying
Engineer magazine
awarded LZ Series Outdoor
Mechanical Room Product
of the Year - Gold,
Chiller category.
September
AAON increases dividend
payment by 18%
November
Consulting-Specifying
Engineer magazine
awarded RN Series
Horizontal Configuration
Rooftop Unit Product of the
Year - Gold, HVAC/R category.
- Norm Asbjornson, CEO
We believe our new, highly innovative water-source
heat pump product line will be very well received in
the marketplace and will enable AAON to garner a
sizeable portion of the total water-source heat pump
market over the next several years.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2016
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________________________ to _____________________________
Commission file number: 0-18953
AAON, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0448736
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2425 South Yukon, Tulsa, Oklahoma 74107
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 583-2266
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.004
(Title of Class)
Rights to Purchase Series A Preferred Stock
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
[ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
[ ] Yes [X] No
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.
[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] Yes [ ] No
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.
[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer
or a smaller reporting company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Large accelerated filer [X] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act.)
[ ] Yes [X] No
The aggregate market value of the common equity held by non-affiliates computed by reference to the closing price of
registrant’s common stock on the last business day of registrant’s most recently completed second quarter June 30,
2016 was $1,093.9 million.
As of February 16, 2017, registrant had outstanding a total of 52,641,334 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 16, 2017, are incorporated into Part III.
TABLE OF CONTENTS
Item Number and Caption
Page
Number
PART I
1. Business.
1A. Risk Factors.
1B. Unresolved Staff Comments.
2. Properties.
3. Legal Proceedings.
4. Mine Safety Disclosure.
PART II
5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
6. Selected Financial Data.
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.
7A. Quantitative and Qualitative Disclosures About Market Risk.
8. Financial Statements and Supplementary Data.
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.
9A. Controls and Procedures.
9B. Other Information.
PART III
10. Directors, Executive Officers and Corporate Governance.
11. Executive Compensation.
12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
13. Certain Relationships and Related Transactions, and Director Independence.
14. Principal Accountant Fees and Services.
PART IV
15. Exhibits and Financial Statement Schedules.
1
5
8
8
8
8
8
11
12
21
22
43
43
46
46
46
46
46
46
47
1
Forward-Looking Statements
This Annual Report includes “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”,
“should”, “will”, and variations of such words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and
assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on which they are made. We undertake no obligations to
update publicly any forward-looking statements, whether as a result of new information, future events or
otherwise. Important factors that could cause results to differ materially from those in the forward-looking statements
include (1) the timing and extent of changes in raw material and component prices, (2) the effects of fluctuations in the
commercial/industrial new construction market, (3) the timing and extent of changes in interest rates, as well as other
competitive factors during the year, and (4) general economic, market or business conditions.
PART I
Item 1. Business.
General Development and Description of Business
AAON, Inc., a Nevada corporation, ("AAON Nevada") was incorporated on August 18, 1987. Our operating subsidiaries
include AAON, Inc., an Oklahoma corporation, and AAON Coil Products, Inc., a Texas corporation. Unless the context
otherwise requires, references in this Annual Report to “AAON,” the “Company”, “we”, “us”, “our”, or “ours” refer
to AAON Nevada and our subsidiaries.
We are engaged in the engineering, manufacturing, marketing and sale of air conditioning and heating equipment
consisting of standard, semi-custom and custom rooftop units, chillers, packaged outdoor mechanical rooms, air handling
units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps and coils.
Products and Markets
Our products serve the commercial and industrial new construction and replacement markets. To date, our sales have
been primarily to the domestic market. Foreign sales accounted for approximately $14.7 million, $14.6 million and
$19.9 million of our sales in 2016, 2015 and 2014, respectively.
Our rooftop and condensing unit markets primarily consist of units installed on commercial or industrial structures of
generally less than ten stories in height. Our air handling units, self-contained units, geothermal/water-source heat
pumps, chillers, packaged outdoor mechanical rooms and coils are applicable to all sizes of commercial and industrial
buildings.
The size of these markets is determined primarily by the number of commercial and industrial building completions.
The replacement market consists of products installed to replace existing units/components that are worn or damaged.
Currently, slightly over half of the industry's market consists of replacement units.
The commercial and industrial new construction market is subject to cyclical fluctuations in that it is generally tied to
housing starts, but has a lag factor of six to 18 months. Housing starts, in turn, are affected by such factors as interest
rates, the state of the economy, population growth and the relative age of the population. When new construction is
down, we emphasize the replacement market.
Based on our 2016 sales of $384.0 million, we estimate that we have approximately a 12-13% share of the greater than
five ton rooftop market and a 2-3% share of the less than five ton market. Approximately 55% of our sales were generated
from the renovation and replacement markets and 45% from new construction. The percentage of sales for new
construction vs. replacement to particular customers is related to the customer’s stage of development.
2
We purchase certain components, fabricate sheet metal and tubing and then assemble and test the finished products.
Our primary finished products consist of a single unit system containing heating and cooling in a self-contained cabinet,
referred to in the industry as "unitary products”. Our other finished products are chillers, packaged outdoor mechanical
rooms, coils, air handling units, condensing units, makeup air units, energy recovery units, rooftop units and geothermal/
water-source heat pumps.
We offer three groups of rooftop units: the RQ Series, consisting of eight cooling sizes ranging from two to ten tons;
the RN Series, offered in 28 cooling sizes ranging from six to 140 tons; and the RL Series, which is offered in 21 cooling
sizes ranging from 45 to 240 tons.
We also offer the SA, SB and M2 Series as indoor packaged, water-cooled or geothermal/water-source heat pump self-
contained units with cooling capacities of three to 70 tons.
Our small packaged geothermal/water-source heat pump units consist of the WH Series horizontal configuration and
WV Series vertical configuration, both from one-half to five tons.
We manufacture a LF Series chiller, air-cooled, a LN Series chiller, air-cooled, and a LZ Series chiller and packaged
outdoor mechanical room, which are available in both air-cooled condensing and evaporative-cooled configurations,
covering a range of four to 540 tons. BL Series boiler outdoor mechanical rooms are also available with 400-6,000
MBH heating capacity. FZ Series fluid cooler outdoor mechanical rooms are also available with a range of 50 to 450
tons.
We offer four groups of condensing units: the CB Series, two to five tons; the CF Series, two to 70 tons; the CN Series,
55 to 140 tons; and the CL Series, 45 to 230 tons.
Our air handling units consist of the indoor F1, H3 and V3 Series and the modular M2 and M3 Series, as well as air
handling unit configurations of the RQ, RN, RL and SA Series units.
Our energy recovery option applicable to our RQ, RN, RL and SB units, as well as our V3, M2 and M3 Series air
handling units, respond to the U.S. Clean Air Act mandate to increase fresh air in commercial structures. Our products
are designed to compete on the higher quality end of standardized products.
Performance characteristics of our products range in cooling capacity from one-half to 540 tons and in heating capacity
from 69,000 to 9,000,000 BTUs. All of our products meet the Department of Energy's (“DOE”) minimum efficiency
standards, which define the maximum amount of energy to be used in producing a given amount of cooling. Many of
our units far exceed these minimum standards and are among the highest efficiency units currently available.
A typical commercial building installation requires one ton of air conditioning for every 300-400 square feet or, for a
100,000 square foot building, 250 tons of air conditioning, which can involve multiple units.
Major Customers
One customer, Texas AirSystems, accounted for 10% or more of our sales during 2016 and 2015. No customer accounted
for 10% or more of our sales during 2014.
Sources and Availability of Raw Materials
The most important materials we purchase are steel, copper and aluminum, which are obtained from domestic
suppliers. We also purchase from other domestic manufacturers certain components, including compressors, electric
motors and electrical controls used in our products. We attempt to obtain the lowest possible cost in our purchases of
raw materials and components, consistent with meeting specified quality standards. We are not dependent upon any
one source for raw materials or the major components of our manufactured products. By having multiple suppliers, we
believe that we will have adequate sources of supplies to meet our manufacturing requirements for the foreseeable
future.
3
Sourcing of raw materials may be impacted in the future by the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the "Dodd-Frank Act") that contains provisions to improve transparency and accountability concerning the supply
of certain minerals, known as "conflict minerals", originating from the Democratic Republic of Congo and adjoining
countries. As companies begin implementing the requirements adopted by the Securities and Exchange Commission
("SEC") in response to the provisions in the Dodd-Frank Act, availability of materials that contain conflict minerals
may be affected.
We attempt to limit the impact of price fluctuations on these materials by entering into cancellable and non-cancellable
fixed price contracts with our major suppliers for periods of six to 18 months. We expect to receive delivery of raw
materials from our fixed price contracts for use in our manufacturing operations.
Representatives
We employ a sales staff of 31 individuals and utilize approximately 65 independent manufacturer representatives'
organizations (“Representatives”) having 104 offices to market our products in the United States and Canada. We also
have one international sales organization, which utilizes 12 distributors in other countries. Sales are made directly to
the contractor or end user, with shipments being made from our Tulsa, Oklahoma, and Longview, Texas, plants to the
job site.
Our products and sales strategy focuses on niche markets. The targeted markets for our equipment are customers seeking
products of better quality than offered, and/or options not offered, by standardized manufacturers.
To support and service our customers and the ultimate consumer, we provide parts availability through our sales offices.
We also have factory service organizations at each of our plants. Additionally, a number of the Representatives we
utilize have their own service organizations, which, in connection with us, provide the necessary warranty work and/
or normal service to customers.
Warranties
Our product warranty policy is: the earlier of one year from the date of first use or 18 months from date of shipment
for parts only; an additional four years for compressors (if applicable); 15 years on aluminized steel gas-fired heat
exchangers (if applicable); 25 years on stainless steel heat exchangers (if applicable); and ten years on gas-fired heat
exchangers in RL products (if applicable). Our warranty policy for the RQ series covers parts for two years from date
of unit shipment and labor for one year from date of unit shipment. Our warranty policy for the WH and WV Series
geothermal/water-source heat pumps covers parts for five years from the date of manufacture.
The Company also sells extended warranties on parts for various lengths of time ranging from six months to ten years.
Revenue for these separately priced warranties is deferred and recognized on a straight-line basis over the separately
priced warranty period.
Research and Development
Our products are engineered for performance, flexibility and serviceability. This has become a critical factor in
competing in the heating, ventilation and air conditioning (“HVAC”) equipment industry. We must continually develop
new and improved products in order to compete effectively and to meet evolving regulatory standards in all of our
major product lines.
All of our Research and Development ("R&D") activities are self-sponsored, rather than customer-sponsored. R&D
activities have involved the RQ, RN and RL (rooftop units), F1, H3, V3, M2 and M3 (air handling units), LF, LN and
LZ (chillers), CB, CF and CN (condensing units), SA and SB (self-contained units), WH and WV (water-source heat
pumps), FZ (fluid coolers) and BL (boilers), as well as component evaluation and refinement, development of control
systems and new product development. We incurred research and development expenses of approximately $12.0 million,
$7.5 million and $6.3 million in 2016, 2015 and 2014, respectively.
4
Backlog
Our backlog as of February 1, 2017 was approximately $53.5 million compared to approximately $52.3 million as of
February 1, 2016. The current backlog consists of orders considered by management to be firm and generally are filled
on average within approximately 60 to 90 days after an order is deemed to become firm; however, the orders are subject
to cancellation by the customers.
Working Capital Practices
Working capital practices in the industry center on inventories and accounts receivable. Our management regularly
reviews our working capital with a view of maintaining the lowest level consistent with requirements of anticipated
levels of operation. Our greatest needs arise during the months of July - November, the peak season for inventory
(primarily purchased material) and accounts receivable. Our working capital requirements are generally met by cash
flow from operations and a bank revolving credit facility, which currently permits borrowings up to $30 million and
had a zero balance at December 31, 2016. We believe that we will have sufficient funds available to meet our working
capital needs for the foreseeable future.
Seasonality
Sales of our products are moderately seasonal with the peak period being July - November of each year due to timing
of construction projects being directly related to warmer weather.
Competition
In the standardized market, we compete primarily with Lennox International, Inc., Trane (Ingersoll Rand Limited),
York (Johnson Controls Inc.) and Carrier (United Technologies Corporation). All of these competitors are substantially
larger and have greater resources than we do. Our products compete on the basis of total value, quality, function,
serviceability, efficiency, availability of product, product line recognition and acceptability of sales outlet. However,
in new construction where the contractor is the purchasing decision maker, we are often at a competitive disadvantage
because of the emphasis placed on initial cost. In the replacement market and other owner-controlled purchases, we
have a better chance of getting the business since quality and long-term cost are generally taken into account.
Employees
As of February 12, 2017, we employed 1,619 permanent employees. Our employees are not represented by
unions. Management considers its relations with our employees to be good.
Patents, Trademarks, Licenses and Concessions
We do not consider any patents, trademarks, licenses or concessions to be material to our business operations, other
than patents issued regarding our energy recovery wheel option, blower, gas-fired heat exchanger, evaporative-cooled
condenser de-superheater and low leakage damper which have terms of 20 years with expiration dates ranging from
2016 to 2033.
Environmental Matters
Laws concerning the environment that affect or could affect our operations include, among others, the Clean Water
Act, the Clean Air Act, the Resource Conservation and Recovery Act, the Occupational Safety and Health Act, the
National Environmental Policy Act, the Toxic Substances Control Act, regulations promulgated under these Acts, and
any other federal, state or local laws or regulations governing environmental matters. We believe that we are in
compliance with these laws and that future compliance will not materially affect our earnings or competitive position.
Available Information
Our Internet website address is http://www.aaon.com. Our annual reports on Form 10-K, quarterly reports on Form 10-
Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended, will be available free of charge through our Internet website as
5
soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information
on our website is not a part of, or incorporated by reference into, this annual report on Form 10-K.
Copies of any materials we file with the SEC can also be obtained free of charge through the SEC’s website at http://
www.sec.gov, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, or by calling the
SEC at 1-800-732-0330.
Item 1A. Risk Factors.
The following risks and uncertainties may affect our performance and results of operations. The discussion below
contains "forward-looking statements" as outlined in the Forward-Looking Statements section above. Our ability to
mitigate risks may cause our future results to materially differ from what we currently anticipate. Additionally, the
ability of our competitors to react to material risks will affect our future results.
Our business can be hurt by economic conditions.
Our business is affected by a number of economic factors, including the level of economic activity in the markets in
which we operate. Sales in the commercial and industrial new construction markets correlate to the number of new
homes and buildings that are built, which in turn is influenced by cyclical factors such as interest rates, inflation,
consumer spending habits, employment rates and other macroeconomic factors over which we have no control. In the
HVAC business, a decline in economic activity as a result of these cyclical or other factors typically results in a decline
in new construction and replacement purchases which could impact our sales volume and profitability.
We may be adversely affected by problems in the availability, or increases in the prices, of raw materials and
components.
Problems in the availability, or increases in the prices, of raw materials or components could depress our sales or
increase the costs of our products. We are dependent upon components purchased from third parties, as well as raw
materials such as steel, copper and aluminum. Occasionally, we enter into cancellable and non-cancellable contracts
on terms from six to 18 months for raw materials and components at fixed prices. However, if a key supplier is unable
or unwilling to meet our supply requirements, we could experience supply interruptions or cost increases, either of
which could have an adverse effect on our gross profit.
We risk having losses resulting from the use of non-cancellable fixed price contracts.
Historically, we have attempted to limit the impact of price fluctuations on commodities by entering into non-cancellable
fixed price contracts with our major suppliers for periods of six to 18 months. We expect to receive delivery of raw
materials from our fixed price contracts for use in our manufacturing operations. These fixed price contracts are not
accounted for using hedge accounting since they meet the normal purchases and sales exemption.
We may not be able to successfully develop and market new products.
Our future success will depend upon our continued investment in research and new product development and our ability
to continue to achieve new technological advances in the HVAC industry. Our inability to continue to successfully
develop and market new products or our inability to implement technological advances on a pace consistent with that
of our competitors could lead to a material adverse effect on our business and results of operations.
We may incur material costs as a result of warranty and product liability claims that would negatively affect
our profitability.
The development, manufacture, sale and use of our products involve a risk of warranty and product liability claims. Our
product liability insurance policies have limits that, if exceeded, may result in material costs that would have an adverse
effect on our future profitability. In addition, warranty claims are not covered by our product liability insurance and
there may be types of product liability claims that are also not covered by our product liability insurance.
6
We may not be able to compete favorably in the highly competitive HVAC business.
Competition in our various markets could cause us to reduce our prices or lose market share, which could have an
adverse effect on our future financial results. Substantially all of the markets in which we participate are highly
competitive. The most significant competitive factors we face are product reliability, product performance, service and
price, with the relative importance of these factors varying among our product line. Other factors that affect competition
in the HVAC market include the development and application of new technologies and an increasing emphasis on the
development of more efficient HVAC products. Moreover, new product introductions are an important factor in the
market categories in which our products compete. Several of our competitors have greater financial and other resources
than we have, allowing them to invest in more extensive research and development. We may not be able to compete
successfully against current and future competition and current and future competitive pressures faced by us may
materially adversely affect our business and results of operations.
The loss of Norman H. Asbjornson could impair the growth of our business.
Norman H. Asbjornson, our founder, has served as our Chief Executive Officer from inception to date and President
from inception to November 2016. He has provided the leadership and vision for our strategy and growth. Although
important responsibilities and functions have been delegated to other highly experienced and capable management
personnel, and our products are technologically advanced and well positioned for sales well into the future, the death,
disability or retirement of Mr. Asbjornson could impair the growth of our business. We do not have an employment
agreement with Mr. Asbjornson.
The Board of Directors attempts to manage this risk by continually engaging in succession planning concerning Mr.
Asbjornson (as well as other key management personnel), as demonstrated by the Board's appointment of Gary D.
Fields as President of AAON in November 2016.
Our business is subject to the risks of interruptions by cybersecurity attacks.
We depend upon information technology infrastructure, including network, hardware and software systems to conduct
our business. Despite our implementation of network and other cybersecurity measures, our information technology
system and networks could be disrupted or experience a security breach from computer viruses, break-ins and similar
disruptions from unauthorized tampering with our computer systems. Our security measures may not be adequate to
protect against highly targeted sophisticated cyber-attacks, or other improper disclosures of confidential and/or sensitive
information. Additionally, we may have access to confidential or other sensitive information of our customers, which,
despite our efforts to protect, may be vulnerable to security breaches, theft, or other improper disclosure. Any cyber-
related attack or other improper disclosure of confidential information could have a material adverse effect on our
business, as well as other negative consequences, including significant damage to our reputation, litigation, regulatory
actions and increased cost.
Exposure to environmental liabilities could adversely affect our results of operations.
Our future profitability could be adversely affected by current or future environmental laws. We are subject to extensive
and changing federal, state and local laws and regulations designed to protect the environment in the United States and
in other parts of the world. These laws and regulations could impose liability for remediation costs and result in civil
or criminal penalties in case of non-compliance. Compliance with environmental laws increases our costs of doing
business. Because these laws are subject to frequent change, we are unable to predict the future costs resulting from
environmental compliance.
We are subject to potentially extreme governmental regulations.
We always face the possibility of new governmental regulations which could have a substantial or even extreme negative
effect on our operations and profitability. Negotiations during the summer of 2013 mitigated some of the negative
effects of the Department of Energy Final Rule, Regulatory Identification No. 1904-AC23, published on March 7, 2011.
However, certain additional testing and listing requirements are still in place and scheduled to be phased in.
7
Several other intrusive component part governmental regulations are in process. If these proposals become final rules,
the effect would be the regulation of compressors and fans in products for which the Department of Energy does not
have current authority. This could affect equipment we currently manufacture and could have an impact on our product
design, operations and profitability.
The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and
accountability concerning the supply of certain minerals, known as "conflict minerals", originating from the Democratic
Republic of Congo and adjoining countries. As a result, in August 2012, the SEC adopted annual disclosure and reporting
requirements for those companies who use conflict minerals in their products. Accordingly, we began our reasonable
country of origin inquiries in fiscal year 2013, with initial disclosure requirements beginning in May 2014. There are
costs associated with complying with these disclosure requirements, including for due diligence to determine the sources
of conflict minerals used in our products and other potential changes to products, processes or sources of supply as a
consequence of such verification activities. The implementation of these rules could adversely affect the sourcing,
supply and pricing of materials used in our products. As there may be only a limited number of suppliers offering
“conflict free” conflict minerals, we cannot be sure that we will be able to obtain necessary conflict minerals from such
suppliers in sufficient quantities or at competitive prices. Also, we may face reputational challenges if we determine
that certain of our products contain minerals not determined to be conflict free or if we are unable to sufficiently verify
the origins for all conflict minerals used in our products through the procedures we may implement.
We are subject to adverse changes in tax laws.
Our tax expense or benefits could be adversely affected by changes in tax provisions, unfavorable findings in tax
examinations or differing interpretations by tax authorities. We are unable to estimate the impact that current and future
tax proposals and tax laws could have on our results of operations. We are currently subject to state and local tax
examinations for which we do not expect any major assessments.
We are subject to international regulations that could adversely affect our business and results of operations.
Due to our use of representatives in foreign markets, we are subject to many laws governing international relations,
including those that prohibit improper payments to government officials and commercial customers, and restrict where
we can do business, what information or products we can supply to certain countries and what information we can
provide to a non-U.S. government, including but not limited to the Foreign Corrupt Practices Act, U.K. Bribery Act
and the U.S. Export Administration Act. Violations of these laws, which are complex, may result in criminal penalties
or sanctions that could have a material adverse effect on our business, financial condition and results of operations.
Operations may be affected by natural disasters, especially since most of our operations are performed at a
single location.
Natural disasters such as tornadoes and ice storms, as well as accidents, acts of terror, infection and other factors beyond
our control could adversely affect our operations. Especially, as our facilities are in areas where tornadoes are likely
to occur, and the majority of our operations are at our Tulsa facilities, the effects of natural disasters and other events
could damage our facilities and equipment and force a temporary halt to manufacturing and other operations, and such
events could consequently cause severe damage to our business. We maintain insurance against these sorts of events;
however, this is not guaranteed to cover all the losses and damages incurred.
If we are unable to hire, develop or retain employees, it could have an adverse effect on our business.
We compete to hire new employees and then seek to train them to develop their skills. We may not be able to successfully
recruit, develop and retain the personnel we need. Unplanned turnover or failure to hire and retain a diverse, skilled
workforce, could increase our operating costs and adversely affect our results of operations.
Variability in self-insurance liability estimates could impact our results of operations.
We self-insure for employee health insurance and workers’ compensation insurance coverage up to a predetermined
level, beyond which we maintain stop-loss insurance from a third-party insurer for claims over $200,000 and $750,000
for employee health insurance claims and workers' compensation insurance claims, respectively. Our aggregate exposure
varies from year to year based upon the number of participants in our insurance plans. We estimate our self-insurance
liabilities using an analysis provided by our claims administrator and our historical claims experience. Our accruals
8
for insurance reserves reflect these estimates and other management judgments, which are subject to a high degree of
variability. If the number or severity of claims for which we self-insure increases, it could cause a material and adverse
change to our reserves for self-insurance liabilities, as well as to our earnings.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
As of December 31, 2016, we own all of our facilities, consisting of approximately 1.55 million square feet of space
for office, manufacturing, warehouse, assembly operations and parts sales in Tulsa, Oklahoma, and Longview, Texas. We
believe that our facilities are well maintained and are in good condition and suitable for the conduct of our business.
Our plant and office facilities in Tulsa, Oklahoma, consist of a 342,000 sq. ft. building (327,000 sq. ft. of manufacturing/
warehouse space and 15,000 sq. ft. of office space) located on a 12-acre tract of land at 2425 South Yukon Avenue, and
a 940,000 sq. ft. manufacturing/warehouse building and a 70,000 sq. ft. office building located on an approximately
78-acre tract of land across the street from the original facility (2440 South Yukon Avenue) (the "Tulsa facilities").
Our manufacturing area is in heavy industrial type buildings, with some coverage by overhead cranes, containing
manufacturing equipment designed for sheet metal fabrication and metal stamping. The manufacturing equipment
contained in the facilities consists primarily of automated sheet metal fabrication equipment, supplemented by
presses. Assembly lines consist of six cart-type conveyor lines and one roller-type conveyor line with variable line
speed adjustment, which are motor driven. Subassembly areas and production line manning are based upon line speed.
In February 2016, we broke ground on a new engineering research and development laboratory at the Tulsa
manufacturing facility. The three-story 75,000 square foot facility will be both an acoustical and a performance
measuring laboratory. The new facility will consist of seven psychrometric chambers allowing AAON to meet and
maintain industry certifications.
Our operations in Longview, Texas, are conducted in a plant/office building at 203-207 Gum Springs Road, containing
263,000 sq. ft. on 33.0 acres. The manufacturing area (approximately 256,000 sq. ft.) is located in three 120-foot wide
sheet metal buildings connected by an adjoining structure. The remaining 7,000 square feet are utilized as office
space. The facility is built for light industrial manufacturing.
Item 3. Legal Proceedings.
We are not a party to any pending legal proceeding which management believes is likely to result in a material liability
and no such action has been threatened against us, or, to the best of our knowledge, is contemplated.
Item 4. Mine Safety Disclosure.
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Our common stock is quoted on the NASDAQ Global Select Market under the symbol "AAON". The table below
summarizes the intraday high and low reported sale prices for our common stock for the past two fiscal years. As of
the close of business on February 16, 2017, there were 1,115 holders of record of our common stock.
9
Quarter Ended High Low
March 31, 2015 $24.71 $20.85
June 30, 2015 $24.95 $22.39
September 30, 2015 $23.23 $19.12
December 31, 2015 $25.15 $19.19
March 31, 2016 $28.02 $19.49
June 30, 2016 $28.27 $25.65
September 30, 2016 $29.04 $25.75
December 31, 2016 $33.90 $27.55
Dividends - At the discretion of the Board of Directors, we pay semi-annual cash dividends. Board approval is required
to determine the date of declaration and amount for each semi-annual dividend payment.
Our recent dividends are as follows:
Declaration Date Record Date Payment Date Dividend per Share
May 2, 2014 June 12, 2014 July 1, 2014 $0.09
November 4, 2014 December 2, 2014 December 23, 2014 $0.09
May 19, 2015 June 12, 2015 July 1, 2015 $0.11
October 29, 2015 December 2, 2015 December 23, 2015 $0.11
May 24, 2016 June 10, 2016 July 1, 2016 $0.11
November 9, 2016 December 2, 2016 December 23, 2016 $0.13
Additionally, on June 5, 2014, we declared a three-for-two stock split of the Company's common stock to be paid in
the form of a stock dividend on July 16, 2014. Stockholders of record at the close of business on June 27, 2014 received
one additional share for every two shares they held as of that date.
The following is a summary of our share-based compensation plans as of December 31, 2016:
EQUITY COMPENSATION PLAN INFORMATION
Plan category
(a)
Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights
(b)
Weighted-average exercise
price of outstanding options,
warrants and rights
(c)
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
The 2007 Long-
Term Incentive
Plan 410,236 $ 10.57 —
The 2016 Long-
Term Incentive
Plan — $ — 3,393,534
10
Repurchases during the fourth quarter of 2016 were as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
(a)
Total
Number
of Shares
(or Units
(b)
Average
Price
Paid
(Per Share
(c)
Total Number
of Shares (or
Units) Purchased
as part of
Publicly Announced
(d)
Maximum Number (or
Approximate Dollar
Value) of Shares (or
Units) that may yet be
Purchased under the
Period Purchased) or Unit) Plans or Programs Plans or Programs
October 2016 34,455 $ 29.61 34,455 —
November 2016 81,225 30.80 81,225 —
December 2016 45,234 32.87 45,234 —
Total 160,914 $ 31.13 160,914 —
Comparative Stock Performance Graph
The following performance graph compares our cumulative total shareholder return, the NASDAQ Composite and a
peer group of U.S. industrial manufacturing companies in the air conditioning, ventilation, and heating exchange
equipment markets from December 31, 2011 through December 31, 2016. The graph assumes that $100 was invested
at the close of trading December 31, 2011, with reinvestment of dividends. Our peer group includes Lennox International,
Inc., Ingersoll Rand Limited, Johnson Controls Inc., and United Technologies Corporation. This table is not intended
to forecast future performance of our Common Stock.
This stock performance Graph is not deemed to be “soliciting material” or otherwise be considered to be “filed” with
the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 (Exchange Act) or to the
liabilities of Section 18 of the Exchange Act, and should not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates it by
reference into such a filing.
11
Item 6. Selected Financial Data.
The following selected financial data should be read in conjunction with our Consolidated Financial Statements and
Notes thereto included under Item 8 of this report and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained in Item 7.
Years Ended December 31,
Results of Operations: 2016 2015 2014 2013 2012
(in thousands, except per share data)
Net sales $ 383,977 $ 358,632 $ 356,322 $ 321,140 $ 303,114
Net income $ 53,376 $ 45,728 $ 44,158 $ 37,547 $ 27,449
Earnings per share:
Basic $ 1.01 $ 0.85 $ 0.81 $ 0.68 $ 0.50
Diluted $ 1.00 $ 0.84 $ 0.80 $ 0.68 $ 0.49
Cash dividends declared per common share: $ 0.24 $ 0.22 $ 0.18 $ 0.13 $ 0.16
(1)
(1) Includes special dividend of $0.05 per common share paid on December 24, 2012.
December 31,
Financial Position at End of Fiscal Year: 2016 2015 2014 2013 2012
(in thousands)
Working capital $ 101,939 $ 80,800 $ 82,227 $ 72,515 $ 47,428
Total assets 256,530 232,854 226,974 210,665 189,000
Long-term and current debt — — — — —
Total stockholders’ equity 205,898 178,918 174,059 164,106 138,136
Use of Non-GAAP Financial Measure
To supplement the Company’s consolidated financial statements presented in accordance with generally accepted
accounting principles (“GAAP”), an additional non-GAAP financial measure is provided and reconciled in the following
table. The Company believes that this non-GAAP financial measure, when considered together with the GAAP financial
measures, provides information that is useful to investors in understanding period-over-period operating results. The
Company believes that this non-GAAP financial measure enhances the ability of investors to analyze the Company’s
business trends and operating performance.
EBITDAX
EBITDAX (as defined below) is presented herein and reconciled from the GAAP measure of net income because of
its wide acceptance by the investment community as a financial indicator of a company's ability to internally fund
operations.
The Company defines EBITDAX as net income, plus (1) depreciation, (2) amortization of bond premiums, (3) share-
based compensation, (4) interest (income) expense and (5) income tax expense. EBITDAX is not a measure of net
income or cash flows as determined by GAAP.
The Company’s EBITDAX measure provides additional information which may be used to better understand the
Company’s operations. EBITDAX is one of several metrics that the Company uses as a supplemental financial
measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful
than, net income, as an indicator of operating performance. Certain items excluded from EBITDAX are significant
components in understanding and assessing a company's financial performance. EBITDAX, as used by the Company,
may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDAX
is a widely followed measure of operating performance and is one of many metrics used by the Company’s management
team, and by other users of the Company’s consolidated financial statements.
12
The following table provides a reconciliation of net income (GAAP) to EBITDAX (non-GAAP) for the periods
indicated:
December 31,
2016 2015 2014 2013 2012
(in thousands)
Net Income, a GAAP measure $ 53,376 $ 45,728 $ 44,158 $ 37,547 $ 27,449
Depreciation 13,035 11,741 11,553 12,312 13,407
Amortization of bond premiums 249 266 688 790 155
Share-based compensation 4,357 2,891 2,178 1,763 1,294
Interest income (541) (427) (964) (1,011) (197)
Income tax expense 26,615 25,611 24,088 18,747 16,868
EBITDAX, a non-GAAP measure $ 97,091 $ 85,810 $ 81,701 $ 70,148 $ 58,976
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We engineer, manufacture, market and sell air conditioning and heating equipment consisting of standard, semi-custom
and custom rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy
recovery units, condensing units, geothermal/water-source heat pumps and coils. These products are marketed and sold
to retail, manufacturing, educational, lodging, supermarket, medical and other commercial industries. We market our
products to all 50 states in the United States and certain provinces in Canada.
Our business can be affected by a number of economic factors, including the level of economic activity in the markets
in which we operate. The recent uncertainty of the economy has negatively impacted the commercial and industrial
new construction markets. A further decline in economic activity could result in a decrease in our sales volume and
profitability. Sales in the commercial and industrial new construction markets correlate closely to the number of new
homes and buildings that are built, which in turn is influenced by cyclical factors such as interest rates, inflation,
consumer spending habits, employment rates and other macroeconomic factors over which we have no control.
We sell our products to property owners and contractors through a network of manufacturers’ representatives and our
internal sales force. The demand for our products is influenced by national and regional economic and demographic
factors. The commercial and industrial new construction market is subject to cyclical fluctuations in that it is generally
tied to housing starts, but has a lag factor of six to 18 months. Housing starts, in turn, are affected by such factors as
interest rates, the state of the economy, population growth and the relative age of the population. When new construction
is down, we emphasize the replacement market. The new construction market in 2016 continued to be unpredictable
and uneven. Thus, throughout the year, we emphasized promotion of the benefits of AAON equipment to property
owners in the replacement market.
The principal components of cost of goods sold are labor, raw materials, component costs, factory overhead, freight
out and engineering expense. The principal high volume raw materials used in our manufacturing processes are steel,
copper and aluminum and are obtained from domestic suppliers. We also purchase from domestic manufacturers certain
components, including compressors, motors and electrical controls.
The price levels of our raw materials fluctuate given that the market continues to be volatile and unpredictable as a
result of the uncertainty related to the U.S. economy and global economy. For the year ended December 31, 2016, the
prices for copper, galvanized steel and stainless steel decreased approximately 4.8%, 9.5% and 12.3%, respectively,
from a year ago, while the price for aluminum remained relatively unchanged from a year ago. For the year ended
December 31, 2015, the prices for copper, galvanized steel and stainless steel decreased approximately 13.0%, 10.6%,
and 13.9%, respectively, from 2014, while the price for aluminum increased 1.8% from 2014.
In 2011, we began using an all aluminum microchannel condenser coil on our small rooftop unit product line, and in
2013, we began using this condenser coil in our new large rooftop product line as well. The condenser coil is the outdoor
coil of a conventional air conditioning system. We expect to be using this type of condenser coil throughout the complete
13
rooftop unit product line. This will reduce our copper tube usage in this component of the product, however, copper
will remain a high volume raw material because of its use throughout the equipment.
We attempt to limit the impact of price fluctuations on these materials by entering into cancellable and non-cancellable
fixed price contracts with our major suppliers for periods of six to 18 months. We expect to receive delivery of raw
materials from our fixed price contracts for use in our manufacturing operations.
The following are highlights of our results of operations, cash flows, and financial condition:
• We spent $26.6 million in capital expenditures in 2016, an increase of $5.6 million from the $21.0 million
spent in 2015, primarily due to construction projects related to our new research and development lab, water-
source heat pump production line, as well as other internal development projects.
• We paid cash dividends of $12.7 million in 2016 compared to $11.9 million in 2015.
• Our volumes continue to increase, with an approximate 12.5% increase in units sold for 2016 versus 2015.
Results of Operations
Units sold for years ended December 31:
2016 2015 2014
Rooftop Units 16,764 14,891 14,336
Split Systems 3,753 3,385 2,622
Outdoor Mechanical Rooms 65 57 114
Water Source Heat Pumps 316 243 251
Total Units 20,898 18,576 17,323
Year Ended December 31, 2016 vs. Year Ended December 31, 2015
Net Sales
Years Ending December 31,
2016 2015 $ Change % Change
(in thousands, except unit data)
Net sales $ 383,977 $ 358,632 $ 25,345 7.1%
Total units 20,898 18,576 2,322 12.5%
Net sales increased due to an increase in our total units sold, offset by a decline in the average price per unit for both
of our locations.
14
Cost of Sales
Years Ending December 31, Percent of Sales
2016 2015 2016 2015
(in thousands)
Cost of sales $ 265,897 $ 249,951 69.2% 69.7%
Gross Profit 118,080 108,681 30.8% 30.3%
The principal components of cost of sales are labor, raw materials, component costs, factory overhead, freight out and
engineering expense. The principal high volume raw materials used in our manufacturing processes are steel, copper
and aluminum, which are obtained from domestic suppliers.
Twelve month average raw material cost per pound as of December 31:
Years Ending December 31,
2016 2015 % Change
Copper $ 3.37 $ 3.54 (4.8)%
Galvanized Steel $ 0.38 $ 0.42 (9.5)%
Stainless Steel $ 1.14 $ 1.30 (12.3)%
Aluminum $ 1.67 $ 1.67 — %
15
Selling, General and Administrative Expenses
Years Ending December 31, Percent of Sales
2016 2015 2016 2015
(in thousands)
Warranty $ 3,601 $ 4,317 0.9 % 1.2 %
Profit Sharing 8,991 8,037 2.3 % 2.2 %
Salaries & Benefits 11,363 11,078 3.0 % 3.1 %
Stock Compensation 2,914 2,082 0.8 % 0.6 %
Advertising 1,395 1,191 0.4 % 0.3 %
Depreciation 796 930 0.2 % 0.3 %
Insurance 1,072 1,153 0.3 % 0.3 %
Professional Fees 2,032 1,794 0.5 % 0.5 %
Donations 370 452 0.1 % 0.1 %
Bad Debt Expense (45) (48) — % — %
Other 6,017 6,452 1.6 % 1.8 %
Total SG&A $ 38,506 $ 37,438 10.0 % 10.4 %
The increase in SG&A is primarily due to increased compensation costs due to better operating results, offset by a
decrease in warranty expense as a result of continued improvements in quality control and a decrease in other expense.
Income Taxes
Years Ending December 31, Effective Tax Rate
2016 2015 2016 2015
(in thousands)
Income tax provision $ 26,615 $ 25,611 33.3% 35.9%
The Company early adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, applying
the changes for excess tax benefits and tax deficiencies prospectively. As a result, excess tax benefits and deficiencies
are reported as an income tax benefit or expense on the statement of income rather than as a component of additional
paid-in capital on the statement of equity. Excess tax benefits and deficiencies are treated as discrete items to the income
tax provision in the reporting period in which they occur. For the twelve months ended December 31, 2016, the Company
recorded $2.1 million in excess tax benefits as an income tax benefit.
Year Ended December 31, 2015 vs. Year Ended December 31, 2014
Net Sales
Years Ending December 31,
2015 2014 $ Change % Change
(in thousands, except unit data)
Net sales $ 358,632 $ 356,322 $ 2,310 0.6%
Total units 18,576 17,323 1,253 7.2%
Net sales remained relatively stable while we saw an increase in our total units sold. Most of the increase in our units
sold came from our Longview facility which have a lower average price per unit.
16
Cost of Sales
Years Ending December 31, Percent of Sales
2015 2014 2015 2014
(in thousands)
Cost of sales $ 249,951 $ 248,059 69.7% 69.6%
Gross Profit 108,681 108,263 30.3% 30.4%
The principal components of cost of sales are labor, raw materials, component costs, factory overhead, freight out and
engineering expense. The principal high volume raw materials used in our manufacturing processes are steel, copper
and aluminum, which are obtained from domestic suppliers.
Twelve month average raw material cost per pound as of December 31:
Years Ending December 31,
2015 2014 % Change
Copper $ 3.54 $ 4.07 (13.0)%
Galvanized Steel $ 0.42 $ 0.47 (10.6)%
Stainless Steel $ 1.30 $ 1.51 (13.9)%
Aluminum $ 1.67 $ 1.64 1.8 %
Selling, General and Administrative Expenses
Years Ending December 31, Percent of Sales
2015 2014 2015 2014
(in thousands)
Warranty $ 4,317 $ 4,874 1.2 % 1.4 %
Profit Sharing 8,037 7,781 2.2 % 2.2 %
Salaries & Benefits 11,078 11,638 3.1 % 3.3 %
Stock Compensation 2,082 1,520 0.6 % 0.4 %
Advertising 1,191 1,015 0.3 % 0.3 %
Depreciation 930 878 0.3 % 0.2 %
Insurance 1,153 1,160 0.3 % 0.3 %
Professional Fees 1,794 1,986 0.5 % 0.6 %
Donations 452 4,202 0.1 % 1.2 %
Bad Debt Expense (48) (1) — % — %
Other 6,452 5,509 1.8 % 1.5 %
Total SG&A $ 37,438 $ 40,562 10.4 % 11.4 %
The decrease in SG&A is primarily due to the non-recurring donations in 2014, along with a decrease in warranty
expense as a result of continued improvements in quality control, offset by an increase in other expense. In 2015,
other expense increased due to sales taxes to certain states.
17
Income Taxes
Years Ending December 31, Effective Tax Rate
2015 2014 2015 2014
(in thousands)
Income tax provision $ 25,611 $ 24,088 35.9% 35.3%
Liquidity and Capital Resources
Our working capital and capital expenditure requirements are generally met through net cash provided by operations
and the occasional use of the revolving bank line of credit based on our current liquidity at the time.
Our cash and cash equivalents increased $16.2 million from December 31, 2015 to December 31, 2016. As of
December 31, 2016, we had $24.2 million in cash and cash equivalents.
As of December 31, 2016, we had certificates of deposit of $5.5 million and investments held to maturity at amortized
cost of $14.1 million. These certificates of deposit had maturity dates of less than two months to approximately 7
months. The investments held to maturity at amortized cost had maturity dates of less than one month to approximately
6 months.
On July 25, 2016 we renewed our line of credit with BOKF, NA dba Bank of Oklahoma, formerly known as Bank of
Oklahoma, N.A. ("Bank of Oklahoma"). The revolving line of credit matures on July 27, 2018. We expect to renew
our line of credit in July 2018 with favorable terms. Under the line of credit, there was one standby letter of credit of
$0.8 million as of December 31, 2016. At December 31, 2016 we have $29.2 million of borrowings available under
the revolving credit facility. No fees are associated with the unused portion of the committed amount.
As of December 31, 2016 and 2015, there were no outstanding balances under the revolving credit facility. Interest on
borrowings is payable monthly at LIBOR plus 2.5%. The weighted average interest rate was 3.0% and 2.6% for the
years ended December 31, 2016 and 2015, respectively.
At December 31, 2016, we were in compliance with all of the covenants under the revolving credit facility. We are
obligated to comply with certain financial covenants under the revolving credit facility. These covenants require that
we meet certain parameters related to our tangible net worth and total liabilities to tangible net worth ratio. At December
31, 2016, our tangible net worth was $205.9 million, which meets the requirement of being at or above $125.0
million. Our total liabilities to tangible net worth ratio was 0.2 to 1.0 which meets the requirement of not being above
2 to 1.
The Board has authorized three stock repurchase programs for the Company. The Company may purchase shares on
the open market from time to time, up to a total of 5.7 million shares. The Board must authorize the timing and amount
of these purchases. Effective May 24, 2016, the Board authorized up to $25.0 million in open market repurchases and
on June 2, 2016, the Company executed a repurchase agreement in accordance with the rules and regulations of the
SEC allowing the Company to repurchase an aggregate amount of $25.0 million or a total of approximately 2.0 million
shares from the open market. The repurchase agreement will terminate upon the aforementioned thresholds having
been met, on April 15, 2017, or upon other provisions contained in the repurchase agreement by either the Company
or its agent. The Company also has a stock repurchase arrangement by which employee-participants in our 401(k)
savings and investment plan are entitled to have shares in AAON, Inc. stock in their accounts sold to the Company.
The maximum number of shares to be repurchased is contingent upon the number of shares sold by employee-
participants. Lastly, the Company repurchases shares of AAON, Inc. stock from certain of its directors and employees
for payment of statutory tax withholdings on stock transactions. Any other repurchases from directors or employees is
contingent upon Board approval. All repurchases are done at current market prices.
18
Our repurchase activity is as follows:
2016 2015 2014
Program Shares Total $
$ per
share Shares Total $
$ per
share Shares Total $
$ per
share
Open market 165,598 $ 4,440,658 $26.82 1,037,590 $ 24,999,963 $24.09 1,016,717 $ 19,998,406 $19.67
401(k) 540,501 14,875,850 27.52 512,754 11,557,598 22.54 417,172 8,246,172 19.77
Directors and
employees 30,072 823,446 27.38 25,746 585,413 22.74 54,341 1,038,459 19.11
Total 736,171 $ 20,139,954 $27.36 1,576,090 $ 37,142,974 $23.57 1,488,230 $ 29,283,037 $19.68
Inception to Date
Program Shares Total $
$ per
share
Open market 3,834,819 $ 60,948,460 $15.89
401(k) 6,082,443 65,732,720 10.81
Directors and
employees 1,873,632 15,663,608 8.36
Total 11,790,894 $142,344,788 $12.07
Dividends - At the discretion of the Board of Directors, we pay semi-annual cash dividends. Board approval is required
to determine the date of declaration and amount for each semi-annual dividend payment.
Our recent dividends are as follows:
Declaration Date Record Date Payment Date Dividend per Share
May 2, 2014 June 12, 2014 July 1, 2014 $ 0.09
November 4, 2014 December 2, 2014 December 23, 2014 $ 0.09
May 19, 2015 June 12, 2015 July 1, 2015 $ 0.11
October 29, 2015 December 2, 2015 December 23, 2015 $ 0.11
May 24, 2016 June 10, 2016 July 1, 2016 $ 0.11
November 9, 2016 December 2, 2016 December 23, 2016 $ 0.13
Additionally, on June 5, 2014, we declared a three-for-two stock split of the Company's common stock to be paid in
the form of a stock dividend on July 16, 2014. Stockholders of record at the close of business on June 27, 2014 received
one additional share for every two shares they held as of that date.
Based on historical performance and current expectations, we believe our cash and cash equivalents balance, the
projected cash flows generated from our operations, our existing committed revolving credit facility (or comparable
financing) and our expected ability to access capital markets will satisfy our working capital needs, capital expenditures
and other liquidity requirements associated with our operations in 2017 and the foreseeable future.
19
Statement of Cash Flows
The table below reflects a summary of our net cash flows provided by operating activities, net cash flows used in
investing activities, and net cash flows used in financing activities for the years indicated.
2016 2015 2014
(in thousands)
Operating Activities
Net Income $ 53,376 $ 45,728 $ 44,158
Income statement adjustments, net 18,996 16,250 12,154
Changes in assets and liabilities:
Accounts receivable 7,048 (5,884) (5,007)
Income tax receivable (1,537) 312 (257)
Inventories (9,478) (1,059) (5,613)
Prepaid expenses and other (83) 76 (305)
Accounts payable 654 (5,109) 3,512
Deferred revenue 417 189 782
Accrued liabilities (5,470) 4,852 4,094
Net cash provided by operating activities 63,923 55,355 53,518
Investing Activities
Capital expenditures (26,604) (20,967) (16,127)
Purchases of investments (14,496) (20,863) (16,820)
Maturities of investments and proceeds from called investments 24,095 18,519 26,536
Other 80 117 382
Net cash used in investing activities (16,925) (23,194) (6,029)
Financing Activities
(Payments) borrowings under revolving credit facility, net — — —
Stock options exercised 2,063 2,795 1,318
Repurchase of stock (19,317) (36,558) (29,066)
Employee taxes paid by withholding shares (823) (585) (218)
Cash dividends paid to stockholders (12,676) (11,857) (9,656)
Net cash used in financing activities $ (30,753) $ (46,205) $ (37,622)
Cash Flows from Operating Activities
Cash flows from operating activities increased primarily due to increased levels of operations generating excess cash
flows.
Cash Flows from Investing Activities
The capital expenditure program for 2017 is estimated to be approximately $41.8 million. The increase in capital
expenditures is primarily due to construction projects related to our new research and development lab, water-source
heat pump production line, as well as other internal development projects. Many of these projects are subject to review
and cancellation at the discretion of our CEO and Board of Directors without incurring substantial charges. The increase
in capital expenditures was offset by decreased investment purchases, primarily driven by the use of maturing investment
funds in our capital expenditure program.
Cash Flows from Financing Activities
Our buyback activity in 2016 decreased compared to prior years, due to less open market repurchases of our stock
pursuant to the terms of our repurchase agreement.
20
Off-Balance Sheet Arrangements
We are not party to any off-balance sheet arrangements that have or are reasonably likely to have a material current or
future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations,
liquidity, capital expenditures or capital resources.
Commitments and Contractual Agreements
We had no material contractual purchase agreements as of December 31, 2016.
Contingencies
We are subject to various claims and legal actions that arise in the ordinary course of business. We closely monitor
these claims and legal actions and frequently consult with our legal counsel to determine whether they may, when
resolved, have a material adverse effect on our financial position, results of operations or cash flows and we accrue
and/or disclose loss contingencies as appropriate. We have concluded that the likelihood is remote that the ultimate
resolution of any pending litigation or claims will be material or have a material adverse effect on the Company's
business, financial position, results of operations or cash flows.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America (“US GAAP”) requires management to make estimates and assumptions about future events, and apply
judgments that affect the reported amounts of assets, liabilities, revenue and expenses in our consolidated financial
statements and related notes. We base our estimates, assumptions and judgments on historical experience, current trends
and other factors believed to be relevant at the time our consolidated financial statements are prepared. However,
because future events and their effects cannot be determined with certainty, actual results could differ from our estimates
and assumptions, and such differences could be material. We believe the following critical accounting policies affect
our more significant estimates, assumptions and judgments used in the preparation of our consolidated financial
statements.
Inventory Reserves – We establish a reserve for inventories based on the change in inventory requirements due to
product line changes, the feasibility of using obsolete parts for upgraded part substitutions, the required parts needed
for part supply sales, replacement parts and for estimated shrinkage.
Warranty – A provision is made for estimated warranty costs at the time the product is shipped and revenue is recognized.
The warranty period is: the earlier of one year from the date of first use or 18 months from date of shipment for parts
only; an additional four years on compressors (if applicable); 15 years on aluminized steel gas-fired heat exchangers
(if applicable); 25 years on stainless steel heat exchangers (if applicable); and 10 years on gas-fired heat exchangers
in RL products (if applicable). With the introduction of the RQ product line in 2010, our warranty policy for the RQ
series was implemented to cover parts for two years from date of unit shipment and labor for one year from date of
unit shipment. Our warranty policy for the WH and WV Series geothermal/water-source heat pumps covers parts for
five years from the date of manufacture. Warranty expense is estimated based on the warranty period, historical warranty
trends and associated costs, and any known identifiable warranty issue.
Due to the absence of warranty history on new products, an additional provision may be made for such products. Our
estimated future warranty cost is subject to adjustment from time to time depending on changes in actual warranty
trends and cost experience. Should actual claim rates differ from our estimates, revisions to the estimated product
warranty liability would be required.
Stock Compensation – We measure and recognize compensation expense for all share-based payment awards made to
our employees and directors, including stock options and restricted stock awards, based on their fair values at the time
of grant. Compensation expense is recognized on a straight-line basis during the service period of the related share-
based compensation award. Forfeitures are accounted for as they occur. The fair value of each option award and restricted
stock award is estimated on the date of grant using the Black-Scholes-Merton option pricing model. The use of the
Black-Scholes-Merton option valuation model requires the input of subjective assumptions such as: the expected
volatility, the expected term of the options granted, expected dividend yield, and the risk-free rate.
21
New Accounting Pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting
standards updates ("ASUs") to the FASB's Accounting Standards Codification.
We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either
not applicable or are expected to have minimal impact on our consolidated financial statements and notes thereto.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to
recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to
customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.
In August 2015, with the issuance of ASU 2015-14, the FASB amended the effective date for us to January 1, 2018.
The following ASUs have been issued in 2016 along with ASU 2014-09 with the same effective dates and transition
requirements:
• ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which provides
implementation guidance for Topic 606 on principal versus agent considerations.
• ASU 2016-10, Identifying Performance Obligations and Licensing, which provides clarification for two
aspects of Topic 606: identifying performance obligations and the licensing implementation guidance.
• ASU 2016-12, Revenue from Contracts with Customers, which further amends Topic 606.
• ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,
which further amends Topic 606.
The Company plans to adopt using the retrospective transition method. The Company has begun assessing the impact
of ASU 2015-09 and believes the impact will not be material to the consolidated financial statements. We do not expect
to complete our evaluation until after our first quarter of 2017. Once we adopt ASU 2014-09, we do not anticipate that
our internal control framework will materially change, but rather that existing internal controls will be modified and
augmented, as necessary, to consider our new revenue recognition policy effective January 1, 2018.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial
Liabilities, which will address certain aspects of recognition, measurement, presentation and disclosure of financial
instruments. The ASU becomes effective in the annual reporting period beginning after December 31, 2017, including
interim reporting periods. We do not expect ASU 2016-01 will have a material effect on our consolidated financial
statements and notes thereto.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Commodity Price Risk
We are exposed to volatility in the prices of commodities used in some of our products and, occasionally, we use fixed
price cancellable and non-cancellable contracts with our major suppliers for periods of six to 18 months to manage this
exposure.
22
Item 8. Financial Statements and Supplementary Data.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
23
24
25
26
27
28
23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
AAON, Inc.
We have audited the accompanying consolidated balance sheets of AAON, Inc. (a Nevada corporation) and subsidiaries
(the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of income, stockholders’
equity, and cash flows for each of the three years in the period ended December 31, 2016. These financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of AAON, Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and
their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Note 11 to the consolidated financial statements, the Company adopted new accounting guidance in
2016, 2015 and 2014, related to the accounting for employee share-based payments.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company’s internal control over financial reporting as of December 31, 2016, based on criteria established
in the 2013 Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated February 23, 2017, expressed an unqualified opinion.
/s/ GRANT THORNTON LLP
Tulsa, Oklahoma
February 23, 2017
24
AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31,
2016 2015
Assets
(in thousands, except share and
per share data)
Current assets:
Cash and cash equivalents $ 24,153 $ 7,908
Certificates of deposit 5,512 10,080
Investments held to maturity at amortized cost 14,083 12,444
Accounts receivable, net 43,001 50,024
Income tax receivable 6,239 4,702
Note receivable 25 23
Inventories, net 47,352 38,499
Prepaid expenses and other 616 533
Total current assets 140,981 124,213
Property, plant and equipment:
Land 2,233 2,233
Buildings 78,806 68,806
Machinery and equipment 158,216 143,100
Furniture and fixtures 12,783 11,270
Total property, plant and equipment 252,038 225,409
Less: Accumulated depreciation 137,146 124,348
Property, plant and equipment, net 114,892 101,061
Certificates of deposit — 1,880
Investments held to maturity at amortized cost — 5,039
Note receivable, long-term 657 661
Total assets $ 256,530 $ 232,854
Liabilities and Stockholders' Equity
Current liabilities:
Revolving credit facility $ — $ —
Accounts payable 7,102 6,178
Accrued liabilities 31,940 37,235
Total current liabilities 39,042 43,413
Deferred revenue 1,498 698
Deferred tax liabilities 9,531 8,706
Donations 561 1,119
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued
Common stock, $.004 par value, 100,000,000 shares authorized, 52,651,448 and
53,012,363 issued and outstanding at December 31, 2016 and 2015, respectively 211 212
Additional paid-in capital — —
Retained earnings 205,687 178,706
Total stockholders' equity 205,898 178,918
Total liabilities and stockholders' equity $ 256,530 $ 232,854
The accompanying notes are an integral part of these consolidated financial statements.
25
AAON, Inc. and Subsidiaries
Consolidated Statements of Income
Years Ending December 31,
2016 2015 2014
(in thousands, except per share data)
Net sales $ 383,977 $ 358,632 $ 356,322
Cost of sales 265,897 249,951 248,059
Gross profit 118,080 108,681 108,263
Selling, general and administrative expenses 38,506 37,438 40,562
Gain on disposal of assets (20) (59) (305)
Income from operations 79,594 71,302 68,006
Interest income, net 292 161 276
Other income (expense), net 105 (124) (36)
Income before taxes 79,991 71,339 68,246
Income tax provision 26,615 25,611 24,088
Net income $ 53,376 $ 45,728 $ 44,158
Earnings per share:
Basic $ 1.01 $ 0.85 $ 0.81
Diluted $ 1.00 $ 0.84 $ 0.80
Cash dividends declared per common share: $ 0.24 $ 0.22 $ 0.18
Weighted average shares outstanding:
Basic 52,924,398 54,045,841 54,809,319
Diluted 53,449,754 54,481,484 55,369,016
The accompanying notes are an integral part of these consolidated financial statements.
26
AAON, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
(in thousands)
Balance at December 31, 2013 55,067 $ 221 $ — $ 163,885 $ 164,106
Net income — — — 44,158 44,158
Stock options exercised and restricted 463 1 2,556 — 2,557
stock awards granted, including tax
benefits
Share-based compensation — — 2,178 — 2,178
Stock repurchased and retired (1,488) (6) (4,734) (24,544) (29,284)
Dividends — — — (9,656) (9,656)
Balance at December 31, 2014 54,042 216 — 173,843 174,059
Net income — — — 45,728 45,728
Stock options exercised and restricted 546 2 5,238 — 5,240
stock awards granted, including tax
benefits
Share-based compensation — — 2,891 — 2,891
Stock repurchased and retired (1,576) (6) (8,129) (29,008) (37,143)
Dividends — — — (11,857) (11,857)
Balance at December 31, 2015 53,012 212 — 178,706 178,918
Net income — — — 53,376 53,376
Stock options exercised and restricted 375 2 2,061 — 2,063
stock awards granted
Share-based compensation — — 4,357 — 4,357
Stock repurchased and retired (736) (3) (6,418) (13,719) (20,140)
Dividends — — — (12,676) (12,676)
Balance at December 31, 2016 52,651 $ 211 $ — $ 205,687 $ 205,898
The accompanying notes are an integral part of these consolidated financial statements.
27
AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ending December 31,
2016 2015 2014
Operating Activities (in thousands)
Net income $ 53,376 $ 45,728 $ 44,158
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 13,035 11,741 11,553
Amortization of bond premiums 249 266 688
Provision for losses on accounts receivable, net of adjustments (25) (48) (22)
Provision for excess and obsolete inventories 625 178 135
Share-based compensation 4,357 2,891 2,178
Gain on disposition of assets (20) (59) (305)
Foreign currency transaction (gain) loss (22) 139 74
Interest income on note receivable (28) (30) (36)
Deferred income taxes 825 1,172 (2,111)
Write-off of note receivable — — —
Changes in assets and liabilities:
Accounts receivable 7,048 (5,884) (5,007)
Income tax receivable (1,537) 312 (257)
Inventories (9,478) (1,059) (5,613)
Prepaid expenses and other (83) 76 (305)
Accounts payable 654 (5,109) 3,512
Deferred revenue 417 189 782
Accrued liabilities and donations (5,470) 4,852 4,094
Net cash provided by operating activities 63,923 55,355 53,518
Investing Activities
Capital expenditures (26,604) (20,967) (16,127)
Proceeds from sale of property, plant and equipment 28 63 319
Investment in certificates of deposits (4,112) (6,680) (9,940)
Maturities of certificates of deposits 10,560 6,098 9,310
Purchases of investments held to maturity (10,384) (14,183) (6,880)
Maturities of investments 10,021 11,408 14,197
Proceeds from called investments 3,514 1,013 3,029
Principal payments from note receivable 52 54 63
Net cash used in investing activities (16,925) (23,194) (6,029)
Financing Activities
Borrowings under revolving credit facility 761 — —
Payments under revolving credit facility (761) — —
Stock options exercised 2,063 2,795 1,318
Repurchase of stock (19,317) (36,558) (29,066)
Employee taxes paid by withholding shares (823) (585) (218)
Cash dividends paid to stockholders (12,676) (11,857) (9,656)
Net cash used in financing activities (30,753) (46,205) (37,622)
Net increase (decrease) in cash and cash equivalents 16,245 (14,044) 9,867
Cash and cash equivalents, beginning of year 7,908 21,952 12,085
Cash and cash equivalents, end of year $ 24,153 $ 7,908 $ 21,952
The accompanying notes are an integral part of these consolidated financial statements.
28
AAON, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2016
1. Business Description
AAON, Inc. is a Nevada corporation which was incorporated on August 18, 1987. Our operating subsidiaries include
AAON, Inc., an Oklahoma corporation and AAON Coil Products, Inc., a Texas corporation (collectively, the
"Company"). The Consolidated Financial Statements include our accounts and the accounts of our subsidiaries.
We are engaged in the engineering, manufacturing, marketing and sale of air conditioning and heating equipment
consisting of standard, semi-custom and custom rooftop units, chillers, packaged outdoor mechanical rooms, air handling
units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps and coils.
2. Summary of Significant Accounting Policies
Principles of Consolidation
These financial statements are prepared in accordance with accounting principles generally accepted in the United
States of America ("U.S. GAAP"). The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents
We consider all highly liquid temporary investments with original maturity dates of three months or less to be cash
equivalents. Cash and cash equivalents consist of bank deposits and highly liquid, interest-bearing money market funds.
The Company's cash and cash equivalents are held in a few financial institutions in amounts that exceed the insurance
limits of the Federal Deposit Insurance Corporation. However, management believes that the Company's counterparty
risks are minimal based on the reputation and history of the institutions selected.
Investments
Certificates of Deposit
We held $5.5 million and $12.0 million in certificates of deposit at December 31, 2016 and December 31, 2015,
respectively. At December 31, 2016, the certificates of deposit bear interest ranging from 0.55% to 0.90% per annum
and have various maturities ranging from less than two months to approximately 7 months.
Investments Held to Maturity
At December 31, 2016, our investments held to maturity were comprised of $14.1 million of corporate notes and bonds
with various maturities ranging from less than one month to approximately 6 months. The investments have moderate
risk with S&P ratings ranging from AA to BBB-.
We record the amortized cost basis and accrued interest of the corporate notes and bonds in the Consolidated Balance
Sheets. We record the interest and amortization of bond premium to interest income in the Consolidated Statements of
Income.
29
The following summarizes the amortized cost and estimated fair value of our investments held to maturity at
December 31, 2016 and December 31, 2015:
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
(Loss)
Fair
Value
December 31, 2016: (in thousands)
Current assets:
Investments held to maturity $ 14,083 $ — $ (12) $ 14,071
Non current assets:
Investments held to maturity — — — —
Total $ 14,083 $ — $ (12) $ 14,071
December 31, 2015:
Current assets:
Investments held to maturity $ 12,444 $ — $ (16) $ 12,428
Non current assets:
Investments held to maturity 5,039 — (17) 5,022
Total $ 17,483 $ — $ (33) $ 17,450
We evaluate these investments for other-than-temporary impairments on a quarterly basis. We do not believe there was
an other-than-temporary impairment for our investments at December 31, 2016 or 2015.
Accounts and Note Receivable
Accounts and note receivable are stated at amounts due from customers, net of an allowance for doubtful accounts. We
generally do not require that our customers provide collateral. The Company determines its allowance for doubtful
accounts by considering a number of factors, including the credit risk of specific customers, the customer’s ability to
pay current obligations, historical trends, economic and market conditions and the age of the receivable. Accounts are
considered past due when the balance has been outstanding for ninety days past negotiated credit terms. Past due
accounts are generally written-off against the allowance for doubtful accounts only after all collection attempts have
been exhausted.
Concentration of Credit Risk
Our customers are concentrated primarily in the domestic commercial and industrial new construction and replacement
markets. To date, our sales have been primarily to the domestic market, with foreign sales accounting for approximately
4%, 4% and 6% of revenues for the years ended December 31, 2016, 2015 and 2014, respectively. One customer, Texas
AirSystems, accounted for 10% or more of our sales during 2016 and 2015. No customer accounted for 10% or more
of our sales during 2014. No customer accounted for 5% or more of our accounts receivable balance at December 31,
2016 or 2015.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate
fair value because of the short-term maturity of the items. The carrying amount of the Company's revolving line of
credit, and other payables, approximate their fair values either due to their short term nature, the variable rates associated
with the debt or based on current rates offered to the Company for debt with similar characteristics.
Inventories
Inventories are valued at the lower of cost or market using the first-in, first-out (“FIFO”) method. Cost in inventory
includes purchased parts and materials, direct labor and applied manufacturing overhead. We establish an allowance
for excess and obsolete inventories based on product line changes, the feasibility of substituting parts and the need for
supply and replacement parts.
30
Property, Plant and Equipment
Property, plant and equipment, including significant improvements, are recorded at cost, net of accumulated
depreciation. Repairs and maintenance and any gains or losses on disposition are included in operations.
Depreciation is computed using the straight-line method over the following estimated useful lives:
Buildings 3-40 years
Machinery and equipment 3-15 years
Furniture and fixtures 3-7 years
Impairment of Long-Lived Assets
We review long-lived assets for possible impairment when events or changes in circumstances indicate, in management’s
judgment, that the carrying amount of an asset may not be recoverable. Recoverability is measured by a comparison
of the carrying amount of an asset or asset group to its estimated undiscounted future cash flows expected to be generated
by the asset or asset group. If the undiscounted cash flows are less than the carrying amount of the asset or asset group,
an impairment loss is recognized for the amount by which the carrying amount of the asset or asset group exceeds its
fair value.
Research and Development
The costs associated with research and development for the purpose of developing and improving new products are
expensed as incurred. For the years ended December 31, 2016, 2015, and 2014 research and development costs amounted
to approximately $12.0 million, $7.5 million, and $6.3 million, respectively.
Advertising
Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2016, 2015, and
2014 was approximately $1.4 million, $1.2 million, and $1.0 million, respectively.
Shipping and Handling
We incur shipping and handling costs in the distribution of products sold that are recorded in cost of sales. Shipping
charges that are billed to the customer are recorded in revenues and as an expense in cost of sales. For the years ended
December 31, 2016, 2015 and 2014 shipping and handling fees amounted to approximately $10.3 million, $9.6 million,
and $8.5 million, respectively.
Income Taxes
Income taxes are accounted for under the asset and liability method. The Company recognizes deferred tax assets and
liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and
the tax basis of assets and liabilities. We establish accruals for unrecognized tax positions when it is more likely than
not that our tax return positions may not be fully sustained. The Company records a valuation allowance for deferred
tax assets when, in the opinion of management, it is more likely than not that deferred tax assets will not be realized.
Share-Based Compensation
The Company recognizes expense for its share-based compensation based on the fair value of the awards that are
granted. The Company’s share-based compensation plans provide for the granting of stock options and restricted stock.
The fair values of stock options are estimated at the date of grant using the Black-Scholes-Merton option valuation
model. The use of the Black-Scholes-Merton option valuation model requires the input of subjective assumptions.
Measured compensation cost is recognized ratably over the vesting period of the related share-based compensation
award. Forfeitures are accounted for as they occur. The fair value of restricted stock awards is determined based on the
market value of the Company’s shares on the grant date and the compensation expense is recognized on a straight-line
basis during the service period of the respective grant.
31
Derivative Instruments
In the course of normal operations, the Company occasionally enters into contracts such as forward priced physical
contracts for the purchase of raw materials that qualify for and are designated as normal purchase or normal sale
contracts. Such contracts are exempted from the fair value accounting requirements and are accounted for at the time
product is purchased or sold under the related contract. The Company does not engage in speculative transactions, nor
does the Company hold or issue financial instruments for trading purposes.
Revenue Recognition
We recognize revenues from sales of products when title and risk of ownership pass to the customer. Final sales prices
are fixed and based on purchase orders. Sales allowances and customer incentives are treated as reductions to sales and
are provided for based on historical experiences and current estimates. Sales of our products are moderately seasonal
with the peak period being July - November of each year.
In addition, the Company presents revenues net of sales tax and net of certain payments to our independent manufacturer
representatives (“Representatives”). Representatives are national companies that are in the business of providing HVAC
units and other related products and services to customers. The end user customer orders a bundled group of products
and services from the Representative and expects the Representative to fulfill the order. Only after the specifications
are agreed to by the Representative and the customer, and the decision is made to use an AAON HVAC unit, will we
receive notice of the order. We establish the amount we must receive for our HVAC unit (“minimum sales price”), but
do not control the total order price which is negotiated by the Representative with the end user customer.
We are responsible for billings and collections resulting from all sales transactions, including those initiated by our
Representatives. The Representatives submit the total order price to us for invoicing and collection. The total order
price includes our minimum sales price and could contain an additional amount which may include both the
Representatives’ fee and amounts due for additional products and services required by the customer. These additional
products and services may include controls purchased from another manufacturer to operate the unit, start-up services,
and curbs for supporting the unit (“Third Party Products”). All are associated with the purchase of a HVAC unit but
may be provided by the Representative or another third party. The Company is under no obligation related to Third
Party Products.
The Representatives’ fee and Third Party Products amounts (“Due to Representatives”) are paid only after all amounts
associated with the order are collected from the customer. The Due to Representatives amount is paid only after all
amounts associated with the order are collected from the customer. The amount of payments to our representatives was
$55.0 million, $55.4 million, and $59.7 million for each of the years ended December 31, 2016, 2015, and 2014,
respectively.
The Company also sells extended warranties on parts for various lengths of time ranging from six months to 10 years.
Revenue for these separately priced warranties is deferred and recognized on a straight-line basis over the separately
priced warranty period.
Insurance Reserves
Under the Company’s insurance programs, coverage is obtained for significant liability limits as well as those risks
required to be insured by law or contract. It is the policy of the Company to self-insure a portion of certain expected
losses related primarily to workers’ compensation and medical liability. Provisions for losses expected under these
programs are recorded based on the Company’s estimates of the aggregate liabilities for the claims incurred.
Product Warranties
A provision is made for the estimated cost of maintaining product warranties to customers at the time the product is
sold based upon historical claims experience by product line. The Company records a liability and an expense for
estimated future warranty claims based upon historical experience and management's estimate of the level of future
claims. Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the liability and
expense in the current year.
32
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Because these estimates and assumptions require significant judgment, actual results could differ from those
estimates and could have a significant impact on our results of operations, financial position and cash flows. We
reevaluate our estimates and assumptions as needed, but at a minimum on a quarterly basis. The most significant
estimates include, but are not limited to, the allowance for doubtful accounts, inventory reserves, warranty accrual,
workers compensation accrual, medical insurance accrual, share-based compensation and income taxes. Actual results
could differ materially from those estimates.
3. Accounts Receivable
Accounts receivable and the related allowance for doubtful accounts are as follows:
December 31,
2016 2015
(in thousands)
Accounts receivable $ 43,091 $ 50,139
Less: Allowance for doubtful accounts (90) (115)
Total, net $ 43,001 $ 50,024
Years Ending December 31,
2016 2015 2014
Allowance for doubtful accounts: (in thousands)
Balance, beginning of period $ 115 $ 171 $ 193
Provisions for losses on accounts receivables, net of adjustments (25) (48) —
Accounts receivable written off, net of recoveries — (8) (22)
Balance, end of period $ 90 $ 115 $ 171
4. Inventories
The components of inventories and the related changes in the allowance for excess and obsolete inventories are as
follows:
December 31,
2016 2015
(in thousands)
Raw materials $ 43,438 $ 33,853
Work in process 2,279 2,522
Finished goods 3,017 2,881
48,734 39,256
Less: Allowance for excess and obsolete inventories (1,382) (757)
Total, net $ 47,352 $ 38,499
33
Years Ending December 31,
2016 2015 2014
Allowance for excess and obsolete inventories: (in thousands)
Balance, beginning of period $ 757 $ 714 $ 579
Provisions for excess and obsolete inventories 625 178 135
Inventories written off — (135) —
Balance, end of period $ 1,382 $ 757 $ 714
5. Note Receivable
In connection with the closure of our Canadian facility on May 18, 2009, we sold land and a building in September
2010 and assumed a note receivable from the borrower secured by the property. The $1.1 million, 15 year note has an
interest rate of 4.0% and is payable to us monthly, and has a $0.6 million balloon payment due in October 2025. Interest
payments are recognized in interest income.
We evaluate the note for impairment on a quarterly basis. We determine the note receivable to be impaired if we are
uncertain of its collectability based on the contractual terms. At December 31, 2016 and 2015, there was no impairment.
6. Supplemental Cash Flow Information
Years Ending December 31,
2016 2015 2014
Supplemental disclosures: (in thousands)
Interest paid $ — $ — $ —
Income taxes paid, net 27,353 24,125 26,456
Non-cash investing and financing activities:
Non-cash capital expenditures 270 83 (79)
7. Warranties
The Company has warranties with various terms from 18 months for parts to 25 years for certain heat exchangers. The
Company has an obligation to replace parts or service its products if conditions under the warranty are met. A provision
is made for estimated warranty costs at the time the related products are sold based upon the warranty period, historical
trends, new products and any known identifiable warranty issues.
Changes in the warranty accrual are as follows:
Years Ending December 31,
2016 2015 2014
Warranty accrual: (in thousands)
Balance, beginning of period $ 8,469 $ 8,130 $ 7,352
Payments made (4,134) (3,978) (4,096)
Provisions 3,601 4,317 4,874
Adjustments related to changes in estimates — — —
Balance, end of period $ 7,936 $ 8,469 $ 8,130
Warranty expense: $ 3,601 $ 4,317 $ 4,874
34
8. Accrued Liabilities
At December 31, accrued liabilities were comprised of the following:
December 31,
2016 2015
(in thousands)
Warranty $ 7,936 $ 8,469
Due to representatives 9,907 10,597
Payroll 4,129 3,954
401(k) Contributions — 3,054
Profit sharing 1,967 2,220
Workers' compensation 580 366
Medical self-insurance 872 676
Customer prepayments 2,256 2,895
Donations 600 600
Employee benefits and other 3,693 4,404
Total $ 31,940 $ 37,235
9. Revolving Credit Facility
Our revolving credit facility provides for maximum borrowings of $30.0 million which is provided by BOKF, NA dba
Bank of Oklahoma, formerly known as Bank of Oklahoma, N.A. ("Bank of Oklahoma"). Under the line of credit, there
was one standby letter of credit totaling $0.8 million as of December 31, 2016. Borrowings available under the revolving
credit facility at December 31, 2016, were $29.2 million. Interest on borrowings is payable monthly at LIBOR plus
2.5%. No fees are associated with the unused portion of the committed amount. As of December 31, 2016 and 2015,
we had no balance outstanding under our revolving credit facility. At December 31, 2016 and 2015, the weighted
average interest rate was 3.0% and 2.6%, respectively.
At December 31, 2016, we were in compliance with our financial covenants. These covenants require that we meet
certain parameters related to our tangible net worth and total liabilities to tangible net worth ratio. At December 31,
2016 our tangible net worth was $205.9 million, which meets the requirement of being at or above $125.0 million. Our
total liabilities to tangible net worth ratio was 0.2 to 1.0, which meets the requirement of not being above 2 to 1.
Effective July 25, 2016, the Company amended its revolving credit facility with the Bank of Oklahoma. The amendment
extends the termination date of the revolving credit facility to July 27, 2018.
10. Income Taxes
The provision (benefit) for income taxes consists of the following:
Years Ending December 31,
2016 2015 2014
(in thousands)
Current $ 25,790 $ 24,439 $ 26,199
Deferred 825 1,172 (2,111)
Total $ 26,615 $ 25,611 $ 24,088
35
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate
before the provision for income taxes.
The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
Years Ending December 31,
2016 2015 2014
Federal statutory rate 35 % 35 % 35 %
State income taxes, net of federal benefit 5 % 5 % 5 %
Domestic manufacturing deduction (3)% (3)% (4)%
Excess tax benefits (3)% — % — %
Other (1)% (1)% (1)%
33 % 36 % 35 %
As discussed in Note 11, the Company early adopted ASU 2016-09, Improvements to Employee Share-Based Payment
Accounting, applying the changes for excess tax benefits and tax deficiencies prospectively. As a result, excess tax
benefits and deficiencies are reported as an income tax benefit or expense on the statement of income rather than as a
component of additional paid-in capital on the statement of equity. Excess tax benefits and deficiencies are treated as
discrete items to the income tax provision in the reporting period in which they occur and are noted in the above table.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amount used for income tax purposes.
The significant components of the Company’s deferred tax assets and liabilities are as follows:
December 31,
2016 2015
(in thousands)
Deferred income tax assets (liabilities):
Accounts receivable and inventory reserves $ 587 $ 351
Warranty accrual 3,165 3,405
Other accruals 1,715 1,248
Share-based compensation 1,784 1,099
Donations 463 691
Other, net 738 986
Total deferred income tax assets 8,452 7,780
Property & equipment (17,983) (16,486)
Total deferred income tax liabilities $ (17,983) $ (16,486)
Net deferred income tax liabilities $ (9,531) $ (8,706)
We file income tax returns in the U.S., state and foreign income tax returns jurisdictions. We are subject to U.S.
examinations for tax years 2012 to present, and to non-U.S. income tax examinations for the tax years of 2012 to
present. In addition, we are subject to state and local income tax examinations for the tax years 2012 to present. The
Company continues to evaluate its need to file returns in various state jurisdictions. Any interest or penalties would be
recognized as a component of income tax expense.
36
11. Share-Based Compensation
On May 22, 2007, our stockholders adopted a Long-Term Incentive Plan (“LTIP”) which provided an additional 3.3
million shares that could be granted in the form of stock options, stock appreciation rights, restricted stock awards,
performance units and performance awards, in addition to the shares from the previous plan, the 1992 Plan. Since
inception of the LTIP, non-qualified stock options and restricted stock awards have been granted with the same vesting
schedule as the 1992 Plan. Under the LTIP, the exercise price of shares granted may not be less than 100% of the fair
market value at the date of the grant.
On May 24, 2016, our stockholders adopted the 2016 Long-Term Incentive Plan ("2016 Plan") which provides for
approximately 3.8 million shares, comprised of 3.4 million new shares provided for under the 2016 Plan and
approximately 0.4 million shares that were available for issuance under the previous LTIP, that are now authorized for
issuance under the 2016 Plan, that can be granted in the form of stock options, stock appreciation rights, restricted stock
awards, performance awards, dividend equivalent rights, and other awards. Under the 2016 Plan, the exercise price of
shares granted may not be less than 100% of the fair market value at the date of the grant. The 2016 Plan is administered
by the Compensation Committee of the Board of Directors or such other committee of the Board of Directors as is
designated by the Board of Directors (the “Committee”). Membership on the Committee is limited to independent
directors. The Committee may delegate certain duties to one or more officers of the Company as provided in the 2016
Plan. The Committee determines the persons to whom awards are to be made, determines the type, size and terms of
awards, interprets the 2016 Plan, establishes and revises rules and regulations relating to the 2016 Plan and makes any
other determinations that it believes necessary for the administration of the 2016 Plan.
The total pre-tax compensation cost related to unvested stock options not yet recognized as of December 31, 2016 is
$8.5 million and is expected to be recognized over a weighted-average period of 2.61 years.
The following weighted average assumptions were used to determine the fair value of the stock options granted on the
original grant date for expense recognition purposes for options granted during December 31, 2016, 2015 and 2014
using a Black Scholes-Merton Model:
2016 2015 2014
Director and Officers:
Expected dividend yield $ 0.22 $ 0.18 N/A
Expected volatility 41.19% 44.14% N/A
Risk-free interest rate 2.00% 1.97% N/A
Expected life (in years) 7.68 8.00 N/A
Employees:
Expected dividend yield $ 0.25 $ 0.22 $ 0.14
Expected volatility 34.50% 42.71% 44.85%
Risk-free interest rate 1.73% 1.41% 2.26%
Expected life (in years) 5.69 8.00 8.00
The expected term of the options is based on evaluations of historical and expected future employee exercise
behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates
approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over
time periods equal to the expected life at grant date.
37
The following is a summary of stock options vested and exercisable as of December 31, 2016:
Weighted
Average Weighted
Range of Number Remaining Average
Exercise of Contractual Exercise Intrinsic
Prices Shares Life Price Value
(in thousands)
$4.54 - 20.92 338,308 4.75 $ 8.03 $ 8,465
$20.96 - 26.50 71,928 8.56 22.50 759
Total 410,236 5.42 $ 10.57 $ 9,224
The following is a summary of stock options vested and exercisable as of December 31, 2015:
Weighted
Average Weighted
Range of Number Remaining Average
Exercise of Contractual Exercise Intrinsic
Prices Shares Life Price Value
(in thousands)
$4.31 - 8.65 421,237 4.89 $ 7.04 $ 6,814
$8.70 - 22.76 27,134 7.82 15.31 215
Total 448,371 5.07 $ 7.54 $ 7,029
The following is a summary of stock options vested and exercisable as of December 31, 2014:
Weighted
Average Weighted
Range of Number Remaining Average
Exercise of Contractual Exercise Intrinsic
Prices Shares Life Price Value
(in thousands)
$3.21 - 6.89 411,553 3.46 $ 5.16 $ 7,113
$7.13 - 8.17 81,050 6.54 7.27 1,226
$8.65 - 21.14 175,527 6.53 8.76 2,392
Total 668,130 4.64 $ 6.36 $ 10,731
38
A summary of option activity under the plans is as follows:
Weighted
Average
Exercise
Options Shares Price
Outstanding at December 31, 2015 1,130,910 $ 13.38
Granted 651,546 29.94
Exercised (257,738) 8.00
Forfeited or Expired (74,014) 21.92
Outstanding at December 31, 2016 1,450,704 $ 21.33
Exercisable at December 31, 2016 410,236 $ 10.57
The total intrinsic value of options exercised during December 31, 2016, 2015 and 2014 was $4.9 million, $7.4 million
and $2.8 million, respectively. The cash received from options exercised during December 31, 2016, 2015 and 2014
was $2.1 million, $2.8 million and $1.3 million, respectively. The impact of these cash receipts is included in financing
activities in the accompanying Consolidated Statements of Cash Flows.
Since 2007, as part of the LTIP and since May 2016 as part of the 2016 Plan, the Compensation Committee of the Board
of Directors has authorized and issued restricted stock awards to directors and key employees. Restricted stock awards
granted to directors vest one-third each year. All other restricted stock awards vest at a rate of 20% per year. The fair
value of restricted stock awards is based on the fair market value of AAON common stock on the respective grant dates,
reduced for the present value of dividends.
These awards are recorded at their fair value on the date of grant and compensation cost is recorded using straight-line
vesting over the service period. At December 31, 2016, unrecognized compensation cost related to unvested restricted
stock awards was approximately $6.5 million which is expected to be recognized over a weighted average period of
1.90 years.
A summary of the unvested restricted stock awards is as follows:
Weighted
Average
Grant date
Restricted stock Shares Fair Value
Unvested at December 31, 2015 410,023 $ 18.78
Granted 136,063 23.13
Vested (119,379) 17.81
Forfeited (18,545) 19.60
Unvested at December 31, 2016 408,162 $ 20.47
39
A summary of share-based compensation is as follows for the years ending December 31, 2016, 2015 and 2014:
2016 2015 2014
Grant date fair value of awards during the period: (in thousands)
Options $ 6,102 $ 3,685 $ 817
Restricted stock 3,147 2,985 5,024
Total $ 9,249 $ 6,670 $ 5,841
2016 2015 2014
Share-based compensation expense: (in thousands)
Options $ 1,681 $ 833 $ 898
Restricted stock 2,676 2,058 1,280
Total $ 4,357 $ 2,891 $ 2,178
2016 2015 2014
Income tax benefit related to share-based compensation: (in thousands)
Options $ 1,610 $ 2,165 $ 979
Restricted stock 458 280 260
Total $ 2,068 $ 2,445 $ 1,239
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which
makes several modifications to Topic 718 including: accounting for excess tax benefits and deficiencies; classifying
excess tax benefits on the statement of cash flows; accounting for forfeitures; classifying awards that permit share
repurchases to satisfy statutory tax-withholding requirement; and classifying tax payments on behalf of employees on
the statement of cash flows. The ASU becomes effective for interim and annual reporting periods beginning after
December 31, 2016. We early adopted the ASU effective July 1, 2016.
The Company previously applied a forfeiture rate to its share-based compensation expense and adjusted expense to
actual as awards vested and/or were forfeited. Upon adoption of ASU 2016-09, the Company accounts for forfeitures
as they occur, rather than estimating forfeitures as of an award's grant date. This change in accounting policy election
was adopted using a modified retrospective transition method and the Company recognized a cumulative-effect
adjustment to retained earnings of approximately $150,000.
Tax payments made on behalf of an employee by repurchasing shares of stock are now shown separately as cash outflows
from financing activities on the statement of cash flows. This provision was retrospectively adopted and prior period
cash flows have been reclassified to conform with this presentation.
Additionally, the Company retrospectively adopted the provision to classify excess tax benefits and deficiencies as
cash flows from operating activities as part of cash payments for taxes on the statement of cash flows. Prior period
cash flows have been reclassified to conform with this presentation.
12. Employee Benefits
Defined Contribution Plan - 401(k) - We sponsor a defined contribution plan (the "Plan”). Eligible employees may
make contributions in accordance with the Plan and IRS guidelines. In addition to the traditional 401(k), eligible
employees are given the option of making an after-tax contribution to a Roth 401(k) or a combination of both. The Plan
provides for automatic enrollment and for an automatic increase to the deferral percentage at January 1st of each year
and each year thereafter. Eligible employees are automatically enrolled in the Plan at a 6% deferral rate and currently
contributing employees deferral rates will be increased to 6% unless their current rate is above 6% or the employee
elects to decline the automatic enrollment or increase.
40
Effective October 1, 2013, the Plan was amended such that the Company contributed 3% of eligible payroll to the Plan
for each employee and matched 100% up to 6% of employee contributions of eligible compensation. We contributed
and continue to contribute in the form of cash and direct the investment to shares of AAON stock. Employees are 100%
vested in salary deferral contributions and vest 20% per year at the end of years two through six of employment in
employer matching contributions. The additional 3% Company contribution, a Safe-Harbor contribution, vested over
two years.
Effective January 1, 2016, the Plan was amended such that the Company matches 175% up to 6% of employee
contributions of eligible compensation. The Company no longer contributes 3% of eligible payroll to the Plan for each
employee. The Company ceased paying administrative expenses for the Plan at which time administrative expenses
are paid for by Plan participants. Additionally, Plan participant forfeitures are used to reduce the cost of the Company
contributions.
For the years ended December 31, 2016, 2015 and 2014 we made contributions of $5.9 million, $9.0 million and $6.8
million, respectively. Administrative expenses were approximately $40 thousand, $0.1 million, and $0.2 million for
the years ended 2016, 2015 and 2014, respectively.
Profit Sharing Bonus Plan - We maintain a discretionary profit sharing bonus plan under which approximately 10%
of pre-tax profit is paid to eligible employees on a quarterly basis in order to reward employee productivity. Eligible
employees are regular full-time employees who are actively employed and working on the first and last days of the
calendar quarter and who were employed full-time for at least three full months prior to the beginning of the calendar
quarter. Profit sharing expense was $9.0 million, $8.0 million and $7.8 million for the years ended December 31, 2016,
2015 and 2014, respectively.
13. Stockholders’ Equity
Stock Repurchase - The Board has authorized three stock repurchase programs for the Company. The Company may
purchase shares on the open market from time to time, up to a total of 5.7 million shares. The Board must authorize
the timing and amount of these purchases. Effective May 24, 2016, the Board authorized up to $25.0 million in open
market repurchases and on June 2, 2016, the Company executed a repurchase agreement in accordance with the rules
and regulations of the SEC allowing the Company to repurchase an aggregate amount of $25.0 million or a total of
approximately 2.0 million shares from the open market. The repurchase agreement will terminate upon the
aforementioned thresholds having been met, on April 15, 2017, or upon other provisions contained in the repurchase
agreement by either the Company or its agent. The Company also has a stock repurchase arrangement by which
employee-participants in our 401(k) savings and investment plan are entitled to have shares in AAON, Inc. stock in
their accounts sold to the Company. The maximum number of shares to be repurchased is contingent upon the number
of shares sold by employee-participants. Lastly, the Company repurchases shares of AAON, Inc. stock from certain of
its directors and employees for payment of statutory tax withholdings on stock transactions. A11 other repurchases
from directors or employees are contingent upon Board approval. All repurchases are done at current market prices.
Our repurchase activity is as follows:
2016 2015 2014
Program Shares Total $
$ per
share Shares Total $
$ per
share Shares Total $
$ per
share
Open market 165,598 $ 4,440,658 $26.82 1,037,590 $ 24,999,963 $24.09 1,016,717 $ 19,998,406 $19.67
401(k) 540,501 14,875,850 27.52 512,754 11,557,598 22.54 417,172 8,246,172 19.77
Directors and
employees 30,072 823,446 27.38 25,746 585,413 22.74 54,341 1,038,459 19.11
Total 736,171 $ 20,139,954 $27.36 1,576,090 $ 37,142,974 $23.57 1,488,230 $ 29,283,037 $19.68
41
Inception to Date
Program Shares Total $
$ per
share
Open market 3,834,819 $ 60,948,460 $15.89
401(k) 6,082,443 65,732,720 10.81
Directors and
employees 1,873,632 15,663,608 8.36
Total 11,790,894 $142,344,788 $12.07
Dividends - At the discretion of the Board of Directors, we pay semi-annual cash dividends. Board approval is required
to determine the date of declaration and amount for each semi-annual dividend payment.
Our recent dividends are as follows:
Declaration Date Record Date Payment Date Dividend per Share
May 2, 2014 June 12, 2014 July 1, 2014 $0.09
November 4, 2014 December 2, 2014 December 23, 2014 $0.09
May 19, 2015 June 12, 2015 July 1, 2015 $0.11
October 29, 2015 December 2, 2015 December 23, 2015 $0.11
May 24, 2016 June 10, 2016 July 1, 2016 $0.11
November 9, 2016 December 2, 2016 December 23, 2016 $0.13
Additionally, on June 5, 2014, we declared a three-for-two stock split of the Company's common stock to be paid in
the form of a stock dividend on July 16, 2014. Stockholders of record at the close of business on June 27, 2014
received one additional share for every two shares they held as of that date.
We paid cash dividends of $12.7 million, $11.9 million and $9.7 million in 2016, 2015 and 2014, respectively.
14. Commitments and Contingencies
We are subject to various claims and legal actions that arise in the ordinary course of business. We closely monitor
these claims and legal actions and frequently consult with our legal counsel to determine whether they may, when
resolved, have a material adverse effect on our financial position, results of operations or cash flows and we accrue
and/or disclose loss contingencies as appropriate. We have concluded that the likelihood is remote that the ultimate
resolution of any pending litigation or claims will be material or have a material adverse effect on the Company's
business, financial position, results of operations or cash flows.
We are occasionally party to short-term, cancellable and occasionally non-cancellable, fixed price contracts with major
suppliers for the purchase of raw material and component parts. We expect to receive delivery of raw materials for use
in our manufacturing operations. These contracts are not accounted for as derivative instruments because they meet
the normal purchase and normal sales exemption.
15. New Accounting Pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting
standards updates ("ASUs") to the FASB's Accounting Standards Codification.
We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either
not applicable or are expected to have minimal impact on our consolidated financial statements and notes thereto.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to
recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to
customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.
In August 2015, with the issuance of ASU 2015-14, the FASB amended the effective date for us to January 1, 2018.
The following ASUs have been issued in 2016 along with ASU 2014-09 with the same effective dates and transition
requirements:
42
• ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which provides
implementation guidance for Topic 606 on principal versus agent considerations.
• ASU 2016-10, Identifying Performance Obligations and Licensing, which provides clarification for two
aspects of Topic 606: identifying performance obligations and the licensing implementation guidance.
• ASU 2016-12, Revenue from Contracts with Customers, which further amends Topic 606.
• ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,
which further amends Topic 606.
The Company plans to adopt using the retrospective transition method. The Company has begun assessing the impact
of ASU 2015-09 and believes the impact will not be material to the consolidated financial statements. We do not expect
to complete our evaluation until after our first quarter of 2017. Once we adopt ASU 2014-09, we do not anticipate
that our internal control framework will materially change, but rather that existing internal controls will be modified
and augmented, as necessary, to consider our new revenue recognition policy effective January 1, 2018.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial
Liabilities, which will address certain aspects of recognition, measurement, presentation and disclosure of financial
instruments. The ASU becomes effective in the annual reporting period beginning after December 31, 2017, including
interim reporting periods. We do not expect ASU 2016-01 will have a material effect on our consolidated financial
statements and notes thereto.
16. Earnings Per Share
Basic net income per share is calculated by dividing net income by the weighted average number of shares of common
stock outstanding during the period. Diluted net income per share assumes the conversion of all potentially dilutive
securities and is calculated by dividing net income by the sum of the weighted average number of shares of common
stock outstanding plus all potentially dilutive securities. Dilutive common shares consist primarily of stock options and
restricted stock awards.
ASU 2016-09 impacts the calculation of diluted weighted average shares under the treasury stock method as the
Company no longer increases or decreases the assumed proceeds from an employee vesting in, or exercising, a share-
based payment award by the amount of excess tax benefits or deficiencies taken to additional paid-in capital.
The following table sets forth the computation of basic and diluted earnings per share:
2016 2015 2014
Numerator: (in thousands, except share and per share data)
Net income $ 53,376 $ 45,728 $ 44,158
Denominator:
Basic weighted average shares 52,924,398 54,045,841 54,809,319
Effect of dilutive stock options and restricted stock 525,356 435,643 559,697
Diluted weighted average shares 53,449,754 54,481,484 55,369,016
Earnings per share:
Basic $ 1.01 $ 0.85 $ 0.81
Dilutive $ 1.00 $ 0.84 $ 0.80
Anti-dilutive shares:
Shares 469,603 146,548 32,436
43
17. Quarterly Results (Unaudited)
The following is a summary of the quarterly results of operations for the years ending December 31, 2016 and 2015:
Quarter
First Second Third Fourth
(in thousands, except per share data)
2016
Net sales $ 85,422 $ 102,319 $ 104,568 $ 91,668
Gross profit 25,731 32,747 33,092 26,510
Net income 10,806 (1) 14,341 (1) 15,682 11,420
Earnings per share:
Basic $ 0.20 (1) $ 0.27 (1) $ 0.30 $ 0.22
Diluted $ 0.20 (1) $ 0.27 (1) $ 0.29 $ 0.21
2015
Net sales $ 76,768 $ 90,275 $ 94,360 $ 97,229
Gross profit 21,798 27,117 30,185 29,581
Net income 8,399 11,130 13,251 12,948
Earnings per share:
Basic $ 0.16 $ 0.21 $ 0.24 $ 0.24
Diluted $ 0.15 $ 0.20 $ 0.24 $ 0.24
(1) As discussed in Notes 10 and 11, the Company early adopted ASU 2016-09, Improvements to Employee Share-Based Payment
Accounting, effective July 1, 2016. As a result, excess tax benefits and deficiencies are reported as an income tax benefit or expense
on the statement of income rather than as a component of additional paid-in capital on the statement of equity. The ASU required
the application of the modified retrospective transition method as of the beginning of the annual period in which the guidance was
adopted. As a result, 2016 net income as reported above will be recast when we file our first and second quarters in 2017. Net
income will increase by $0.8 million and $0.4 million, for the first and second quarters of 2016, respectively. Additionally, earnings
per basic and diluted share will increase approximately $.01 and $.01, respectively, for each of the three months ended March 31,
2016 and June 30, 2016, respectively, versus what was reported above.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not Applicable.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
At the end of the period covered by this Annual Report on Form 10-K, our management, under the supervision and
with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of
the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer believe that:
• Our disclosure controls and procedures are designed at a reasonable assurance threshold to ensure that
information required to be disclosed by us in the reports we file under the Securities Exchange Act of 1934
is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms; and
• Our disclosure controls and procedures operate at a reasonable assurance threshold such that important
information flows to appropriate collection and disclosure points in a timely manner and are effective to ensure
that such information is accumulated and communicated to our management, and made known to our Chief
Executive Officer and Chief Financial Officer, particularly during the period when this Annual Report was
prepared, as appropriate to allow timely decisions regarding the required disclosure.
44
Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures and
concluded that these controls and procedures were effective as of December 31, 2016.
(b) Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting.
Our internal control over financial reporting is a process designed by, or under the supervision of, our principal executive
and principal financial officer, and effected by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with U.S. GAAP.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement preparation and
presentation.
In making our assessment of internal control over financial reporting, management has used the criteria issued by the
Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in the 2013 Internal Control—
Integrated Framework. Based on our assessment, we believe that, as of December 31, 2016, our internal control over
financial reporting is effective at the reasonable assurance level based on those criteria.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2016 has been audited
by Grant Thornton LLP, our independent registered public accounting firm, as stated in their report which is included
in this Item 9A of this report on Form 10-K.
(c) Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting that occurred during the fourth quarter of 2016
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
45
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
AAON, Inc.
We have audited the internal control over financial reporting of AAON, Inc. (a Nevada corporation) and subsidiaries
(the “Company”) as of December 31, 2016, based on criteria established in the 2013 Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The
Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on
the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 31, 2016, based on criteria established in the 2013 Internal Control - Integrated Framework issued by
COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated financial statements of the Company as of and for the year ended December 31, 2016, and
our report dated February 23, 2017, expressed an unqualified opinion on those financial statements.
/s/ GRANT THORNTON LLP
Tulsa, Oklahoma
February 23, 2017
46
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by Items 401, 405, 406 and 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is incorporated
by reference to the information contained in our definitive Proxy Statement to be filed with the Securities and Exchange
Commission in connection with our annual meeting of shareholders scheduled to be held on May 16, 2017.
Code of Ethics
We adopted a code of ethics that applies to our principal executive officer, principal financial officer and principal
accounting officer or persons performing similar functions, as well as other employees and directors. Our code of ethics
can be found on our website at www.aaon.com. We will also provide any person without charge, upon request, a copy
of such code of ethics. Requests may be directed to AAON, Inc., 2425 South Yukon Avenue, Tulsa, Oklahoma 74107,
attention Scott M. Asbjornson, or by calling (918) 382-6204.
Item 11. Executive Compensation.
The information required by Items 402 and 407(e)(4) and (e)(5) of Regulation S-K is incorporated by reference to the
information contained in our definitive Proxy Statement to be filed with the Securities and Exchange Commission in
connection with our annual meeting of shareholders scheduled to be held on May 16, 2017.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
The information required by Item 403 and Item 201(d) of Regulation S-K is incorporated by reference to the information
contained in our definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection
with our annual meeting of stockholders scheduled to be held May 16, 2017.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required to be reported pursuant to Item 404 of Regulation S-K and paragraph (a) of Item 407 of
Regulation S-K is incorporated by reference in our definitive proxy statement relating to our annual meeting of
shareholders scheduled to be held May 16, 2017.
Our Code of Conduct guides the Board of Directors in its actions and deliberations with respect to related party
transactions. Under the Code, conflicts of interest, including any involving the directors or any Named Officers, are
prohibited except under any guidelines approved by the Board of Directors. Only the Board of Directors may waive a
provision of the Code of Conduct for a director or a Named Officer, and only then in compliance with all applicable
laws, rules and regulations. We have not entered into any new material related party transactions and have no preexisting
material related party transactions in 2016, 2015 or 2014.
Item 14. Principal Accountant Fees and Services.
This information is incorporated by reference in our definitive Proxy Statement to be filed with the Securities and
Exchange Commission in connection with our annual meeting of stockholders scheduled to be held May 16, 2017.
47
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) Financial statements.
(1)
The consolidated financial statements and the report of independent registered public accounting
firm are included in Item 8 of this Form 10-K.
(2)
The consolidated financial statements other than those listed at item (a)(1) above have been
omitted because they are not required under the related instructions or are not applicable.
(3)
The exhibits listed at item (b) below are filed as part of, or incorporated by reference into, this
Form 10-K.
(b) Exhibits:
(3) (A) Amended and Restated Articles of Incorporation (ii)
(B) Bylaws (i)
(B-1) Amendments of Bylaws (iii)
(4) (A) Third Restated Revolving Credit and Term Loan Agreement and related documents (iv)
(A-1) Amendment Eleven to Third Restated Revolving Credit Loan Agreement (v)
(10.1) AAON, Inc. 1992 Stock Option Plan, as amended (vii)
(10.2) AAON, Inc. 2007 Long-Term Incentive Plan, as amended (viii)
(10.3) AAON, Inc. 2016 Long-Term Incentive Plan (vi)
(21) List of Subsidiaries (ix)
(23) Consent of Grant Thornton LLP
(31.1) Certification of CEO
(31.2) Certification of CFO
(32.1) Section 1350 Certification – CEO
(32.2) Section 1350 Certification – CFO
(101) (INS) XBRL Instance Document
(101) (SCH) XBRL Taxonomy Extension Schema Document
(101) (CAL) XBRL Taxonomy Extension Calculation Linkbase Document
(101) (DEF) XBRL Taxonomy Extension Definition Linkbase Document
(101) (LAB) XBRL Taxonomy Extension Label Linkbase Document
(101) (PRE) XBRL Taxonomy Extension Presentation Linkbase Document
(i)
Incorporated herein by reference to the exhibits to our Form S-18 Registration Statement
No. 33-18336-LA.
(ii)
Incorporated herein by reference to exhibits to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2014.
(iii)
Incorporated herein by reference to our Forms 8-K dated March 10, 1997, May 27, 1998
and February 25, 1999, or exhibits thereto.
(iv) Incorporated herein by reference to exhibit to our Form 8-K dated July 30, 2004.
(v) Incorporated herein by reference to exhibit to our Form 8-K dated July 27, 2016.
(vi)
Incorporated herein by reference to our Form S-8 Registration Statement No. 333-212863
dated August 2, 2016.
48
(vii) Incorporated by reference to exhibits to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1991, and to our Form S-8 Registration Statement No.
333-52824.
(viii) Incorporated herein by reference to our Form S-8 Registration Statement No.
333-151915, Form S-8 Registration Statement No. 333-207737, and to our Form 8-K
dated May 21, 2014.
(ix) Incorporated herein by reference to exhibits to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2004.
49
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: February 23, 2017 By: /s/ Norman H. Asbjornson
Norman H. Asbjornson, Chief Executive Officer
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: February 23, 2017 /s/ Norman H. Asbjornson
Norman H. Asbjornson
Chief Executive Officer and Director
(principal executive officer)
Dated: February 23, 2017 /s/ Scott M. Asbjornson
Scott M. Asbjornson
Chief Financial Officer
(principal financial officer)
Dated: February 23, 2017 /s/ Rebecca A. Thompson
Rebecca A. Thompson
Chief Accounting Officer
(principal accounting officer)
Dated: February 23, 2017 /s/ Gary D. Fields
Gary D. Fields
President and Director
Dated: February 23, 2017 /s/ Jack E. Short
Jack E. Short
Director
Dated: February 23, 2017 /s/ Paul K. Lackey, Jr.
Paul K. Lackey, Jr.
Director
Dated: February 23, 2017 /s/ A.H. McElroy II
A.H. McElroy II
Director
Dated: February 23, 2017 /s/ Jerry R. Levine
Jerry R. Levine
Director
Dated: February 23, 2017 /s/ Angela E. Kouplen
Angela E. Kouplen
Director
Dated: February 23, 2017 /s/ Luke A. Bomer
Luke A. Bomer
Secretary
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our reports dated February 23, 2017, with respect to the consolidated financial statements and internal
control over financial reporting in the Annual Report of AAON, Inc. on Form 10-K for the year ended December 31,
2016. We consent to the incorporation by reference of said reports in the Registration Statements of AAON, Inc. on
Forms S-8 (File No. 333-52824, File No. 333-151915, File No. 333-207737, and File No. 333-212863).
/s/ GRANT THORNTON LLP
Tulsa, Oklahoma
February 23, 2017
Exhibit 31.1
CERTIFICATION
I, Norman H. Asbjornson, certify that:
1. I have reviewed this Annual Report on Form 10-K of AAON, Inc.
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) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 our consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) 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;
d) disclosed in this report any change in the registrant’s internal controls over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) 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 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.
Dated: February 23, 2017
/s/ Norman H. Asbjornson
Norman H. Asbjornson
Chief Executive Officer
Exhibit 31.2
CERTIFICATION
I, Scott M. Asbjornson, certify that:
1. I have reviewed this Annual Report on Form 10-K of AAON, Inc.
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) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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 our consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) 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;
d) disclosed in this report any change in the registrant’s internal controls over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) 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 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.
Dated: February 23, 2017
/s/ Scott M. Asbjornson
Scott M. Asbjornson
Chief Financial Officer
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
In connection with the Annual Report of AAON, Inc. (the “Company”), on Form 10-K for the year ended
December 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Norman
H. Asbjornson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to
§ 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and our results of operations.
Dated: February 23, 2017
/s/ Norman H. Asbjornson
Norman H. Asbjornson
Chief Executive Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of AAON, Inc. (the “Company”), on Form 10-K for the year ended
December 31, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott
M. Asbjornson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to
§ 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and our results of operations.
Dated: February 23, 2017
/s/ Scott M. Asbjornson
Scott M. Asbjornson
Chief Financial Officer
NORMAN H. ASBJORNSON has
served as CEO and Chairman
of the Board of the Company
since 1988. Mr. Asbjornson also
serves as the Chairman of the
Board of AAON Coil Products,
Inc. Mr. Asbjornson served as the
President of AAON, Inc., from
1988 to 2016. Mr. Asbjornson
has been in senior management
positions in the HVAC industry
for over 40 years.
KATHY I. SHEFFIELD has
served as Senior Vice President,
Administration, of the Company
since 2012, Treasurer of the
Company since 1999, and Vice
President of the Company from
2002 to 2012. Ms. Sheffield has
been in leadership positions
with the Company for over
25 years. Ms. Sheffield also
serves as Senior Vice President,
Administration, and Treasurer
of AAON, Inc. and as Treasurer
of AAON Coil Products, Inc.
Company Officers
GARY D. FIELDS has served
as President of the Company
since 2016 and a director of the
Company since 2015. Mr. Fields
been involved in the HVAC
industry for over 35 years. From
1983 to 2012, he was an HVAC
equipment sales representative
at and, from 2002 to 2012, a
member of the ownership group
of Texas AirSystems, the largest
independent HVAC equipment
and solutions provider in the state
of Texas. Mr. Fields is an owner
and President of GKR Partners
LTD, which has provided HVAC
business development advice and
consultation to the Company and
its sales representatives since 2013.
SCOTT M. ASBJORNSON has
served as Vice President, Finance,
and CFO of the Company since
2012. Mr. Asbjornson joined the
Company in 1990 and is the son
of the Company’s CEO, Norman H.
Asbjornson. Mr. Asbjornson has a
Masters of Business Administration
and has held various leadership
positions with the Company
and AAON Coil Products, Inc.,
including Vice President (2007-
2010) and President (2010-2012)
of AAON Coil Products, Inc.
He also serves as Vice President,
Finance, and CFO of AAON, Inc.
REBECCA A. THOMPSON
has served as Chief Accounting
Officer of the Company since
2012. Ms. Thompson previously
served as a Senior Manager at
Grant Thornton, LLP where
she had 11 years of experience
in the assurance division. Ms.
Thompson is a licensed certified
public accountant.
ROBE RT G . F E RG U S has
s e r ve d a s Vi c e Pre s i d e nt ,
M a n u f a c t u r i n g , o f t h e
Company since 1989. Mr. Fergus
also serves as Vice President,
Manufacturing, of AAON, Inc.
Mr. Fergus has been in senior
management positions in the
HVAC industry for over 40 years.
SAMUEL J. NEALE has
served as Vice President of the
Company since 2015. Mr. Neale has
served as President of AAON Coil
Products Inc. since 2012. Mr. Neale
has been in leadership positions
in the HVAC industry for over 15
years. Mr. Neale is a professionally
licensed mechanical engineer.
Transfer Agent and Registrar
Progressive Transfer Company,
1981 East Murray-Holladay
Road, Suite 200,
Salt Lake City, Utah 84117
Auditors
Grant Thornton LLP,
2431 East 61st Street, Suite 500
Tulsa, Oklahoma 74136
General Counsel
Johnson & Jones, P.C.
Two Warren Place
6120 South Yale Avenue, Suite 500
Tulsa, Oklahoma 74136
Investor Relations
Jerry Levine,
105 Creek Side Road,
Mt. Kisco, New York 10549,
Ph: 914-244-0292,
Fax: 914-244-0295,
jrladvisor@yahoo.com
Executive Offices
2425 South Yukon Avenue,
Tulsa, Oklahoma 74107
Common Stock
NASDAQ-AAON
MIKEL D. CREWS has served
as Vice President, Operations
since 2017. Mr. Crews has served
as Director of Material and
Operations since 2015, Manager of
Operations from 1991 to 2015, and
in various operational, production
and inventory management roles
since the Company’s inception.
Mr. Crews has been in leadership
positions in the HVAC industry
for over 40 years.
Board of Directors
Back row (from left to right): Angela E. Kouplen, A.H. McElroy, II, Paul K. Lackey, Jerry R. Levine
Front row (from left to right): Jack. E. Short, Norman H. Asbjornson, Gary D. Fields
NORMAN H. ASBJORNSON
CEO/Chairman of the Board
GARY D. FIELDS
President/Director
JACK E. SHORT has served as a
director the Company since July 2004 and is the
Chairman of the Audit Committee. Mr. Short was
employed by PriceWaterhouseCoopers for 29
years and retired as the managing partner of the
Oklahoma practice in 2001.
A.H. MCELROY, II has served as a
director of the Company since 2007 and is
Chairman of the Compensation Committee.
From 1997 to present, Mr. McElroy has served as
President and CEO of McElroy Manufacturing,
Inc., a manufacturer of fusion equipment and
fintube machines.
PAUL K. LACKEY, JR. has served as
a director of the Company since 2007 and
is Chairman of the Governance Committee.
Between April 2002 and October 2005 Mr.
Lackey served as CEO and President of The
NORDAM Group, a privately held aerospace
company. Between October 2005 and December
2008 Mr. Lackey served as the Chairman and CEO
of The NORDAM Group. Between January 2009
and December 2011 Mr. Lackey served as the
Executive Chairman of the Board of The
NORDAM Group. Since January 2012, Mr.
Lackey has served as the Chairman of the Board
of The NORDAM Group.
JERRY R. LEVINE has served as a
director of the Company since 2008. Since 1999,
Mr. Levine has provided investor and shareholder
relations services and advice to the Company.
ANGELA E. KOUPLEN was
elected as a director of the Company in 2016.
Ms. Kouplen has over 20 years of experience at
multiple energy companies, with an emphasis on
information technology, contract management,
sourcing/vendor relations, human resource
management, strategy and governance. From
2012 through 2014, Ms. Kouplen served as
Director - Talent Acquisition and
Leadership of WPX Energy. Since 2015, Ms.
Kouplen has served as Vice President - Information
Technology of WPX Energy.
Ma Acosta De Aguayo
Andres Acosta-Lujan
Enriqueta Adame
Derrick Adams
Gary Adams
Rebecca Adams
Ryan Adams
Olalekan Adeyeye
Maria Aguayo
Daniel Alagdon
Julio Albino
James Alexander
Marquis Alexander
Shannon Alford
Nader Al-Hashmi
Paul Allegrezza
Donald Allen
Michael Amburgey
Sarah Andersen
Wesley Anselme
William Appeldorn
Clyde Archer
Jesus Arellanes Ramirez
Fidel Argumedo Rangel*
Jose Argumedo Ruiz
Vincent Argyle
Thomas Armer, Jr.
Maria Arredondo
Rogelio Arteaga
Norman Asbjornson
Scott Asbjornson
David L Ashlock
David R Ashlock
Gary Ashmore
Joseph Avila
Richard Backus, III
Nora Backus
Jacob Baier
Brandon Bailey
Christopher Bailey
Christopher Baker
Dwight Baker
John Baldwin
Dennis Balthazar
Claudia Banda
Myles Barber
Gregory Barker, Jr.
Justin Barlett
James Barnes, III
Loyd Barnes, Jr.
David Barnett
Ana Barragan De Alteneh
Teresa Barron
Sherry Bates
James Baugh
Stuart Baugh
Avery Beavers
Daniel Beck
Timothy Beck
Lionel Beckman
Jason Bell
Douglas Benedict
Bonnie Benson
Christopher Benson
Ida Bermudez
David Berry
Sergio Beserra
Tusun Bey
Daniel Bigby
Courtney Bilderback
Mackenzie Binkley
Amie Bishop
Latoya Black
Vickie Black
Ethan Blackman
Brian Blackmon
Maria Blanco
Corey Bledsoe
David Blevins
Justin Blevins
Nicholas Bobbitt
Lam Boi
Lhing Boi
Mang Boi
Jessica Boih
Nuam Boih
Michael Boney
Mario Bonilla Marroquin
Tiaa Boone
Roger Borja Barreiro
Rosendo Botello
Kyle Bowman
Albert Boyd
John Boyd
Justin Boyd
Robert Boyd
Marc Bradbury
Brian Bradford
Shahani Britt
Alan Brock
Dustin Brod
Winston Broseke
Orville Brower
Allen Brown
Johnny Brown, Jr.
Christopher Bryant
Demario Bryant
Jason Bunnell
Scott Burgess
Trevor Burke
Jermaine Burkhalter
Latisha Burkhalter
Douglas Burns
Monica Burns
Danielle Burrow
Thomas Burrow
Clifton Burrus
Penny Bush
Wayne Bush
Verenice Bustos
James Butler
Konnor Buxton
Janibal Cabudoy
Alejandro Cadena
Cleveland Cage, Jr.
Margarito Calderon
Sandra Caldwell
Jorge Calixto
Edward Calloway*
Lazaro Cama
Maria Camacho
David Campbell
Ieshia Canada
Jacob Cantrel
Andres Cardenas
Billy Carder
Drew Cardoza
Lisa Carriero
Vickie Carrington
Larry Carter, Jr.
Terence Carter
Cristobal Carvajal Colorado
Beatriz Casiano
Michael Cato
Hector Cazares
Cornelio Ceja Grimaldo
Francisco J Cervantes
Francisco Javier Cervantes
Justo Chagoya
Guadalupe Chairez-Galan
Larry Chalk
Patrick Chapman
Aleex Chatkehoodle
Christella Chavez
Edgar Chavez
Gregory Chavez
Zully Chavez
Daniel Cherry
Mani Chettipalli
Eddie Choates
Salvador Choto Matus
Ngai Ciin
Kham Cin
Luan Cin
Paul Cin
Suan Cin
Tuang Cin
Vung Cin
Vungh Cin
Theresa Cing Kok
Cing Cing
Dim K Cing
Dim L Cing
Lun Cing
Man H Cing
Man L Cing
Nang Cing
Nem Cing
Niang Cing
Ning Cing
San Cing
Thang S Cing
Thang Z Cing
Justin Claiborne
Christi Clark
George Clark
Samuel Clark, Jr.
Juan Clemente Valladares
Mark Cobb
Adriana Cobos
Kenneth Cochran
Troy Cockrum
Christi Collins
Tim Collinsworth
Aaron Columbus
Bobby Conditt
Nicholas Conger
Dale Conkwright
Anastasia Conner
Jude Connolly
Chelsea Connor
Mark Cook
Michael Coolidge
Scott Coon
Donna Coonfield
Gregory Cooper
James Cooper
Kelli Copeland
Pablo Cordova Cordova
Mariana Cordova
Jeremy Cornelius
Genoveva Corona De Rivera
Roberto Corona
Miguel Cortez
Rosa Cortez
Billy Cox
Diana Cox
Franklin Cox
Adrian Crabtree
Kathleen Crabtree
Richard Craite
Steven Crase
Jacob Crawford
Jacob Crayne
Mikel Crews
Darrell Crow
Jacinto Cruz Rodriguez
Chris Cummings
Joseph Cummings
Robert Cummings
Kevin Cyrus
Zawng Dai
Cing Dal
Gin Dal
Go Dal
Hau Dal*
Neng Dal
Henley Dang
Clyde Daniels Jr.
Robert Daniels, II
John Daniels
Justin Daniels
Jenifur Davidson
Arthur Davis
Byron Davis
Cameron Davis
Carolyn Davis
Darryl Davis
Jerry Davis*
Billy Davis, Jr.
Matthew Davis
Richard Davis
Samuel Davis
Travis Davis
Daniel De Casas
Michael De Jesus Negron
Yoana De La Torre
Danyale Dearion
Seth DeCoux
Ismael Delapaz
Doreen Deleo
Juana Delobo
Raquel Deluna
Barry Dennis
Dylon Dennis
Michael Dennis
Joseph Denton
Bruce Derr
Matthew Deshazer
Stephen Deshazer
Audencia Devilla
Brandon Deville
Roy Deville
Elizabeth Diaz De Moreno
Anthony Diaz
Ciang Dim
Hau Dim
Vung Dim
Johan Dina
Zam Do
Sol Dominguez
Man Don
Nem Don
Cin Dong
Mksing Dopmul
Nang Dopmul
Thangminlian Dopmul
Thomas Dreadfulwater
Seneca Drennan
Daniel Drucker
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Hau Kam
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Ngin Kam
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Htang Kap
Lian Kap
Thang K Kap
Thang S Kap
Thong Kap
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Tuang Kawi
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Leland Kennedy
Lynn Kennedy
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Dal Khai
David Khai
Dim Khai
En Khai
Go Khai
Hang Khai
John Khai
Kham K Khai
Kham L Khai
Laang Khai
Ngin C Khai
Ngin T Khai
Pau Khai
Paul Khai
Peter Khai
Thang H Khai
Thang K Khai
Thang S Khai
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Thawng Khai
Tun Khai
Vuum Khai
Zaam Khai
Thura Khaing
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Go Kham
Kam Kham
Mung Kham
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Pau D Kham
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Paw Khual
Thang L Khual
Thang S Khual
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Thawng Khual
Za Khual
Cin Khup
Dai Khup
Kap K Khup
Kap S Khup
Lian Khup
Ngin Khup
Pau C Khup
Pau K Khup
Pau L Khup
Thang G Khup
Thang S Khup
Thawng Khup
Thuam Khup
Tuan Khup
Vungh Khup
Alan Kilgore
Andrew Kilgore
Rodney Kilgore
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Cing Kim
Dai Kim
Ed Kim
Hau Kim
Nang Kim
Nem Kim
Pa Kim
Thang Kim
Thang Z Kim
Zam Kim
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Martin Kindle
Clinton King
Cody King
Joseph King
Lori King*
Randy King
Russell King
Steven King
Roger Kinkade, Jr.
Korby Kinkade
Mangneo Kipgen
Alan Kizer
Spencer Kizer
Robert Knebel
James Koss
Robert Krafjack
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Mikhail Krupenya
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Nicholas Kuykendall
Phillip Lafond*
Giang Lai
Dau Lakum
Lun Lal
Lami Lam Tung
Gin Lam
Langh Lam
Myoshia Landrum
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Gin Lang
Kap Lang
Mang Lang
Pum Lang
Hau Langh
Kap Langh
Thawng Langh
Cheto Lara
Martin Larsen
Man Lawh
Man M Lawh
Steve Lawrence, Jr.
Terry Lawrence
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Stephen Lawson
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Lai Le
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Katina Lee
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Tanesha Lewis
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Vah Lhing
Awi Lian
Bawi Lian
Cing Deih Lian
Dal Lian
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Do Lian
Dong Lian
Gin K Lian
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Gin Z Lian
Go Lian
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Cing N Lun
Cing Ngai Lun
Cing S Lun
Dim Lun
Ngo Lun
Niang Lun
Van Lun
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Vuum Lun*
Thang Luong
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Ko Lwin
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Keith Mackey
Larry Madalone, II
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Tam Mai
Nikki Malone
Jeffrey Maly
Cing Man
Nang Man
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Chin Mang
Dai Mang
Dal Mang
Do Mang
En Mang
Gin Mang
Hau Mang
Hau S Mang
Kam Mang
Kham Mang
Kham T Mang
Khan Mang
Lian Mang
Lian N Mang
Lian S Mang
Linus Mang
Luke Mang
Ngin Mang
Niang Mang
Ning Mang
Sui Mang
Thang Mang*
Thawng Mang
Vung Mang
Zam Mang
Zen Mang
Zung Mang
Thang Manga
William Markwardt
Ma Marquez
De-Gilbreath
Mariana Marquez
Ana Marroquin
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Jonathan Marshall
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William Martin
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Hector Martinez
Molina
Amanda Martinez
Luis Martinez
Moses Martinez
Obdulia Martinez
Florentino Martin-
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Thomas Masengale, Jr.
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James Mason
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Donald Matthews
Charles Mattocks, Iv
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Ron Mauch
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Roy McConnell
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J Medina Olvera
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De Diaz
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Jon D Moody
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James Moore
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Tony Moore
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Tony Morehead
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John Morgan
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Clayton Mote
Do Muang
Mua Muang
Vum Muang
Arna Mukherjee
Eric Mulliniks
Thang L Mun
Thang S Mun
Bosco Mung
Cin D Mung
Cin K Mung
Cin S Mung
Cin T Mung
Dai Mung
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Dal Mung
En Mung
Gindal Mung
Hero Mung
James Mung
Khual K Mung
Khual S Mung
Khup Mung
Khup G Mung
Lang G Mung
Lang K Mung
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Pau K Mung
Pau S Mung
Song Mung
Suan G Mung
Suan S Mung
Thang K Mung
Thang L Mung
Thang S Mung
Tual Mung
Vum Mung
Vungh Mung
Gabriel Muniz
Gonzalez
Jesus Munoz
John Mutanda
Saw Naing
Diego Najera
Ah Nan
Michael Nance
Lawrence Nang
Sing Nang
Thawng Nang
Thomas Nang
Darin Narboe
Jose Nava
Maria Nava
Abel Navejas
Lian Nawl
Clayton Neal
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Pamela Neisler
Niang Nel
Ciin Neu
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Mang Ngaih
Haunung Ngin Pi
Nuam Ngin
En Ngo
Pau Ngo
Duong Nguyen
Manh Nguyen
Thanh Nguyen
Ciang Niang
Cin Niang
Cing K Niang
Cing L Niang
Dim H Niang
Dim L Niang
En Niang
Esther Niang
Gin Niang
Go Niang
Hau Niang
Khem Niang
Lam Niang
Mang Niang
Nem Niang
Pum Niang
Vung Niang
Zel Niang
Jacob Nichols
Thang Ning
Zam Ning
Cing No
Thang No
Ashley Nobile
Christopher Nolasco
Christopher Norfleet
Robert Norfleet, Jr.
Willie Norfleet
Eric Norris
Tumai Npawt
Ngin Ntem
Ciin L Nuam
Ciin N Nuam
Hau Nuam
Niang L Nuam
Niang S Nuam
Michael O’brien
Alexander Ofosu
Rickey Ogens*
Kennie Oliver
Anthony Oliveras
Eric Olson
James O’neill, Jr.
Leticia Orona
Margarita Orona
Jessica Ortiz Estrada
Felipe Ortiz
David Osborne
Ofelia Osuna
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Devin Overstreet
Johnny Owens
Gerard Pacheco
Luis Pacheco
Hugo Padilla
Mark Page
Billy Parker
Chavaughna Parker
Jeff Parkhurst
Jason Pate
Bryan Patterson
Corry Patterson
Chin Pau
Ciang Pau
Cin Pau
Dai Pau
Dal Pau
En Pau
Gin S Pau
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Kam Pau
Khawm Pau
Lang Pau
Liang Pau
Nang Pau
Neng H Pau
Neng K Pau
Pum Pau
Thang Pau
Thawng Pau
Tual Pau
Zam K Pau
Zam L Pau
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Mani Pazhanathadalam
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Jose Perez Garcia
Pedro Perez Paez
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Sergio Perez
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Kinh Pham
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Shannon Phillips
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Helen Pi
Thang Pi
Thomas Pi
Tuang Pi
Tuang Pi
Goh Piang
Khup Piang
Thang K Piang
Thang L Piang
Van Piang
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Cin Pii
Mayra Pina
Jose Pineda
Dixan Pita Mendez
Clifford Pitchford
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Basant Pokhrel
Renu Pokhrel
Jesus Ponce
Micah Ponder
Htinram Pongkum
Mark Pool
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Jeffery Powers
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Kenneth Prentice, Jr.
Eric Prickett
Khai Pu
Khai Pu
Kham Pu
Muang Pu
Peter Pu
Tuang Pu
Alma Puga
Daniel Puga, Jr.
Khai Pui
Thang Pui
Thang Puno
Darrell Purser
Javier Quezada
Holly Ralston
Yosselin Ramirez
Aguilar
Francisco Ramirez
Cortez
Antonia Ramirez
William Ramirez
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Tommy Ratliff
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Terry Ratzloff
Keianya Rayson
Thomas Read
Diego Rebollar-Marin
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James Reed
Freeman Reed, Jr.
Margaret Reeves
Stepan Regus
Alberto Rendon Parra
Rodolfo Renteria
Svyatoslav Reshetov
Agustin Reyes, Jr.
Pablo Reyes
Thomas Reynolds
Daniel Rhoades
David Richardson, Jr.
Robert Riddell
Angela Rideout
Brett Riegel
Delmecio Riser
Hillary Rite
Rafael Rivera Pena
Ramon Rivera
Carl Roberts
Meko Roberts
Jamie Robertson
David Robinson, Jr.
Jesus Rodriguez Santibanez
Carlos Jon Rodriguez
Hector Rodriguez
Maria G Rodriguez
Maria L Rodriguez
Rebecca Rodriguez
Rivelino Rodriguez
J Rodriguez-Flores
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Don Rogers
Tony Rogers
Lidia Rojas
Nelson Rojas
Tony Rongey
Oscar Rose
Robert Rosencutter
Casey Ross
Chase Rosser
Richard Rowe, Jr.
Ma Ruiz Ortega
Ricardo Ruiz
Ava Russell
Kimberly Russell
Crystal Rutherford
Karina Saenz Acosta
Cesar Saenz Rodriguez
Lorenza Salas
Abelino Salazar
Adan Salazar
Nora Salazar
Mario Saldana
Jose Saldivar Orepeza
Maria Saldivar
Miguel Saldivar
Victor Saldivar
David Salego
Diana Salinas
Jeffrey Salisbury
Ah Salupta
Ciin San
Beatriz Sanchez
Marcus Sanchez
Miguel Sanchez
Tanisha Sanders
Michael Sandor, Jr.
Cin Sang
Lian Sang
Mang Sang
Samuel Sang
Thiam Sang
Tuan Sang
Zam Sang
Lal Sangi
William Sangster
Basilisa Santiago Avila
Wenceslao Santiago
Ignacio Santillan
Rudy Santos
Rebecca Sar
Brooklyn Sargent
James Satre
Erick Sawyer
Nang Sbsum
William Scharosch
Samuel Scherf
Thang Sei
Tong Sei
Nem Sen
Roi Seng
Maria Serrano De Torres
Carrol Shackelford
Douglas Sheehan
Joseph Sheets
Kathy Sheffield
John Shelton
Vasiliy Shemereko
Khin Si
Maw Si
Zam Siam
Ciin Sian
Cing Sian
Ngin Sian
Pau Sian
Edward Sickler
Nelson Sierra
Cory Simmons
Jerry Simmons
Dwayne Simpson
Daai Sing
Dal Sing
Nang Sing
Thawn Sing
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Andrew Slavens
Danny Slayton
Llewellyn Slayton
Debi Sloan
Larry Slone
Ryan Smallwood
Alyante Smith
David Smith
Frankie Smith
Jeffery Smith
Anthony Smith, Jr.*
Wilbert Smith, Jr.
Justin Smith
Kerry Smith
Presley Smith
Renaldo Smith
Ricardo Smith
Samuel Smith
Kap So Te
Showe Soe
Jose Solares
Maria Solis
Nemisia Solis
Clent Southerland, II
Kevin Souvannasing
Denney Sowder
John Spain, III
Ronnie Sparks
Jameson Spires
Lawana Stane
Joel Staner
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Brent Stockton
Kevin Stoddard
Phajon Stoker
Scott Stoltzfus
Kathryn Stone
Michael Straub
John Suan Mung Pi
Paul Suan Mung
Hau Suan
Kim Suan
Ngin Suan
Nin Suan
Pau Suan
Thang Suan
Vung Suan
Zen Suan
Kham Suantak
Hau Sum
Mang Sum
Pau Sum
Wa Sum
Francis Survia
Jack Sweet
Eric Sypert
James Taber
Thang Taithul
William Tankersley
Keith Tanner
Whitney Tapp
Joe Tart
Larry Tate
Mark Tate
Nekesha Tatum
Tenna Tatum
Beverly Taylor
Charles Taylor
Eric Taylor
Wayne Taylor
Thang Te
Nicholas Teague
Andrea Teakell
Kevin Teakell
Robert Teis
Shannon Terry
Lian Thang Lam
Benjamin Thang
Cin Thang
Cin L Thang
Cin P Thang
Cin Z Thang
Dai Thang
Do Thang
Do T Thang
Gin Thang
Go Thang
Hau N Thang
Hau S Thang
Kam K Thang
Kam L Thang
Kam S Thang
Kam Suan Thang
Kham Thang
Lam Thang
Lam L Thang
Lang Thang
Langh Thang
Lian C Thang
Lian K Thang
Lian S Thang
Mang M Thang
Mang Tawi Thang
Mang Tung Thang
Ngin L Thang
Ngin S Thang
Ngun R Thang
Pau Kap Thang
Pau Khan Thang
Pau Sian Thang
Pau Sum Thang
Suan Thang
Thawng Thang
Zen Thang
Peter Thangpi
Suan Thawn
Thang Lam Thawn
Tual Thawn
John Thawng
Lang Thawng
Michael Thomas II
Brian Thomas
Fred Thomas
Gerald Thomas
Cheryl Thomason
Archie Thompson
Rebecca Thompson
Thiyagarajah Thurairajah
Jessica Thurber
Kelly Thurber
Ted Tiger
Chad Tillery
Gabriela Tirado
Thawng Tluang
William Tobar
Harold Toerck
Debbie Tomlin
Cesar Torres Bibiano
Cong Tran
Hiep Tran
Tuong Tran
Mark Tribble
Vincent Tripp
Colton Trippany
Juanito Tronzon, Jr.
Seng Tu
Ngin Tuan
Cin Tuang
Dal Tuang
Kam Tuang
Kham Tuang
Sian Tuang
Sing Tuang
Suanlam Tuang
Thang L Tuang
Thang Lam Tuang
Thang Z Tuang
Tun Tuang*
Vungh Tuang
Zam Tuang
Ngin Tun
Thang Tun
Zam Tun
Kaam Tung
Langh Tung
Mung Tung
Suang Tung
Thang Tung
Vung Tung
Michael Tunnell
Paul Turbe
David Turley
Randal Tyer
Jessica Tyler
Jacob Tzang
Jesus Tzul
Cing Uap
Pau Uap
Braden Underwood
Dawn Underwood
Pernell Underwood
Tony Urich
Maria Urquiza
Yadira Urquiza
Vicki Vail
Julio Valle
Dong Van
Brennen Vance
Allen Vang
Brandon Vanzandt
Shawn Vawter*
Juan Vazquez
Antonio Velasco
James Velde
Juan Vences
Angel Venegas
Salome Vera
James Verhamme
George Verrett
Jeremy Vick
Teresa Victory
Efrain Villa
Isabel Villalpando Martinez
Raulito Villanueva
Selina Viramontes
Cuong Vo
Tong Vo
Thu Vu Nguyen
Chuan Vu
Ciin Vum
Ciin Vung
Cing Vung
Kap Vung
Mang Vung
Mary Vung
Niang Vung
Ning Vung
Vum Vung
Mark Wakefield
Stephen Wakefield
Whitney Wakefield
Cody Walden
Diana Walker
Joshua Walker
Ronald Walker, Jr.
Roderick Walker
David Walkup
Barry Wall
Amilcar Wallace
Santonnieyeo Wallace, III
Tenekia Wallace
Todd Wallingford
Jasimine Walter
Darius Walters
Misty Walters
Newman Walton
Gayle Ward
Perry Warner
Ryan Warren
Bryan Waskowiak
Amanda Watkins
Steven Watkins
Boone Watson
Trevor Watson
Joseph Weidman
Anthony Welch
Randolph Wesson, III
Sharon West
William Wheeler
Deborah Whitaker
Allyn White
Kyle White
Timothy White
Steven Whorton
Gordon Wichman
Jackie Wiles
Jerry Wiles
Michael Wiles
James Wilkinson
Bobbie Williams
Chante Williams
Cheray Williams
Donna Williams
Justin Williams
Katheryn Williams
Latrenia Williams
Nicole Williams
Rodney Williams
Stanton Williams
Aaron Williamson
James Williamson
Jeremy Williamson
Clyde Willis
Javoris Willis
Brandi Wilson
Christopher Wilson
Isaac Wilson
James Wilson
Scott Wilson
Naw Win
Thomas Wingo
Micah Wisdom
Jack Witt, Jr.
Riley Wood
Ronald Wood
Cody Woodard
Stephen Woods, Jr.
Brandon Workman
Kasey Worthington
Benjamin Wright
Barry Wyers
Jim Wyrick
Linda Wyrick
Patrial Yarbrough
Marc Young
Lang Zahlangh
Cing Zam
En Zam
Nu Zam
Daung Zaung
Aurora Zavaleta
Juan Zermeno
Virginia Zermeno
Thangkim Zotaithul
*Pictured
Engineering Research & Development Lab
Construction - AAON Headquarters - Tulsa, OK
Opening 2018
AAON, Inc.
2425 S. Yukon Avenue, Tulsa, OK
p: 918.583.2266
AAON Coil Products, Inc.
203 Gum Springs Road, Longview, TX
p: 903.236.4403
www.AAON.com