AAON is a global leader in providing

equipment with environmentally

responsible designs. AAON utilizes
extensive product knowledge and state of
the art manufacturing to continuously
provide a wide variety of energy efficient
and earth friendly features to the
dynamic marketplace. The success of our
commitments can be seen in the consistent
growth of our sales and the increasing
profitability of the company.
 2010 Annual Report

Company Profile Financial Highlights

Outdoor Air Condensing Indoor Air Handling Units 2010 2009 2008 2007 2006
Handling Units Units
Income Data ($000)
Net Sales $244,552 $245,282 $279,725 $262,517 $231,460
Gross Profit $55,188 $67,545 $67,176 $57,369 $43,890
H3 Series SA Series V3 Series Operating Income $32,715 $43,754 $43,388 $35,666 $25,831
RL Series CL Series Interest Expense $45 $9 $71 $10 $81
Interest Income $258 $71 $27 $8 $24
Depreciation $9,886 $9,061 $9,412 $9,665 $9,146
Pre-Tax Income $32,693 $43,892 $44,068 $35,343 $26,198
M2 Series M3 Series F1 Series Net Income $21,894 $27,721 $28,589 $23,156 $17,133
RN Series CC Series Earnings Per Share
(Basic)1 $1.30 $1.61 $1.63 $1.24 $0.93
Rooftop Units (Diluted)
1 $1.30 $1.60 $1.60 $1.22 $0.90
Balance Sheet ($000)
Working Capital $55,502 $65,354 $40,600 $38,788 $36,356
Current Assets $91,748 $96,240 $80,118 $76,295 $70,759
RQ Series CB Series
RL Series RN Series RQ Series Net Fixed Assets $67,418 $59,896 $60,550 $60,770 $59,222
Accumulated Depreciation $86,307 $80,567 $72,269 $63,579 $54,182
Cash & Cash Investment $2,393 $25,639 $269 $879 $288
Boiler packaged mechanical rooms
Total Assets $160,277 $156,211 $140,743 $137,140 $130,056
Current Liabilities $36,246 $30,886 $39,518 $37,507 $34,403
Long-Term Debt $0 $0 $121 $239 $0
Stockholders’ Equity $116,739 $117,999 $96,522 $95,420 $91,592
LL Series
BL Series LL Series Air—Condensed Evaporative—Condensed LC Series Air—Condensed Stockholders’ Equity per Diluted Share1 $6.91 $6.82 $5.41 $5.04 $4.83
Funds Flow Data ($000)
Operations $32,152 $45,205 $33,447 $31,247 $19,428
Investments $(28,276) $(9,639) $(9,593) $(10,751) $(16,781)
Financing $(27,200) $(10,101) $(24,460) $(20,036) $(3,333)
AAON is engaged in the engineering, manufacturing, marketing and sales of air conditioning and heating equipment consisting Net Increase (Decrease) in Cash $(23,246) $25,370 $(610) $591 $(549)
of rooftop units, chillers, air-handling units, make-up air units, heat recovery units, condensing units, commercial self-contained Ratio Analysis
units and coils. Since the founding of AAON in 1988, AAON has maintained a commitment to design, develop, manufacture and Return on Average Equity 18.7% 25.8% 29.8% 24.8% 20.0%
deliver heating and cooling products to perform beyond all expectations and demonstrate the value of AAON to our customers. Return on Average Assets 13.7% 17.7% 20.3% 16.9% 13.2%
AAON provides specific and unique solutions for individual customer requirements. Pre-Tax Income on Sales 13.4% 17.9% 15.8% 13.5% 11.3%
Net Income on Sales 9.0% 11.3% 10.2% 8.8% 7.4%
Total Liabilities to Equity 0.4 0.3 0.5 0.4 0.4
Quick Ratio2 1.2 1.9 1.0 1.1 1.1
Current Ratio 2.5 3.1 2.0 2.0 2.1
Year-End Price Earnings Ratio1 22 12 13 16 19

1
Reflects 3-for-2 stock split in August 2007
2
Cash, cash equivalents + receivables/current liabilities.
President’s Letter
In 2010, total sales declined only slightly to $244.6 million from $245.3
million a year earlier. Impacted by higher commodity prices, one-time
“We maintained
costs associated with the relocation and addition of certain production our commitment
facilities and restricted pricing flexibility, gross profit decreased 18.3% from
$67.5 million (27.5% of sales) to $55.2 million (22.6% of sales). It should be to manufacture
noted that the cost of sales in 2009 benefited by $2.2 million resulting from
hedging of copper. Our SG&A expenses declined 5.5% to $22.5 million technologically
Dear Shareholder, (9.2% of sales) from $23.8 million (9.7% of sales) primarily as a result of
We were quite pleased with our sales decreased profit sharing related to lower net income. Operating income
innovative products
performance this past year taking into dropped 25.2% from $43.8 million (17.8% of sales) to $32.7 million (13.4% that are energy
of sales). Pretax income declined similarly to $32.7 million (13.4% of sales)
consideration the severely restricted in 2010 from $43.9 million (17.9% of sales), while net income was $21.9 efficient, meet or
economic environment which caused a 14% million (9.0% of sales) or $1.30 per share, as compared with $27.7 million

decline in non-residential construction. (11.3% of sales) or $1.60 per share. Net income in 2009, reflects a gain from exceed government
copper hedging of $1.4 million or $0.08 per share.
We maintained our commitment to standards and
manufacture technologically innovative Our 2010 tax rate was 33%, compared to 36.8%, due to credits received
produce significant
from programs initiated by State and Federal governments. Our per share
products that are energy efficient, meet or
calculations are based upon 16.9 million diluted shares outstanding in 2010 savings to our
exceed government standards and produce and 17.3 million diluted shares in 2009.
significant savings to our customers. Aided customers.”
Strong Financial Condition
by wide acceptance of both our improved
Our financial condition at December 31, 2010, remained strong. Total current assets were $91.7 million with a current ratio of
products and new products introduced 2.5:1. Capital expenditures climbed to $17.4 million as compared with $9.8 million a year earlier. We repurchased 822,740 shares
during the last two years, we were once again of common stock at a total cost of $19.4 million and made dividend payments totaling $9.2 million. We maintained a strong liquid
position, with no long-term debt. Total shareholders’ equity at December 31, 2010, was $116.7 million or $7.07 per share, compared
able to increase our share of the market.
to $118.0 million or $6.85 per share at yearend 2009.

Capital Expenditures
We continue to witness increasing acceptance of our technologically innovative, highly reliable product lines. Our strong manufacturing
and financial base enabled us to diversify both our product mix and customer base. These diversities give the Company significant
potential for growth over the intermediate and longer term. In order to meet these future demands, we significantly increased our
capital spending for both machinery and plant capacity. In 1998, we purchased a 40-acre tract of land including a 457,000 square
foot building. Over the next decade this property was expanded to 713,000 square feet and, by the end of 2008, AAON utilized
approximately 40% of the property with the remainder leased to a third party. The lease expired in May of last year and we began to
immediately renovate the remaining 330,000 square feet.
 2010 Annual Report

“Our financial condition We originally budgeted capital expenditures of $7-8 million customers has been excellent. Since our entire product line now factors in the stock performance of each company compared
for 2010. By mid-year it became evident that we would need to requires foam insulation it is necessary for us to buy additional with that of its peers. The Company was also previously honored
at December 31, 2010, substantially raise our forecast due to our improving backlog foam manufacturing machinery. Furthermore, we will initiate a in this list for years 2000-2002.
and incoming order rate. Furthermore, we determined that two number of new production lines.
remained strong. Total of our metal fabricating machines would have to be replaced New Products
by early 2011 and three additional machines were necessary to In December 2010, the Federal government passed the 2010 Tax New Federal government regulations require that all commercial
current assets were $91.7 accommodate our future growth. We placed deposits on this Relief Act which provides a 100% depreciation allowance on any air conditioning systems larger than 10 tons must be capable of

million with a current equipment last year and took delivery of the two replacement qualified asset placed in service from September 2010 through varying air volume in accordance with load requirements. The
machines at the beginning of this year. The remaining three units December 2011. This allowance continues through 2012, but at full product line of AAON, including the newly designed 2-10 ton
ratio of 2.5:1. Capital will be delivered by June 2011. a reduced rate of 50%. We plan to take full advantage of this tax equipment, meets these requirements. The Company’s variable
benefit over the next two years. air volume system is designed with a backward curved fan and
expenditures climbed to By yearend 2010 our capital expenditures had climbed to $17.4 digital scroll compressor which can vary the amount of air into
million. We completed a 165,000 square foot facility dedicated Recognitions a space, thereby varying the amount of cooling and heating. The
$17.4 million as compared to the production of our 16-30 ton line of products and initiated In October, the Company’s RN series rooftop unit and LC series variable air volume system can produce annual energy savings

with $9.8 million a year renovation of an additional 165,000 square feet of manufacturing
which will house the production of our 26-70 ton product line.
chiller product were named 2010 Product of the Year – Silver and
Bronze, respectively, in the HVAC/R category by Consulting-
up to 30-40% as compared with competing constant air volume
systems.

earlier. We repurchased This facility is expected to be completed by mid-2011. In total, Specifying Engineer Magazine. These awards add to the 2008
we spent approximately $4.0 million on additional plant capacity announcement that the rooftop product produced by AAON In January, we attended the AHRI Expo, a large industry trade
822,740 shares of common and approximately $13.4 million on machinery and equipment. with Digital Precise Air Control had been voted “Product of the show, where we introduced our new oilless magnetic bearing
Year – Gold” in the HVAC category and “Most Valuable Product” centrifugal “break through” chiller system ranging in size from
stock at a total cost For 2011, we have budgeted total capital expenditures in the for the overall competition. 90 to 540 tons. The response to this product was exceptional. The
range of $28-30 million. Approximately 25% of that amount will standard compressor in an air conditioner uses oil as a lubricant.
of $19.4 million and be devoted to enlarging our manufacturing capacity and will Additionally, in May 2009 we were notified by the National The oil circulates throughout the entire refrigeration system. Oil,

made dividend payments include the completion of our 26-70 ton product line facility Society of Professional Engineers (NSPE) that the Digital Precise by its nature, reduces heat transfer effectiveness, thereby lowering
and the construction of a new 200,000 square foot warehouse Air Control System had been selected to receive the 2009 NSPE the energy efficiency of the equipment. The oilless magnetic
totaling $9.2 million. and office building which is expected to be finished by year end. Professional Engineers in Industry New Product Award in bearing compressor eliminates the need for lubrication, thus
Once completed, we will have 1.2 million square feet of plant and the Large Company category. This prestigious award honors improving the efficiency of the refrigeration cycle. In addition,
We maintained a strong buildings in our Tulsa facility with manufacturing capability of American companies and their contributions to society. Winning this type of compressor is more efficient than the traditional
$800 million to $1 billion depending on our product mix. products were chosen for their exceptional engineering research, scroll compressor. The AAON patented evaporative condenser,
liquid position, with no design and overall impact on our national economy. combined with the magnetic bearing compressor, creates a

long-term debt. The remainder of our capital expenditures will be directed chiller system with very low energy and water consumption
toward the purchase of machinery. Over the past three years we Also, for the fourth consecutive year, AAON was selected to the compared to the systems now in the market. This chiller system
redesigned our entire product line to include foam composite Forbes “100 Best Small Companies” list, ranking 77th. Inclusion uses approximately 30% less energy and water. The total chiller
construction for the cabinets, making for a stronger, more highly on the Forbes list requires companies to meet a series of financial market is estimated to be $700 million annually. We expect to
energy efficient product compared with the traditional use of benchmarks, including earnings and sales growth and return gain a modest share of this market over the next two to three
fiberglass as the inner liner of the cabinets. The response from our on equity in the past 12 months and over five years. Forbes also years.
 2010 Annual Report

In 2010, we introduced a newly designed 2-6 ton unitary product market customer may choose our more efficient geothermal unit Our Employees
“Our growing market
and a redesigned 5-10 ton line. These products have inner and (water source heat pump system) over the traditional air cooled Our most important asset is our base of trained and knowledgeable
outer sheet metal walls filled with foam which create composite system. Furthermore, the American Recovery and Reinvestment employees. In response to the economic challenges of 2009, our share can be directly
construction for the cabinets. In addition, these products are Act of 2009 provides a tax credit for geothermal installations workforce became more flexible and we saw increased participation in
manufactured with direct drive blower assemblies and with our which reduces the payback period. This Act played an important training efforts. This combination of outcomes allowed us to support attributed to the
airfoil backward curved fan which produces a far more efficient role in stimulating geothermal product sales this past year. fluctuating manufacturing demands over the past two years, retain
product compared with the traditional belt driven, forward our most skilled personnel and respond to the opportunities which
efforts of our sales
curved fan product. We established a strong foothold in that
highly competitive market due to the excellent response to the
Sales Representative Performance
Our growing market share can be directly attributed to the efforts
arose in our markets.
representatives. At the
technological innovations we incorporated into the line. We of our sales representatives. At the end of 2010, AAON had 112 Since our founding, we have distributed 10% of pre-tax profits end of 2010, AAON had
estimate the size of this market to be in the range of $1.1 to $1.3 offices operating in all 50 states and Canada. The replacement equally to all personnel at each operating subsidiary. The purpose
billion or approximately 55-60% of the total unitary rooftop market represented approximately 45% of AAON’s total sales and of this “profit sharing” has been to provide an immediate reward 112 offices operating
market. This market offers AAON excellent growth potential firm demand in this segment helped to cushion the weakness in for maintaining the subsidiary’s profitability. For a long-term focus,
over the intermediate and longer term. demand from new construction. End markets such as education, employees now own nearly 4% of the Company’s outstanding stock
in all 50 states and
healthcare, government, municipal and the military performed
Geothermal relatively well, while we continued to witness a negative tone
through our 401(k) plan which allows employees to benefit, along with
other shareholders, from share appreciation. AAON matches 50% of
Canada.”
The growing acceptance of our redesigned 2-6 ton product in the commercial, industrial and retail sectors. The success of all employee contributions to the Plan up to 9% of compensation and,
line enabled our sales in the geothermal market to gain 40% to our product line diversification along with a widening diversity during 2010, we began contributing an amount equal to 1.5% of each
approximately $15 million in 2010. Our product, with composite of customers can be directly traced to the efforts of our sales employee’s pre-tax earnings to the 401(k) plan even if the employee
cabinet, improved foam technology and enhanced coil design, representatives. They will continue to play a major role in the chose to make no contribution of his or her own. All company
is designed to be used as a rooftop product. The replacement Company’s future growth. contributions purchase company stock on the open market using

The ongoing success of our Company can be directly attributed to our employees.
 2010 Annual Report

“We view our employees as a long-term investment in We view our employees as a long-term investment in skills, talent
and knowledge. We believe that our approach to personnel increases
skills, talent and knowledge. We believe that our shareholder value by developing an ownership perspective and
a sense of individual responsibility among our employees, while
approach to personnel increases shareholder value helping them meet their personal financial, health and development

by developing an ownership perspective and a sense of goals.

individual responsibility among our employees, while Outlook

Significant strides were made toward improving and enlarging
helping them meet their personal financial, health our manufacturing capabilities during one of the most
challenging economic periods witnessed in many years. We
and development goals.” remain committed to providing the capital necessary in order to
produce new, technologically innovative products which meet our
either cash contributions from the Company, dividends received blood sugar levels and smoking rates since tracking began customers’ demands while addressing the major industry concern:
from company stock or cash from prior divestitures of company for those figures while simultaneously reducing name-brand energy efficiency. Over the past decade, we spent approximately
stock within the plan. Shares of AAON stock are later sold to prescription usage. We believe that giving employees direct $115 million on plant renovation, expansion and on the purchase
the Company and retired if participants choose to diversify control over their health-care dollars has made our employees of machinery. All of these expenditures were made from our free
their holdings or leave the plan. The 401(k) program improves more health-conscious and cost-conscious while keeping health cash flow while remaining debt free.
retirement preparedness and encourages employee longevity care costs competitive for the Company and its shareholders.
through a six-year benefit vesting structure. We believe that the Our growth objectives can be achieved, and enhanced by the

combination of these two incentives align the interests of our Unfortunately, the recent health care reform legislation has continuing commitment and support of our customers, sales

employees with those of our shareholders in a manner designed placed restrictions on our ability to manage a significant aspect representatives and shareholders, as well as with the cooperation

to improve capital appreciation and profitability. of our employment costs. Due to the uncertainty surrounding of our loyal employees, all of whose names appear at the end of

the legislation, we have maintained our “grandfathered” status this report. The future growth potential of AAON is in excellent

We are in our third year of offering only a high-deductible health for the 2010-2011 plan year even though our existing plan design hands and I believe will come to fruition.

plan along with contributions to health savings accounts, wellness covers the level of benefits required under the new regulations.
incentives and on-site clinics that are focused on preventative As the regulatory environment surrounding health insurance
Sincerely,
care. Total medical costs, including the employees’ out-of-pocket develops, we will be closely examining the costs and benefits of
costs, are running 30% below the national average cost of just our current plan compared to a non-grandfathered status and the
health insurance, which indicates the effectiveness of the current developing health insurance exchanges. However, in preparation
plan design from a cost-control perspective. In addition to for the requirement to report the value of health insurance on
Norman H. Asbjornson
financial performance, nearly all of the average health indicators, employee W-2s, we have modified our payroll statements. Now,
President & CEO
as verified through our annual Health Risk Assessments, have on every payroll statement employees see the full value of all
March 21, 2011
improved since we began to focus on prevention and wellness. We benefits paid on their behalf by the Company in combination
have seen improvements in average blood pressure, cholesterol, with their regular earnings.
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Table of Contents
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, 2010
or
Item Number and Caption Page Number
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
PART I
For the transition period from _____________________________ to _____________________________
1. Business. 1
Commission file number: 0-18953
AAON, INC. 1A. Risk Factors. 4
(Exact name of registrant as specified in its charter)
1B. Unresolved Staff Comments. 6
Nevada 87-0448736
(State or other jurisdiction (IRS Employer
2. Properties. 6
of incorporation or organization) Identification No.)
3. Legal Proceedings. 6
2425 South Yukon, Tulsa, Oklahoma 74107
(Address of principal executive offices) (Zip Code) PART II
Registrant’s telephone number, including area code: (918) 583-2266
5. Market for Registrant’s Common Equity, Related Stockholder 7
Securities registered pursuant to Section 12(g) of the Act: Matters and Issuer Purchases of Equity Securities.
Common Stock, par value $.004 6. Selected Financial Data. 10
(Title of Class)
Rights to Purchase Series A Preferred Stock 7. Management’s Discussion and Analysis of Financial Condition 10
(Title of Class) and Results of Operations.
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 7A. Quantitative and Qualitative Disclosures About Market Risk. 20
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 8. Financial Statements and Supplementary Data. 20

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) 9. Changes in and Disagreements with Accountants on 20
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was Accounting and Financial Disclosure.
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [_] No 9A. Controls and Procedures. 21
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every 9B. Other Information. 22
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).
PART III
[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 10. Directors, Executive Officers and Corporate Governance. 23
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X] 11. Executive Compensation. 23
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). 12. Security Ownership of Certain Beneficial Owners and 23
Management and Related Stockholder Matters.
Large accelerated filer [_] Accelerated filer [X]
Non-accelerated filer [_] Smaller reporting company [_] 13. Certain Relationships and Related Transactions. 23

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act.) 14. Principal Accountant Fees and Services. 25
[_] Yes [X] No
PART IV
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, 2010) 15. Exhibits and Financial Statement Schedules. 26
was $386.4 million.
As of February 28, 2011, registrant had outstanding a total of 16,492,682 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 17, 2011, are incorporated into Part III.
 2010 Annual Report

Part 1
Our air-handling units consist of the F1 and H/V Series and the modular (M2 and M3) Series.

Our heat recovery option applicable to our RQ, RN and RL units, as well as our M2 and M3 Series air handlers, 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
Item 1. Business. products.

General Development and Description of Business Performance characteristics of our products range in cooling capacity from 20,000 - 4,320,000 BTU’s and in heating capacity from 69,000 -
9,000,000 BTU’s. All of our products meet the Department of Energy’s efficiency standards, which define the maximum amount of energy to be
AAON, Inc., a Nevada corporation, was incorporated on August 18, 1987. We have two operating subsidiaries, AAON, Inc., an Oklahoma
used in producing a given amount of cooling.
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, Inc., and our subsidiaries.
A typical commercial building installation requires a 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.
We are engaged in the manufacture and sale of air-conditioning and heating equipment. Our products consist of rooftop units, chillers, air-
handling units, make-up air units, heat recovery units, condensing units, commercial self contained units and coils.
We have developed and are beginning to market a residential condensing unit (CB Series) and air handlers (F1 Series).
Products and Markets
Major Customers
Our products serve the commercial and industrial new construction and replacement markets. To date our sales have been primarily to the
No customer accounted for 10% of our sales during 2010, 2009 or 2008.
domestic market. Foreign sales accounted for approximately 5% of our sales in 2010.

Our rooftop and condenser markets consist of units installed on commercial or industrial structures of generally less than 10 stories in height.
Sources and Availability of Raw Materials
Our air-handling units, commercial self contained units, chillers, and coils are applicable to all sizes of commercial and industrial buildings. 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
The size of these markets is determined primarily by the number of commercial and industrial building completions. The replacement market attempt to obtain the lowest possible cost in our purchases of raw materials and components, consistent with meeting specified quality standards.
consists of products installed to replace existing units/components that are worn or damaged. Historically, approximately half of the industry’s We are not dependent upon any one source for raw materials or the major components of our manufactured products. By having multiple
market has consisted of replacement units. suppliers, we believe that we will have adequate sources of supplies to meet our manufacturing requirements for the foreseeable future.

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 We attempt to limit the impact of increases in raw materials and purchased component prices on our profit margins by negotiating with each of
factor of 6-18 months. Housing starts, in turn, are affected by such factors as interest rates, the state of the economy, population growth and the our major suppliers on a term basis from six months to one year.
relative age of the population. When new construction is down, we emphasize the replacement market.
Distribution
Based on our 2010 level of sales of $245 million, we estimate that we have a 14% share of the rooftop market and a 1% share of the coil market.
We employ a sales staff of 20 individuals and utilize approximately 93 independent manufacturer representatives’ (“Representatives”)
Approximately 55% of our sales now come from new construction and 45% from renovation/replacements. The percentage of sales for new
organizations having 108 offices to market our products in the United States and Canada. We also have one international sales organization,
construction vs. replacement to particular customers is related to the customer’s stage of development.
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.
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, cooling and/or heat recovery components in a selfcontained cabinet, referred to in
Our products and sales strategy focus on niche markets. The targeted markets for our equipment are customers seeking products of better quality
the industry as “unitary” products. Our other finished products are chillers, coils, air-handling units, condensing units, make-up air units, heat
than offered, and/or options not offered, by standardized manufacturers.
recovery units and commercial self-contained units.
To support and service our customers and the ultimate consumer, we provide parts availability through our sales offices and have factory service
We offer four groups of rooftop units. Our RQ Series consisting of six cooling sizes ranging from one to six tons; our RN Series offered in 18
organizations at each of our plants. Also, a number of the manufacturer representatives we utilize have their own service organizations, which, in
cooling sizes ranging from six to 70 tons; our RL Series, which is offered in 15 cooling sizes ranging from 40 to 230 tons; and our HA Series,
connection with us, provide the necessary warranty work and/or normal service to customers.
which is a horizontal discharge package for either rooftop or ground installation offered in eight sizes ranging from seven and one-half to 50 tons.
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
We manufacture a Model LC Chiller, air cooled, and a Model LL chiller, which is available in both air-cooled condensing and evaporative cooled
four years for compressors (if applicable); 15 years on aluminized steel gas-fired heat exchangers (if applicable); 25 years on stainless steel heat
configurations.
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.

1 2
 2010 Annual Report

Research and Development Environmental Matters

All of our R&D activities are self-sponsored, rather than customer-sponsored. R&D has involved the RQ, RN and RL (rooftop units), F1, H/V, Laws concerning the environment that affect or could affect our domestic operations include, among others, the Clean Water Act, the Clean
M2 and M3 (air handlers), LC and LL (chillers), CB and CC (condensing units), SA (commercial self-contained units) and BL (boilers), as well as Air Act, the Resource Conservation and Recovery Act, the Occupational Safety and Health Act, the National Environmental Policy Act, the
component evaluation and refinement, development of control systems and new product development. We incurred research and development Toxic Substances Control Act, regulations promulgated under these Acts, and any other federal, state or local laws or regulations governing
expenses of approximately $3,605,000, $3,074,000 and $2,577,000 in 2010, 2009 and 2008, respectively. environmental matters. We believe that we presently comply with these laws and that future compliance will not materially adversely affect our
earnings or competitive position.
Backlog
Our current backlog as of March 1, 2011, was approximately $37,978,000 compared to approximately $33,569,000 at March 1, 2010. The current Available Information
backlog consists of orders considered by management to be firm and substantially all of which will be filled by July 1, 2011; however, the orders 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
are subject to cancellation by the customers. Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 will be available
through our Internet website as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC.
Working Capital Practices
Working capital practices in the industry center on inventories and accounts receivable. Our management regularly reviews our working capital Item 1A. Risk Factors.
with a view to maintaining the lowest level consistent with requirements of anticipated levels of operation. Our greatest needs arise during The following risks and uncertainties may affect our performance and results of operations.
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 Our business has been hurt by the current economic downturn.
$15,150,000. We believe that we will have sufficient funds available to meet our working capital needs for the foreseeable future. We expect to
renew our revolving credit agreement in July 2011. We do not expect that the current situation in the credit market will impact our renewal. Our business is affected by a number of economic factors, including the level of economic activity in the markets in which we operate. The state
of the United States economy has negatively impacted the commercial and industrial new construction markets. The current decline in economic
Seasonality activity in the United States could materially affect our financial condition and results of operations. 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
Sales of our products are moderately seasonal with the peak period being July - November of each year. factors such as interest rates, inflation, consumer spending habits, employment rates and other macroeconomic factors over which we have no
control. In the Heating, Ventilation, and Air Conditioning (“HVAC”) business, a decline in economic activity as a result of these cyclical or other
Competition factors typically results in a decline in new construction and replacement purchases, which has resulted in a decrease in our sales volume and
In the standardized market, we compete primarily with Lennox International, Inc., Ingersoll Rand Limited, Johnson Controls Inc. and United profitability.
Technologies Corporation. All of these competitors are substantially larger and have greater resources than we do. In the custom market,
we compete with many larger and smaller manufacturers. Our products compete on the basis of total value, quality, function, serviceability, We may be adversely affected by problems in the availability, or increases in the prices, of raw materials
efficiency, availability of product, product line recognition and acceptability of sales outlet. However, in new construction where the contractor and components.
is the purchasing decision maker, we are often at a competitive disadvantage because of the emphasis placed on initial cost. In the replacement Our business is affected by a number of economic factors, including the level of economic activity in the markets in which we operate. The state
market and other owner-controlled purchases, we have a better chance of getting the business since quality and long-term cost are generally taken of the United States economy has negatively impacted the commercial and industrial new construction markets. The current decline in economic
into account. activity in the United States could materially affect our financial condition and results of operations. 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
Employees factors such as interest rates, inflation, consumer spending habits, employment rates and other macroeconomic factors over which we have no
As of March 1, 2011, we had 1,394 permanent employees and 26 temporary employees. Our employees are not currently represented by unions. control. In the Heating, Ventilation, and Air Conditioning (“HVAC”) business, a decline in economic activity as a result of these cyclical or other
Management considers relations with our employees to be good. factors typically results in a decline in new construction and replacement purchases, which has resulted in a decrease in our sales volume and
profitability.
Patents, Trademarks, Licenses and Concessions
We risk having losses resulting from the use of noncancelable fixed price contracts.
We do not consider any patents, trademarks, licenses or concessions to be material to our business operations, other than patents issued
regarding our heat recovery wheel option, blower, gas-fired heat exchanger and evaporative condenser desuperheater which have terms of twenty Historically, we attempted to limit the impact of price fluctuations on commodities by entering into noncancelable fixed price contracts with
years with expiration dates ranging from 2016 to 2022. our major suppliers for periods of 6 - 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 as financial derivative instruments since they meet the normal
purchases and sales exemption.

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 2010 Annual Report

We may not be able to successfully develop and market new products. We are subject to adverse changes in tax laws.
Our future success will depend upon our continued investment in research and new product development and our ability to continue to realize Tax benefits could be adversely affected by changes in tax provisions, unfavorable findings in tax examinations or differing interpretations by tax
new technological advances in the HVAC industry. Our inability to continue to successfully develop and market new products or our inability 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
to achieve technological advances on a pace consistent with that of our competitors could lead to a material adverse effect on our business and are not currently under audit by any taxing jurisdiction other than one state sales tax audit.
results of operations.
Item 1B. Unresolved Staff Comments.
We may incur material costs as a result of warranty and product liability claims that would negatively
affect our profitability. None.
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 Item 2. Properties.
addition, warranty claims are not covered by our product liability insurance and there may be types of product liability claims that are also not Our plant and office facilities in Tulsa, Oklahoma, consist of a 342,000 sq. ft. building (327,000 sq. ft. of manufacturing/warehouse space
covered by our product liability insurance. and 15,000 sq. ft. of office space) located on a 12-acre tract of land at 2425 South Yukon Avenue (the “original facility”), and a 693,000 sq. ft.
manufacturing/warehouse building and a 22,000 sq. ft. office building (the “expansion facility”) located on a 40-acre tract of land across the street
We may not be able to compete favorably in the highly competitive hvac business. from the original facility (2440 South Yukon Avenue). We own both the original facility and the expansion facility. Both plants are of sheet metal
Competition in our various markets could cause us to reduce our prices or lose market share, or could negatively affect our cash flow, which construction.
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 The original facility’s manufacturing area is in a heavy industrial type building, with total coverage by bridge cranes, containing manufacturing
factors varying among our product line. Other factors that affect competition in the HVAC market include the development and application of equipment designed for sheet metal fabrication and metal stamping. The manufacturing equipment contained in the original facility consists
new technologies and an increasing emphasis on the development of more efficient HVAC products. Moreover, new product introductions are an primarily of automated sheet metal fabrication equipment, supplemented by presses, press breaks and numerical control punching equipment.
important factor in the market categories in which our products compete. Several of our competitors have greater financial and other resources Assembly lines consist of three cart-type conveyor lines with variable line speed adjustment, which are motor driven. Subassembly areas and
than we have, allowing them to invest in more extensive research and development. We may not be able to compete successfully against current production line manning are based upon line speed. The manufacturing facility is 1,140 feet in length and varies in width from 390 feet to
and future competition and current and future competitive pressures faced by us may materially adversely affect our business and results of 220 feet.
operations.
In the expansion facility we use 22,000 sq. ft. for office space, 20,000 sq. ft. for warehouse space and 80,000 sq. ft. for two production lines; an
The loss of Norman H. Asbjornson could impair the growth of our business. additional 106,000 sq. ft. is utilized for sheet metal fabrication. The remaining 487,000 sq. ft. is presently being prepared as additional plant space
Norman H. Asbjornson, our founder, has served as our President and Chief Executive Officer from inception to date. He has provided the for long-term growth.
leadership and vision for our growth. Although important responsibilities and functions have been delegated to other highly experienced and
capable management personnel, our products are technologically advanced and well positioned for sales into the future and we carry key man Our operations in Longview, Texas are conducted in a plant/office building at 203-207 Gum Springs Road, containing 258,000 sq. ft. on 14
insurance on Mr. Asbjornson, his death, disability or retirement could impair the growth of our business. We do not have an employment acres. The manufacturing area (approximately 251,000 sq. ft.) is located in three 120-foot wide sheet metal buildings connected by an adjoining
agreement with Mr. Asbjornson. structure. The remaining 7,000 square feet are utilized as office space. The facility is built for light industrial manufacturing. An additional,
contiguous 15 acres were purchased in 2004 and 2005 for future expansion. We own both the existing plant/office building, and the 15 acres
Our stockholder rights plan and some provisions in our bylaws and Nevada law could delay or prevent a designated for future expansion.
change in control.
Our stockholder rights plan and some provisions in our bylaws and Nevada law could delay or prevent a change in control, which could adversely
Item 3. Legal Proceedings.
affect the price of our common stock. 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 is
contemplated by or, to the best of our knowledge, has been threatened against us.
Our business is subject to the risks of interruptions by problems such as computer viruses.
Despite our implementation of network security measures, our services are vulnerable to computer viruses, break-ins and similar disruptions
from unauthorized tampering with our computer systems. Any such event could have a material adverse affect on our business.

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.

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 2010 Annual Report

On November 7, 2006, the Board of Directors authorized us to repurchase shares from certain directors and officers following their exercise of
stock options. The maximum number of shares to be repurchased is contingent upon the number of shares sold. Through December 31, 2010,

Part 2
we repurchased 379,750 shares for an aggregate price of $7,894,792, or an average price of $20.79 per share. We purchased the shares at current
market prices.

Repurchases during the fourth quarter of 2010 were as follows:

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities. Issuer Purchases of Equity Securities
(d)
Our Common Stock is traded on the NASDAQ Global Select Market under the symbol “AAON”. The range of high and low sale prices for our
Common Stock during the last two years, as reported by National Association of Securities Dealers, Inc., was as follows: (c) Maximum Number (or
(a)
(b) Total Number of Shares (or Approximate Dollar Value)
Total Number of
Period Average Price Paid Units) Purchased as Part of of Shares (or Units) that
Shares (or Units)
Quarter Ended High Low Per Share (or Unit) Publicly Announced Plans May Yet Be Purchased
Purchased
March 31, 2009 $ 21.18 $ 14.54 or Programs Under the Plans or
June 30, 2009 $ 21.93 $ 15.95 Programs
September 30, 2009 $ 22.32 $ 18.57 October 2010 17,444 $24.41 17,444 -
December 31, 2009 $ 20.65 $ 18.00
November 2010 5,445 $25.13 5,445 -

March 31, 2010 $ 23.05 $ 18.64 December 2010 18,912 $28.51 18,912 -

June 30, 2010 $ 25.26 $ 21.50 Total 41,801 $26.36 41,801 -

September 30, 2010 $ 26.13 $ 20.08
December 31, 2010 $ 29.64 $ 22.91

On February 28, 2011, there were 1,006 holders of record, and approximately 4,400 beneficial owners, of our Common Stock.

On February 14, 2006, the Board of Directors voted to initiate a semi-annual cash dividend. We initially paid semi-annual dividends of $0.20
per share. The Board of Directors approved dividend payments of $0.16 per share related to the 3-for-2 stock split effective August 21, 2007. The
Board of Directors approved future dividend payments of $0.18 per share on May 19, 2009. Board approval is required to determine the date of
declaration and amount for each semi-annual dividend payment.

In 2009, dividends were declared to shareholders of record at the close of business on December 14, 2009 and were paid on January 4, 2010. In
2010, dividends were declared to shareholders of record at the close of business on June 10, 2010 and December 1, 2010 and were paid on July 1,
2010 and December 22, 2010. We paid cash dividends of $9.2 million during the year ended December 31, 2010.

On November 6, 2007, our Board of Directors authorized a stock buyback program, targeting repurchases of up to approximately 10% (1.8
million shares) of our outstanding stock from time to time in open market transactions. On May 12, 2010, we completed the stock buyback
program. Through May 12, 2010, we repurchased a total of 1,800,000 shares under this program for an aggregate price of $36,061,425, or an
average price of $20.03 per share. We purchased the shares at current market prices.

On May 17, 2010, the Board authorized a new stock buyback program, targeting repurchases of up to approximately 5% (approximately 850,000
shares) of our outstanding stock from time to time in open market transactions. Through December 31, 2010, we repurchased a total of 478,493
shares under this program for an aggregate price of $11,509,433, or an average price of $24.05 per share. We purchased the shares at current
market prices.

On July 1, 2005, we entered into a stock repurchase arrangement by which employee-participants in our 401(k) savings and investment plan are
entitled to have shares of AAON stock in their accounts sold to us to provide diversification of their investments. The maximum number of shares
to be repurchased is contingent upon the number of shares sold by employees. Through December 31, 2010, we repurchased 993,155 shares for
an aggregate price of $18,042,789, or an average price of $18.17 per share. We purchased the shares at current market prices.

7 8
 2010 Annual Report

Stock Performance Graph (1) Item 6. Selected Financial Data.

The following graph compares our cumulative total shareholder return, the NASDAQ Composite and the peer group named below. The graph The following selected financial data should be read in conjunction with the financial statements and related notes thereto for the periods
assumes a $100 investment at the closing price on January 1, 2005, and reinvestment of dividends on the date of payment without commissions. indicated which are included elsewhere in this report.
This table is not intended to forecast future performance of our Common Stock.
Years Ended December 31,
Compulsion of 5 Year Cumulative Total Return Results of Operations: 2010 2009 2008 2007 2006
Assumes Initial Investment of $100 (in thousands, except per share data)
December 2010
Net sales $ 244,552 $ 245,282 $ 279,725 $ 262,517 $ 231,460
300.00
Net income $ 21,894 $ 27,721 $ 28,589 $ 23,156 $ 17,133
250.00 Earnings per share:

Basic $ 1.30 $ 1.61 $ 1.63 $ 1.24 $ 0.93

200.00
Diluted $ 1.30 $ 1.60 $ 1.60 $ 1.22 $ 0.90

150.00 Cash dividends declared per common share $ 0.36 $ 0.36 $ 0.32 $ 0.32 $ 0.32

Weighted average shares outstanding:

100.00
Basic 16,799 17,187 17,560 18,628 18,456

Diluted 16,893 17,309 17,855 18,927 18,968

50.00

December 31,
0.00
Financial Position at End of Fiscal Year: 2010 2009 2008 2007 2006
2005 2006 2007 2008 2009 2010
(in thousands)
AAON INC. S&P 500 Index - Total Returns Peer Group
Working capital $ 55,502 $ 65,354 $ 40,600 $ 38,788 $ 36,356
The peer group consists of Lennox International, Inc., Ingersoll Rand Limited, Johnson Controls Inc., and United Technologies Corporation. All
Total assets $ 160,277 $ 156,211 $ 140,743 $ 137,140 $ 130,056
companies in the peer group are in the business of manufacturing air conditioning and heat exchange equipment.
Long-term and current debt $ 0 $ 76 $ 3,113 $ 330 $ 59
(1) Securities and Exchange Commission (“SEC”) filings sometimes “incorporate information by reference.” This means we are referring you
Total stockholders’ equity $ 116,739 $ 117,999 $ 96,522 $ 95,420 $ 91,592
to information that has previously been filed with the SEC, and that this information should be considered as part of the filing you are reading.
Unless we specifically state otherwise, this Stock Performance Graph shall not be deemed to be incorporated by reference and shall not constitute
soliciting material or otherwise be considered filed under the Securities Act of 1933, as amended, or the Securities Exchange act of 1934, as
amended. Basic earnings per common share were computed by dividing net income by the weighted average number of shares of common stock
outstanding during the reporting period. Diluted earnings per common share were determined on the assumed exercise of dilutive options, as
determined by applying the treasury stock method.

Item 7. Management’s Discussion and Analysis of Financial Condition and

Results of Operations.
Overview
We engineer, manufacture and market air-conditioning and heating equipment consisting of rooftop units, chillers, air-handling units, make-
up air units, heat recovery units, condensing units, commercial self-contained units and coils. These products are marketed and sold to retail,
manufacturing, educational, medical and other commercial industries. We market units to all 50 states in the United States and certain provinces
in Canada. Foreign sales were approximately 5% of our 2010 sales.

We sell our products to property owners and contractors through a network of manufacturers’ representatives and our internal sales force.
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 6-18 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.

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 2010 Annual Report

The principal components of cost of goods sold are labor, raw materials, component costs, factory overhead, freight out and engineering expense. Set forth below is income statement information and as a percentage of sales for years 2010, 2009 and 2008:
The principal high volume raw materials used in our manufacturing processes are steel, copper and aluminum, which are obtained from domestic
suppliers. The raw materials market was volatile during 2010 and 2009 due to the economic environment. Prices decreased by approximately 34% years ending December 31,
for steel and increased by approximately 155% for aluminum and 210% for copper from December 31, 2008 to December 31, 2010. During 2010,
we entered into an aluminum contract for 2011 purchases that was slightly above the average index price as of December 31, 2010. As market 2010 2009 2008
prices for aluminum have shown increases since January 1, 2011, our contract price more closely approximates market value in 2011. (in thousands)

We entered into a derivative instrument in the third quarter of 2009 with a large financial institution to mitigate our exposure to volatility in Net sales  $ 244,552 100.0% $ 245,282  100.0% $ 279,725 100.0%
copper prices. The derivative was in the form of a commodity futures contract. The derivative contract settled monthly beginning in January 2010
Cost of sales 189,364 77.4% 177,737 72.5% 212,549 76.0%
and ending in December 2010. The contract was for a total of 2,250,000 pounds of copper at $2.383 per pound. The contract was for quantities
equal to or less than those expected to be used in our manufacturing operations. We recorded adjustments of $14,000 and $2.2 million ($1.4 Gross profit 55,188 22.6% 67,545 27.5%  67,176 24.0%
million after tax) to cost of sales from the unrealized gain on derivative assets at fair value in the Consolidated Statements of Income for the years
Selling, general and
ended 2010 and 2009 respectively.
administrative expenses 22,473 9.2% 23,791 9.7% 23,788 8.5%

We attempt to limit the impact of price fluctuations on these materials by entering into cancelable and noncancelable fixed price contracts with Income from operations 32,715 13.4% 43,754 17.8% 43,388 15.5%
our major suppliers for periods of 6 - 18 months. We expect to receive delivery of raw materials from our fixed price contracts for use in our
Interest expense (45)  0.0% (9)  0.0% (71) 0.0%
manufacturing operations. These contracts are not accounted for as derivative instruments since they meet the normal purchases and sales
exemption. Interest income 258 0.1% 71 0.0% 27 0.0%
Other income (expense), net (235) 0.1% 76 0.1% 724 0.3%
We are subject to claims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability from these
claims and actions, if any, will not have a material effect on our results of operations or financial position. Income before income taxes 32,693  13.4%  43,892 17.9% 44,068 15.8%

Income tax provision 10,799 4.4% 16,171 6.6% 15,479 5.6%

Selling, general, and administrative (“SG&A”) costs include our internal sales force, warranty costs, profit sharing and administrative expenses.
Warranty expense is estimated based on historical trends and other factors. Our product warranty policy is: the earlier of one year from the date Net income $ 21,894 9.0%  $ 27,721 11.3% $ 28,589 10.2%
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). Warranty charges on heat exchangers do not occur frequently. With the introduction of the RQ product line in
Results of Operations
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. Key events impacting our cash balance, financial condition and results of operations in 2010 include the following:

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 • We have again taken a leading position in energy savings with the introduction of the direct drive blower which has eliminated the
15,000 sq. ft. of office space) located at 2425 S. Yukon Avenue (“the original facility”), and a 693,000 sq. ft. manufacturing/warehouse building and traditional V-belt drive, thus saving energy and maintenance problems associated with the V-belt drives. This has been made possible
a 22,000 sq. ft. office building (“the expansion facility”) located across the street from the original facility at 2440 S. Yukon Avenue. We own both by advances in electronic motor control by use of variable frequency drive on larger motors and electrically commutated motors on
the original facility and the expansion facility. smaller horsepowers. All of this is being further enhanced by requirements on buildings through ASHRAE (American Society of Heating,
Refrigerating and Air-Conditioning Engineers) Standard 189-1 which requires one of these concepts on high efficiency buildings at the
In the expansion facility we use 22,000 sq. ft. for office space, 20,000 sq. ft. for warehouse space and 80,000 sq. ft. for two production lines; an present time and will be required by ASHRAE Standard 90-1 on January 2012. We also utilize a high performance composite foam panel
additional 106,000 sq. ft. is utilized for sheet metal fabrication. The remaining 487,000 sq. ft. is presently being prepared as additional plant space to eliminate over half of the heat transfer from typical fiberglass insulated panels. All of these innovations increase the demand for our
for long-term growth. products thus increasing market share.
• Released new products and set up new manufacturing lines in the new building addition which was completed at the end of 2009.
Other operations in Longview, Texas are conducted in a plant/office building at 203-207 Gum Springs Road, containing 258,000 sq. ft. (251,000 • We attempt to moderate the volatility of certain commodity costs by utilizing purchase agreements and pricing strategies which affect our
sq. ft. of manufacturing/ warehouse and 7,000 sq. ft. of office space). An additional 15 acres were purchased in 2004 and 2005 for future gross margins.
expansion. We own both the existing plant/office building, and the 15 acres designated for future expansion. • In February 2006, our Board of Directors initiated a program of semi-annual cash dividend payments. Cash payments of $9.2 million were
made in 2010. Dividends payable of $3.1 million were declared in June 2010, released for payment to our transfer agent in June 2010 and
Our previous operations in Burlington, Ontario, Canada, were located at 279 Sumach Drive, consisting of an 82,000 sq. ft. office/manufacturing paid to stockholders in July 2010. Dividends payable of $3.0 million were declared and paid in December 2010. Dividends payable of $3.1
facility. The property was sold in September 2010 for $1.5 million ($0.4 million cash and we are carrying back a $1.1 million note receivable). million were declared in December 2009 and paid in January 2010.
• Stock repurchases resulted in cash payments of $19.5 million. This cash outlay is partially offset by cash received from options exercised by
employees as a part of an incentive bonus program of $1.2 million.
• We have a strong liquidity position at December 31, 2010 with cash on hand of approximately $2.4 million, $1.5 million in certificates of
deposit and $9.5 million of current assets in corporate notes and bonds. In view of the current economic environment, our goal remains to
maintain a healthy financial condition.
• Purchases of equipment and renovations to manufacturing facilities remained a priority. Our capital expenditures were $17.5 million.
Equipment purchases create significant efficiencies, lower production costs and allow continued growth in production. We currently
estimate dedicating $28 million to $30 million to capital expenditures in 2011 for continued growth.

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 2010 Annual Report

Net Sales Selling, General and Administrative Expenses

Net sales were $244.6 million, $245.3 million and $279.7 million in 2010, 2009 and 2008, respectively. Sales in 2010 remained substantially level SG&A were $22.5 million, $23.8 million and $23.8 million in 2010, 2009 and 2008, respectively. As a percentage of sales, SG&A expenses were
with 2009 due to the favorable reception to our new products and increased market share, despite poor economic conditions which caused non- 9.2%, 9.7% and 8.5% in 2010, 2009 and 2008 respectively. In 2010, compared to 2009, we experienced a decrease in our SG&A expenses. The
residential construction spending to decline 14.1%. The decrease in sales in 2009 from 2008 was due to decreased volume related to the economic decrease was primarily due to a decrease in profit sharing expense related to lower net income. In 2009, our SG&A expenses remained consistent
environment and lower sales from our Canadian operations. The economic environment negatively impacted commercial construction markets with 2008, despite lower sales volumes in 2009 compared to 2008. Warranty expenses in 2009 increased due to specific warranty items and sales
with some projects delayed, postponed indefinitely or cancelled. The replacement market was also affected by customers delaying equipment related expenses increased due to our expanded marketing to remain competitive in the current environment.
replacement as a cost saving strategy. In 2008, an increase in volume of products sold related to our new and redesigned products being favorably
received by our customers, the diversified customer mix of products, active marketing by sales representatives and pricing strategies implemented Interest Expense
in order to keep up with the then increasing raw material costs.
Interest expense was approximately $45,000, $9,000 and $71,000 in 2010, 2009 and 2008, respectively. The increase in interest expense of
approximately $36,000 in 2010 from 2009 was due to increased borrowings on the revolving credit facility. We borrowed $20.8 million from the
Gross Profit revolving credit facility during 2010 compared to $10.0 million during 2009. Interest on borrowings is payable monthly at the greater of 4.0% or
Gross margins were $55.2 million, $67.5 million and $67.2 million in 2010, 2009 and 2008, respectively. Gross margins decreased $12.3 million in LIBOR plus 2.5% (4.0% at December 31, 2010). The decrease in interest expense in 2009 from 2008 was due to fewer borrowings on the revolving
2010 from 2009. As a percentage of sales, gross margins were 22.6%, 27.5% and 24.0% in 2010, 2009 and 2008, respectively. The 18.0% decrease in credit facility. In 2008, we borrowed $46.9 million from the revolving credit facility. Average borrowings under the revolving credit facility are
gross margins in 2010 from 2009 was primarily a result of the absence of a derivative related to a copper hedge of $2.2 million that we benefited typically paid in full within the month of borrowing or the following month.
from in 2009, higher raw material and commodity costs, increased labor expenses to relocate a production line and set up new production lines
for the Tulsa building addition and related supplies to stock the new lines, and our inability in the current economic environment to implement Interest Income
price increases to our minimum sales prices for HVAC units. The increase in gross profit in 2009 from 2008, resulted from lower material costs,
Interest income was approximately $258,000, $71,000 and $27,000 in 2010, 2009 and 2008, respectively. The increase in interest income of
improved production and labor efficiencies, a reduction in manufacturing related expenses and a $2.2 million ($1.4 million net of tax) unrealized
approximately $187,000 in 2010 from 2009 was mainly due to interest income from our investments in corporate notes and bonds, see Note 1.
gain from a financial derivative asset included in cost of sales, despite lower net sales and expenses associated with the Canadian facility closure.
Investments Held to Maturity. The increase in interest income in 2009 from 2008 was mainly due to interest income from a tax refund.
Our gross margins as a percentage of sales excluding the unrealized gain were 22.6%, 26.6% and 24.0% in 2010, 2009 and 2008, respectively.

The principal components of cost of goods sold are labor, raw materials, component costs, factory overhead, freight out and engineering Other Income (Expense)
expense. The principal high volume raw materials used in our manufacturing processes are steel, copper and aluminum, which are obtained Other expense was approximately $235,000 in 2010. Other income was approximately $76,000 and $724,000 in 2009 and 2008, respectively.
from domestic suppliers. We also purchase from other domestic manufacturers certain components, including compressors, electric motors and The decrease in other income of approximately $311,000 in 2010 from 2009 was primarily due to the termination of the lease on our expansion
electrical controls used in our products. The suppliers of these components are significantly affected by the raw material costs of steel, copper facility in May 2009. Prior to the lease expiration in May 2009, other income was predominantly attributable to rental income from our expansion
and aluminum used in their products. The raw materials market was volatile during 2010 and 2009 due to the economic environment. Prices facility. The decrease in other income in 2009 from 2008 was also primarily related to the termination of the lease. We began renovations on the
decreased by approximately 34% for steel and increased by approximately 155% for aluminum and 210% for copper from December 31, 2008 to expansion facility to give us increased manufacturing capacity upon expiration of the lease. Our 2010 capital expenditures reflected the outlay to
December 31, 2010. During 2010, we entered into an aluminum contract for 2011 purchases that was slightly above the average index price as of remodel the facility.
December 31, 2010. As market prices for aluminum have shown increases since January 1, 2011, our contract price more closely approximates
market value in 2011. Impact of Current Economic Conditions
We entered into a financial derivative instrument in the third quarter of 2009 with a large financial institution to mitigate our exposure to Our business is affected by a number of economic factors, including the level of economic activity in the markets in which we operate. The
volatility in copper prices. The financial derivative was in the form of a commodity futures contract. The contract was for a total of 2,250,000 state of the economy has negatively impacted the commercial and industrial new construction markets. The decline in economic activity has
pounds of copper at $2.383 per pound. In March 2010, we locked in the settlement price of $3.3975 per pound for the remainder of 2010. The resulted in a decrease in our sales volume and profitability. Sales in the commercial and industrial new construction markets correlate closely to
contract was for quantities equal to or less than those used in our manufacturing operations in 2010. The derivative contract began settling in the number of new homes and buildings that are built, which in turn is influenced by cyclical factors such as interest rates, inflation, consumer
January 2010 and concluded in December 2010. spending habits, employment rates and other macroeconomic factors over which we have no control.

In addition to our financial derivative instrument, we attempt to limit the impact of price fluctuations on these materials by entering into
cancelable and noncancelable fixed price contracts with our major suppliers for periods of 6 - 18 months. We expect to receive delivery of raw
materials from our fixed price contracts for use in our manufacturing operations. These contracts are not accounted for as financial derivative
instruments since they meet the normal purchases and sales exemption.

We are subject to claims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability from these
claims and actions, if any, will not have a material effect on our results of operations or financial position.

13 14
 2010 Annual Report

Analysis of Liquidity and Capital Resources Accounts receivable increased by $6.4 million at December 31, 2010 due primarily to slower customer payments. Accounts receivable decreased
by $5.5 million at December 31, 2009 compared to December 31, 2008 and was attributable to a decrease in sales. Accounts receivable increased
Our working capital and capital expenditure requirements are generally met through net cash provided by operations and the occasional use of by $0.9 million at December 31, 2008 compared to December 31, 2007 due to increased sales.
the revolving bank line of credit based on our current liquidity at the time.
Inventories increased by $4.8 million at December 31, 2010 compared to December 31, 2009 due to an increase related to the valuation of
General inventories associated with higher raw material and component part prices and increased inventory levels associated with an increase in our
Our revolving credit facility provides for maximum borrowings of $15.2 million which is provided by the Bank of Oklahoma, National backlog. Inventories decreased by $7.2 million at December 31, 2009 compared to December 31, 2008. The decrease in inventories in 2009 from
Association. At December 31, 2010, borrowings available under the revolving credit facility were $14.3 million. Under the line of credit, there is 2008 was attributable to a decrease in inventory requirements related to lower sales volumes, a decrease related to the valuation of inventories
one standby letter of credit totaling $0.9 million. Interest on borrowings is payable monthly at the greater of 4.0% or LIBOR plus 2.5% (4.0% at due to lower raw material and component part prices and sales of inventory as part of the Canadian facility closure. Inventories increased by $4.8
December 31, 2010). No fees are associated with the unused portion of the committed amount. At December 31, 2010, we had no borrowings million at December 31, 2008 compared to December 31, 2007 primarily related to the procurement of inventory to accommodate increased
outstanding under the revolving credit facility. sales.

At December 31, 2009, we had no borrowings outstanding under the revolving credit facility. At December 31, 2008, we had $2.9 million Accounts payable increased by $6.5 million at December 31, 2010 compared to December 31, 2009 due an increase in inventory levels and
outstanding under the revolving credit facility. At December 31, 2010, 2009 and 2008, we were in compliance with our financial ratio covenants. timing of payments to vendors. Accounts payable decreased by $6.3 million at December 31, 2009 compared to December 31, 2008. The decrease
The covenants are related to our tangible net worth, total liabilities to tangible net worth ratio and working capital. At December 31, 2010 our in accounts payable in 2009 from 2008 was attributable to fewer purchases related to lower sales volumes. Accounts payable increased by $0.4
tangible net worth was $117.0 million which meets the requirement of being at or above $75.0 million. Our total liabilities to tangible net worth million at December 31, 2008 compared to December 31, 2007 due to the timing of payment to vendors.
ratio was 1 to 3, which meets the requirement of not being above 2 to 1. Our working capital was $55.5 million which meets the requirement
of being at or above $30.0 million. On July 30, 2010, we renewed the line of credit with a maturity date of July 30, 2011 with terms substantially Accrued liabilities increased by $2.4 million at December 31, 2010 compared to December 31, 2009 due to an increase in amounts due to
the same as the previous agreement. Subsequently, as a requirement of our workers compensation insurance, our standby letter of credit was representatives and payroll partially offset by a decrease in medical self-insurance reserves. Accrued liabilities increased by $0.8 million at
extended with an increase of $1.5 million to $2.4 million and will expire December 31, 2011. We expect to renew our revolving credit agreement December 31, 2009 compared to December 31, 2008. The increase in accrued liabilities in 2009 from 2008 is attributable to higher warranty
in July 2011. We do not anticipate that the current situation in the credit market will impact our renewal. and medical self-insurance reserves related to specific items. Accrued liabilities increased by $0.9 million at December 31, 2008 compared to
December 31, 2007 due to higher workers compensation expenses and higher warranty expenses related to increased sales.
We believe projected cash flows from operations and our bank revolving credit facility (or comparable financing) will provide us the necessary
liquidity and capital resources for fiscal year 2011 and the foreseeable future. The belief that we will have the necessary liquidity and capital Cash Flows Used in Investing Activities. Cash flows used in investing activities were $28.3 million, $9.6 million and $9.6 million in 2010, 2009
resources is based upon our knowledge of the HVAC industry and our place in that industry, our ability to limit our growth if necessary, our and 2008, respectively. Cash flows used in investing activities in 2010 increased significantly from 2009 and were related to a $15.0 million
ability to adjust dividend cash payments, and our relationship with our existing bank lender. For information concerning our revolving credit investment with a large financial institution in January 2010. The investments were allocated to cash and money market funds, certificates of
facility at December 31, 2010, see Note 3, Revolving Credit Facility. deposit, corporate notes and bonds and foreign corporate notes and bonds with a maturity of one year or less. The investments began maturing
during 2010 and at December 31, 2010 the investment balance was $11.0 million. The increase was also attributable to manufacturing and
Cash Provided by Operating Activities. Net cash provided from operating activities has fluctuated from year-to-year. Net cash provided by equipment purchases and costs to expand our manufacturing facilities. Cash flows used in investing activities in 2009 did not significantly
operating activities was $32.2 million, $45.2 million and $33.4 million in 2010, 2009 and 2008, respectively. The year-to-year variances are fluctuate from 2008 and were related to manufacturing and equipment purchases and costs to expand our manufacturing facilities. The decrease
primarily from changes in net income, accounts receivable, inventories, accounts payable and accrued liabilities as described below. in cash flows used in investing activities in 2008 from 2007 was primarily related to lower capital expenditures. Management utilizes cash flows
provided from operating activities to fund capital expenditures that are expected to increase growth and create efficiencies. We expect to expend
Net income was $21.9 million, $27.7 million and $28.6 million in 2010, 2009 and 2008 respectively. The decrease in net income of $5.8 approximately $28 million - $30 million in 2011 for a building addition at the Tulsa facility and machinery and equipment to accommodate
million in 2010 from 2009 was primarily due to the absence of a derivative related to a copper hedge of $2.2 million ($1.4 million net of tax) anticipated growth. We expect the cash requirements to be provided by cash flows from operations and matured investments. We did not invest
that we benefited from in 2009, higher raw material and commodity costs, increased labor expenses to relocate a production line and set up in certificates of deposits, money market funds or corporate notes and bonds in 2009 or 2008.
new production lines for the Tulsa building addition and related supplies to stock the new lines, and our inability in the current economic
environment to implement price increases to our minimum sales prices for HVAC units. The decrease in net income in 2009 from 2008 was Cash Flows Used in Financing Activities. Cash flows used in financing activities were $27.2 million, $10.1 million and $24.5 million in 2010,
primarily due to lower volume of sales which was a result of the economic environment and lower sales from our Canadian operations offset by 2009 and 2008, respectively. The increase in cash flows used in financing activities of $17.1 million in 2010 from 2009 is primarily related to
lower material costs, improved production and labor efficiencies, a reduction in manufacturing related expenses and a $2.2 million ($1.4 million a higher volume of stock repurchases and the payment of $9.2 million in dividends. The decrease in cash flows used in financing activities in
net of tax) unrealized gain from a financial derivative asset. 2009 from 2008 was primarily related to lower volume of stock repurchases. We occasionally utilize our revolving line of credit to meet certain
short-term cash demands based on our liquidity at the time. We had no borrowings outstanding under the revolving credit facility at December
Depreciation expense was $9.9 million, $9.1 million and $9.4 million in 2010, 2009 and 2008, respectively. The increase in depreciation is due 31, 2010 or at December 31, 2009. We had $2.9 million outstanding under the revolving credit facility at December 31, 2008. We accessed $20.8
to the increase in depreciable assets of equipment and building additions. The decrease in depreciation in 2009 was due to the realization of full million, $10.0 million and $46.9 million of borrowings under the line of credit during 2010, 2009 and 2008, respectively.
depreciation of certain capital assets. Share-based compensation was $0.8 million in each of 2010, 2009 and 2008. Both depreciation expense and
share-based compensation expense decreased net income, but had no effect on operating cash. We received cash from stock options exercised of $1.2 million, $1.2 million and $1.7 million and classified the excess tax benefit of stock
options exercised and restricted stock awards vested of $0.4 million, $0.7 million and $1.6 million in financing activities in 2010, 2009 and 2008,
respectively.

15 16
 2010 Annual Report

We repurchased shares of stock under the Board of Directors authorized stock buyback programs. We also repurchased shares of stock from our The following accounting policies may involve a higher degree of estimation or assumption:
employees’ 401(k) savings and investment plan, directors and officers and the open market in the amount of $19.6 million for 822,740 shares, $3.1
million for 165,117 shares and $24.8 million for 1,211,538 shares of stock in 2010, 2009 and 2008, respectively. Revenue Recognition – We recognize revenues from sales of products when the products are shipped and the title and risk of ownership pass to
the customer. Final sales prices are fixed based on purchase orders. Sales allowances and customer incentives are treated as reductions to sales and
On February 14, 2006, the Board of Directors voted to initiate a semi-annual cash dividend. We initially paid semi-annual dividends of $0.20 per are provided for based on historical experiences and current estimates. Our policy is to record the collection and payment of sales taxes through a
share. On July 12, 2007, our Board of Directors approved a 3-for-2 stock split of our outstanding stock for shareholders of record as of August 3, liability account.
2007. The stock split was treated as a 50% stock dividend which was distributed on August 21, 2007. As a result of the stock split, our Board of
Directors adjusted the dividend paid per share to $0.16. The Board of Directors approved future dividend payments of $0.18 per share on May 19, We present revenues net of certain payments to our independent manufacturer representatives (“Representatives”). Representatives are national
2009. Board approval is required to determine the date of declaration and amount for each semi-annual dividend payment. 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
Cash dividends of $9.2 million were paid in 2010. Cash dividends of $5.9 million were paid in 2009, and we accrued a liability for payment of $3.1 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.
million of dividends in January 2010. Cash dividends of $5.8 million were paid in 2008, and $2.8 million in dividends were declared and accrued 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
as a liability in December 2008 for payment in January 2009. by the Representative with the end user customer.

Commitments and Contractual Agreements 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
The following table summarizes our contractual agreements as of December 31, 2010:
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
Payments Due By Period
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
Less Than the Representative or another third party. The Company is under no obligation related to Third Party Products.
Contractual Obligations Total 1 Year 1–3 Years 4–5 Years After 5 years

(in thousands) The Representatives do not provide us with a break-out of the amount of the total order price over the minimum sales price which includes
the Representatives’ fee and Third Party Product amounts (“Due to Representatives”). The Due to Representatives amount is paid only after all
Purchase obligations(1) $ 1,662 $ 1,662 $ - $ - $ - amounts associated with the order are collected from the customer. The amount of payments to our Representatives was $51.4 million, $58.0
million and $55.4 million for the years ended December 31, 2010, 2009, and 2008, respectively.
Total contractual obligations $ 1,662 $ 1,662 $ - $ - $ -

Allowance for Doubtful Accounts - Our allowance for doubtful accounts is estimated to cover the risk of loss related to accounts receivable. We
establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends in collections
The purchase obligation consists of an aluminum commitment with one supplier. We expect to receive delivery of raw materials for use in
(1)
and write-offs, current customer status, the age of the receivable, economic conditions and other information. Aged receivables are reviewed on
our manufacturing operations. This contract is not accounted for as a derivative instrument because it meets the normal purchases and sales
a monthly basis to determine if the reserve is adequate and adjusted accordingly at that time. The evaluation of these factors involves complex,
exemption.
subjective judgments. Thus, changes in these factors or changes in economic circumstances may significantly impact our Consolidated Financial
Statements.
We are subject to claims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability from these
claims and actions, if any, will not have a material effect on our results of operations of financial position.
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
Critical Accounting Policies estimated shrinkage.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities Warranty – A provision is made for estimated warranty costs at the time the product is shipped and revenue is recognized. The warranty period
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because these estimates 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
and assumptions require significant judgment, future actual results could differ from those estimates and could have a significant impact on our applicable); 15 years on aluminized steel gas-fired heat exchangers (if applicable); 25 years on stainless steel heat exchangers (if applicable); and
results of operations, financial position and cash flows. We reevaluate our estimates and assumptions on a monthly basis. 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.
Warranty expense is estimated based on the warranty period, historical warranty trends and associated costs, and any known identifiable
warranty issue. Warranty charges associated with heat exchangers do not occur frequently.

17 18
 2010 Annual Report

Due to the absence of warranty history on new products, an additional provision may be made for such products. Our estimated future warranty Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
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. Interest Rate Risk.

Medical Insurance – A provision is made for medical costs associated with our Medical Employee Benefit Plan, which is primarily a self- We are subject to interest rate risk on our revolving credit facility, which bears variable interest based upon the greater of a rate
funded plan. A provision is made for estimated medical costs based on historical claims paid and potential significant future claims. The plan is of 4.0% or LIBOR plus 2.5%. We had no borrowings outstanding under the revolving credit facility as of December 31, 2010.
supplemented by employee contributions and an excess policy for claims over $125,000 each.
Commodity Price Risk
Stock Compensation – We account for equity-based compensation in accordance with FASC Topic 718, Compensation – Stock Compensation. We entered into a financial derivative instrument in the third quarter of 2009 with a large financial institution to mitigate our
Applying this standard to value equity-based compensation requires us to use significant judgment and to make estimates, particularly for the exposure to volatility in copper prices. We did not incur losses due to counterparty non-performance. We do not use financial
assumptions used in the Black-Scholes valuation model, such as stock price volatility and expected option lives, as well as for the expected option derivatives for speculative purposes.
forfeiture rates. We measure the cost of employee services received in exchange for an award of equity instruments using the Black-Scholes
valuation model to calculate the grant-date fair value of the award. The compensation cost is recognized over the period of time during which an Fluctuations in copper commodity prices impacted the value of the financial derivative we held. The financial derivative contract
employee is required to provide service in exchange for the award, which will be the vesting period. began settling monthly in January 2010 and concluded in December 2010. The contract was for a total of 2,250,000 pounds of
copper at $2.383 per pound. In March 2010, we locked in the settlement price of $3.3975 per pound for the remainder of
Historically, actual results have been within management’s expectations. 2010. Prior to locking in the settlement price, we would have been subject to gains which we would have recorded as a financial
derivative asset if the forward copper commodity prices increased and losses which we would have recorded as a financial
New Accounting Pronouncements derivative liability if they decreased. We were in an unrealized gain position on the financial derivative asset during 2009 and
2010. We settled the derivative December 2010.
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements (“ASU 2010-06”), which requires reporting entities to provide information about movements of assets among Levels 1 and 2 of
We used COMEX index pricing to support our fair value calculation, which is a Level 2 input per the valuation hierarchy as the
the three-tier fair value hierarchy. Separate disclosures need to be made of the amounts of significant transfers in and out of Level 1 and Level 2
pricing is for instruments similar but not identical to the contract we settled. We did not designate the financial derivative as a
fair value measurements along with a description of the reason for the transfers. Also, disclosure of activity in Level 3 fair value measurements
cash flow hedge. We recorded changes in the financial derivative’s fair value in earnings based on mark-to-market
needs to be made on a gross basis rather than as one net number. ASU 2010-06 also requires: (1) fair value measurement disclosures for each
accounting. For the year ended December 31, 2010, we recorded approximately $14,000 to cost of sales from the unrealized gain
class of assets and liabilities, and (2) disclosures about the valuation techniques and inputs used to measure fair value for both recurring and
on our financial derivative asset at fair value in the Consolidated Statements of Income.
nonrecurring fair value measurements, which are required for fair value measurements that fall in either Level 2 or Level 3. The new disclosures
and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for
The principal components of cost of goods sold are labor, raw materials, component costs, factory overhead, freight out and
the Level 3 activity disclosures, which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal
engineering expense. The principal high volume raw materials used in our manufacturing processes are steel, copper and
years. Adoption of ASU 2010-06 did not have a material impact on our Consolidated Financial Statements.
aluminum, which are obtained from domestic suppliers. The raw materials market was volatile during 2010 and 2009 due to the
economic environment. We have included a three-year comparison to show fluctuations in raw materials costs. Prices have
In February 2010, the FASB issued ASU 2010-09,Topic 855, Subsequent Events (“ASU 2010-09”), which discontinues the requirement that entities
decreased by approximately 34% for steel and increased by approximately 155% for aluminum and 211% for copper from
disclose the date through which they have evaluated subsequent events. ASU 2010-09 is effective upon issuance. We adopted ASU 2010-09 for
December 31, 2008 to December 31, 2010. During 2010, we entered into an aluminum contract for 2011 purchases that was slightly
reporting in the fourth quarter of 2009. Adoption of ASU 2010-09 did not have a material impact on our Consolidated Financial Statements.
above the average index price as of December 31, 2010. As market prices for aluminum have shown increases since January 1,
2011, our contract price more closely approximates market value in 2011.
Forward-Looking Statements
This Annual Report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words We are subject to claims and legal actions that arise in the ordinary course of business. Management believes that the ultimate
such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will”, and variations of such words and similar expressions are liability from these claims and actions, if any, will not have a material effect on our results of operations or financial position.
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 In addition to the financial derivative instrument described above, we attempt to limit the impact of price fluctuations on these
or forecasted in such forwardlooking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which materials by entering into cancelable and noncancelable fixed price contracts with our major suppliers for periods of 6 - 18
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 months. We expect to receive delivery of raw materials from our fixed price contracts for use in our manufacturing
result of new information, future events or otherwise. Important factors that could cause results to differ materially from those in the forward- operations. These contracts are not accounted for as financial derivative instruments since they meet the normal purchases and
looking statements include (1) the timing and extent of changes in raw material and component prices, (2) the effects of fluctuations in the sales exemption.
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. We do not utilize financial derivative financial instruments to hedge our interest rate risk. We occasionally use financial derivatives to
economically hedge our commodity price risk.

Item 8. Financial Statements and Supplementary Data.

The financial statements and supplementary data are included commencing at page 33.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial

Disclosure.
None.

19 20
 2010 Annual Report

Item 9A. Controls and Procedures. (c) Report of Independent Registered Public Accounting Firm

(a) Evaluation of Disclosure Controls and Procedures Report of Independent Registered Public Accounting Firm
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
Board of Directors and Stockholders
Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and
AAON, Inc.
procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer believe that:

We have audited AAON, Inc. (a Nevada Corporation) and subsidiaries’, collectively, the “Company”, internal control over financial reporting
• Our disclosure controls and procedures are designed at a reasonable assurance threshold to ensure that information required to be
as of December 31, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
disclosed by us in the reports we file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within
Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control
the time periods specified in the SEC’s rules and forms; and
over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
• Our disclosure controls and procedures operate at a reasonable assurance threshold such that important information flows to appropriate Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion of the Company’s internal
collection and disclosure points in a timely manner and are effective to ensure that such information is accumulated and communicated control over financial reporting based on our audit.
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. 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
AAON’s Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures and concluded that these maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
controls and procedures were effective as of December 31, 2010. 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
(b) Management’s Annual Report on Internal Control over Financial Reporting opinion.
The management of AAON, Inc. and our subsidiaries is responsible for establishing and maintaining adequate internal control over financial
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
preparation and fair presentation of published financial statements.
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
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
can provide only reasonable assurance with respect to financial statement preparation and presentation.
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
In making our assessment of internal control over financial reporting, management used the criteria issued by the Committee of Sponsoring
company’s assets that could have a material effect on the financial statements.
Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on our assessment, we believe that,
as of December 31, 2010, our internal control over financial reporting is effective at the reasonable assurance level based on those criteria.
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
Our independent registered public accounting firm has issued an attestation report on our internal control over financial reporting.
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, 2010,
Date: March 10, 2011 /s/ Norman H. Asbjornson
based on criteria established in Internal Control – Integrated Framework issued by COSO.
Norman H. Asbjornson
Chief Executive Officer
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of AAON, Inc. and subsidiaries, as of December 31, 2010 and 2009, and the related consolidated statements of income,

stockholders’ equity and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2010 and our report
/s/ Kathy I. Sheffield
dated March 10, 2011, expressed an unqualified opinion on those consolidated financial statements.
Kathy I. Sheffield
Chief Financial Officer
/s/ GRANT THORNTON LLP

Tulsa, Oklahoma
March 10, 2011

(d) 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 2010 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

21 22
 2010 Annual Report

Part 3
Our director independence standards are as follows:

It is the policy of the Board that a majority of the members of the Board consist of directors independent of the Company and of our
management. For a director to be deemed “independent,” the Board shall affirmatively determine that the director has no material relationship
with us or our affiliates or any member of the senior management or his or her affiliates. In making this determination, the Board applies, at
Item 10. Directors, Executive Officers and Corporate Governance. a minimum and in addition to any other standards for independence established under applicable statutes and regulations as outlined by the
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 NASDAQ listing standards Rule 4200, the following standards, which it may amend or supplement from time to time:
information contained in our definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with our 2011
• A director who is, or has been within the last three years, an employee of the Company, or whose immediate family member is, or
Annual Meeting of Stockholders.
has been within the last three years a Named Officer, cannot be deemed independent. Employment as an interim Chairman or Chief
Executive Officer will not disqualify a director from being considered independent following that employment.
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 • A director who has received, or who has an immediate family member who has received, during any twelve-month period within the
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 last three years, more than $120,000 in direct compensation from us, other than director and committee fees and benefits under a
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 tax-qualified retirement plan, or non-discretionary compensation for prior service (provided such compensation is not contingent in
Yukon Avenue, Tulsa, Oklahoma 74107, attention Kathy I. Sheffield, or by calling (918) 382-6204. any way on continued service), cannot be deemed independent. Compensation received by a director for former service as an interim
Chairman or Chief Executive Officer and compensation received by an immediate family member for service as one of our non-
executive employees will not be considered in determining independence under this test.
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 • A director who (A) is, or whose immediate family member is, a current partner of a firm that is our external auditor; (B) is a current
in our definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with our 2011 Annual Meeting of employee of such a firm; or (C) was, or whose immediate family member was, within the last three years (but is no longer) a partner
Stockholders. or employee of such a firm and personally worked on our audit within that time cannot be deemed independent.

• A director who is, or whose immediate family member is, or has been within the last three years, employed as an executive officer of
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
another company where any of our present Named Officers at the time serves or served on that company’s compensation committee
Stockholder Matters. cannot be deemed independent.
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 2011 Annual Meeting of • A director who is a current employee or general partner, or whose immediate family member is a current executive officer or general
Stockholders. partner, of an entity that has made payments to, or received payments from us for property or services in an amount which, in any
of the last three fiscal years, exceeds the greater of $200,000 or 5% of such other entity’s consolidated gross revenues, other than
payments arising solely from investments in our securities or payments under non-discretionary charitable contribution matching
Item 13. Certain Relationships and Related Transactions. programs, cannot be deemed independent.
Transactions with Related Persons
For purposes of the independence standards set forth above, the terms:
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 • “affiliate” means any of our consolidated subsidiaries and any other company or entity that controls, is controlled by or is under
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 common control with us;
in compliance with all applicable laws, rules and regulations. We did not enter into any new related party transactions and have no preexisting
• “executive officer” means an “officer” within the meaning of Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended;
related party transactions in 2010, 2009 or 2008.
and

Director Independence • “immediate family” means spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and
The Board of Directors (“Board”) has adopted director independence standards that meet and/or exceed listing standards set by NASDAQ. sisters-in-law and anyone (other than employees) sharing a person’s home, but excluding any person who is no longer an immediate
NASDAQ has set forth six applicable tests and requires that a director who fails any of the tests be deemed not independent. In 2010, the Board family member as a result of legal separation or divorce, death or incapacitation.
affirmatively determined, considering the standards described more fully below, that Messrs. Short, Lackey, McElroy, Levine and Cappy are
independent. As a result of his position as our President, Mr. Asbjornson does not qualify as independent under the standards set forth below. The Board undertakes an annual review of the independence of all non-employee directors. In advance of the meeting at which
The Board has determined that Mr. Johnson should not be deemed independent, because he is a member of the law firm that serves as our this review occurs, each non-employee director is asked to provide the Board with full information regarding the director’s
General Counsel. In addition, each member of the Audit Committee and the Compensation Committee is independent. business and other relationships with us and our affiliates and with senior management and their affiliates to enable the Board to
evaluate the director’s independence.

23 24
 2010 Annual Report

Part 4
Directors have an affirmative obligation to inform the Board of any material changes in their circumstances or relationships that may impact their
designation by the Board as “independent.” This obligation includes all business relationships between, on the one hand Directors or members of
their immediate family, and, on the other hand, us and our affiliates or members of senior management and their affiliates, whether or not such
business relationships are subject to any other approval requirements.
Item 15. Exhibits and Financial Statement Schedules.
Item 14. Principal Accountant Fees and Services. (a) Financial statements.
Incorporated by reference to our definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with our See Index to Consolidated Financial Statements on page 29.
2011 Annual Meeting of Stockholders.
(b) Exhibits:

(3) (A) Articles of Incorporation (i)

(A-1) Article Amendments (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) Sixth Amendment to Third Restated Revolving Credit and Term Loan Agreement (v)
(B) Rights Agreement dated February 19, 1999, as amended (vi)

(10.1) AAON, Inc. 1992 Stock Option Plan, as amended (vii)

(10.2) AAON, Inc. 2007 Long-Term Incentive Plan, as amended (viii)

(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

(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 the exhibits to our Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, and to our Forms 8-K dated March 21, 1994, March 10, 1997, and March 17, 2000.

(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 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 August 3, 2010

(vi) Incorporated by reference to exhibits to our Forms 8-K dated February 25, 1999, and August 20, 2002, and Form 8-A
Registration Statement No. 000-18953, as amended.

25 26
 2010 Annual Report

(vii) Incorporated herein by reference to exhibits to our Annual Report on Form 10-K for the fiscal year ended Signatures
December 31, 1991, and to our Form S-8 Registration Statement No. 33-78520, as amended.
Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly
(viii) Incorporated herein by reference to Appendix B to our definitive Proxy Statement for the 2007 Annual Meeting of caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Stockholders filed April 23, 2007.

(ix) Incorporated herein by reference to exhibits to our Annual Report on Form 10-K for the fiscal year ended AAON, INC.
December 31, 2004.
Dated: March 10, 2011 By: /s/ Norman H. Asbjornson
Norman H. Asbjornson, President

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Dated: March 10, 2011 /s/ Norman H. Asbjornson

Norman H. Asbjornson
President and Director
(principal executive officer)

Dated: March 10, 2011 /s/ Kathy I. Sheffield

Kathy I. Sheffield
Vice President and Treasurer
(principal financial officer
and principal accounting officer)

Dated: March 10, 2011 /s/ John B. Johnson, Jr.

John B. Johnson, Jr.
Director


Dated: March 10, 2011 /s/ Jack E. Short
Jack E. Short
Director

Dated: March 10, 2011 /s/ Paul K. Lackey, Jr.

Paul K. Lackey, Jr.
Director

Dated: March 10, 2011 /s/ A.H. McElroy II

A.H. McElroy II
Director

Dated: March 10, 2011 /s/ Jerry R. Levine
Jerry R. Levine
Director

Dated: March 10, 2011 /s/ Joseph E. Cappy
Joseph E. Cappy
Director

27 28
 2010 Annual Report

Index to Consolidated Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Page Board of Directors and Stockholders

AAON, Inc.
Report of Independent Registered Public Accounting Firm 30
Consolidated Balance Sheets 31 We have audited the accompanying consolidated balance sheets of AAON, Inc. (a Nevada Corporation) and subsidiaries’ (collectively
Consolidated Statements of Income 32 referred to as the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of income, stockholders’ equity and
comprehensive income, and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the
Consolidated Statements of Stockholders’ Equity and Comprehensive Income 33
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
Consolidated Statements of Cash Flows 34
Notes to Consolidated Financial Statements 35 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, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the
period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AAON, Inc. and
subsidiaries internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 10, 2011,
expressed an unqualified opinion on the effectiveness of internal control over financial reporting.

/s/ GRANT THORNTON LLP

Tulsa, Oklahoma
March 10, 2011

29 30
 2010 Annual Report

AAON, Inc., and Subsidiaries

Consolidated Balance Sheets AAON, Inc., and Subsidiaries
Consolidated Statements of Income
December 31, December 31,
2010 2009 Years Ending December 31,
Assets (in thousands, except share and per share data) 2010 2009 2008
Current Assets: (in thousands, except per share data)
Cash and cash equivalents $ 2,393 $ 25,639 Net sales $ 244,552 $ 245,282 $ 279,725
Certificates of deposit 1,503 -
Cost of sales 189,364 177,737 212,549
Investments held to maturity at amortized cost 9,520 -
Gross profit 55,188 67,545 67,176
Accounts receivable, net 39,901 33,381
Note receivable, current 26 - Selling, general and administrative expenses 22,473 23,791 23,788
Inventories, net 33,602 28,788 Income from operations 32,715 43,754 43,388
Prepaid expenses and other 656 1,087 Interest expense (45) (9) (71)
Financial derivative asset - 2,200
Interest income 258 71 27
Assets held for sale, net - 1,522
Deferred tax assets 4,147 3,623 Other income (expense), net (235) 76 724
Total Current Assets 91,748 96,240 Income before income taxes 32,693 43,892 44,068
Property, plant and equipment: Income tax provision 10,799 16,171 15,479
Land 1,328 1,328 Net income $ 21,894 $ 27,721 $ 28,589
Buildings 45,482 41,697 Earnings per share:
Machinery and equipment 100,559 90,213 Basic $ 1.30 $ 1.61 $ 1.63
Furniture and fixtures 6,356 7,225
Diluted $ 1.30 $ 1.60 $ 1.60
Total property, plant and equipment 153,725 140,463
Less: Accumulated depreciation 86,307 80,567 Cash dividends declared per common share $ 0.36 $ 0.36 $ 0.32
Property, plant and equipment, net 67,418 59,896 Weighted average shares outstanding:
Note receivable, long-term 1,111 75 Basic 16,799 17,187 17,560
Total assets $ 160,277 $ 156,211 Diluted 16,893 17,309 17,855
Liabilities and Stockholders’ Equity
Current liabilities:
The accompanying notes are an integral part of these statements.
Current maturities of long-term debt $ - $ 76
Accounts payable 15,046 8,524
Dividends payable - 3,100
Accrued liabilities 21,200 19,186
Total current liabilities 36,246 30,886
Deferred tax liabilities 7,292 7,326
Commitments and Contingencies
Stockholders’ equity:
Preferred stock, $.001 par value, 7,500,000
- -
shares authorized, no shares issued
Common stock, $.004 par value, 75,000,000 shares authorized, 16,505,653 and
68 71
17,214,979 issued and outstanding at December 31, 2010 and 2009, respectively
Additional paid in capital - 644
Accumulated other comprehensive income, net of tax - 1,077
Retained earnings 116,671 116,207
Total stockholders’ equity 116,739 117,999
Total liabilities and stockholders’ equity $ 160,277 $ 156,211

The accompanying notes are an integral part of these statements.

31 32
 2010 Annual Report

AAON, Inc., and Subsidiaries AAON, Inc., and Subsidiaries

Consolidated Statements of Stockholders’ Equity and Comprehensive Income Consolidated Statements of Cash Flows Years Ended December 31,
Accumulated
2010 2009 2008
Other
Common Stock Paid-In Comprehensive Retained (in thousands)
Shares Amount Capital Income Earnings Total Operating Activities
(in thousands) Net income $ 21,894 $ 27,721 $ 28,589
Balance at December 31, 2007 18,054* $ 73* $ – $ 1,942 $ 93,405 $ 95,420
Adjustments to reconcile net income to net cash provided
Comprehensive income: by operating activities:
Net income – – – – 28,589 28,589 Depreciation 9,886 9,061 9,412
Foreign currency translation Amortization of bond premiums 379 - -
– – – (1,164) – (1,164)
adjustment
Provision for losses on accounts receivable, net of adjustments (117) 10 547
Total comprehensive income 27,425 Provision for excess and obsolete inventories - 410 -
Stock options exercised and Share-based compensation 791 848 750
restricted stock awards vested, Excess tax benefits from stock options exercised and
including tax benefits restricted stock awards vested (356) (703) (1,613)
366 2 3,307 – – 3,309
Share-based compensation – – 750 – – 750 (Gain) loss on disposition of assets (73) (59) (27)
Stock repurchased and retired (1,211) (4) (3,519) – (21,238) (24,761) Unrealized gain on financial derivative asset (14) (2,200) -
Dividends – – – – (5,621) (5,621) Deferred income taxes (558) 3,531 160
Balance at December 31, 2008 17,209 71 538 778 95,135 96,522 Changes in assets and liabilities:
Accounts receivable (6,403) 5,495 (905)
Comprehensive income:
Inventories (4,814) 7,243 (4,779)
Net income – – – – 27,721 27,721
Prepaid expenses and other 431 (660) 13
Foreign currency translation
– – – 299 – 299 Financial derivative asset 2,214 - -
adjustment
Accounts payable 6,522 (6,334) 449
Total comprehensive income 28,020
Accrued liabilities 2,370 842 851
Stock options exercised and
Net cash provided by operating activities 32,152 45,205 33,447
restricted stock awards vested, 170 1 1,938 – – 1,939
including tax benefits Investing Activities
Share-based compensation – – 848 – – 848 Proceeds from sale of property, plant and equipment 136 135 17
Stock repurchased and retired (164) (1) (2,680) – (448) (3,129) Investment in certificates of deposit (2,745) - -
Dividends – – – – (6,201) (6,201) Maturities of certificates of deposit 1,242 - -
Balance at December 31, 2009 17,215 71 644 1,077 116,207 117,999 Investments held to maturity (12,018) - -
Maturities of investments 2,119 - -
Comprehensive income:
Proceeds from assets held for sale 460 - -
Net income – – – – 21,894 21,894
Capital expenditures (17,470) (9,774) (9,610)
Foreign currency translation Net cash used in investing activities (28,276) (9,639) (9,593)
– – – (1,077) 1,155 78
adjustment
Financing Activities
Total comprehensive income 21,972
Borrowings under revolving credit facility 20,839 9,972 46,865
Stock options exercised and Payments under revolving credit facility (20,839) (12,873) (43,964)
restricted stock awards vested, 113 – 1,524 – – 1,524
including tax benefits Borrowings (payments) of long-term debt (76) (136) (118)
Stock options exercised 1,168 1,236 1,696
Share-based compensation – – 791 – – 791
Excess tax benefits from stock options exercised and
Stock repurchased and retired (822) (3) (2,959) – (16,518) (19,480) restricted stock awards vested 356 703 1,613
Dividends – – – – (6,067) (6,067) Repurchase of stock (19,480) (3,129) (24,761)
Balance at December 31, 2010 16,506 $ 68 $ 0 $ 0 $ 116,671 $ 116,739 Cash dividends paid to stockholders (9,168) (5,874) (5,791)
Net cash used in financing activities (27,200) (10,101) (24,460)
* Reflects 3-for-2 stock split effective August 21, 2007
Effects of exchange rate on cash 78 (95) (4)
Net increase (decrease) in cash and cash equivalents (23,246) 25,370 (610)
The accompanying notes are an integral part of these statements.
Cash and cash equivalents, beginning of year 25,639 269 879
Cash and cash equivalents, end of year $ 2,393 $ 25,639 $ 269

33 The accompanying notes are an integral part of these statements. 34

 2010 Annual Report

AAON, Inc., and Subsidiaries Concentrations

Notes to Consolidated Financial Statements 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 5% of revenues in 2010. No customer
December 31, 2010 accounted for 10% of our sales during 2010, 2009 or 2008 or more than 5% of our accounts receivable balance at December 31, 2010, 2009
or 2008.

1. Business, Summary of Significant Accounting Policies and Other Financial Data Cash and Cash Equivalents
AAON, Inc. is a Nevada corporation which was incorporated on August 18, 1987. Our operating subsidiaries include AAON, Inc., an Oklahoma Cash and cash equivalents consist of bank deposits and highly liquid, interest-bearing money market funds with initial maturities of three
corporation and AAON Coil Products, Inc., a Texas corporation. The Consolidated Financial Statements include our accounts and the accounts months or less.
of our subsidiaries. Unless the context otherwise requires, references in this Annual Report to “AAON,” the “Company”, “we,” “us,” “our” or “ours”
refer to AAON, Inc., and our subsidiaries. Certificates of Deposit
We have $1.5 million of current assets in certificates of deposit as of December 31, 2010 with various maturities of less than one year. The
We are engaged in the manufacture and sale of air conditioning and heating equipment consisting of rooftop units, chillers, airhandling units, certificates of deposit bear interest ranging from 0.5% to 4.3% per annum. We did not invest in any certificates of deposit in 2009 or 2008.
make-up air units, heat recovery units, condensing units and coils. All significant intercompany accounts and transactions have been eliminated.
Investments Held to Maturity
Revenue Recognition
Our investments held to maturity include $9.5 million of current assets in corporate notes and bonds with maturities of less than one year. The
We recognize revenues from sales of products when the products are shipped and the title and risk of ownership pass to the customer. Final sales investments have moderate risk with S&P ratings ranging from AA+ to BBB-. We did not invest in any investments held to maturity in 2009
prices are fixed based on purchase orders. Sales allowances and customer incentives are treated as reductions to sales and are provided for based or 2008.
on historical experiences and current estimates. Our policy is to record the collection and payment of sales taxes through a liability account.
The following summarizes the amortized cost and estimated fair value of our investments held to maturity:
We present revenues 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
gross gross
a bundled group of products and services from the Representative and expects the Representative to fulfill the order. Only after the specifications amortized unrealized unrealized
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. cost(1) gain loss fair value
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 (in thousands)
by the Representative with the end user customer.
Current Assets:
We are responsible for billings and collections resulting from all sales transactions, including those initiated by our Representatives. The
Investments held to maturity $ 9,520 $ - $ - $ 9,520
Representatives submit the total order price to us for invoicing and collection. The total order price includes our minimum sales price and
an additional amount which may include both the Representatives’ fee and amounts due for additional products and services required by the Total $ 9,520 $ - $ - $ 9,520
customer. These additional products and services may include controls purchased from another manufacturer to operate the unit, start-up (1)
We evaluate for other-than-temporary impairments on a quarterly basis.
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.
Accounts Receivable
The Representatives do not provide us with a break-out of the amount of the total order price over the minimum sales price which includes
We grant credit to our customers and perform ongoing credit evaluations. We generally do not require collateral or charge interest. We establish
the Representatives’ fee and Third Party Product amounts (“Due to Representatives”). The Due to Representatives amount is paid only after all
an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, economic and market
amounts associated with the order are collected from the customer. The amount of payments to our Representatives was $51.4 million, $58.0
conditions and the age of the receivable. Accounts are considered past due when the balance has been outstanding for greater than ninety days.
million and $55.4 million for the years ended December 31, 2010, 2009, and 2008, respectively.
Past due accounts are generally written off against the allowance for doubtful accounts only after all collection attempts have been exhausted.
There are no concentrations of credit risk.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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, future 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 on a monthly basis. The most
significant estimates include the allowance for doubtful accounts, inventory reserves, warranty accrual, medical insurance accrual, share-based
compensation and the fair value of the derivative. Actual results could differ materially from those estimates.

35 36
 2010 Annual Report

Accounts receivable and the related allowance for doubtful accounts are as follows: Inventory balances at December 31, 2010 and 2009, and the related changes in the allowance for excess and obsolete inventories
for the three years ended December 31, 2010, 2009 and 2008, are as follows:
December 31, December 31,
2010 2009 2010 2009
(in thousands) (in thousands)
Accounts receivable $ 40,501 $ 34,157 Raw materials $ 28,560 $ 26,581
Less: Allowance for doubtful accounts (600) (776) Work in process 3,334 1,835
Total, net $ 39,901 $ 33,381 Finished goods 2,058 1,132
33,952 29,548
Less: Allowance for excess and obsolete inventories (350) (760)
Years Ended December 31,
Total, net $ 33,602 $ 28,788
2010 2009 2008
(in thousands) Years Ended December 31,
Allowance for doubtful accounts: 2010 2009 2008
Balance, beginning of period $ 776 $ 795 $ 407
(in thousands)
Provision for losses on accounts receivable 617 629 674
Allowance for excess and obsolete inventories:
Adjustments to provision (734) (630) (127)
Balance, beginning of period $ 760 $ 350 $ 350
Accounts receivable written off, net of recoveries (59) (18) (159)
Provision for excess and obsolete inventories 800 1,849 800
Balance, end of period $ 600 $ 776 $ 795
Adjustments to reserve (800) (1,439) (800)
Inventories written off (410) - -
Balance, end of period $ 350 $ 760 $ 350
Note Receivable
In September 2010, we sold our Canadian facility (see Note 11, Canadian Facility) and assumed a note receivable from one borrower secured by Financial derivative
the property. The $1.1 million, fifteen-year note receivable is based on a 4.0% interest rate with a $0.6 million balloon payment due in October
2025. The note calls for monthly combined interest and principal payments beginning in October 2010. Interest payments are recognized in We entered into a financial derivative instrument in the third quarter of 2009 with a large financial institution to mitigate our exposure to
interest income. volatility in copper prices. We monitored our financial derivative and the credit worthiness of the financial institution. We did not incur losses
due to counterparty non-performance. We do not use derivatives for speculative purposes.
We evaluate for impairment on a quarterly basis. We determine the note receivable to be impaired if we are uncertain of the collectability of the
note based on the contractual terms. The loan is secured through right of return on the property. The loan was current as of December 31, 2010. The financial derivative contract began settling monthly in January 2010 and concluded in December 2010. The contract was for a total of
The note receivable is not considered impaired and no impairment was recorded at December 31, 2010. There are no concentrations of credit risk 2,250,000 pounds of copper at $2.383 per pound. In March 2010, we locked in the settlement price of $3.3975 per pound for the remainder of
2010. Prior to locking in the settlement price, we would have been subject to gains which we would have recorded as a financial derivative asset if
Inventories the forward copper commodity prices increased and losses which we would have recorded as a financial derivative liability if they decreased. We
were in an unrealized gain position on the financial derivative asset during 2009 and 2010.
Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out (“FIFO”) method. 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. We settled the derivative at December 31, 2010 and recognized the following derivative assets at fair value in the Consolidated Balance Sheets for
the year ended December 31, 2009:

Type of Contract Income Statement Location amount

(in thousands)
Derivatives not designated as hedging instruments:
Commodity futures contract Derivative assets $ 2,200
Total Derivatives not designated as hedging instruments $ 2,200

We used COMEX index pricing to support our fair value calculation, which is a Level 2 input per the valuation hierarchy as the pricing is for
instruments similar but not identical to the contract we settled. We did not designate the financial derivative as a cash flow hedge. We recorded
changes in the financial derivative’s fair value in earnings based on mark-to-market accounting. We recorded adjustments of $14,000 and $2.2
million ($1.4 million after tax) to cost of sales from the unrealized gain on derivative assets at fair value in the Consolidated Statements of Income
for the years ended 2010 and 2009 respectively.

37 38
 2010 Annual Report

We recorded the following unrealized gain on our financial derivative asset in the Consolidated Statements of Income for the twelve months Accrued Liabilities
ended December 31, 2010 and 2009 respectively:
At December 31, accrued liabilities were comprised of the following:

Type of Contract Income Statement Location amount

2010 2009
(in thousands) (in thousands)
Financial derivative not designated as hedging instruments: Warranty $ 7,300 $ 7,200
Commodity futures contract Cost of sales $ 14 Due to Representatives 1
9,668 7,975

Total financial derivative not designated as hedging instruments $ 14 Payroll 2,398 1,633
Workers’ compensation 855 591
Medical self-insurance 734 1,410
Employee benefits and other 245 377
Type of Contract Income Statement Location amount Total $ 21,200 $ 19,186
(in thousands)
Derivatives not designated as hedging instruments:
1
Due to Representatives was previously described as Commissions. We will use the term Due to Representatives going forward
Commodity futures contract Cost of Sales $ 2,200 to better represent the true nature of these items, which is the excess of the total order price over the minimum sales price, which
Total Derivatives not designated as hedging instruments $ 2,200 includes both the Representatives’ fee and Third Party Products.

Warranties
Property, Plant and Equipment
A provision is made for estimated warranty costs at the time the related products are sold based upon the warranty period,
Property, plant and equipment are stated at cost. Maintenance and repairs, including replacement of minor items, are charged to expense as historical trends, new products and any known identifiable warranty issues. Warranty expense was $4.5 million, $4.8 million and
incurred; major additions to physical properties are capitalized. Depreciation expense on property, plant and equipment is recorded primarily $4.0 million for the years ended December 31, 2010, 2009 and 2008, respectively.
to cost of sales with an immaterial amount recorded to selling, general, and administrative expenses using the straight-line method over the
following estimated useful lives:
Changes in the warranty accrual during the years ended December 31, 2010, 2008 and 2007 are as follows:

Description Years 2010 2009 2008

(in thousands)
Buildings 10-40 Balance, beginning of the year $ 7,200 $ 6,589 $ 6,308
Machinery and Equipment 3-15 Payments made (4,405) (4,211) (3,608)
Furniture and Fixtures 2-5 Warranties issued 3,987 4,822 3,889
Adjustments related to changes in estimates 518 - -
Impairment of Long-Lived Assets Balance, end of period $ 7,300 $ 7,200 $ 6,589
We evaluate long-lived assets for impairment when events or changes in circumstances indicate, in management’s judgment, that the carrying
value of such assets may not be recoverable. When an indicator of impairment has occurred, management’s estimate of undiscounted cash flows In 2010, the provision for warranties was increased due to the introduction of the RQ product line and the implementation of
attributable to the assets is compared to the carrying value of the assets to determine whether impairment has occurred. If an impairment of the extended warranty provisions for the RQ series.
carrying value has occurred, the amount of the impairment recognized in the financial statements is determined by estimating the fair value of
the assets and recording a loss for the amount that the carrying value exceeds the estimated fair value. Management determined no impairment
was required during 2010, 2009 or 2008.

Commitments and Contractual Agreements

We are a party to several short-term, cancelable and noncancelable, 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 purchases and sales exemption.

In the normal course of business we expect to purchase 1.4 million pounds of aluminum in the form of legally binding commitments at $1.138
per pound or $1.6 million.

39 40
 2010 Annual Report

Earnings Per Share Profit Sharing Bonus Plan

Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during We maintain a discretionary profit sharing bonus plan under which 10% of pre-tax profit at each subsidiary is paid to eligible employees on a
the period. Diluted net income per share assumes the conversion of all potentially dilutive securities and is calculated by dividing net income by quarterly basis in order to reward employee productivity. Eligible employees are regular full-time employees who are actively employed and
the sum of the weighted average number of shares of common stock outstanding plus all potentially dilutive securities. Dilutive common shares working on the first day of the calendar quarter and remain continuously, actively employed and working on the last day of the quarter and who
consist primarily of stock options and restricted stock awards. work at least 80% of the quarter. Profit sharing expense was $3.8 million, $4.8 million and $5.1 million for the years ended December 31, 2010,
2009 and 2008, respectively.
The following table sets forth the computation of basic and diluted earnings per share:
Defined Contribution Plan - 401(k)
Years Ended, We sponsor a defined contribution benefit plan (“the Plan”). Eligible employees may make contributions in accordance with the Plan and IRS
2010 2009 2008 guidelines. In addition to the traditional 401(k), effective July 2010, eligible employees were given the option of making an after-tax contribution
to a Roth 401(k) or a combination of both. Effective May 30, 2005, the Plan was amended to provide for automatic enrollment and provided
(in thousands except share and per share data)
for an automatic increase to the deferral percentage at January 1st of each year and each year thereafter, unless the employee elects to decline
Numerator: the automatic increase and enrollment. Beginning with pay periods after May 30, 2005, the one year enrollment waiting period was waived.
Net income $ 21,894 $ 27,721 $ 28,589 Administrative expenses we paid for the plan were approximately $97,000, $81,000 and $93,000 for the years ended 2010, 2009 and 2008,
respectively.

Denominator:
After January 1, 2007, our matching increased to 50% of the employee’s salary deferral up to the first 9% of compensation. From January 1, 2006
Denominator for basic earnings per share – to December 31, 2006, we matched 50% of the employee’s salary deferral up to the first 7% of compensation. We contribute in the form of cash
16,798,777 17,186,930 17,560,295
Weighted average shares 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
Effect of dilutive stock options 94,151 122,038 294,568 of years two through six of employment in employer matching contributions. We made matching contributions of $1.7 million, $1.2 million and
Denominator for diluted earnings per share – $1.4 million in 2010, 2009 and 2008, respectively.
16,892,928 17,308,968 17,854,863
Weighted average shares
Fair Value Measurements

Earnings per share We follow the provisions of FASC Topic 820, Fair Value Measurements and Disclosures related to financial assets and liabilities that are being
measured and reported on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
Basic $ 1.30 $ 1.61 $ 1.63
orderly transaction between market participants in the principal market at the measurement date (exit price). We are required to classify fair
Diluted $ 1.30 $ 1.60 $ 1.60 value measurements in one of the following categories:

Level 1 inputs which are defined as quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the
Anti-dilutive shares 81,000 226,950 308,250
ability to access at the measurement date.
Weighted average exercise price $ 22.84 $ 15.64 $ 16.63
Level 2 inputs which are defined as inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either
directly or indirectly.

Advertising Level 3 inputs are defined as unobservable inputs for the assets or liabilities.
Advertising costs are expensed as incurred. Advertising expense was approximately $877,000, $761,000 and $635,000 for the years ended
December 31, 2010, 2009 and 2008, respectively. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of
the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and
Research and Development liabilities and their placement within the fair value hierarchy levels.

Research and development costs are expensed as incurred. Research and development expense was $3.6 million, $3.1 million and $2.6 million for
Financial Derivative Fair Value Measurements
the years ended December 31, 2010, 2009 and 2008, respectively.
Our financial derivative asset consisted of a forward purchase contract that was measured at fair value using the quoted prices in the COMEX
Shipping and Handling commodity markets which is the lowest level of input significant to measurement. The measurement is based on pricing for instruments similar
but not identical to the contract we settled. These prices were based upon regularly traded commodities on COMEX. The financial derivative
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
contract began settling monthly in January 2010 and ending in December 2010. The contract was for a total of 2,250,000 pounds of copper at
customer are recorded in revenues.
$2.383 per pound. We locked in the settlement price of $3.3975 per pound. We settled the derivative in December 2010.

41 42
 2010 Annual Report

We used COMEX index pricing to support our fair value calculation, which is a Level 2 input per the valuation hierarchy as the pricing is for 2. Supplemental Cash Flow Information
instruments similar but not identical to the contract we settled. We did not designate the financial derivative as a cash flow hedge. We recorded
Interest payments of approximately $45,000, $9,000 and $71,000 were made during the years ended December 31, 2010, 2009 and 2008,
changes in the financial derivative’s fair value in earnings based on mark-to-market accounting. For the year ended December 31, 2010, we
respectively. Payments for income taxes of $7.8 million, $10.0 million and $12.7 million were made during the years ended December 31, 2010,
recorded approximately $14,000 to cost of sales from the unrealized gain on our financial derivative asset at fair value in the Consolidated
2009 and 2008, respectively. We sold the $1.5 million asset held for sale and recorded a $1.1 million note receivable in September 2010. As of
Statements of Income.
December 31, 2010, we have received $0.4 million in cash payments related to the sale. Cash dividends of $9.2 million were paid in 2010. Cash
dividends $5.9 million were paid in 2009, and we accrued a liability for payment of $3.1 million of dividends in January 2010. Cash dividends of
The following table presents the fair value of our assets and liabilities measured at fair value on a recurring basis as of December 31, 2009 in the
$5.8 million were paid in 2008, and $2.8 million in dividends were declared and accrued as a liability in December 2008 for payment in January
Consolidated Balance Sheets:
2009.

Quoted Prices in
Active Markets for Identical Significant Other Significant
3. Revolving Credit Facility
Assets Observable Inputs Unobservable Inputs Our revolving credit facility provides for maximum borrowings of $15.2 million which is provided by the Bank of Oklahoma, National
Level 1 Level 2 Level 3 Total Association. Under the line of credit, there is one standby letter of credit totaling $0.9 million. Borrowings available under the revolving credit
(in thousands) facility at December 31, 2010, were $14.3 million. Interest on borrowings is payable monthly at the greater of 4.0% or LIBOR plus 2.5% (4.0% at
Assets: December 31, 2010). No fees are associated with the unused portion of the committed amount. We had no borrowings outstanding under the
revolving credit facility at December 31, 2010. We had no borrowings outstanding under the revolving credit facility at December 31, 2009. We
Derivative Assets $ - $ 2,200 $ - $ 2,200
had $2.9 million outstanding under the revolving credit facility at December 31, 2008.

At December 31, 2010, 2009 and 2008, we were in compliance with our financial ratio covenants. The covenants are related to our tangible
Subsequent Events net worth, total liabilities to tangible net worth ratio and working capital. At December 31, 2010 our tangible net worth was $117.0 million
which meets the requirement of being at or above $75.0 million. Our total liabilities to tangible net worth ratio was 1 to 3 which meets the
In February 2011, a severe snowstorm in the Tulsa area caused property damage to a roof over a portion of our manufacturing facility at 2425
requirement of not being above 2 to 1. Our working capital was $55.5 million which meets the requirement of being at or above $30.0 million.
South Yukon Ave. The company does not expect the repair of the property damage or the temporary interruption in our manufacturing processes
On July 30, 2010, we renewed the line of credit with a maturity date of July 30, 2011 with terms substantially the same as the previous agreement.
to have a material impact on our Consolidated Financial Statements.
Subsequently, as a requirement of our workers compensation insurance, our standby letter of credit was extended with an increase of $1.5 million
to $2.4 million and will expire December 31, 2011. We expect to renew our revolving credit agreement in July 2011. We do not anticipate that the
New Accounting Pronouncements
current situation in the credit market will impact our renewal.
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements (“ASU 2010-06”), which requires reporting entities to provide information about movements of assets among Levels 1 and 2 of 4. Debt
the three-tier fair value hierarchy. Separate disclosures need to be made of the amounts of significant transfers in and out of Level 1 and Level 2
Short-term debt at December 31, 2010 and 2009 consisted of notes payable totaling approximately $0 and $76,000 due in 2011 and 2010,
fair value measurements along with a description of the reason for the transfers. Also, disclosure of activity in Level 3 fair value measurements
respectively. In 2010 and 2009, respectively, the notes payable were due in monthly installments of $7,588, with an interest rate of 4.148%, related
needs to be made on a gross basis rather than as one net number. ASU 2010-06 also requires: (1) fair value measurement disclosures for each
to a computer capital lease.
class of assets and liabilities, and (2) disclosures about the valuation techniques and inputs used to measure fair value for both recurring and
nonrecurring fair value measurements, which are required for fair value measurements that fall in either Level 2 or Level 3. The new disclosures
and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for
5. Income Taxes
the Level 3 activity disclosures, which are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal We follow the provisions of FASC Topic 740, Income Taxes, including the liability method of accounting for income taxes, which provides that
years. Adoption of ASU 2010-06 did not have a material impact on our Consolidated Financial Statements. deferred tax liabilities and assets are based on the difference between the financial statement and income tax bases of assets and liabilities using
currently enacted tax rates.
In February 2010, the FASB issued ASU 2010-09, Subsequent Events (“ASU 2010-09”), which discontinues the requirement that entities disclose
the date through which they have evaluated subsequent events. ASU 2010-09 is effective upon issuance. We adopted ASU 2010-09 for reporting We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.
in the fourth quarter of 2009. Adoption of ASU 2010-09 did not have a material impact on our Consolidated Financial Statements.
The income tax provision consists of the following:

Years Ending December 31,

2010 2009 2008
(in thousands)
Current $ 10,241 $ 19,529 $ 16,163
Deferred 558 (3,358) (684)
$ 10,799 $ 16,171 $ 15,479

43 44
 2010 Annual Report

The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows: We apply the provisions of FASC Topic 718, Compensation – Stock Compensation. The compensation cost is based on the grant date fair value
Years Ending December 31, of stock options issued calculated using a Black-Scholes-Merton Option Pricing Model, or the grant date fair value of a restricted share less the
2010 2009 2008 present value of dividends.

(in thousands) We recognized approximately $446,000, $484,000 and $400,000 at December 31, 2010, 2009 and 2008, respectively, in pre-tax compensation
Federal statutory rate 35% 35% 35% expense related to stock options in the Consolidated Statements of Income. The total pre-tax compensation cost related to unvested stock options
State income taxes, net of federal benefit 4% 4% 3% not yet recognized as of December 31, 2010 is $1.1 million and is expected to be recognized over a weighted-average period of 2.3 years.

Other (6%) (2%) (3%)

The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for
33% 37% 35% expense recognition purposes for options granted during December 31, 2010, 2009 and 2008:

The “Other” tax rate primarily relates to the domestic production activity credit, certain domestic credits and a change in rate applied to deferred 2010 2009 2008
taxes.
Directors and Officers:

The tax effect of temporary differences giving rise to our deferred income taxes at December 31 is as follows: Expected dividend yield 1.53% 1.87% 1.72%

December 31, Expected volatility 45.37% 47.47% 45.16%

2010 2009 2008 Risk-free interest rate 2.63% 2.53% 3.08%

(in thousands) Expected life 7 years 7 years 7 years

Forfeiture rate 0% 0% 0%
Net current deferred assets and (liabilities) relating to:
Valuation reserves $ 342 $ 572 $ 446 Employees:
Warranty accrual 2,385 2,544 2,567 Expected dividend yield 1.53% 1.87% 1.72%
Other accruals 1,311 1,297 1,262 Expected volatility 45.29% 46.94% 44.47%
Other, net 109 (790) (40) Risk-free interest rate 2.44% 2.62% 3.05%
$ 4,147 $ 3,623 $ 4,235 Expected life 8 years 8 years 8 years
Net long-term deferred (assets) and liabilities relating to: Forfeiture rate 31% 31% 31%
Depreciation and amortization $ 7,796 $ 7,820 $ 7,247
The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate
NOL - - (2,265)
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
Share-based compensation (504) (494) (400) based on historical volatility of our stock over time periods equal to the expected life at grant date.
$ 7,292 $ 7,326 $ 4,582
The following is a summary of stock options outstanding as of December 31, 2010:
The total net operating loss (“NOL”) deferred tax asset related to AAON Canada was utilized in 2009. We file income tax returns in the U.S.
federal jurisdiction, and various state and foreign jurisdictions.
Options Outstanding Options Exercisable
There are no unrecognized tax benefits that if recognized would impact the effective tax rate at December 31, 2010. Therefore, there are no related
accruals for interest and penalties related to unrecognized tax benefits at December 31, 2010.
Number Weighted Number Weighted
Range of Outstanding at Weighted Average Average Aggregate Exercisable at Average
As of December 31, 2010, we are subject to U.S. Federal income tax examinations for the tax years 2007 through 2010, and to non-U.S. income
Exercise December 31, Remaining Exercise Intrinsic December 31, Exercise
tax examinations for the tax years of 2007 through 2010. In addition, we are subject to state and local income tax examinations for the tax years Prices 2010 Contractual Life Price Value 2010 Price
2006 through 2010.
9.68 – 10.82 68,900 3.18 $ 10.24 $ 17.97 68,900 $ 10.24
6. Share-Based Compensation
11.29 – 15.99 172,800 6.61 14.59 13.62 92,200 13.93
We have historically maintained a stock option plan for key employees, directors and consultants (“the 1992 Plan”). The 1992 Plan provided for
16.13 – 20.68 118,800 6.92 18.47 9.74 50,800 18.18
4.4 million shares of common stock to be issued under the plan. Under the terms of the plan, the exercise price of shares granted may not be less
than 85% of the fair market value at the date of the grant. Options granted to directors prior to May 25, 2004, vest one year from the date of grant 21.42 – 27.45 59,000 9.41 23.66 4.55 1,000 21.42
and are exercisable for nine years thereafter. Options granted to directors on or after May 25, 2004, vest one-third each year, commencing one Total 419,500 6.53 $ 16.25 $ 14.42 212,900 $ 13.79
year after the date of grant. All other options granted vest at a rate of 20% per year, commencing one year after date of grant, and are exercisable
during years 2-10.

On May 22, 2007, our stockholders adopted a Long-Term Incentive Plan (“LTIP”) which provides an additional 750,000 shares that can be
granted in the form of stock options, stock appreciation rights, restricted stock awards, performance units and performance awards. Since
inception of the Plan, non-qualified stock options and restricted stock awards have been granted with the same vesting schedule as the previous
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.

45 46
 2010 Annual Report

A summary of option activity under the plan is as follows: 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. The weighted average grant date fair value of restricted stock awards granted during 2010 and 2009 was $22.24 and $19.72 per share,
Weighted Weighted Average Aggregate respectively. We recognized approximately $344,000, $364,000 and $350,000 at December 31, 2010, 2009 and 2008, respectively in pre-tax
Average Remaining Intrinsic compensation expense related to restricted stock awards in the Consolidated Statements of Income. In addition, as of December 31, 2010,
Options Shares Exercise Price Contractual Term Value ($000) unrecognized compensation cost related to unvested restricted stock awards was approximately $431,000 which is expected to be recognized over
Outstanding at December 31, 2007 928,933 $ 9.47 a weighted average period of 1.6 years.

Granted 50,000 16.64

A summary of the unvested restricted stock awards is as follows:
Exercised (348,075) 4.87
Shares
Forfeited or Expired (51,282) 15.76
Unvested at January 1, 2010 33,250
Outstanding at December 31, 2008 579,576 12.29
Granted 14,850
Granted 93,000 15.92
Vested (19,000)
Exercised (164,013) 7.53
Forfeited (1,050)
Forfeited or Expired (48,050) 17.00
Unvested at December 31, 2010 28,050
Outstanding at December 31, 2009 460,513 14.22
Granted 81,000 22.70 FASC Topic 718, Compensation – Stock Compensation requires that cash flows from the exercise of stock options resulting from tax benefits in
Exercised (99,613) 11.73 excess of recognized cumulative compensation costs be classified as financing cash flows. During December 31, 2010, 2009 and 2008, the excess
(22,400) 18.02 tax benefits of stock options exercised and restricted stock awards vested was $0.4 million, $0.7 million and $1.6 million respectively.
Forfeited or Expired
Outstanding at December 31, 2010 419,500 16.25 6.53 $ 5,017 7. Stockholder Rights Plan
Exercisable at December 31, 2010 212,900 $ 13.79 4.89 $ 3,071
During 1999, the Board of Directors adopted a Stockholder Rights Plan (the “Plan”), which was amended in 2002. Under the Plan, stockholders
of record on March 1, 1999, received a dividend of one right per share of our Common Stock. Stock issued after March 1, 1999, contains a
The weighted average grant date fair value of options granted during 2010 and 2009 was $9.86 and $6.87, respectively. The total intrinsic value of notation incorporating the rights. Each right entitles the holder to purchase one one-thousandth (1/1,000) of a share of Series A Preferred Stock
options exercised during December 31, 2010, 2009 and 2008 was $2.4 million, $3.3 million and $6.4 million, respectively. The cash received from at an exercise price of $90. The rights are traded with our Common Stock. The rights become exercisable after a person has acquired, or a tender
options exercised during December 31, 2010, 2009 and 2008 was $1.2 million, $1.2 million and $1.7 million, respectively. The impact of these offer is made for, 15% or more of our Common Stock. If either of these events occurs, upon exercise the holder (other than a holder owning more
cash receipts is included in financing activities in the accompanying Consolidated Statements of Cash Flows. than 15% of the outstanding stock) will receive the number of shares of our Common Stock having a market value equal to two times the exercise
price.
A summary of the status of the unvested stock options is as follows:
The rights may be redeemed by us for $0.001 per right until a person or group has acquired 15% of our Common Stock. The rights expire on
Weighted Average Grant
Shares Date Fair Value August 20, 2012.

Unvested at January 1, 2010 216,200 $ 6.77 8. Stock Repurchase

Granted 81,000 9.86
On November 6, 2007, we began a stock buyback program, targeting repurchases of up to approximately 10% (1.8 million shares) of our
Vested (74,500) 6.41 outstanding stock from time to time in open market transactions. On May 12, 2010, we completed the stock buyback program. Through May 12,
Forfeited (16,100) 7.39 2010, we repurchased a total of 1,800,000 shares under this program for an aggregate price of $36,061,425, or an average price of $20.03 per share.
Unvested at December 31, 2010 206,600 $ 8.06 We purchased the shares at current market prices.

On May 17, 2010, the Board authorized a new stock buyback program, targeting repurchases of up to approximately 5% (approximately 850,000
The total grant date fair value of options vested during December 31, 2010 and 2009 was $0.5 million and $0.5 million, respectively. shares) of our outstanding stock from time to time in open market transactions. Through December 31, 2010, we repurchased a total of 478,493
shares under this program for an aggregate price of $11,509,433, or an average price of $24.05 per share. We purchased the shares at current
During 2007, the Compensation Committee of the Board of Directors authorized and issued restricted stock awards to directors and key market prices.
employees. The restricted stock award program offers the opportunity to earn shares of AAON Common Stock over time, rather than options
that give the right to purchase stock at a set price. Restricted stock awards granted to directors vest one-third each year. All other restricted stock On July 1, 2005, we entered into a stock repurchase arrangement by which employee participants in our 401(k) savings and investment plan are
awards vest at a rate of 20% per year. Restricted stock awards are grants that entitle the holder to shares of common stock subject to certain terms. entitled to have shares of AAON stock in their accounts sold to us to provide diversification of their investments. The maximum number of shares
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 to be repurchased is unknown under the program as the amount is contingent on the number of shares sold by employees. Through December
present value of dividends. 31, 2010, we repurchased 993,155 shares for an aggregate price of $18,042,789, or an average price of $18.17 per share. We purchased the shares at
current market prices.

47 48
 2010 Annual Report

On November 7, 2006, the Board of Directors authorized us to repurchase shares from certain directors and officers following their exercise of 12. Quarterly Results (Unaudited)
stock options. The maximum number of shares to be repurchased under the program is unknown as the amount is contingent on the number of
The following is a summary of the quarterly results of operations for the years ending December 31, 2010 and 2009:
shares sold. Through December 31, 2010, we repurchased 379,750 shares for an aggregate price of $7,894,792, or an average price of $20.79 per
share. We purchased the shares at current market prices.
Quarter Ended
March 31 June 30 September 30 December 31
9. Dividends
(in thousands, except per share data)
On February 14, 2006, the Board of Directors voted to initiate a semi-annual cash dividend. We initially paid semi-annual dividends of $0.20
2010
per share. The Board of Directors approved dividend payments of $0.16 per share related to the 3 for 2 stock split effective August 21, 2007. The
Net sales $ 49,309 $ 64,531 $ 64,886 $ 65,826
Board of Directors approved future dividend payments of $0.18 per share on May 19, 2009. Board approval is required to determine the date of
declaration and amount for each semi-annual dividend payment. Gross profit 12,994 15,506 12,497 14,191
Net income 5,118 5,821 5,173 5,782
Cash dividends of $9.2 million were paid in 2010. Cash dividends of $5.9 million were paid in 2009, and we accrued a liability for payment of $3.1 Earnings per share:
million of dividends in January 2010. Cash dividends of $5.8 million were paid in 2008, and $2.8 million in dividends were declared and accrued
Basic 0.30 0.34 0.31 0.35
as a liability in December 2008 for payment in January 2009.
Diluted 0.30 0.34 0.31 0.35
10. Commitments and Contingencies
Quarter Ended
We are subject to claims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability from these
claims and actions, if any, will not have a material effect on our results of operations or financial position. March 31 June 30 September 30 December 31
(in thousands, except per share data)
11. Canadian Facility 2009
On May 18, 2009 we announced the closure of our Canadian facility and filed a form 8-K to that effect. At the same time, we notified the 47 Net sales $ 63,965 $ 68,597 $ 58,492 $ 54,228
Canadian employees of the expected closure date. The actual closure date was at the end of September 2009. We accrued and charged to expense Gross profit 16,934 18,104 17,728* 14,779*
$0.3 million through December 31, 2009, in closure costs related to employee termination benefits in accordance with Canadian labor laws and
Net income 6,728 7,097 7,741* 6,155*
regulations. We incurred employee termination costs as well as costs to dispose of inventory. We accrued and charged to expense $0.4 million
Earnings per share:
as an adjustment to our inventory reserve in second quarter 2009 to account for inventory items we did not transfer to our other locations. The
following closure costs were included in income from continuing operations in the income statement and paid as of December 31, 2009: Basic 0.39 0.41 0.45* 0.36*
Diluted 0.39 0.41 0.45* 0.36*

Balance Additional Charged to

*Includes the impact of the unrealized gain from the derivative.
at 6/30/09 Accrual Expense
(in thousands)
Employee termination benefits $ 280 $ 26 $ 306
Inventory reserve adjustments 389 - 389
Total $ 669 $ 26 $ 695

We reclassified certain fixed assets to assets held for sale upon closure of our Canadian manufacturing operations in September 2009. The assets
consist of a building and land valued at the lower of cost or market. No additional depreciation expense was taken on the building as of
October 1, 2009.

In September 2010, we sold the building and land. The sale price was $1.5 million which was equivalent to the carrying value of the assets held for
sale on our Consolidated Balance Sheets. We assumed a note receivable from one borrower secured by the property. The $1.1 million, fifteen-year
note receivable is based on a 4.0% interest rate with a $0.6 million balloon payment due in October 2025. The note calls for monthly combined
interest and principal payments beginning in October 2010. Interest payments are recognized in interest income. The products previously
manufactured at the Canadian facility will be produced by the Tulsa, Oklahoma and Longview, Texas facilities in the future.

49 50
 2010 Annual Report

Exhibit 23.1 Exhibit 31.1

Consent of Independent Registered Public Accounting Firm

Certification
We have issued our reports dated, March 10, 2011, with respect to the consolidated financial statements and internal control over financial reporting
included in the Annual Report of AAON, Inc. on Form 10-K for the year ended December 31, 2010. We hereby consent to the incorporation by I, Norman H. Asbjornson, certify that:
reference of said reports in the Registration Statements of AAON, Inc. on Forms S-8 (File No. 333-52824, effective December 28, 2000 and File No.
333-151915, effective June 25, 2008). 1. I have reviewed this Annual Report on Form 10-K of AAON, Inc.

/s/ GRANT THORNTON LLP 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
Tulsa, Oklahoma to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
March 10, 2011 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.

Date: March 10, 2011 /s/ Norman H. Asbjornson

Norman H. Asbjornson
Chief Executive Officer

51 52
 2010 Annual Report

Exhibit 31.2 Exhibit 32.1

Certification CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,
I, Kathy I. Sheffield, certify that:
AS ADOPTED PURSUANT TO
1. I have reviewed this Annual Report on Form 10-K of AAON, Inc. SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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 In connection with the Annual Report of AAON, Inc. (the “Company”), on Form 10-K for the year ended December 31, 2010, as
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Norman H. Asbjornson, Chief Executive Officer of the
the period covered by this report; Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and our results of operations.
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: March 10, 2011 /s/ Norman H. Asbjornson

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under Norman H. Asbjornson
our supervision, to ensure that material information relating to the registrant, including our consolidated subsidiaries, is made Chief Executive Officer
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; Exhibit 32.2

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions CERTIFICATION PURSUANT TO
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on 18 U.S.C. SECTION 1350,
such evaluation;
AS ADOPTED PURSUANT TO
d) disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
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 In connection with the Annual Report of AAON, Inc. (the “Company”), on Form 10-K for the year ended December 31, 2010, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kathy I. Sheffield, Chief Financial Officer of the Company,
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent
functions): (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which (2) The information contained in the Report fairly presents, in all material respects, the financial condition and our results of operations.
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
March 10, 2011 /s/ Kathy I. Sheffield
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. Kathy I. Sheffield
Chief Financial Officer

Date: March 10, 2011 /s/ Kathy I. Sheffield

Kathy I. Sheffield
Chief Financial Officer

53 54
 Corporate
Officers Board of Directors Data
Transfer Agent and
Registrar
Progressive Transfer Company,
1981 East Murray-Holladay
Road, Suite 200,
Salt Lake City, Utah 84117

Norman H. Kathy I. Sheffield Robert G. Fergus David E. Knebel John B. Auditors

Asbjornson became treasurer of the has served as Vice has served as Vice Johnson, Jr. Grant Thornton LLP,
has served as President Company in 1999 and Vice President of the Company President of Sales for the has served as Secretary 2431 East 61st Street, Suite
and a director of the President in June of 2002. since 1988. Mr. Fergus Company since 2005. and a director of
500, Tulsa, Oklahoma 74136
Company since 1988. Ms. Sheffield previously has been in senior Mr. Knebel has been the Company since
Mr. Asbjornson has been served as Accounting management positions in the heating and air 1988. Mr. Johnson
in senior management Manager of the Company in the heating and air conditioning industry is a member of the
Back row (from left to right): A.H. McElroy, II, Jerry R. Levine, Jack E. Short, Paul K. Lackey, Jr.
positions in the heating from 1988 to 1999. conditioning industry for for over 40 years, holding firm of Johnson &
Front row (from left to right): John B. Johnson, Jr., Norman H. Asbjornson, Joseph E. Cappy General Counsel
and air conditioning over 40 years. positions in design, Jones which serves as Johnson & Jones,
industry for over 40 years. research, software General Counsel of the Norman H. Asbjornson A.H. McElroy, II was elected as a director
development, engineering, Company.
2200 Bank of America
President/CEO of the Company in 2007. From 1997 to
teaching, sales and senior present, Mr. McElroy has served as President Center, 15 West Sixth Street,
management. John B. Johnson, Jr. Secretary and CEO of McElroy Manufacturing, Inc., Tulsa, Oklahoma 74119
a manufacturer of fusion equipment and
Joseph E. Cappy was elected a director of fintube machines.
the Company in 2010. From 1997 to 2003, Investor Relations
Mr. Cappy served as the Chairman, President Paul K. Lackey, Jr. was elected as a Jerry Levine,
and CEO of DollarThrifty Automotive Group. director of the Company in 2007. From 2001 105 Creek Side Road,
From 1987 to 1997 he was Vice President of to present, Mr. Lackey has served as CEO
Chrysler Corporation. From 1982 to 1987 he and president of NORDAM, a privately held Mt. Kisco, New York 10549,
was President and CEO of American Motors aerospace company. Ph: 914-244-0292,
Corporation. Fax: 914-244-0295,
Jerry R. Levine has served as a director
Jack E. Short was elected to the Board of the Company since 2008. Since 1999, Mr. [email protected]
in July 2004 and is the Chairman of the Levine has provided investor and shareholder
Audit Committee. Mr. Short was employed relations services and advice to the Company. Executive Offices
by PriceWaterhouseCoopers for 29 years
and retired as the managing partner of the 2425 South Yukon Avenue,
Oklahoma practice in 2001. Tulsa, Oklahoma 74107

Common Stock
NASDAQ-AAON

55 56
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Norman Asbjornson Gene Boese Yong Cantrell Thomas Contreras Alvaro De Leon Robert Fergus Pedro Garza Billy Hawley, Jr. Alexander Ignatenkov En Khai Jose Lebron
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 Matthew Leeper Fernando Marroquin Silvestre Mendez Thawng Mung Tommy Owens, Jr Renu Pokhrel Maria Rodriguez Marcus Seip Khup Suan Suum Tuang George Webb
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Mariana Luna Dirk Mcclellan Matthew Morgan Robert Norfleet, Jr. Cesar Perez Jose Recio-Gomes Ruiz Sweetie Smith Cin Thawng George Verrett Thomas Wingo
Jose Macias Roy Mcconnell Myron Morgan Richard Norgren Sergio Perez Peggy Redden Luis Sanchez-Lopez Robert Smith, Ii Lang Thawng Teresa Victory Wanda Winkfield
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N Mai Wesley Mccowan, Jr. Shannon Morrison John Nutt Maurice Perkins Margaret Reeves Michael Sandor, Jr. Malcolm Soles Gerald Thomas Selina Viramontes Edward Wofford
Carlos Malone Marc Mccuin Desron Morrow Deangelo Oakley Deray Perry Alberto Rendon Jason Sanford Mercedes Soles Lee Thomas Cuong Vo John Wold
Jeffrey Maly Michael Mccuin Marcus Morrow Michael O’brien John Peters Rodolfo Renteria Cin Sang Maria Solis Cheryl Thomason Suong Vo Justin Wolf
Ciin Man Kathy Mcculloch Phillip Moss, Jr. Alexander Ofosu Ladrue Peters Svyatoslav Reshetov Thang Sang Nemisia Solis Shaun Thompson Tong Vo James Wolfe, Iv
Cing Man Loyd Mcdaniel Clayton Mote Rickey Ogans Heather Peterson Maria Reyes De Arroyo Thiam Sang Wiley Sorrels Tuan Thung Thu-Chung Thi Vu Curtis Wood
Maria Mancilla Randall Mcdaniel Darrell Mote John Ogle Daniel Peurifoy Thomas Reynolds Zam Sang Paula Sosa Ted Tiger Lian Vum Ronald Wood
Dal Mang Sharon Mcdaniel Stephanie Mounce Ruben Olan Garcia Randy Phelps Robert Riddell Agustin Santana Kevin Souvannasing Dustin Tiner Ning Vung Jim Wyrick
Gin Mang Stacy Mcdonald Gary Mount Maria Olivas De Nicholas Phifer Angela Rideout Reinaldo Santana Denney Sowder Gabriela Tirado Stephen Wakefield Linda Wyrick
Kam Mang James Mcelroy Eddie Moura, Jr. Torres Alexander Phillips Brett Riegel Wenceslao Santiago Ronnie Sparks William Tobar Diana Walker Ector Yancey, Jr.
Kham Mang Deborah Mcfarlin Do Muang Scotty Oliver Brandon Phillips Delmecio Riser Harold Santiago Torres Elda Spears Christopher Toles Joshua Walker Jack Yang
Khup Mang Joshua Mcgee Eric Mulliniks Anthony Oliveras Louis Phillips Stephen Riser Carlos Santiago Torrez Jameson Spires Breny Tornes Roderick Walker Morgan Yeubanks
Lian Mang Charles Mcgraw Gin L. Mung Eric Olson Michael Phillips James Ritchie Ignacio Santillan Michael Sportel Reinaldo Torres Gene Walker, Jr. Kathryn Young
Nang Mang Mark Mcillwain Gin S. Mung Sunday Omasere Mang Pi Hillary Rite Pedro Santillan Jennifer Spratling Jose Torres Gonzalez Mark Walkup Keith Young
Ngin Mang Kyle Mckelvey Kai Mung James O’neill, Jr. Thang Pi Genoveva Rivera David Sarant Richard Sprowles Heip Tran Barry Wall Patricia Young
Suan Mang Michael Mckenzie Kam Mung James O’neill, Sr. Tuang Pi John Roberts Richard Satterfield Jess St George Hieu Tran Leslie Wallis, Jr. Josh Youngs
Evelyn Manning Domingo Mcknight Khai Mung Benjamin Orme Thang K. Piang Benton Robinson Erick Sawyer Lawana Stane Tuong Tran Stacey Walters Nikolay Zagorodniy
Adam Mansfield Sean Mcniel Lang Mung Leticia Orona Thang L. Piang Michael L. Robinson William Scharosch Larry Stanton Marisol Trejo William Wamsley Lang Zah Lang
Georgina Manzo De Gina Means Lian Mung Margarita Orona Zam Piang Michael W. Robinson Bucklusio Schartz Lekitha Stephenson Martin Trevino-Saldana Gayle Ward Jorge Zaragoza
Barrera Brittaney Medders Pau Mung Glens Orona Moreno Pedro Pina-Valles Alex Rodriguez Richard Schumpert Russell Sterrett Mark Tribble Phillip Ward Derrick Zarnt
Paul Mapes Patricia Medina Pum Mung Margarita Orozco Jose Pineda Diana Rodriguez Brummett Scott Charles Stirens Ha Trinh Billy Warden, Ii Aurora Zavaleta
William Markwardt J Medina Olvera Suaan Mung Dehuizar Fernando Pineda, Jr. Edgar Rodriguez Dajuane Scott Brent Stockton Juanito Tronzon Perry Warner Luis Zepeda
Ma Marquez De- James Melda Suan G. Mung Carlos Orozco-Torres Clifford Pitchford Felipe Rodriguez Joseph Scott Michael Straub Juan Trujillo Vielka Washington Juan Zermeno
Gilbreath Manuel Melendez Suan S. Mung David Osborne Susanne Poindexter Gilberto Rodriguez Kenneth Scott Billy Strength Kam Tuang Steven Watkins Virginia Zermeno
Ana Marroquin Hernandez Thang Mung Jennifer Overmeyer Basant Pokhrel Hector Rodriguez Vivian Scroggins Brandon Strong Kham Tuang Demetria Webb

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 AAON, Inc. AAON Coil Products, Inc.
2425 South Yukon Avenue • Tulsa, OK 74107 203 Gum Springs Road • Longview, TX 75602
918.583.2266 • Fax: 918.583.6094 903.236.4403 • Fax: 903.236.4463

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