10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

[a] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

or

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to ____________________

Commission file number:  0-18953

AAON, INC.

(Exact name of registrant as specified in its charter) 

Nevada	87-0448736
(State or other jurisdiction	(IRS Employer
of incorporation or organization)	Identification No.)
2425 South Yukon, Tulsa, Oklahoma 74107
(Address of principal executive offices) (Zip Code)

(918) 583-2266

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes a                                 No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes a                                 No                                  Not Applicable 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer a	Accelerated filer
Non-accelerated filer	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes                                  No a

As of August 3, 2015, registrant had outstanding a total of 54,230,539 shares of its $.004 par value Common Stock.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

AAON, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
	June 30, 2015		December 31, 2014
Assets	(in thousands, except share and per share data)
Current assets:
Cash and cash equivalents	$	37,600	$	21,952
Certificates of deposit	6,240		6,098
Investments held to maturity at amortized cost	6,101		11,972
Accounts receivable, net	45,480		44,092
Income tax receivable	3,385		2,569
Note receivable	26		30
Inventories, net	47,182		37,618
Prepaid expenses and other	1,055		609
Deferred tax assets	5,837		6,143
Total current assets	152,906		131,083
Property, plant and equipment:
Land	2,233		2,233
Buildings	66,583		64,938
Machinery and equipment	134,745		127,968
Furniture and fixtures	10,581		10,388
Total property, plant and equipment	214,142		205,527
Less:  Accumulated depreciation	118,347		113,605
Property, plant and equipment, net	95,795		91,922
Certificates of deposit	480		5,280
Investments held to maturity at amortized cost	75		4,015
Note receivable	756		817
Total assets	$	250,012	$	233,117
Liabilities and Stockholders' Equity
Current liabilities:
Revolving credit facility	$	—	$	—
Accounts payable	10,513		11,370
Dividends payable	5,982		—
Accrued liabilities	30,755		31,343
Total current liabilities	47,250		42,713
Deferred revenue	833		1,006
Deferred tax liabilities	12,808		13,677
Donations	1,692		1,662
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued	—		—
Common stock, $.004 par value, 100,000,000 shares authorized, 54,263,876 and 54,041,829	217		216
issued and outstanding at June 30, 2015 and December 31, 2014, respectively
Additional paid-in capital	—		—
Retained earnings	187,212		173,843
Total stockholders' equity	187,429		174,059
Total liabilities and stockholders' equity	$	250,012	$	233,117

The accompanying notes are an integral part of these consolidated financial statements.

- 1 -

AAON, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
	Three Months Ended   June 30,					Six Months Ended   June 30,
	2015			2014		2015			2014
	(in thousands, except share and per share data)
Net sales	$	90,275		$	92,310	$	167,043		$	168,677
Cost of sales	63,158			64,434		118,128			118,955
Gross profit	27,117			27,876		48,915			49,722
Selling, general and administrative expenses	9,200			10,584		17,517			18,213
Gain on disposal of assets	(30		)	—		(25		)	(24		)
Income from operations	17,947			17,292		31,423			31,533
Interest income, net	29			71		73			140
Other income (expense), net	27			34		(48		)	13
Income before taxes	18,003			17,397		31,448			31,686
Income tax provision	6,873			6,034		11,919			10,501
Net income	$	11,130		$	11,363	$	19,529		$	21,185
Earnings per share:
Basic	$	0.21		$	0.21	$	0.36		$	0.38
Diluted	$	0.20		$	0.20	$	0.36		$	0.38
Cash dividends declared per common share:	$	0.11		$	0.09	$	0.11		$	0.09
Weighted average shares outstanding:
Basic	54,208,362			55,004,175		54,205,657			55,036,281
Diluted	54,669,763			55,568,212		54,714,604			55,603,979

The accompanying notes are an integral part of these consolidated financial statements.

- 2 -

AAON, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(Unaudited)
	Common Stock					Paid-in			Retained
	Shares		Amount			Capital			Earnings			Total
	(in thousands)
Balances at December 31, 2014	54,042		$	216		$	—		$	173,843		$	174,059
Net income	—		—			—			19,529			19,529
Stock options exercised and restricted	498		2			4,984			—			4,986
stock awards vested, including tax benefits
Share-based compensation	—		—			1,281			—			1,281
Stock repurchased and retired	(276	)	(1		)	(6,265		)	(178		)	(6,444		)
Dividends	—		—			—			(5,982		)	(5,982		)
Balances at June 30, 2015	54,264		$	217		$	—		$	187,212		$	187,429

The accompanying notes are an integral part of these consolidated financial statements.

- 3 -

AAON, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
	Six Months Ended   June 30,
	2015			2014
Operating Activities	(in thousands)
Net income	$	19,529		$	21,185
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	5,599			5,719
Amortization of bond premiums	106			389
Provision for losses on accounts receivable, net of adjustments	(102		)	(8		)
Provision for excess and obsolete inventories, net	59			156
Share-based compensation	1,281			984
Excess tax benefits from stock options exercised and restricted stock awards vested	(2,452		)	(680		)
Gain on disposition of assets	(25		)	(24		)
Foreign currency transaction loss	53			—
Interest income on note receivable	(16		)	(20		)
Deferred income taxes	(563		)	(1,961		)
Changes in assets and liabilities:
Accounts receivable	(1,286		)	(13,824		)
Income tax receivable	1,636			1,753
Inventories	(9,623		)	(4,624		)
Prepaid expenses and other	(446		)	(525		)
Accounts payable	(1,030		)	3,422
Deferred revenue	136			378
Accrued liabilities	(867		)	5,185
Net cash provided by operating activities	11,989			17,505
Investing Activities
Capital expenditures	(9,304		)	(5,903		)
Proceeds from sale of property, plant and equipment	30			29
Investment in certificates of deposits	—			(9,220		)
Maturities of certificates of deposits	4,658			3,904
Purchases of investments held to maturity	—			(5,955		)
Maturities of investments	9,201			6,539
Proceeds from called investments	504			1,269
Principal payments from note receivable	28			35
Net cash provided by (used in) investing activities	5,117			(9,302		)
Financing Activities
Stock options exercised	2,534			632
Excess tax benefits from stock options exercised and restricted stock awards vested	2,452			680
Repurchase of stock	(6,444		)	(5,116		)
Net cash used in financing activities	(1,458		)	(3,804		)
Net increase in cash and cash equivalents	15,648			4,399
Cash and cash equivalents, beginning of period	21,952			12,085
Cash and cash equivalents, end of period	$	37,600		$	16,484

The accompanying notes are an integral part of these consolidated financial statements.

- 4 -

AAON, Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

1. General

Basis of Presentation

The accompanying unaudited consolidated financial statements of AAON, Inc., a Nevada corporation, and our operating subsidiaries, all of which are wholly-owned, (collectively, the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements have not been audited by the Company's independent registered public accounting firm, except that the consolidated balance sheet at December 31, 2014 is derived from audited consolidated financial statements. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The financial statements reflect all adjustments (all of which are of a normal recurring nature) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for a full year. Certain disclosures have been condensed in or omitted from these consolidated financial statements. The accompanying unaudited financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. All intercompany balances and transactions have been eliminated in consolidation.

We are engaged in the manufacture and sale of air conditioning and heating equipment consisting of rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, self-contained units and coils.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP  requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because these estimates and assumptions require significant judgment, actual results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash flows. We reevaluate our estimates and assumptions as needed, but at a minimum on a quarterly basis. The most significant estimates include, but are not limited to, the allowance for doubtful accounts, inventory reserves, warranty accrual, worker's compensation accrual, medical insurance accrual, income taxes and share-based compensation. Actual results could differ materially from those estimates.

Accounting Policies

A comprehensive discussion of our critical accounting policies and management estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no significant changes in our critical accounting policies.

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASUs") to the FASB's Accounting Standards Codification.

We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements and notes thereto.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on January 1, 2017; however, in July 2015 the FASB approved a one-year deferral, deferring the effective date for us to January 1, 2018. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We do not expect ASU 2014-09 will have a material effect on our consolidated financial statements and notes thereto.

- 5 -

2.  Revenue Recognition

We recognize revenues from sales of products when 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 are provided for based on historical experiences and current estimates. Sales of our products are moderately seasonal with the peak period being July - November of each year.

In addition, we present revenues net of sales tax and net of certain payments to our independent manufacturer representatives (“Representatives”). Representatives are national companies that are in the business of providing HVAC units and other related products and services to customers. The end user customer orders a bundled group of products and services from the Representative and expects the Representative to fulfill the order. Only after the specifications are agreed to by the Representative and the customer, and the decision is made to use an AAON HVAC unit, will we receive notice of the order. We establish the amount we must receive for our HVAC unit (“minimum sales price”), but do not control the total order price that is negotiated by the Representative with the end user customer.

We are responsible for billings and collections resulting from all sales transactions, including those initiated by our Representatives. The Representatives submit the total order price to us for invoicing and collection. The total order price includes our minimum sales price and an additional amount which may include both the Representatives’ fee and amounts due for additional products and services required by the customer. These additional products and services may include controls purchased from another manufacturer to operate the unit, start-up services, and curbs for supporting the unit (“Third Party Products”). All are associated with the purchase of a HVAC unit but may be provided by the Representative or another third party. The Company is under no obligation related to Third Party Products.

The Representatives’ fee and Third Party Products amounts (“Due to Representatives”) are paid only after all amounts associated with the order are collected from the customer. The amount of payments to our Representatives were $14.1 million and $12.7 million for the three months ended June 30, 2015 and 2014, respectively. The amount of payments to our Representatives were $28.1 million and $24.6 million for the six months ended June 30, 2015 and 2014, respectively.

The Company also sells extended warranties on parts for various lengths of time ranging from 6 months to 10 years. Revenue for these separately priced warranties is deferred and recognized on a straight-line basis over the separately priced warranty period.

3.  Investments

Certificates of Deposit – We held $6.7 million and $11.4 million in certificates of deposit at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015, the certificates of deposit bear interest ranging from 0.35% to 0.60% per annum and have various maturities ranging from less than six months to approximately 13 months.

Investments Held to Maturity – Our investments held to maturity are comprised of $6.2 million of corporate notes and bonds with original maturities ranging from less than three months to approximately 13 months. The investments have moderate risk with S&P ratings ranging from AA- to BBB-.

- 6 -

We record the amortized cost basis and accrued interest of the corporate notes and bonds in the Consolidated Balance Sheets. We record the interest and amortization of bond premium to interest income in the Consolidated Statements of Income.

The following summarizes the amortized cost and estimated fair value of our investments held to maturity as of

June 30, 2015 and December 31, 2014:

	Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Fair Value
June 30, 2015:	(in thousands)
Current assets:
Investments held to maturity	$	6,101	$	—	$	(9	)	$	6,092
Non current assets:
Investments held to maturity	75		—		—			75
Total	$	6,176	$	—	$	(9	)	$	6,167
December 31, 2014:
Current assets:
Investments held to maturity	$	11,972	$	—	$	(7	)	$	11,965
Non current assets:
Investments held to maturity	4,015		—		(16		)	3,999
Total	$	15,987	$	—	$	(23	)	$	15,964

4.  Accounts Receivable

Accounts receivable and the related allowance for doubtful accounts are as follows:

	June 30, 2015			December 31, 2014
	(in thousands)
Accounts receivable	$	45,549		$	44,263
Less:  Allowance for doubtful accounts	(69		)	(171		)
Total, net	$	45,480		$	44,092

	Three months ended					Six months ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Allowance for doubtful accounts:	(in thousands)
Balance, beginning of period	$	112		$	63	$	171		$	193
Provisions for losses on accounts receivables, net of recoveries	(43		)	115		(94		)	(15		)
Accounts receivable written off	—			7		(8		)	7
Balance, end of period	$	69		$	185	$	69		$	185

- 7 -

5.  Inventories

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.

	June 30, 2015			December 31, 2014
	(in thousands)
Raw materials	$	43,647		$	34,153
Work in process	1,945			2,262
Finished goods	2,363			1,917
	47,955			38,332
Less:  Allowance for excess and obsolete inventories	(773		)	(714		)
Total, net	$	47,182		$	37,618

The related changes in the allowance for excess and obsolete inventories account are as follows:

	Three months ended				Six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Allowance for excess and obsolete inventories:	(in thousands)
Balance, beginning of period	$	755	$	583	$	714	$	579
Provisions for excess and obsolete inventories	18		152		59		156
Inventories written off	—		—		—		—
Balance, end of period	$	773	$	735	$	773	$	735

6.  Supplemental Cash Flow Information

	Three months ended					Six months ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Supplemental disclosures:	(in thousands)
Interest paid	$	—		$	—	$	—		$	—
Income taxes paid	$	6,643		$	9,850	10,846			10,533
Non-cash investing and financing activities:
Non-cash capital expenditures	(102		)	262		(173		)	264
Dividends declared	5,982			4,779		5,982			4,779

- 8 -

7.  Warranties

The Company has warranties with various terms ranging from 18 months for parts to 25 years for certain heat exchangers. The Company has an obligation to replace parts or service its products if conditions under the warranty are met. A provision is made for estimated warranty costs at the time the related products are sold based upon the warranty period, historical trends, new products and any known identifiable warranty issues.  

Changes in the warranty accrual are as follows:

	Three months ended						Six months ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Warranty accrual:	(in thousands)
Balance, beginning of period	$	8,105		$	7,448		$	8,130		$	7,352
Payments made	(1,117		)	(1,242		)	(2,003		)	(2,135		)
Provisions	1,104			1,569			1,965			2,558
Balance, end of period	$	8,092		$	7,775		$	8,092		$	7,775
Warranty expense:	$	1,104		$	1,569		$	1,965		$	2,558

8.  Accrued Liabilities

Accrued liabilities are as follows:

	June 30, 2015		December 31, 2014
	(in thousands)
Warranty	$	8,092	$	8,130
Due to representatives	9,510		10,188
Payroll	3,266		3,153
Profit sharing	2,029		2,016
Worker's compensation	322		535
Medical self-insurance	527		532
Customer prepayments	1,933		1,639
Donations	600		1,600
Employee benefits and other	4,476		3,550
Total	$	30,755	$	31,343

9.  Revolving Credit Facility

Our revolving credit facility provides for maximum borrowings of $30.0 million which is provided by BOKF, NA dba Bank of Oklahoma, formerly known as Bank of Oklahoma, N.A. ("Bank of Oklahoma"). Under the line of credit, there is one standby letter of credit totaling $0.8 million. Borrowings available under the revolving credit facility at June 30, 2015 were $29.2 million. Interest on borrowings is payable monthly at LIBOR plus 2.5%. No fees are associated with the unused portion of the committed amount. We had no outstanding balance under the revolving credit facility at June 30, 2015 and December 31, 2014. The termination date of the revolving credit facility is July 27, 2016.

As of June 30, 2015, we were in compliance with our financial covenants. These covenants require that we meet certain parameters related to our tangible net worth, total liabilities to tangible net worth ratio and working capital. At June 30, 2015, our tangible net worth was $187.4 million and met the requirement of being at or above $95.0 million. Our total liabilities to tangible net worth ratio was 0.33 to 1, and met the requirement of not being above 2 to 1. Our working capital was $105.7 million and met the requirement of being at or above $40.0 million.

- 9 -

10.  Income Taxes

Income tax expense for each of the three months ended June 30, 2015 and 2014 was $6.9 million, or 38.2% of pre-tax income, and $6.0 million, or 34.7% of pre-tax income, respectively. Income tax expense for each of the six months ended June 30, 2015 and 2014 was $11.9 million, or 37.9% of pre-tax income, and $10.5 million, or 33.1% of pre-tax income, respectively. The Company’s estimated annual 2015 effective tax rate is approximately 37.9%. This differs from the U.S. federal statutory rate of 35% due principally to items such as state and local income taxes, the federal domestic activities deduction and state income tax credits. The Company's income tax expense for the six months ended June 30, 2014 was decreased by $0.7 million due to a change in method of accounting for state investment credits to recognize them as each annual portion of the credit becomes available for use on tax returns.

We file income tax returns in the U.S., state and foreign income tax returns jurisdictions. We are subject to U.S. examinations for tax years 2011 to present, and to non-U.S. income tax examinations for the tax years of 2010 to present. In addition, we are subject to state and local income tax examinations for the tax years 2010 to present. The Company continues to evaluate its need to file returns in various state jurisdictions. Any interest or penalties would be recognized as a component of income tax expense.

11. Share-Based Compensation

We have historically maintained a stock option plan for key employees, directors and consultants (“the 1992 Plan”). The 1992 Plan provided for 14.9 million shares to be issued under the plan in the form of stock options. Under the terms of the 1992 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 and are exercisable for nine years thereafter. Options granted to directors on or after May 25, 2004 vest one-third each year, commencing one 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 3.3 million 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 LTIP, 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.

The compensation cost related to unvested stock options not yet recognized as of June 30, 2015 is $1.5 million and is expected to be recognized over a weighted-average period of 2.0 years.

The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during the six months ended June 30,2015 and 2014 using a Black Scholes Model:

	Six months ended
	June 30, 2015			June 30, 2014
Director and Officers:
Expected dividend rate	$	0.18		N/A
Expected volatility	44.14		%	N/A
Risk-free interest rate	1.97		%	N/A
Expected life (in years)	8			N/A
Employees:
Expected dividend rate	$	0.18		$	0.16
Expected volatility	44.14		%	45.77		%
Risk-free interest rate	2.05		%	2.40		%
Expected life (in years)	8			8

The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date.

- 10 -

The following is a summary of stock options vested and exercisable as of June 30, 2015:

Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Intrinsic Value (in thousands)
$4.31-$7.18	221,842	4.08	$	5.74	$	3,722
$7.44-$8.17	15,300	5.94	7.65		227
$8.65-$23.57	181,970	6.85	8.94		2,472
Total	419,112	5.35	$	7.20	$	6,421

The following is a summary of stock options vested and exercisable as of June 30, 2014:

Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Intrinsic Value (in thousands)
$3.21-$6.89	472,028	3.62	$	5.04	$	8,171
$7.13-$8.17	56,175	6.92	7.25		848
$8.65-$19.27	196,298	6.79	8.76		2,668
Total	724,501	4.73	$	6.22	$	11,687

A summary of option activity under the plans is as follows:

Options	Shares		Weighted Average Exercise Price
Outstanding at December 31, 2014	1,235,150		$	8.16
Granted	62,605		22.93
Exercised	(398,805	)	6.35
Forfeited or Expired	(17,260	)	11.82
Outstanding at June 30, 2015	881,690		$	9.95
Exercisable at June 30, 2015	419,112		$	7.20

The total intrinsic value of options exercised during the six months ended June 30,2015 and 2014 was $6.8 million and $1.3 million, respectively. The cash received from options exercised during the six months ended June 30,2015 and 2014 was $2.5 million and $0.6 million, respectively. The impact of these cash receipts is included in financing activities in the accompanying Consolidated Statements of Cash Flows.

Since 2007, as part of the LTIP, the Compensation Committee of the Board of Directors has authorized and issued restricted stock awards to directors and key employees. Restricted stock awards granted to directors vest one-third each year. All other restricted stock awards vest at a rate of 20% per year. The fair value of restricted stock awards is based on the fair market value of AAON, Inc. common stock on the respective grant dates, reduced for the present value of dividends.

These awards are recorded at their fair value on the date of grant and compensation cost is recorded using straight-line vesting over the service period. At June 30,2015, unrecognized compensation cost related to unvested restricted stock awards was approximately $5.4 million, which is expected to be recognized over a weighted average period of 2.2 years.

- 11 -

A summary of the unvested restricted stock awards is as follows:

Restricted stock	Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	414,846		$	16.76
Granted	114,538		22.32
Vested	(70,459	)	15.32
Forfeited	(15,512	)	18.54
Unvested at June 30, 2015	443,413		$	18.36

A summary of share-based compensation is as follows:

	Three months ended				Six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Grant date fair value of awards during the period:	(in thousands)
Options	$	—	$	68	$	657	$	188
Restricted stock	834		2,765		2,556		3,035
Total	$	834	$	2,833	$	3,213	$	3,223

Share-based compensation expense:
Options	$	246	$	312	$	398	$	520
Restricted stock	597		260		883		464
Total	$	843	$	572	$	1,281	$	984

Income tax benefit related to share-based compensation:
Options	$	1,160	$	160	$	2,236	$	484
Restricted stock	194		164		216		196
Total	$	1,354	$	324	$	2,452	$	680

- 12 -

12.  Earnings Per Share

Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share assumes the conversion of all potentially dilutive securities and is calculated by dividing net income by the sum of the weighted average number of shares of common stock outstanding plus all potentially dilutive securities. Dilutive common shares consist primarily of stock options and restricted stock awards.

	Three months ended				Six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
	(in thousands, except share and per share data)
Numerator:
Net income	$	11,130	$	11,363	$	19,529	$	21,185
Denominator:
Basic weighted average shares	54,208,362		55,004,175		54,205,657		55,036,281
Effect of dilutive stock options and restricted stock	461,401		564,037		508,947		567,698
Diluted weighted average shares	54,669,763		55,568,212		54,714,604		55,603,979
Earnings per share:
Basic	$	0.21	$	0.21	$	0.36	$	0.38
Diluted	$	0.20	$	0.20	$	0.36	$	0.38
Anti-dilutive shares:
Shares	145,136		18,445		134,625		19,448

13. Stockholders’ Equity

Stock Repurchase - On May 17, 2010, the Board authorized a stock buyback program, targeting repurchases of up to approximately 5% (approximately 2.9 million shares) of our outstanding stock from time to time in open market transactions. In May 2015, the Board authorized repurchases up to an additional 2.75 million shares, or a total of approximately 5.7 million shares. Since the inception of the program, we repurchased a total of approximately 2.6 million shares for an aggregate price of $31.5 million, or an average price of $11.97 per share. We purchased the shares at current market prices. No repurchases were made under the program for the six months ended June 30, 2015 and 2014.

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, Inc. stock in their accounts sold to the Company. The maximum number of shares to be repurchased is contingent upon the number of shares sold by employees. Through June 30,2015, we repurchased approximately 5.3 million shares for an aggregate price of $45.4 million, or an average price of $8.58 per share. We purchased the shares at current market prices. For each of the six months ended June 30,2015 and 2014, we repurchased approximately 0.3 million and 0.2 million shares, respectively.

Periodically, the Company repurchases shares of AAON, Inc. stock from certain of its directors and employees. The number of shares to be repurchased is contingent upon Board approval. Through June 30,2015, we repurchased approximately 1.8 million shares for an aggregate price of $14.5 million, or an average price of $7.94 per share. We purchased the shares at current market prices. For each of the six months ended June 30,2015 and 2014 we repurchased approximately 0.01 million and 0.05 million shares under this program.

Dividends - At the discretion of the Board of Directors, we pay semi-annual cash dividends. Board approval is required to determine the date of declaration and amount for each semi-annual dividend payment.

On May 2, 2014, the Board of Directors declared a regular semi-annual cash dividend of $0.09 per share, to stockholders of record at the close of business on June 12, 2014, the record date. Those dividends were paid on July 1, 2014.

On June 5, 2014, the Board of Directors declared a three-for-two stock split of the Company's common stock paid in the form of a stock dividend on July 16, 2014. Stockholders of record at the close of business on June 27, 2014 received one additional share for every two shares they held as of that date.

- 13 -

At a meeting of the Board of Directors on November 4, 2014, the Board declared a regular semi-annual cash dividend of $0.09 per share. The dividends were payable to shareholders of record at the close of business on December 2, 2014, the record date, and were paid on December 23, 2014.

On May 19, 2015, the Board of Directors declared a regular semi-annual cash dividend of $0.11 per share, to stockholders of record at the close of business on June 12, 2015, the record date. The dividends were paid on July 1, 2015.

14. Commitments and Contingencies

We are subject to various claims and legal actions that arise in the ordinary course of business. We closely monitor these claims and legal actions and frequently consult with our legal counsel to determine whether they may, when resolved, have a material adverse effect on our financial position, results of operations or cash flows and we accrue and/or disclose loss contingencies as appropriate. We have concluded that the likelihood is remote that the ultimate resolution of any pending litigation or claims will be material or have a material adverse effect on the Company's business, financial position, results of operations or cash flows.

We are party to short-term, cancellable and non-cancellable, fixed price contracts with major suppliers for the purchase of raw material and component parts. We expect to receive delivery of raw materials for use in our manufacturing operations. These contracts are not accounted for as derivatives instruments because they meet the normal purchases and sales exemption. We had no material contractual purchase agreements as of June 30, 2015 or December 31, 2014.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto, which are included in this report, and our audited consolidated financial statements and the notes thereto, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. This discussion contains or incorporates by reference “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, but rather are based on expectations, estimates, assumptions and projections about our industry, business and future financial results, based on information available at the time this report is filed with the SEC or, with respect to any document incorporated by reference, available at the time that such document was prepared. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those identified in the section entitled “Forward-Looking Statements” in this Item 2 of this Quarterly Report on Form 10-Q and in the section entitled “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. We do not assume any obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or otherwise, except as required by law.

Overview

We engineer, manufacture and market air conditioning and heating equipment consisting of rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, self-contained units and coils. These products are marketed and sold to retail, manufacturing, educational, lodging, supermarket, medical and other commercial industries. We market our products to all 50 states in the United States and certain provinces in Canada. Foreign sales were approximately $7.0 million of our total net sales for the six months just ended and $11.3 million of our sales during the same period of 2014.

Our business can be affected by a number of economic factors, including the level of economic activity in the markets in which we operate. The uncertainty of the economy has negatively impacted the commercial and industrial new construction markets. A further decline in economic activity could result in a decrease in our sales volume and profitability. Sales in the commercial and industrial new construction markets correlate closely to the number of new homes and buildings that are built, which in turn is influenced by cyclical factors such as interest rates, inflation, consumer spending habits, employment rates and other macroeconomic factors over which we have no control.

We sell our products to property owners and contractors through a network of manufacturers’ representatives and our internal sales force. The demand for our products is influenced by national and regional economic and demographic factors. The commercial and industrial new construction market is subject to cyclical fluctuations in that it is generally tied to housing starts, but has a lag factor of six to 18 months. Housing starts, in turn, are affected by such factors as interest rates, the state of the economy, population growth and the relative age of the population. When new construction is down, we emphasize the replacement market. The new construction market in 2014 through the second quarter of 2015 continued to be unpredictable and uneven. Thus, we continue to emphasize promotion of the benefits of AAON equipment to property owners in the replacement market.

- 14 -

The principal components of cost of goods sold are labor, raw materials, component costs, factory overhead, freight and engineering expense. The principal high volume raw materials used in our manufacturing processes are steel, copper and aluminum, and are obtained from domestic suppliers. We also purchase from domestic manufacturers certain components, including compressors, motors and electrical controls.

The price levels of our raw materials have remained relatively consistent the past few years, but the market continues to be volatile and unpredictable as a result of the uncertainty related to the U.S. economy and a weakening global economy. For the six months ended June 30, 2015, the price for aluminum and stainless steelincreased by approximately 12.5% and 2.8%, respectively, from the six months ended June 30, 2014. The price for copper and galvanized steel decreased by approximately 7.7% and 2.2%, respectively, for the same period.

In 2011, we began using an all aluminum microchannel condenser coil on our small rooftop unit product line and, in 2013, we began using this condenser coil in our larger rooftop product line as well. The condenser coil is the outdoor coil of a conventional air conditioning system. We expect to be using this type of condenser coil throughout the complete rooftop unit product line. This will reduce our copper tube usage in this component of the product, however, copper will remain a high volume raw material because of its use throughout the equipment.

We may attempt to limit the impact of price fluctuations on these materials by entering into cancellable and non-cancellable fixed price contracts with our major suppliers for periods of six to 18 months. We expect to receive delivery of raw materials from our fixed price contracts for use in our manufacturing operations.

The following are recent highlights and items that impacted our results of operations, cash flows and financial condition:

• Overall unit sales in 2015 have increased approximately 4.8% as compared to 2014.

• Our SG&A Expense as a percent of sales decreased for both the quarter and six months.

• Our portfolio of investments continues to mature, resulting in an increase in cash and cash equivalents of approximately $15.6 million in 2015.

Results of Operations

Three Months Ended June 30, 2015 vs. Three Months Ended June 30, 2014

Units Sold

	Three Months Ended   June 30,
	2015	2014
Rooftop Units	3,858	3,913
Split Systems	1,025	762
Outdoor Mechanical Rooms	14	38
Total Units	4,897	4,713

- 15 -

Net Sales

	Three Months Ended   June 30,
	2015		2014		Change			% Change
	(in thousands, except unit data)
Net sales	$	90,275	$	92,310	$	(2,035	)	(2.2	)%
Total units	4,897		4,713		184			3.9	%

The decrease in net sales was due to slight changes in the product mix of units sold.

Cost of Sales

	Three Months Ended   June 30,				Percent of Sales
	2015		2014		2015		2014
	(in thousands)
Cost of sales	$	63,158	$	64,434	70.0	%	69.8	%
Gross Profit	27,117		27,876		30.0	%	30.2	%

The principal components of cost of sales are labor, raw materials, component costs, factory overhead, freight out and engineering expense. The principal high volume raw materials used in our manufacturing processes are steel, copper and aluminum, which are obtained from domestic suppliers. Cost of sales decreased overall due to the corresponding decrease in sales.

Twelve-month average raw material cost per pound as of June 30:

	2015		2014		% Change
Copper	$	3.86	$	4.18	(7.7	)%
Galvanized Steel	$	0.45	$	0.46	(2.2	)%
Stainless Steel	$	1.47	$	1.43	2.8	%
Aluminum	$	1.71	$	1.52	12.5	%

- 16 -

Selling, General and Administrative Expenses

	Three Months Ended   June 30,					Percent of Sales
	2015			2014		2015		2014
	(in thousands)
Warranty	$	1,104		$	1,569	1.2	%	1.7	%
Profit Sharing	2,029			1,957		2.2	%	2.1	%
Salaries & Benefits	2,685			2,795		3.0	%	3.0	%
Stock Compensation	620			422		0.7	%	0.5	%
Advertising	190			504		0.2	%	0.5	%
Depreciation	237			217		0.3	%	0.2	%
Insurance	304			338		0.3	%	0.4	%
Professional Fees	360			411		0.4	%	0.4	%
Donations	(155		)	1,049		(0.2	)%	1.1	%
Other	1,826			1,322		2.0	%	1.4	%
Total SG&A	9,200			10,584		10.2	%	11.5	%

The overall decrease in SG&A was primarily due to the $1.0 million donation made in 2014, along with a decrease in warranty expense, offset by an increase in sales taxes to certain states.

Income Taxes

	Three Months Ended   June 30,				Effective Tax Rate
	2015		2014		2015		2014
	(in thousands)
Income tax provision	$	6,873	$	6,034	38.2	%	34.7	%

The Company’s estimated annual 2015 effective tax rate is expected to be approximately 37.9%. Based on the forecasted effective rate for 2015, the Company expects increases due to state income taxes and lower domestic manufacturing deductions compared to this same period in 2014.

Six Months Ended June 30, 2015 vs. Six Months Ended June 30, 2014

Units Sold

	Six Months Ended   June 30,
	2015	2014
Rooftop Units	7,181	7,011
Split Systems	1,618	1,341
Outdoor Mechanical Rooms	31	70
Total Units	8,830	8,422

- 17 -

Net Sales

	Six Months Ended   June 30,
	2015		2014		Change			% Change
	(in thousands, except unit data)
Net sales	$	167,043	$	168,677	$	(1,634	)	(1.0	)%
Total units	8,830		8,422		408			4.8	%

The decrease in net sales was due to an increase in overall units sold, offset by a decrease in the average price per unit.

Cost of Sales

	Six Months Ended   June 30,				Percent of Sales
	2015		2014		2015		2014
	(in thousands)
Cost of sales	$	118,128	$	118,955	70.7	%	70.5	%
Gross Profit	48,915		49,722		29.3	%	29.5	%

The principal components of cost of sales are labor, raw materials, component costs, factory overhead, freight out and engineering expense. The principal high volume raw materials used in our manufacturing processes are steel, copper and aluminum, which are obtained from domestic suppliers. Cost of sales decreased overall due to the corresponding decrease in sales.

Twelve-month average raw material cost per pound as of June 30:

	2015		2014		% Change
Copper	$	3.86	$	4.18	(7.7	)%
Galvanized Steel	$	0.45	$	0.46	(2.2	)%
Stainless Steel	$	1.47	$	1.43	2.8	%
Aluminum	$	1.71	$	1.52	12.5	%

- 18 -

Selling, General and Administrative Expenses

	Six Months Ended   June 30,					Percent of Sales
	2015			2014		2015		2014
	(in thousands)
Warranty	$	1,965		$	2,558	1.2	%	1.5	%
Profit Sharing	3,552			3,568		2.1	%	2.1	%
Salaries & Benefits	5,120			5,236		3.1	%	3.1	%
Stock Compensation	927			688		0.6	%	0.4	%
Advertising	392			630		0.2	%	0.4	%
Depreciation	466			439		0.3	%	0.3	%
Insurance	609			611		0.4	%	0.4	%
Professional Fees	1,002			974		0.6	%	0.6	%
Donations	(44		)	1,105		—	%	0.7	%
Other	3,528			2,404		2.1	%	1.4	%
Total SG&A	17,517			18,213		10.5	%	10.8	%

The overall decrease in SG&A was primarily due to a non-recurring $1.0 million donation made in 2014, along with a decrease in warranty expense and advertising, offset by an increase in stock compensation and sales taxes to certain states.

Income Taxes

	Six Months Ended   June 30,				Effective Tax Rate
	2015		2014		2015		2014
	(in thousands)
Income tax provision	$	11,919	$	10,501	37.9	%	33.1	%

The Company’s estimated annual 2015 effective tax rate is expected to be approximately 37.9%. The Company's income tax expense for the six months ended June 30, 2014 was decreased by $0.7 million due to a change in method of accounting for state investment credits to recognize them as each annual portion of the credit becomes available for use on tax returns. Based on the forecasted effective rate for 2015, the Company expects increases due to state income taxes and lower domestic manufacturing deductions compared to this same period in 2014.

Liquidity and Capital Resources

Our working capital and capital expenditure requirements are generally met through net cash provided by operations and the occasional use of our revolving credit facility.

Our cash and short-term investments increased $9.9 million from December 31, 2014 to June 30, 2015 and totaled $49.9 million at June 30, 2015; while long-term investments decreased $8.7 million, from $9.3 million to $0.6 million, respectively.

Under the line of credit, there was one standby letter of credit of $0.8 million as of June 30, 2015. At June 30, 2015, we have $29.2 million of borrowings available under the revolving credit facility. No fees are associated with the unused portion of the committed amount.

We had no outstanding balance under the revolving credit facility at June 30, 2015 and December 31, 2014. Interest on borrowings is payable monthly at LIBOR plus 2.5%. The termination date of the revolving credit facility is July 27, 2016.

- 19 -

At June 30, 2015, we were in compliance with all of the covenants under the revolving credit facility. We are obligated to comply with certain financial covenants under the revolving credit facility. These covenants require that we meet certain parameters related to our tangible net worth, total liabilities to tangible net worth ratio and working capital. At June 30, 2015, our tangible net worth was $187.4 million, which meets the requirement of being at or above $95.0 million. Our total liabilities to tangible net worth ratio was 0.33 to 1.0 which meets the requirement of not being above 2 to 1. Our working capital was $105.7 million, which meets the requirement of being at or above $40.0 million.

On May 2, 2014, the Board of Directors declared a regular semi-annual cash dividend of $0.09 per share, to stockholders of record at the close of business on June 12, 2014, the record date. Those dividends were paid on July 1, 2014.

On June 5, 2014, the Board of Directors declared a three-for-two stock split of the Company's common stock to be paid in the form of a stock dividend on July 16, 2014. Stockholders of record at the close of business on June 27, 2014 received one additional share for every two shares they held as of that date.

At a meeting of the Board of Directors on November 4, 2014, the Board declared a regular semi-annual cash dividend of $0.09 per share. The dividends were payable to shareholders of record at the close of business on December 2, 2014, the record date, and were paid on December 23, 2014.

On May 19, 2015, the Board of Directors declared a regular semi-annual cash dividend of $0.11 per share, to stockholders of record at the close of business on June 12, 2015, the record date. The dividends were paid on July 1, 2015.

We repurchased shares of stock from the open market, our employees’ 401(k) savings investment plan, option exercises of our directors and officers, and vested restricted stock from employees, directors and officers in the amount of $6.4 million for 0.3 million shares and $5.1 million for 0.3 million shares during the six months ended June 30, 2015 and 2014, respectively. We repurchased the shares at current market prices.

Based on historical performance and current expectations, we believe our cash and cash equivalents balance, the projected cash flows generated from our operations, our existing committed revolving credit facility (or comparable financing) and our expected ability to access capital markets will satisfy our working capital needs, capital expenditures and other liquidity requirements associated with our operations in 2015 and the foreseeable future.

- 20 -

Statement of Cash Flows

The following table reflects the major categories of cash flows for the six months ended June 30, 2015 and 2014. For additional details, see the Condensed Consolidated Statements of Cash Flows in the condensed consolidated financial statements.

	Six months ended June 30,
	2015			2014
	(in thousands)
Operating Activities
Net Income	$	19,529		$	21,185
Income statement adjustments, net	3,940			4,555
Changes in assets and liabilities:
Accounts receivable	(1,286		)	(13,824		)
Income tax receivable	1,636			1,753
Inventories	(9,623		)	(4,624		)
Prepaid expenses and other	(446		)	(525		)
Accounts payable	(1,030		)	3,422
Deferred revenue	136			378
Accrued liabilities	(867		)	5,185
Net cash provided by operating activities	11,989			17,505
Investing Activities
Capital expenditures	(9,304		)	(5,903		)
Purchases of investments	—			(15,175		)
Maturities of investments and proceeds from called investments	14,363			11,712
Other	58			64
Net cash provided by (used in) investing activities	5,117			(9,302		)
Financing Activities
Stock options exercised and excess tax benefits from stock options exercised and restricted stock awards vested	4,986			1,312
Repurchase of stock	(6,444		)	(5,116		)
Net cash used in financing activities	$	(1,458	)	$	(3,804	)

Cash Flows Provided by Operating Activities

The decrease in cash flows from operations is primarily due to purchases of inventories as the Company enters the high demand portion of the year; faster payment to vendors and representatives; and better collections resulting in days sales outstanding of approximately 46 days as compared to approximately 52 days for the same period last year.

Cash Flows Provided by (Used in) Investing Activities

Our portfolio of investments continues to mature with no reinvestment activity. Capital expenditures have increased for production growth. The capital expenditure program for 2015 is estimated to be approximately $22.0 million.

Cash Flows Used in Financing Activities

Options exercised by employees increased substantially as compared to last year, which increased the related excess tax benefits as well. Buyback activity was relatively consistent for both periods, with the change in amounts primarily driven by the increase in the stock price as compared to the same period last year.

- 21 -

Off-Balance Sheet Arrangements

We are not party to any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

We had no material contractual purchase agreements as of June 30, 2015.

Critical Accounting Policies

There have been no material changes in the Company’s critical accounting policies during the six months ended June 30, 2015.

Recent Accounting Pronouncements

See Note 1 of the Notes to the Consolidated Financial Statements for a discussion of recent accounting pronouncements.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will”, “should”, and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause results to differ materially from those in the forward-looking statements include (1) the timing and extent of changes in raw material and component prices, (2) the effects of fluctuations in the commercial/industrial new construction market, (3) the timing and extent of changes in interest rates, as well as other competitive factors during the year, and (4) general economic, market or business conditions.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Commodity Price Risk

We are exposed to volatility in the prices of commodities used in some of our products and we may use fixed price cancellable and non-cancellable contracts with our major suppliers for periods of six to 18 months to manage this exposure.

Item 4.Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer with the oversight of the Audit Committee, regarding the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of the end of the period covered by this Quarterly Report, that our disclosure controls and procedures were effective.

(c) Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

- 22 -

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are subject to various claims and legal actions that arise in the ordinary course of business. We closely monitor these claims and legal actions and frequently consult with our legal counsel to determine whether they may, when resolved, have a material adverse effect on our financial position, results of operations, or cash flows and we accrue and/or disclose loss contingencies as appropriate. We have concluded that the likelihood is remote that the ultimate resolution of any pending litigation or claims will be material or have a material adverse effect on the Company's business, financial position, results of operations or cash flows.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014. The risk factors described in our Annual Report could materially adversely affect our business, financial condition or future results. There have been no material changes to the risk factors included in our 2014 Annual Report.

Item 2.  Unregistered Sales of Equity and Securities and Use of Proceeds.

On May 17, 2010, the Board authorized a stock buyback program, targeting repurchases of up to approximately 5% (2.9 million shares) of the Company's outstanding stock. In May 2015, the Board authorized repurchases up to an additional 2.75 million shares, or a total of approximately 5.7 million shares. We repurchased a total of approximately 2.6 million shares under this program for an aggregate price of $31.5 million, or an average price of $11.97 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, Inc. stock in their accounts sold to the Company. The maximum number of shares to be repurchased is contingent upon the number of shares sold by employees. Through June 30, 2015, we repurchased approximately 5.3 million shares for an aggregate price of $45.4 million, or an average price of $8.58 per share. We purchased the shares at current market prices.

Periodically, the Company repurchases shares of AAON, Inc. stock from certain of its directors and employees. The number of shares to be repurchased is contingent upon Board approval. Through June 30, 2015, we repurchased approximately 1.8 million shares for an aggregate price of $14.5 million, or an average price of $7.94 per share. We purchased the shares at current market prices.

Repurchases during the second quarter of 2015 were as follows:

	ISSUER PURCHASES OF EQUITY SECURITIES
Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may yet be Purchased under the Plans or Programs
April 2015	30,621	$	24.13	30,621	—
May 2015	40,259	23.71		40,259	—
June 2015	73,974	23.63		73,974	—
Total	144,854	$	23.76	144,854	—

Item 3. Defaults Upon Senior Securities.

None.

Item 4.  Mine Safety Disclosures.

Not applicable.

Item 4A.  Submission of Matters to a Vote of Security Holders.

- 23 -

On May 19, 2015, the Company held its Annual Meeting. At the Annual Meeting, the Company's stockholders (i) elected each of the nominees listed below to the Company's Board of Directors to serve until the 2018 Annual Meeting of Stockholders or until their respective successors are elected and qualified and (ii) ratified the selection of Grant Thornton, LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2015. The final results for the votes regarding each proposal are set forth below.

(i) The voting results with respect to the election of each director were as follows:

Nominees:	For	Against	Withheld	Broker Non-Votes
Norman H. Asbjornson	46,392,971	—	1,056,025	4,488,334
Gary D. Fields	47,022,592	—	426,404	4,488,334

(ii) The voting results with respect to the ratification of the selection of Grant Thornton, LLP as the Company's

independent registered public accounting firm for the fiscal year ending December 31, 2015 were as follows:

For	Against	Abstain	Broker Non-Votes
50,561,098	1,305,590	70,642	—

Item 5.  Other Information.

On May 19, 2015, the Board of Directors declared a regular semi-annual cash dividend of $0.11 per share, to stockholders of record at the close of business on June 12, 2015, the record date. The dividends were paid on July 1, 2015.

Item 6.  Exhibits.

(a)          Exhibits
(i)	Exhibit 31.1	Section 302 Certification of CEO
(ii)	Exhibit 31.2	Section 302 Certification of CFO
(iii)	Exhibit 32.1	Section 1350 Certification of CEO
(iv)	Exhibit 32.2	Section 1350 Certification of CFO

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AAON, INC.
Dated: August 6, 2015	By:	/s/ Norman H. Asbjornson
		Norman H. Asbjornson   President/CEO
Dated: August 6, 2015	By:	/s/ Scott M. Asbjornson
		Scott M. Asbjornson Chief Financial Officer

- 24 -

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Norman H. Asbjornson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AAON, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

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; and

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; and

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:	August 6, 2015
		/s/ Norman H. Asbjornson
		Norman H. Asbjornson
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Scott M. Asbjornson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AAON, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

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; and

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; and

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:	August 6, 2015
		/s/ Scott M. Asbjornson
		Scott M. Asbjornson
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AAON, Inc. (the “Company”), on Form 10-Q for the quarter ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Norman H. Asbjornson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

August 6, 2015
	/s/ Norman H. Asbjornson
	Norman H. Asbjornson
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AAON, Inc. (the “Company”), on Form 10-Q for the quarter ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott M. Asbjornson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)           The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

August 6, 2015
	/s/ Scott M. Asbjornson
	Scott M. Asbjornson
	Chief Financial Officer

XML

Warranties (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance, beginning of period	$ 8,105	$ 7,448	$ 8,130	$ 7,352
Payments made	(1,117)	(1,242)	(2,003)	(2,135)
Provisions	1,104	1,569	1,965	2,558
Balance, end of period	8,092	7,775	8,092	7,775
Warranty expense	$ 1,104	$ 1,569	$ 1,965	$ 2,558

XML

Share-Based Compensation (Summary of Grant Date Fair Value of Awards) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options	$ 0	$ 68	$ 657	$ 188
Restricted stock	834	2,765	2,556	3,035
Total	$ 834	$ 2,833	$ 3,213	$ 3,223

XML

Share-Based Compensation (Summary of Stock Option Activity) (Details) - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Shares [Roll Forward]
Outstanding, beginning of period (in shares)	1,235,150
Granted (in shares)	62,605
Exercised (in shares)	(398,805)
Forfeited or Expired (in shares)	(17,260)
Outstanding, end of period (in shares)	881,690
Exercisable, end of period (in shares)	419,112	724,501
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning of period (weighted average exercise price)	$ 8.16
Granted (weighted average exercise price)	22.93
Exercised (weighted average exercise price)	6.35
Forfeited or Expired (weighted average exercise price)	11.82
Outstanding, end of period (weighted average exercise price)	9.95
Exercisable, end of period (weighted average exercise price)	$ 7.20	$ 6.22

XML

Accounts Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Receivables [Abstract]
Accounts receivable	$ 45,549	$ 44,263
Less: Allowance for doubtful accounts	(69)	(171)
Total, net	$ 45,480	$ 44,092

XML

Supplemental Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2015

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

	Three months ended					Six months ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Supplemental disclosures:	(in thousands)
Interest paid	$	—		$	—	$	—		$	—
Income taxes paid	$	6,643		$	9,850	10,846			10,533
Non-cash investing and financing activities:
Non-cash capital expenditures	(102		)	262		(173		)	264
Dividends declared	5,982			4,779		5,982			4,779

XML

Share-Based Compensation (Summary of Income Tax Benefit Related to Share-Based Compensation) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options	$ 1,160	$ 160	$ 2,236	$ 484
Restricted stock	194	164	216	196
Total	$ 1,354	$ 324	$ 2,452	$ 680

XML

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Change in Accounting Estimate [Line Items]
Income tax expense (benefit)	$ 6,873	$ 6,034	$ 11,919	$ 10,501
Effective tax rate	38.20%	34.70%	37.90%	33.10%
Expected effective income tax rate for the year			37.90%
Statutory federal tax rate			35.00%
Investment Tax Credit Carryforward [Member]
Change in Accounting Estimate [Line Items]
Income tax expense (benefit)				$ (700)

XML

Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Supplemental disclosure:
Interest paid	$ 0	$ 0	$ 0	$ 0
Income taxes paid	6,643	9,850	10,846	10,533
Non-cash investing and financing activities:
Non-cash capital expenditures	(102)	262	(173)	264
Dividends declared	$ 5,982	$ 4,779	$ 5,982	$ 4,779

XML

Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions					3 Months Ended		6 Months Ended		61 Months Ended	104 Months Ended	120 Months Ended
	May. 19, 2015	Nov. 04, 2014	May. 02, 2014	May. 17, 2010	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2015	May. 18, 2015
Schedule of Shareholders' Equity [Line Items]
Cash dividends declared per common share					$ 0.11	$ 0.09	$ 0.11	$ 0.09
Dividend Declared [Member]
Schedule of Shareholders' Equity [Line Items]
Cash dividends declared per common share	$ 0.11	$ 0.09	$ 0.09
2010 Stock Repurchase Program
Schedule of Shareholders' Equity [Line Items]
Stock repurchase program authorized percentage				5.00%
Stock repurchase program amount authorized (in shares)	5,700,000			2,900,000.0								2,750,000.00
Stock repurchased during period (in shares)									2,600,000
Aggregate price of shares repurchased since inception									$ 31.5
Average price of shares repurchased since inception (per share)									$ 11.97
2005 401(k) Stock Repurchase Program
Schedule of Shareholders' Equity [Line Items]
Stock repurchased during period (in shares)							300,000	200,000			5,300,000
Aggregate price of shares repurchased since inception											$ 45.4
Average price of shares repurchased since inception (per share)											$ 8.58
2006 Director and Officer Repurchase Program
Schedule of Shareholders' Equity [Line Items]
Stock repurchased during period (in shares)						50,000	10,000			1,800,000
Aggregate price of shares repurchased since inception										$ 14.5
Average price of shares repurchased since inception (per share)										$ 7.94

XML

Share-Based Compensation (Summary of Unvested Restricted Stock Awards) (Details) - 6 months ended Jun. 30, 2015 - $ / shares	Total
Shares [Roll Forward]
Unvested, beginning of period (in shares)	414,846
Granted (in shares)	114,538
Vested (in shares)	(70,459)
Forfeited (in shares)	(15,512)
Unvested, end of period (in shares)	443,413
Weighted Average Grant Date Fair Value [Roll Forward]
Unvested, beginning of period (weighted average grant date fair value)	$ 16.76
Granted (weighted average grant date fair value)	22.32
Vested (weighted average grant date fair value)	15.32
Forfeited (weighted average grant date fair value)	18.54
Unvested, end of period (weighted average grant date fair value)	$ 18.36

XML

Investments

6 Months Ended

Jun. 30, 2015

Investments [Abstract]

Investments

Investments

Certificates of Deposit – We held $6.7 million and $11.4 million in certificates of deposit at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015, the certificates of deposit bear interest ranging from 0.35% to 0.60% per annum and have various maturities ranging from less than six months to approximately 13 months.

Investments Held to Maturity – Our investments held to maturity are comprised of $6.2 million of corporate notes and bonds with original maturities ranging from less than three months to approximately 13 months. The investments have moderate risk with S&P ratings ranging from AA- to BBB-.

We record the amortized cost basis and accrued interest of the corporate notes and bonds in the Consolidated Balance Sheets. We record the interest and amortization of bond premium to interest income in the Consolidated Statements of Income.

The following summarizes the amortized cost and estimated fair value of our investments held to maturity as of

June 30, 2015 and December 31, 2014:

	Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Fair Value
June 30, 2015:	(in thousands)
Current assets:
Investments held to maturity	$	6,101	$	—	$	(9	)	$	6,092
Non current assets:
Investments held to maturity	75		—		—			75
Total	$	6,176	$	—	$	(9	)	$	6,167
December 31, 2014:
Current assets:
Investments held to maturity	$	11,972	$	—	$	(7	)	$	11,965
Non current assets:
Investments held to maturity	4,015		—		(16		)	3,999
Total	$	15,987	$	—	$	(23	)	$	15,964

XML

Share-Based Compensation (Narrative) (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized pre-tax compensation cost	$ 1.5
Weighted average recognition period (in years)	2 years
Total intrinsic value of options exercised during period	$ 6.8	$ 1.3
Cash received from options exercised during period	$ 2.5	$ 0.6
1992 Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock authorized to be issued under plan (in shares)	14,900,000
Exercise price of shares granted may not be less than fair market value (percentage)	85.00%
2007 Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock authorized to be issued under plan (in shares)	3,281,250
Exercise price of shares granted may not be less than fair market value (percentage)	100.00%
Unrecognized pre-tax compensation cost	$ 5.4
Weighted average recognition period (in years)	2 years 2 months 12 days
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercisable period	2 years
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercisable period	10 years
Restricted Stock [Member] | 2007 Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting period	20.00%
All Other Options Granted [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting period	20.00%
Director [Member] | Options Granted Prior to May 25, 2004 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Exercisable period	9 years
Director [Member] | Options Granted on or after May 25, 2004 [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual vesting period	33.33%

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share

	Three months ended				Six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
	(in thousands, except share and per share data)
Numerator:
Net income	$	11,130	$	11,363	$	19,529	$	21,185
Denominator:
Basic weighted average shares	54,208,362		55,004,175		54,205,657		55,036,281
Effect of dilutive stock options and restricted stock	461,401		564,037		508,947		567,698
Diluted weighted average shares	54,669,763		55,568,212		54,714,604		55,603,979
Earnings per share:
Basic	$	0.21	$	0.21	$	0.36	$	0.38
Diluted	$	0.20	$	0.20	$	0.36	$	0.38
Anti-dilutive shares:
Shares	145,136		18,445		134,625		19,448

XML

Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Option Assumptions

The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during the six months ended June 30,2015 and 2014 using a Black Scholes Model:

	Six months ended
	June 30, 2015			June 30, 2014
Director and Officers:
Expected dividend rate	$	0.18		N/A
Expected volatility	44.14		%	N/A
Risk-free interest rate	1.97		%	N/A
Expected life (in years)	8			N/A
Employees:
Expected dividend rate	$	0.18		$	0.16
Expected volatility	44.14		%	45.77		%
Risk-free interest rate	2.05		%	2.40		%
Expected life (in years)	8			8

Summary of Stock Options Outstanding

The following is a summary of stock options vested and exercisable as of June 30, 2015:

Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Intrinsic Value (in thousands)
$4.31-$7.18	221,842	4.08	$	5.74	$	3,722
$7.44-$8.17	15,300	5.94	7.65		227
$8.65-$23.57	181,970	6.85	8.94		2,472
Total	419,112	5.35	$	7.20	$	6,421

The following is a summary of stock options vested and exercisable as of June 30, 2014:

Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Intrinsic Value (in thousands)
$3.21-$6.89	472,028	3.62	$	5.04	$	8,171
$7.13-$8.17	56,175	6.92	7.25		848
$8.65-$19.27	196,298	6.79	8.76		2,668
Total	724,501	4.73	$	6.22	$	11,687

Summary of Stock Option Activity

A summary of option activity under the plans is as follows:

Options	Shares		Weighted Average Exercise Price
Outstanding at December 31, 2014	1,235,150		$	8.16
Granted	62,605		22.93
Exercised	(398,805	)	6.35
Forfeited or Expired	(17,260	)	11.82
Outstanding at June 30, 2015	881,690		$	9.95
Exercisable at June 30, 2015	419,112		$	7.20

Summary of Unvested Restricted Stock Awards

A summary of the unvested restricted stock awards is as follows:

Restricted stock	Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	414,846		$	16.76
Granted	114,538		22.32
Vested	(70,459	)	15.32
Forfeited	(15,512	)	18.54
Unvested at June 30, 2015	443,413		$	18.36

Summary of Grant Date Fair Value of Awards During Period

A summary of share-based compensation is as follows:

	Three months ended				Six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Grant date fair value of awards during the period:	(in thousands)
Options	$	—	$	68	$	657	$	188
Restricted stock	834		2,765		2,556		3,035
Total	$	834	$	2,833	$	3,213	$	3,223

Summary of Share-Based Compensation Expense

Share-based compensation expense:
Options	$	246	$	312	$	398	$	520
Restricted stock	597		260		883		464
Total	$	843	$	572	$	1,281	$	984

Summary of Income Tax Benefit Related to Share-Based Compensation

Income tax benefit related to share-based compensation:
Options	$	1,160	$	160	$	2,236	$	484
Restricted stock	194		164		216		196
Total	$	1,354	$	324	$	2,452	$	680

XML

Share-Based Compensation (Summary of Assumptions) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Director and Officers [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend rate	$ 0.18
Expected volatility	44.14%
Risk-free interest rate	1.97%
Expected life	8 years
2007 Long-Term Incentive Plan Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend rate	$ 0.18	$ 0.16
Expected volatility	44.14%	45.77%
Risk-free interest rate	2.05%	2.40%
Expected life	8 years	8 years

XML

Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue Recognition [Abstract]
Payments to representatives	$ 14.1	$ 12.7	$ 28.1	$ 24.6
Extended product warranties, minimum length			6 months
Extended product warranties, maximum length			10 years

XML

Investments (Narrative) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Schedule of Investments [Line Items]
Certificates of deposits	$ 6,700	$ 11,400
Certificates of deposit interest rate, lower range	0.35%
Certificates of deposit interest rate, upper range	0.60%
Investments held to maturity	$ 6,176	$ 15,987
Minimum [Member]
Schedule of Investments [Line Items]
Certificates of deposit maturity dates	6 months
Investments maturity dates	3 months
Maximum [Member]
Schedule of Investments [Line Items]
Certificates of deposit maturity dates	13 months
Investments maturity dates	13 months

XML

Revenue Recognition

6 Months Ended

Jun. 30, 2015

Revenue Recognition [Abstract]

Revenue Recognition

Revenue Recognition

We recognize revenues from sales of products when 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 are provided for based on historical experiences and current estimates. Sales of our products are moderately seasonal with the peak period being July - November of each year.

In addition, we present revenues net of sales tax and net of certain payments to our independent manufacturer representatives (“Representatives”). Representatives are national companies that are in the business of providing HVAC units and other related products and services to customers. The end user customer orders a bundled group of products and services from the Representative and expects the Representative to fulfill the order. Only after the specifications are agreed to by the Representative and the customer, and the decision is made to use an AAON HVAC unit, will we receive notice of the order. We establish the amount we must receive for our HVAC unit (“minimum sales price”), but do not control the total order price that is negotiated by the Representative with the end user customer.

We are responsible for billings and collections resulting from all sales transactions, including those initiated by our Representatives. The Representatives submit the total order price to us for invoicing and collection. The total order price includes our minimum sales price and an additional amount which may include both the Representatives’ fee and amounts due for additional products and services required by the customer. These additional products and services may include controls purchased from another manufacturer to operate the unit, start-up services, and curbs for supporting the unit (“Third Party Products”). All are associated with the purchase of a HVAC unit but may be provided by the Representative or another third party. The Company is under no obligation related to Third Party Products.

The Representatives’ fee and Third Party Products amounts (“Due to Representatives”) are paid only after all amounts associated with the order are collected from the customer. The amount of payments to our Representatives were $14.1 million and $12.7 million for the three months ended June 30, 2015 and 2014, respectively. The amount of payments to our Representatives were $28.1 million and $24.6 million for the six months ended June 30, 2015 and 2014, respectively.

The Company also sells extended warranties on parts for various lengths of time ranging from 6 months to 10 years. Revenue for these separately priced warranties is deferred and recognized on a straight-line basis over the separately priced warranty period.

XML

Investments (Investments Held to Maturity) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Gain (Loss) on Investments [Line Items]
Amortized Cost	$ 6,176	$ 15,987
Gross Unrealized Gain	0	0
Gross Unrealized (Loss)	(9)	(23)
Fair Value	6,167	15,964
Current Assets [Member]
Gain (Loss) on Investments [Line Items]
Amortized Cost	6,101	11,972
Gross Unrealized Gain	0	0
Gross Unrealized (Loss)	(9)	(7)
Fair Value	6,092	11,965
Non Current Assets [Member]
Gain (Loss) on Investments [Line Items]
Amortized Cost	75	4,015
Gross Unrealized Gain	0	0
Gross Unrealized (Loss)	0	(16)
Fair Value	$ 75	$ 3,999

XML

Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Payables and Accruals [Abstract]
Warranty	$ 8,092	$ 8,130
Due to representatives	9,510	10,188
Payroll	3,266	3,153
Profit sharing	2,029	2,016
Worker's compensation	322	535
Medical self-insurance	527	532
Customer prepayments	1,933	1,639
Donations	600	1,600
Employee benefits and other	4,476	3,550
Total	$ 30,755	$ 31,343

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 37,600	$ 21,952
Certificates of deposit	6,240	6,098
Investments held to maturity at amortized cost	6,101	11,972
Accounts receivable, net	45,480	44,092
Income tax receivable	3,385	2,569
Notes receivable	26	30
Inventories, net	47,182	37,618
Prepaid expenses and other	1,055	609
Deferred tax assets	5,837	6,143
Total current assets	152,906	131,083
Property, plant and equipment:
Land	2,233	2,233
Buildings	66,583	64,938
Machinery and equipment	134,745	127,968
Furniture and fixtures	10,581	10,388
Total property, plant and equipment	214,142	205,527
Less: Accumulated depreciation	118,347	113,605
Property, plant and equipment, net	95,795	91,922
Certificates of deposit	480	5,280
Investments held to maturity at amortized cost	75	4,015
Note receivable	756	817
Total assets	250,012	233,117
Current liabilities:
Revolving credit facility	0	0
Accounts payable	10,513	11,370
Dividends payable	5,982	0
Accrued liabilities	30,755	31,343
Total current liabilities	47,250	42,713
Deferred revenue	833	1,006
Deferred tax liabilities	12,808	13,677
Donations	$ 1,692	$ 1,662
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued	$ 0	$ 0
Common stock, $.004 par value, 100,000,000 shares authorized, 54,263,876 and 54,041,829 issued and outstanding at June 30, 2015 and December 31, 2014, respectively	217	216
Additional paid-in capital	0	0
Retained earnings	187,212	173,843
Total stockholders' equity	187,429	174,059
Total liabilities and stockholders' equity	$ 250,012	$ 233,117

XML

Share-Based Compensation (Summary of Stock Options Outstanding) (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of shares vested and exercisable	419,112	724,501
Options vested and exercisable weighted average remaining contractual life	5 years 4 months 5 days	4 years 8 months 23 days
Options vested and exercisable weighted average exercise price	$ 7.20	$ 6.22
Options vested and exercisable intrinsic value	$ 6,421	$ 11,687
$4.31-$7.18
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower range	$ 4.31
Range of exercise prices, upper range	$ 7.18
Number of shares vested and exercisable	221,842
Options vested and exercisable weighted average remaining contractual life	4 years 1 month
Options vested and exercisable weighted average exercise price	$ 5.74
Options vested and exercisable intrinsic value	$ 3,722
$7.44-$8.17
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower range	$ 7.44
Range of exercise prices, upper range	$ 8.17
Number of shares vested and exercisable	15,300
Options vested and exercisable weighted average remaining contractual life	5 years 11 months 10 days
Options vested and exercisable weighted average exercise price	$ 7.65
Options vested and exercisable intrinsic value	$ 227
$8.65-$23.57
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower range	$ 8.65
Range of exercise prices, upper range	$ 23.57
Number of shares vested and exercisable	181,970
Options vested and exercisable weighted average remaining contractual life	6 years 10 months 5 days
Options vested and exercisable weighted average exercise price	$ 8.94
Options vested and exercisable intrinsic value	$ 2,472
$3.21-$6.89
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower range		$ 3.21
Range of exercise prices, upper range		$ 6.89
Number of shares vested and exercisable		472,028
Options vested and exercisable weighted average remaining contractual life		3 years 7 months 12 days
Options vested and exercisable weighted average exercise price		$ 5.04
Options vested and exercisable intrinsic value		$ 8,171
$7.13-$8.17
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower range		$ 7.13
Range of exercise prices, upper range		$ 8.17
Number of shares vested and exercisable		56,175
Options vested and exercisable weighted average remaining contractual life		6 years 11 months 2 days
Options vested and exercisable weighted average exercise price		$ 7.25
Options vested and exercisable intrinsic value		$ 848
$8.65-$19.27
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower range		$ 8.65
Range of exercise prices, upper range		$ 19.27
Number of shares vested and exercisable		196,298
Options vested and exercisable weighted average remaining contractual life		6 years 9 months 14 days
Options vested and exercisable weighted average exercise price		$ 8.76
Options vested and exercisable intrinsic value		$ 2,668

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating Activities
Net income	$ 19,529	$ 21,185
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	5,599	5,719
Amortization of bond premiums	106	389
Provision for losses on accounts receivable, net of adjustments	(102)	(8)
Provision for excess and obsolete inventories, net	59	156
Share-based compensation	1,281	984
Excess tax benefits from stock options exercised and restricted stock awards vested	(2,452)	(680)
Gain on disposal of assets	(25)	(24)
Foreign currency transaction loss	53	0
Interest income on note receivable	(16)	(20)
Deferred income taxes	(563)	(1,961)
Changes in assets and liabilities:
Accounts receivable	(1,286)	(13,824)
Income tax receivable	1,636	1,753
Inventories	(9,623)	(4,624)
Prepaid expenses and other	(446)	(525)
Accounts payable	(1,030)	3,422
Deferred revenue	136	378
Accrued liabilities	(867)	5,185
Net cash provided by operating activities	11,989	17,505
Investing Activities
Capital expenditures	(9,304)	(5,903)
Proceeds from sale of property, plant and equipment	30	29
Investment in certificates of deposits	0	(9,220)
Maturities of certificates of deposits	4,658	3,904
Purchases of investments held to maturity	0	(5,955)
Maturities of investments	9,201	6,539
Proceeds from called investments	504	1,269
Principal payments from note receivable	28	35
Net cash provided by (used in) investing activities	5,117	(9,302)
Financing Activities
Stock options exercised	2,534	632
Excess tax benefits from stock options exercised and restricted stock awards vested	2,452	680
Repurchase of stock	(6,444)	(5,116)
Net cash used in financing activities	(1,458)	(3,804)
Net increase in cash and cash equivalents	15,648	4,399
Cash and cash equivalents, beginning of period	21,952	12,085
Cash and cash equivalents, end of period	$ 37,600	$ 16,484

XML

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Inventory Disclosure [Abstract]
Raw materials	$ 43,647		$ 34,153
Work in process	1,945		2,262
Finished goods	2,363		1,917
Inventory, gross	47,955		38,332
Less: Allowance for excess and obsolete inventories	(773)	$ (755)	(714)	$ (735)	$ (583)	$ (579)
Total, net	$ 47,182		$ 37,618

XML

Investments (Tables)

6 Months Ended

Jun. 30, 2015

Investments [Abstract]

Amortized Cost and Estimated Fair Value of Investments Held to Maturity

The following summarizes the amortized cost and estimated fair value of our investments held to maturity as of

June 30, 2015 and December 31, 2014:

	Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Fair Value
June 30, 2015:	(in thousands)
Current assets:
Investments held to maturity	$	6,101	$	—	$	(9	)	$	6,092
Non current assets:
Investments held to maturity	75		—		—			75
Total	$	6,176	$	—	$	(9	)	$	6,167
December 31, 2014:
Current assets:
Investments held to maturity	$	11,972	$	—	$	(7	)	$	11,965
Non current assets:
Investments held to maturity	4,015		—		(16		)	3,999
Total	$	15,987	$	—	$	(23	)	$	15,964

XML

Inventories (Allowance) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Inventory Valuation Reserves [Roll Forward]
Balance, beginning of period	$ 755	$ 583	$ 714	$ 579
Provisions for excess and obsolete inventories	18	152	59	156
Inventories written off	0	0	0	0
Balance, end of period	$ 773	$ 735	$ 773	$ 735

XML

Inventories (Tables)

6 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

Inventories

	June 30, 2015			December 31, 2014
	(in thousands)
Raw materials	$	43,647		$	34,153
Work in process	1,945			2,262
Finished goods	2,363			1,917
	47,955			38,332
Less:  Allowance for excess and obsolete inventories	(773		)	(714		)
Total, net	$	47,182		$	37,618

Inventories (Allowance)

The related changes in the allowance for excess and obsolete inventories account are as follows:

	Three months ended				Six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Allowance for excess and obsolete inventories:	(in thousands)
Balance, beginning of period	$	755	$	583	$	714	$	579
Provisions for excess and obsolete inventories	18		152		59		156
Inventories written off	—		—		—		—
Balance, end of period	$	773	$	735	$	773	$	735

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2015

Basis of Presentation and Significant Accounting Policies [Abstract]

Basis of Presentation

General

Basis of Presentation

The accompanying unaudited consolidated financial statements of AAON, Inc., a Nevada corporation, and our operating subsidiaries, all of which are wholly-owned, (collectively, the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements have not been audited by the Company's independent registered public accounting firm, except that the consolidated balance sheet at December 31, 2014 is derived from audited consolidated financial statements. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The financial statements reflect all adjustments (all of which are of a normal recurring nature) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for a full year. Certain disclosures have been condensed in or omitted from these consolidated financial statements. The accompanying unaudited financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. All intercompany balances and transactions have been eliminated in consolidation.

We are engaged in the manufacture and sale of air conditioning and heating equipment consisting of rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, self-contained units and coils.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP  requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because these estimates and assumptions require significant judgment, actual results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash flows. We reevaluate our estimates and assumptions as needed, but at a minimum on a quarterly basis. The most significant estimates include, but are not limited to, the allowance for doubtful accounts, inventory reserves, warranty accrual, worker's compensation accrual, medical insurance accrual, income taxes and share-based compensation. Actual results could differ materially from those estimates.

Accounting Policies

A comprehensive discussion of our critical accounting policies and management estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2014. There have been no significant changes in our critical accounting policies.

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASUs") to the FASB's Accounting Standards Codification.

We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements and notes thereto.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on January 1, 2017; however, in July 2015 the FASB approved a one-year deferral, deferring the effective date for us to January 1, 2018. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We do not expect ASU 2014-09 will have a material effect on our consolidated financial statements and notes thereto.

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Stockholders' equity:
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.004	$ 0.004
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	54,263,876	54,041,829
Common stock, shares outstanding	54,263,876	54,041,829

XML

Share-Based Compensation

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

We have historically maintained a stock option plan for key employees, directors and consultants (“the 1992 Plan”). The 1992 Plan provided for 14.9 million shares to be issued under the plan in the form of stock options. Under the terms of the 1992 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 and are exercisable for nine years thereafter. Options granted to directors on or after May 25, 2004 vest one-third each year, commencing one 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 3.3 million 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 LTIP, 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.

The compensation cost related to unvested stock options not yet recognized as of June 30, 2015 is $1.5 million and is expected to be recognized over a weighted-average period of 2.0 years.

The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during the six months ended June 30,2015 and 2014 using a Black Scholes Model:

	Six months ended
	June 30, 2015			June 30, 2014
Director and Officers:
Expected dividend rate	$	0.18		N/A
Expected volatility	44.14		%	N/A
Risk-free interest rate	1.97		%	N/A
Expected life (in years)	8			N/A
Employees:
Expected dividend rate	$	0.18		$	0.16
Expected volatility	44.14		%	45.77		%
Risk-free interest rate	2.05		%	2.40		%
Expected life (in years)	8			8

The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date.

The following is a summary of stock options vested and exercisable as of June 30, 2015:

Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Intrinsic Value (in thousands)
$4.31-$7.18	221,842	4.08	$	5.74	$	3,722
$7.44-$8.17	15,300	5.94	7.65		227
$8.65-$23.57	181,970	6.85	8.94		2,472
Total	419,112	5.35	$	7.20	$	6,421

The following is a summary of stock options vested and exercisable as of June 30, 2014:

Range of Exercise Prices	Number of Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Intrinsic Value (in thousands)
$3.21-$6.89	472,028	3.62	$	5.04	$	8,171
$7.13-$8.17	56,175	6.92	7.25		848
$8.65-$19.27	196,298	6.79	8.76		2,668
Total	724,501	4.73	$	6.22	$	11,687

A summary of option activity under the plans is as follows:

Options	Shares		Weighted Average Exercise Price
Outstanding at December 31, 2014	1,235,150		$	8.16
Granted	62,605		22.93
Exercised	(398,805	)	6.35
Forfeited or Expired	(17,260	)	11.82
Outstanding at June 30, 2015	881,690		$	9.95
Exercisable at June 30, 2015	419,112		$	7.20

The total intrinsic value of options exercised during the six months ended June 30,2015 and 2014 was $6.8 million and $1.3 million, respectively. The cash received from options exercised during the six months ended June 30,2015 and 2014 was $2.5 million and $0.6 million, respectively. The impact of these cash receipts is included in financing activities in the accompanying Consolidated Statements of Cash Flows.

Since 2007, as part of the LTIP, the Compensation Committee of the Board of Directors has authorized and issued restricted stock awards to directors and key employees. Restricted stock awards granted to directors vest one-third each year. All other restricted stock awards vest at a rate of 20% per year. The fair value of restricted stock awards is based on the fair market value of AAON, Inc. common stock on the respective grant dates, reduced for the present value of dividends.

These awards are recorded at their fair value on the date of grant and compensation cost is recorded using straight-line vesting over the service period. At June 30,2015, unrecognized compensation cost related to unvested restricted stock awards was approximately $5.4 million, which is expected to be recognized over a weighted average period of 2.2 years.

A summary of the unvested restricted stock awards is as follows:

Restricted stock	Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	414,846		$	16.76
Granted	114,538		22.32
Vested	(70,459	)	15.32
Forfeited	(15,512	)	18.54
Unvested at June 30, 2015	443,413		$	18.36

A summary of share-based compensation is as follows:

	Three months ended				Six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Grant date fair value of awards during the period:	(in thousands)
Options	$	—	$	68	$	657	$	188
Restricted stock	834		2,765		2,556		3,035
Total	$	834	$	2,833	$	3,213	$	3,223

Share-based compensation expense:
Options	$	246	$	312	$	398	$	520
Restricted stock	597		260		883		464
Total	$	843	$	572	$	1,281	$	984

Income tax benefit related to share-based compensation:
Options	$	1,160	$	160	$	2,236	$	484
Restricted stock	194		164		216		196
Total	$	1,354	$	324	$	2,452	$	680

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 03, 2015
Document And Entity Information
Entity Registrant Name	AAON INC
Entity Central Index Key	0000824142
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		54,230,539
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share assumes the conversion of all potentially dilutive securities and is calculated by dividing net income by the sum of the weighted average number of shares of common stock outstanding plus all potentially dilutive securities. Dilutive common shares consist primarily of stock options and restricted stock awards.

	Three months ended				Six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
	(in thousands, except share and per share data)
Numerator:
Net income	$	11,130	$	11,363	$	19,529	$	21,185
Denominator:
Basic weighted average shares	54,208,362		55,004,175		54,205,657		55,036,281
Effect of dilutive stock options and restricted stock	461,401		564,037		508,947		567,698
Diluted weighted average shares	54,669,763		55,568,212		54,714,604		55,603,979
Earnings per share:
Basic	$	0.21	$	0.21	$	0.36	$	0.38
Diluted	$	0.20	$	0.20	$	0.36	$	0.38
Anti-dilutive shares:
Shares	145,136		18,445		134,625		19,448

XML

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Net sales	$ 90,275	$ 92,310	$ 167,043	$ 168,677
Cost of sales	63,158	64,434	118,128	118,955
Gross profit	27,117	27,876	48,915	49,722
Selling, general and administrative expenses	9,200	10,584	17,517	18,213
Gain on disposal of assets	(30)	0	(25)	(24)
Income from operations	17,947	17,292	31,423	31,533
Interest income, net	29	71	73	140
Other income (expense), net	27	34	(48)	13
Income before taxes	18,003	17,397	31,448	31,686
Income tax provision	6,873	6,034	11,919	10,501
Net income	$ 11,130	$ 11,363	$ 19,529	$ 21,185
Earnings per share:
Basic (usd per share)	$ 0.21	$ 0.21	$ 0.36	$ 0.38
Diluted (usd per share)	0.20	0.20	0.36	0.38
Cash dividends declared per common share	$ 0.11	$ 0.09	$ 0.11	$ 0.09
Weighted average shares outstanding:
Basic (in shares)	54,208,362	55,004,175	54,205,657	55,036,281
Diluted (in shares)	54,669,763	55,568,212	54,714,604	55,603,979

XML

Supplemental Cash Flow Information

6 Months Ended

Jun. 30, 2015

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

	Three months ended					Six months ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Supplemental disclosures:	(in thousands)
Interest paid	$	—		$	—	$	—		$	—
Income taxes paid	$	6,643		$	9,850	10,846			10,533
Non-cash investing and financing activities:
Non-cash capital expenditures	(102		)	262		(173		)	264
Dividends declared	5,982			4,779		5,982			4,779

XML

Inventories

6 Months Ended

Jun. 30, 2015

Inventory Disclosure [Abstract]

Inventories

Inventories

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.

	June 30, 2015			December 31, 2014
	(in thousands)
Raw materials	$	43,647		$	34,153
Work in process	1,945			2,262
Finished goods	2,363			1,917
	47,955			38,332
Less:  Allowance for excess and obsolete inventories	(773		)	(714		)
Total, net	$	47,182		$	37,618

The related changes in the allowance for excess and obsolete inventories account are as follows:

	Three months ended				Six months ended
	June 30, 2015		June 30, 2014		June 30, 2015		June 30, 2014
Allowance for excess and obsolete inventories:	(in thousands)
Balance, beginning of period	$	755	$	583	$	714	$	579
Provisions for excess and obsolete inventories	18		152		59		156
Inventories written off	—		—		—		—
Balance, end of period	$	773	$	735	$	773	$	735

XML

Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Accounts Receivable

	June 30, 2015			December 31, 2014
	(in thousands)
Accounts receivable	$	45,549		$	44,263
Less:  Allowance for doubtful accounts	(69		)	(171		)
Total, net	$	45,480		$	44,092

Allowance for Doubtful Accounts

	Three months ended					Six months ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Allowance for doubtful accounts:	(in thousands)
Balance, beginning of period	$	112		$	63	$	171		$	193
Provisions for losses on accounts receivables, net of recoveries	(43		)	115		(94		)	(15		)
Accounts receivable written off	—			7		(8		)	7
Balance, end of period	$	69		$	185	$	69		$	185

XML

Stockholders' Equity

6 Months Ended

Jun. 30, 2015

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Stock Repurchase - On May 17, 2010, the Board authorized a stock buyback program, targeting repurchases of up to approximately 5% (approximately 2.9 million shares) of our outstanding stock from time to time in open market transactions. In May 2015, the Board authorized repurchases up to an additional 2.75 million shares, or a total of approximately 5.7 million shares. Since the inception of the program, we repurchased a total of approximately 2.6 million shares for an aggregate price of $31.5 million, or an average price of $11.97 per share. We purchased the shares at current market prices. No repurchases were made under the program for the six months ended June 30, 2015 and 2014.

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, Inc. stock in their accounts sold to the Company. The maximum number of shares to be repurchased is contingent upon the number of shares sold by employees. Through June 30,2015, we repurchased approximately 5.3 million shares for an aggregate price of $45.4 million, or an average price of $8.58 per share. We purchased the shares at current market prices. For each of the six months ended June 30,2015 and 2014, we repurchased approximately 0.3 million and 0.2 million shares, respectively.

Periodically, the Company repurchases shares of AAON, Inc. stock from certain of its directors and employees. The number of shares to be repurchased is contingent upon Board approval. Through June 30,2015, we repurchased approximately 1.8 million shares for an aggregate price of $14.5 million, or an average price of $7.94 per share. We purchased the shares at current market prices. For each of the six months ended June 30,2015 and 2014 we repurchased approximately 0.01 million and 0.05 million shares under this program.

Dividends - At the discretion of the Board of Directors, we pay semi-annual cash dividends. Board approval is required to determine the date of declaration and amount for each semi-annual dividend payment.

On May 2, 2014, the Board of Directors declared a regular semi-annual cash dividend of $0.09 per share, to stockholders of record at the close of business on June 12, 2014, the record date. Those dividends were paid on July 1, 2014.

On June 5, 2014, the Board of Directors declared a three-for-two stock split of the Company's common stock paid in the form of a stock dividend on July 16, 2014. Stockholders of record at the close of business on June 27, 2014 received one additional share for every two shares they held as of that date.

At a meeting of the Board of Directors on November 4, 2014, the Board declared a regular semi-annual cash dividend of $0.09 per share. The dividends were payable to shareholders of record at the close of business on December 2, 2014, the record date, and were paid on December 23, 2014.

On May 19, 2015, the Board of Directors declared a regular semi-annual cash dividend of $0.11 per share, to stockholders of record at the close of business on June 12, 2015, the record date. The dividends were paid on July 1, 2015.

XML

Revolving Credit Facility

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Revolving Credit Facility

Revolving Credit Facility

Our revolving credit facility provides for maximum borrowings of $30.0 million which is provided by BOKF, NA dba Bank of Oklahoma, formerly known as Bank of Oklahoma, N.A. ("Bank of Oklahoma"). Under the line of credit, there is one standby letter of credit totaling $0.8 million. Borrowings available under the revolving credit facility at June 30, 2015 were $29.2 million. Interest on borrowings is payable monthly at LIBOR plus 2.5%. No fees are associated with the unused portion of the committed amount. We had no outstanding balance under the revolving credit facility at June 30, 2015 and December 31, 2014. The termination date of the revolving credit facility is July 27, 2016.

As of June 30, 2015, we were in compliance with our financial covenants. These covenants require that we meet certain parameters related to our tangible net worth, total liabilities to tangible net worth ratio and working capital. At June 30, 2015, our tangible net worth was $187.4 million and met the requirement of being at or above $95.0 million. Our total liabilities to tangible net worth ratio was 0.33 to 1, and met the requirement of not being above 2 to 1. Our working capital was $105.7 million and met the requirement of being at or above $40.0 million.

XML

Warranties

6 Months Ended

Jun. 30, 2015

Guarantees [Abstract]

Warranties

 Warranties

The Company has warranties with various terms ranging from 18 months for parts to 25 years for certain heat exchangers. The Company has an obligation to replace parts or service its products if conditions under the warranty are met. A provision is made for estimated warranty costs at the time the related products are sold based upon the warranty period, historical trends, new products and any known identifiable warranty issues.  

Changes in the warranty accrual are as follows:

	Three months ended						Six months ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Warranty accrual:	(in thousands)
Balance, beginning of period	$	8,105		$	7,448		$	8,130		$	7,352
Payments made	(1,117		)	(1,242		)	(2,003		)	(2,135		)
Provisions	1,104			1,569			1,965			2,558
Balance, end of period	$	8,092		$	7,775		$	8,092		$	7,775
Warranty expense:	$	1,104		$	1,569		$	1,965		$	2,558

XML

Accrued Liabilities

6 Months Ended

Jun. 30, 2015

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued Liabilities

Accrued liabilities are as follows:

	June 30, 2015		December 31, 2014
	(in thousands)
Warranty	$	8,092	$	8,130
Due to representatives	9,510		10,188
Payroll	3,266		3,153
Profit sharing	2,029		2,016
Worker's compensation	322		535
Medical self-insurance	527		532
Customer prepayments	1,933		1,639
Donations	600		1,600
Employee benefits and other	4,476		3,550
Total	$	30,755	$	31,343

XML

Income Taxes

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense for each of the three months ended June 30, 2015 and 2014 was $6.9 million, or 38.2% of pre-tax income, and $6.0 million, or 34.7% of pre-tax income, respectively. Income tax expense for each of the six months ended June 30, 2015 and 2014 was $11.9 million, or 37.9% of pre-tax income, and $10.5 million, or 33.1% of pre-tax income, respectively. The Company’s estimated annual 2015 effective tax rate is approximately 37.9%. This differs from the U.S. federal statutory rate of 35% due principally to items such as state and local income taxes, the federal domestic activities deduction and state income tax credits. The Company's income tax expense for the six months ended June 30, 2014 was decreased by $0.7 million due to a change in method of accounting for state investment credits to recognize them as each annual portion of the credit becomes available for use on tax returns.

We file income tax returns in the U.S., state and foreign income tax returns jurisdictions. We are subject to U.S. examinations for tax years 2011 to present, and to non-U.S. income tax examinations for the tax years of 2010 to present. In addition, we are subject to state and local income tax examinations for the tax years 2010 to present. The Company continues to evaluate its need to file returns in various state jurisdictions. Any interest or penalties would be recognized as a component of income tax expense.

XML

Accounts Receivable (Allowance) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance, beginning of period	$ 112	$ 63	$ 171	$ 193
Provisions for losses on accounts receivables, net of recoveries	43	(115)	94	15
Accounts receivable written off, net of recoveries	0	7	(8)	7
Balance, end of period	$ 69	$ 185	$ 69	$ 185

XML

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Net income	$ 11,130	$ 11,363	$ 19,529	$ 21,185
Basic weighted average shares (in shares)	54,208,362	55,004,175	54,205,657	55,036,281
Effect of dilutive stock options and restricted stock (in shares)	461,401	564,037	508,947	567,698
Diluted weighted average shares (in shares)	54,669,763	55,568,212	54,714,604	55,603,979
Basic (usd per share)	$ 0.21	$ 0.21	$ 0.36	$ 0.38
Diluted (usd per share)	$ 0.20	$ 0.20	$ 0.36	$ 0.38
Anti-dilutive shares (in shares)	145,136	18,445	134,625	19,448

XML

Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2015

Basis of Presentation and Significant Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP  requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because these estimates and assumptions require significant judgment, actual results could differ from those estimates and could have a significant impact on our results of operations, financial position and cash flows. We reevaluate our estimates and assumptions as needed, but at a minimum on a quarterly basis. The most significant estimates include, but are not limited to, the allowance for doubtful accounts, inventory reserves, warranty accrual, worker's compensation accrual, medical insurance accrual, income taxes and share-based compensation. Actual results could differ materially from those estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASUs") to the FASB's Accounting Standards Codification.

We consider the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements and notes thereto.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on January 1, 2017; however, in July 2015 the FASB approved a one-year deferral, deferring the effective date for us to January 1, 2018. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We do not expect ASU 2014-09 will have a material effect on our consolidated financial statements and notes thereto.

XML

Warranties (Tables)

6 Months Ended

Jun. 30, 2015

Guarantees [Abstract]

Warranty

Changes in the warranty accrual are as follows:

	Three months ended						Six months ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Warranty accrual:	(in thousands)
Balance, beginning of period	$	8,105		$	7,448		$	8,130		$	7,352
Payments made	(1,117		)	(1,242		)	(2,003		)	(2,135		)
Provisions	1,104			1,569			1,965			2,558
Balance, end of period	$	8,092		$	7,775		$	8,092		$	7,775
Warranty expense:	$	1,104		$	1,569		$	1,965		$	2,558

XML

Share-Based Compensation (Summary of Share-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options	$ 246	$ 312	$ 398	$ 520
Restricted stock	597	260	883	464
Total	$ 843	$ 572	$ 1,281	$ 984

XML

Revolving Credit Facility (Details)	6 Months Ended
	Jun. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)
Line of Credit Facility [Line Items]
Borrowings outstanding under revolving credit facility	$ 0	$ 0
Fees associated with unused portion of committed amount	0
Actual net worth for compliance	187,400,000
Minimum net worth required for compliance	$ 95,000,000.0
Ratio of total liability to net worth	0.33
Maximum ratio of total liability to net worth for compliance	2
Actual working capital for compliance	$ 105,700,000
Minimum working capital for compliance	40,000,000.0
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Credit facility maximum borrowings	30,000,000.0
Standby letter of credit	800,000.0
Borrowings available under the revolving credit facility	$ 29,200,000.0
Frequency of periodic payment	monthly
Revolving Credit Facility [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Stated percentage	2.50%

XML

Consolidated Statements of Stockholders' Equity - 6 months ended Jun. 30, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Paid-in Capital	Retained Earnings
Balance at Dec. 31, 2014	$ 174,059	$ 216	$ 0	$ 173,843
Balance (in shares) at Dec. 31, 2014		54,042
Net income	19,529
Stock options exercised and restricted stock awards vested, including tax benefits	4,986	$ 2	4,984
Stock options exercised and restricted stock awards vested, including tax benefits (in shares)		498
Share-based compensation	1,281		1,281
Stock repurchased and retired	(6,444)	$ (1)	(6,265)	(178)
Stock repurchased and retired (in shares)		(276)
Dividends	(5,982)			(5,982)
Balance at Jun. 30, 2015	$ 187,429	$ 217	$ 0	$ 187,212
Balance (in shares) at Jun. 30, 2015		54,264

XML

Accounts Receivable

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Accounts Receivable

Accounts Receivable

Accounts receivable and the related allowance for doubtful accounts are as follows:

	June 30, 2015			December 31, 2014
	(in thousands)
Accounts receivable	$	45,549		$	44,263
Less:  Allowance for doubtful accounts	(69		)	(171		)
Total, net	$	45,480		$	44,092

	Three months ended					Six months ended
	June 30, 2015			June 30, 2014		June 30, 2015			June 30, 2014
Allowance for doubtful accounts:	(in thousands)
Balance, beginning of period	$	112		$	63	$	171		$	193
Provisions for losses on accounts receivables, net of recoveries	(43		)	115		(94		)	(15		)
Accounts receivable written off	—			7		(8		)	7
Balance, end of period	$	69		$	185	$	69		$	185

XML

Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2015

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued liabilities are as follows:

	June 30, 2015		December 31, 2014
	(in thousands)
Warranty	$	8,092	$	8,130
Due to representatives	9,510		10,188
Payroll	3,266		3,153
Profit sharing	2,029		2,016
Worker's compensation	322		535
Medical self-insurance	527		532
Customer prepayments	1,933		1,639
Donations	600		1,600
Employee benefits and other	4,476		3,550
Total	$	30,755	$	31,343

XML

Warranties (Narrative) (Details)	6 Months Ended
	Jun. 30, 2015
Guarantees [Abstract]
Product warranty accrual, minimum length	18 months
Product warranty accrual, maximum length	25 years

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

We are subject to various claims and legal actions that arise in the ordinary course of business. We closely monitor these claims and legal actions and frequently consult with our legal counsel to determine whether they may, when resolved, have a material adverse effect on our financial position, results of operations or cash flows and we accrue and/or disclose loss contingencies as appropriate. We have concluded that the likelihood is remote that the ultimate resolution of any pending litigation or claims will be material or have a material adverse effect on the Company's business, financial position, results of operations or cash flows.

We are party to short-term, cancellable and non-cancellable, fixed price contracts with major suppliers for the purchase of raw material and component parts. We expect to receive delivery of raw materials for use in our manufacturing operations. These contracts are not accounted for as derivatives instruments because they meet the normal purchases and sales exemption. We had no material contractual purchase agreements as of June 30, 2015 or December 31, 2014.