FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002 Commission file number: 33-183336-LA AAON, INC. ---------- (Exact name of registrant as specified in its charter) Nevada 87-0448736 ------ ---------- (State or other jurisdiction (IRS Employer of incorporation) 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 |X| No ------------- ---------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. 13,223,904 shares of $.004 par value Common Stock.
PART I - FINANCIAL INFORMATION Item 1. Financial Statements. On pages 5 through 11 of this report. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. AAON, Inc. engineers, manufactures and markets commercial rooftop air-conditioning, heating and heat recovery equipment, chillers, air conditioning coils, air handlers, and condensing units. AAON's primary products are its RK, RL, RM and RN series units. Earlier this year, AAON introduced the new, highly energy-efficient RM to replace the RK and an expanded air-handler product. In the third quarter of 2002, a new, exclusive Modulating Hot Gas Reheat feature was introduced for the rooftop product lines, condensing units and air handlers. The new feature addresses humidity, mold and indoor air quality problems that plague many environments due to excessive moisture. AAON sells its products to property owners and contractors through a network of manufacturers' representatives and its internal sales force. The demand for AAON's products is influenced by national and regional economic and demographic factors. The commercial and industrial new construction market is subject to cyclical fluctuations in that it is generally tied to housing starts, but has a lag factor of 6-18 months. Housing starts, in turn, are affected by such factors as interest rates, the state of the economy, population growth and the relative age of the population. When new construction is down, the Company emphasizes the replacement market. The principal components of cost of goods sold are labor, raw materials, component costs, factory overhead, freight out and engineering expense. The principal raw materials used in AAON's manufacturing processes are steel, copper and aluminum. The major component costs include compressors, electric motors and electronic controls. Selling, general, and administrative costs include the Company's internal sales force, warranty costs, profit sharing and administrative expense. Warranty expense is estimated based on historical trends and other factors. The Company's warranty period is generally one year from the date of first use or 15 months from date of shipment; however, compressors (if applicable) carry an additional four-year warranty and gas-fired heat exchangers (if applicable) have a 15-year warranty. Set forth below is income statement information with respect to the Company for the three-month and nine-month periods ended September 30, 2002, and 2001: <TABLE> Three Months Ended Nine Months Ended Sept. 30, 2002* Sept. 30, 2001* Sept. 30, 2002* Sept. 30, 2001* *Unaudited (In thousands, except share and per share data) <CAPTION> <S> <C> <C> <C> <C> Net Sales $ 41,702 $ 41,402 $117,873 $122,357 Cost of Sales 31,301 32,669 88,118 91,480 -------- -------- -------- -------- Gross profit 10,401 8,733 29,755 30,877 Selling, general and administrative expenses 3,992 3,210 12,007 13,229 -------- -------- -------- -------- Income from operations 6,409 5,523 17,748 17,648 Income expense / (Interest income) (82) 115 (52) 723 Other income (80) (61) (237) (296) -------- -------- -------- -------- Income before income taxes 6,571 5,469 18,037 17,221 Income tax provision 2,385 1,946 6,538 6,306 -------- -------- -------- -------- Net income $ 4,186 $ 3,523 $ 11,499 $ 10,915 ======== ======== ======== ======== </TABLE> (1)
Results of Operations. In the third quarter of 2002, net sales increased $300,000 (1%) from $41,402,000 to $41,702,000 compared to the same period in 2001. Net sales during the nine-month period ended September 30, 2002 decreased by $4,484,000 (4%) from $122,357,000 to $117,873,000 compared to the same period in 2001. The decrease in sales for the nine-month period ended September 30, 2002, compared to the same period in 2001, resulted from a slowdown in production caused by the heavy volume of new products being produced in the second quarter, and from a slowdown in the construction market and overall economic conditions. Sales to existing customers in the nine months ending September 30, 2002 continued to account for 85% of the Company's business, with the balance coming from new business. Gross profit increased $1,668,000 (19%) from $8,733,000 to $10,401,000 for the three months ended September 30, 2002, and decreased $1,122,000 (4%) from $30,877,000 to $29,755,000 for the nine months ended September 30, 2002, compared to the same period in 2001. The increase in margins for the quarter ended September 30, 2002 was due to increased production efficiencies and the ability to maintain prices for basic commodities and raw materials due to agreements with major suppliers. The decrease in margins for the nine months ended September 30, 2002 was primarily attributable to start-up costs related to the production of new products and lower plant utilization due to the decrease in sales in the second quarter. SG&A expenses increased by $782,000 (24%) from $3,210,000 to $3,992,000 for the three months ended September 30, 2002, but decreased $1,222,000 (9%) from $13,229,000 to $12,007,000 for the nine months ended September 30, 2002, compared to the same period in 2001. The quarter increase was primarily due to an increase in warranty expense related to new products that began shipping late in the second quarter. The nine-month decrease was attributable to a decrease in warranty expense and bad debt expense. Interest income was $82,000 for the three months ended September 30, 2002 and $52,000 for the nine months ended September 30, 2002. The Company had interest expense of $115,000 for the three months and $723,000 for the nine months for the same periods in 2001. The Company had no debt and certificates of deposit investments in 2002, versus debt in 2001. Other income increased from $61,000 to $80,000 (31%) for the quarter ended September 30, 2002 compared to the quarter ended September 30, 2001, and decreased $59,000 from $296,000 to $237,000 (20%) for the nine months ended September 30, 2002, primarily due to a decrease in rental income. Financial Condition and Liquidity. The Company generated $14,647,000 and $14,560,000 cash from operating activities during the nine months ended September 30, 2002 and September 30, 2001, respectively. The increase in cash allowed the investment of $10 million in certificates of deposits. These funds and subsequent cash flows will be retained for general working purposes, the company stock buyback program and future business opportunities. Accounts receivable increased $3,502,000 at September 30, 2002 compared to December 31, 2001, due to an increase in sales of $6,807,000 in the third quarter of this year compared to the fourth quarter of 2001, and a slower pay cycle by a few customers in the third quarter. Inventories increased by $1,166,000 at September 30, 2002, compared to December 31, 2001, due to the procurement of inventory levels needed to meet projected production demands and the additional inventory needed for the manufacturing of new products. Prepaid expenses increased $775,000 at September 30, 2002, compared to December 31, 2001, due to deposits made on equipment acquisitions. (2)
Property, plant and equipment additions totaled $2,835,000 for the nine months ended September 30, 2002, reflecting primarily additions to machinery and equipment and building renovations. All capital expenditures and building renovations in the first nine months of 2002 were financed out of cash generated from operations. Accounts payable and accrued liabilities increased by $5,000,000 at September 30, 2002, compared to December 31, 2001, due primarily to an increase in income taxes payable, warranty and timing of payments to vendors. Management believes the Company's bank revolving credit facility (or comparable financing), term loans, and projected cash flows from operations will provide the necessary liquidity and capital resources to the Company for the foreseeable future. The Company's belief that it will have the necessary liquidity and capital resources is based upon its knowledge of the HVAC industry and its place in that industry, its ability to limit the growth of its business if necessary, and its relationship with its existing bank lender. For information concerning the Company's long-term debt at September 30, 2002, see Note 5 to the Financial Statements. Critical Accounting Policies. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company re-evaluates its estimates and assumptions on a monthly basis. The following accounting policies may involve a higher degree of estimation or assumption: Allowance for Doubtful Accounts - The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, economic and market conditions, the age of the receivable and other information. Allowance for Excess and Obsolete Inventories - The Company establishes an allowance for excess and obsolete inventories based on the change in inventory due to product line changes, the feasibility of substituting parts and the need for part supply sales and replacement parts. Warranty - A provision is made for the estimated cost of warranty obligation at the time the products are sold. Warranty expense is estimated based on the Company's warranty period, historical trends, new products in the field, any known identifiable warranty issues and other factors. Forward-Looking Statements This report includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "believes," "seeks," "estimates," "will," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes 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 actual results to differ materially from those in the forward-looking statements include: (1) the timing and extent of changes in material prices, (2) the effects of fluctuations in the commercial/industrial new construction market, (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. (3)
Item 3. Quantitative and Qualitative Disclosures About Market Risk. Foreign sales account for less than 2% of the Company's total sales and the Company accepts payment for such sales only in U.S. dollars; hence, the Company is not exposed to any foreign currency exchange rate risk. Important raw materials purchased by the Company are steel, copper and aluminum, which are subject to price fluctuations. The Company attempts to limit the impact of price increases on these materials by negotiating with each of its major suppliers on a term basis from six months to one year. Item 4. Controls and Procedures. As of September 30, 2002, an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures was performed under the supervision and with the participation of the Company's management including the CEO and CFO. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2002. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to September 30, 2002. Item 5. Other Events. On October 17, 2002, the Company announced a stock buyback program to repurchase up to 10% (1,325,000 shares) of its outstanding stock. (4)
<TABLE> AAON, Inc. Consolidated Balance Sheets Sept. 30, 2002* December 31, 2001 (In thousands, except share and per share data) <CAPTION> <S> <C> <C> ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,784 $ 1,123 Accounts receivable 26,894 23,392 Inventories 14,637 13,471 Prepaid expenses 995 220 Deferred income tax 4,067 4,067 ---------- ---------- Total current assets 48,377 42,273 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT, at cost Land 874 874 Buildings 18,206 16,893 Machinery and equipment 36,616 35,331 Furniture and fixtures 3,434 3,197 ---------- ---------- Total property, plant & equipment 59,130 56,295 Less: accumulated depreciation 25,864 22,273 ---------- ---------- Net property, plant & equipment 33,266 34,022 Certificates of deposit 10,000 - Total Assets $91,643 $76,295 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 9,224 $ 8,005 Accrued liabilities 17,277 13,496 Current maturities of long-term debt - 884 ---------- ---------- Total current liabilities 26,501 22,385 ---------- ---------- DEFERRED TAX LIABILITY 2,884 2,884 ---------- ---------- LONG-TERM DEBT - 985 ---------- ---------- STOCKHOLDERS' EQUITY Preferred Stock, $.001 par; 5,000,000 shares authorized, no shares issued - - Common Stock, $.004 par; 50,000,000 share authorized, 13,223,904 and 12,999,310 issued and outstanding at Sept. 30, 2002, and December 31, 2001, respectively** 53 53 Additional paid-in capital 1,781 1,063 Retained earnings** 60,424 48,925 ---------- ---------- Total stockholders' equity 62,258 50,041 Total Liabilities and Stockholders' Equity $91,643 $76,295 ========== ========== *Unaudited **Reflects stock split effective June 4, 2002 </TABLE> (5)
<TABLE> AAON, Inc. Consolidated Statements of Operations Three Months Ended Nine Months Ended Sept. 30, 2002* Sept. 30, 2001* Sept. 30, 2002* Sept. 30, 2001* (In thousands, except share and per share data) <CAPTION> <S> <C> <C> <C> <C> Net sales $ 41,702 $ 41,402 $ 117,873 $ 122,357 Cost of sales 31,301 32,669 88,118 91,480 ---------------- ------------------ ----------------- ------------------ Gross profit 10,401 8,733 29,755 30,877 Selling, general and administrative expenses 3,992 3,210 12,007 13,229 ---------------- ------------------ ----------------- ------------------ Income from operations 6,409 5,523 17,748 17,648 Interest expense (interest (82) 115 (52) 723 income) Other income (80) (61) (237) (296) ---------------- ------------------ ----------------- ------------------ Income before income taxes 6,571 5,469 18,037 17,221 Income tax provision 2,385 1,946 6,538 6,306 ---------------- ------------------ ----------------- ------------------ Net Income $ 4,186 $ 3,523 $ 11,499 $ 10,915 ================ ================== ================= ================== Earnings Per Share** Basic $ 0.32 $ 0.27 $ 0.87 $ 0.84 ================ ================== ================= ================== Diluted $ 0.30 $ 0.26 $ 0.84 $ 0.80 Weighted Average Shares Outstanding** Basic 13,220,792 13,072,703 13,165,747 12,990,378 ================ ================== ================= ================== Diluted 13,794,595 13,735,409 13,746,839 13,638,431 ================ ================== ================= ================== *Unaudited **Reflects split effective June 4, 2002 </TABLE> (6)
<TABLE> AAON, Inc. Consolidated Statements of Stockholders' Equity Common Stock Paid in Retained Shares Amount Capital Earnings Total ------ ------ ------- -------- ----- (In thousands) <CAPTION> <S> <C> <C> <C> <C> <C> Balance, December 31, 2001** 12,999 $ 53 $1,063 $48,925 $ 50,041 Exercise of Common Stock Options* 225 - 718 - 718 Net Income* - - - 11,499 11,499 ----------- ------------ ------------ -------------- ------------ Balance, September 30, 2002*, ** 13,224 $ 53 $1,781 $60,424 $62,258 =========== ============ ============ ============== ============ *Unaudited **Reflects stock split effective June 4, 2002 </TABLE> (7)
<TABLE> AAON, Inc. Consolidated Statements of Cash Flows Nine Months Ended Nine Months Ended Sept. 30, 2002* Sept. 30, 2001* (In thousands) <CAPTION> <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 11,499 $ 10,915 ----------------- ------------------ Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and Amortization 3,591 3,129 Change in assets and liabilities: (increase) decrease in: Accounts Receivable (3,502) 2,062 Inventories (1,166) 1,732 Prepaid Expenses (775) 20 Increase (decrease) in: Accounts Payable 1,219 (5,134) Accrued Liabilities 3,781 1,836 ----------------- ------------------ Total Adjustments 3,148 3,645 ----------------- ------------------ Net cash provided by Operating Activities 14,647 14,560 ----------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (2,835) (7,539) Investments in Certificates of Deposit (10,000) - ----------------- ------------------ Net cash used in Investing Activities (12,835) (7,539) ----------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES Borrowing under Revolving Credit Agreement 23,613 48,993 Payments under Revolving Credit Agreement (24,058) (53,043) Payments of long-term debt (1,424) (769) Exercise of Stock Options 718 586 Repurchase of Common Stock - (2,777) ----------------- ------------------ Net cash used in Financing Activities (1,151) (7,010) ----------------- ------------------ NET CHANGE IN CASH 661 11 CASH, beginning of period 1,123 17 ----------------- ------------------ CASH, end of period $ 1,784 $ 28 ================= ================== *Unaudited </TABLE> (8)
AAON, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 1. BASIS OF PRESENTATION: --------------------- The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures made in these financial statements are adequate to make the information presented not misleading when read in conjunction with the financial statements and the notes thereto included in the Company's latest audited financial statements which were included in the Form 10-K Report for the fiscal year ended December 31, 2001, filed by AAON, Inc. with the SEC. Certain reclassifications of prior year amounts have been made to conform to current year presentations. These reclassifications had no impact on net income. Management believes that no adjustments to the financial statements are necessary. 2. CASH AND CASH EQUIVALENTS ------------------------- Cash and cash equivalents of $1,784,000 consist of bank deposits and highly liquid, interest-bearing money market funds with initial maturities of three months or less. 3. INVENTORIES: ------------ Inventories at September 30, 2002 (unaudited), and December 31, 2001, consist of the following: September 30, 2002 December 31, 2001 ------------------- ------------------ Raw Materials $ 11,404,000 $ 10,376,000 Work in Process 2,949,000 2,258,000 Finished Goods 1,484,000 1,687,000 ------------------- ------------------ Total Inventory 15,837,000 14,321,000 Less Allowance for Excess and Obsolete Inventory 1,200,000 850,000 ------------------- ------------------ $ 14,637,000 $ 13,471,000 =================== ================== 4. LONG-TERM INVESTMENTS: ---------------------- Long-term investments consist of a $10 million certificate of deposit bearing interest at 3.25% per annum with a maturity date of June 12, 2004. There is a three-month interest penalty for early withdrawal. (9)
5. LONG-TERM DEBT: --------------- Long-term debt at September 30, 2002 (unaudited), and December 31, 2001, consists of the following: Sept. 30, 2002 Dec. 31, 2001 -------------- ------------- $15,150,000 bank line of credit with interest payable monthly at LIBOR plus 1.60% (3.42% at September 30, 2002) due July 31, 2002 -0- $ 446,000 Three notes payable bearing interest at 7.47%, and 7.52%, collateralized by machinery and equipment -0- 1,423,000 -------------- ------------- -0- 1,869,000 Less: Current Maturities -0- 884,000 -------------- ------------- -0- $ 985,000 ============== ============= On July 30, 2002, the bank renewed the line of credit with a maturity date of July 31, 2003. 6. STOCKHOLDER RIGHTS PLAN: ------------------------ On August 20, 2002, the Board of Directors amended the Company's Stockholder Rights Plan. The plan creates a dividend of one right for each outstanding share of the Company's common stock. The rights are traded with the Company's common stock. Generally, the rights become exercisable after a public announcement that a person has acquired, or tender offer is made for, 15% or more of the common stock of the Company. If either of these events occur, each right will entitle the holder (other than a holder owning more than 15% of the outstanding stock) to buy the number of shares of the Company's common stock having a market value two times the exercise price. The exercise price is $90. The rights may be redeemed by the company for $0.001 per right until a person or group has acquired 15% of the Company's common stock. The initial distribution of the rights was made to stockholders of record as of March 1, 1999. The Final Expiration Date of the Rights is August 20, 2012. 7. NEW ACCOUNTING PRONOUNCEMENTS: ------------------------------ In July 2001, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations" (Statement 141), SFAS No. 142, "Goodwill and Other Intangible Assets" (Statement 142), and SFAS No. 143, "Accounting for Asset Retirement Obligations" (Statement 143). In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal for Long-Lived Assets" (Statement 144). Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. The adoption of Statement 141 had no material impact on the Company's results of operations or financial condition. Statement 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with the provisions of Statement 142. The Company was required to adopt the provisions of Statement 142 effective January 1, 2002. The adoption of Statement 142 had no material impact on the Company's results of operations or financial condition. Statement 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the long-lived asset. Statement 143 is effective for fiscal years beginning after June 15, 2002. The Company is currently assessing the impact of Statement 143 on its financial condition and results of operations. (10)
Statement 144 supersedes, but retains the basic framework of SFAS 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," including provisions relating to asset impairment, and the requirement to report discontinued operations separately and extends that reporting to a component of an entity that either has been disposed of or is classified as held for sale. The Company was required to adopt Statement 144 effective January 1, 2002. The adoption of Statement 144 had no material impact on the Company's results of operations or financial condition. 8. FOOTNOTES INCORPORATED BY REFERENCE: ------------------------------------ Certain footnotes are applicable to the financial statements, but would be substantially unchanged from those presented in the December 31, 2001, 10-K filed with the SEC. Accordingly, reference should be made to this statement for the following: Note Description ======== ================================================================ 1 Business and Summary of Significant Accounting Policies 4 Income Taxes 5 Benefit Plans 7 Contingencies (11)
PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 99.1 - Certification of CEO 99.2 - Certification of CFO (b) Reports on Form 8-K: Registrant filed two reports on Form 8-K during the three-month period ended September 30, 2002, one reporting an amendment of its Second Restated Revolving Credit Loan Agreement on July 30, 2002, and the other reporting amendments of its Rights Agreement on August 20, 2002, to increase the exercise price of a Right to $90 per share, extend the term of the Plan to August 20, 2012, and reduce the percentage ownership that will trigger the Rights Plan to 15%. 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: November 13, 2002 By: /s/ Norman H. Asbjornson ---------------------------- Norman H. Asbjornson President Dated: November 13, 2002 By: /s/ Kathy I. Sheffield ---------------------------- Kathy I. Sheffield Treasurer (12)
CERTIFICATION I, Norman H. Asbjornson, President/CEO of AAON, INC. certify that: 1. I have reviewed this quarterly report on Form 10-Q of AAON, Inc.: 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures 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 quarterly report is being prepared: b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: November 13, 2002 /s/ Norman H. Asbjornson ----------------------- Norman H. Asbjornson President/CEO (13)
CERTIFICATION I, Kathy I. Sheffield, Treasurer/CFO of AAON, INC. certify that: 1. I have reviewed this quarterly report on Form 10-Q of AAON, Inc.: 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures 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 quarterly report is being prepared: b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: November 13, 2002 /s/ Kathy I. Sheffield ---------------------- Kathy I. Sheffield Treasurer/CFO (14)
Exhibit 99.1 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 Period ended September 30, 2002, 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. ss. 1350, as adopted pursuant to ss. 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 results of operations of the company. /s/Norman H. Asbjornson Chief Executive Officer November 13, 2002 (15)
Exhibit 99.2 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 Period ended September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kathy I. Sheffield, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 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 results of operations of the company. /s/ Kathy I. Sheffield Kathy I. Sheffield Chief Financial Officer November 13, 2002 (16)