AAON

EARNING RESPECT
AS WE EARN RETURNS

Continuous Years of Growth
AAON is devoted to the goal of

continued growth through new

product development, expanded

market penetration and enhanced

employee productivity.

$200

150

100

50

0

Listed on The Nasdaq Stock Market

S A L E S - $
[in $ Millions]

147%
Increase

1996 to 2000

109.6

155.0

131.9

81.7

62.8

E A R N I N G S   P E R   S H A R E - $
[Diluted]

S T O C K   P R I C E - $
[As of end of December]

$2.50

2.00

1.50

1.00

527%
Increase

1996 to 2000

$2.07

$1.50

$0.82

0.50

$0.33

$0.48

$20

15

10

5

0

263%
Increase

1996 to 2000

$17.69

$14.38

$9.31

$7.56

$4.88

1996

1997

1998 1999 2000

1996

1997

1998 1999

2000

0.00

1996

1997

1998 1999 2000

To   O u r   S t o c k h o l d e r s :

Simply defined, momentum is the speed or force of motion.

Beginning in 1996, we placed in motion a plan to grow the
Company’s revenues and earnings through product development
and diversity of our customer base. The successful
implementation of our plan resulted in a period of accelerated
growth in which your Company’s share of the rooftop HVAC market
has risen to approximately 12% from 7% in 1996. During that time
net sales advanced from $62.8 million to $155.0 million or an
increase of 147%, while net income climbed 509% to $12.8
million or $2.07 per share from $2.1 million or $0.33 per share.
The introduction of new and expanded product lines such as air
handlers, condensing units and wall-hung systems have begun to
bear fruit. Our growing manufacturers’ representative network
continues to contribute significantly to the overall sales and
earnings of the Company while giving us a broad and varied roster
of customers. With 101 offices, our manufacturers representative
business grew by more than $12 million in 2000, contributing
approximately 60% of total sales.

from 

the
Rooftops

Shouting

F

I N A N C I A L

H I G H L I G H T S

2000

1999

1998

1997

1996

I n c o m e   D a t a   ( $ 0 0 0 )
Net Sales  . . . . . . . . . . . . . . . . . . . . . . . . . . 154,982
Gross Profit  . . . . . . . . . . . . . . . . . . . . . . . . . 34,749
Operating Income  . . . . . . . . . . . . . . . . . . . . . 20,827
904
Interest Expense . . . . . . . . . . . . . . . . . . . . . .
3,465
Depreciation and Amortization  . . . . . . . . . . . .
Pretax Income  . . . . . . . . . . . . . . . . . . . . . . . 20,359
Net Income  . . . . . . . . . . . . . . . . . . . . . . . . . 12,794
2.18
Earnings Per Share  . . . . . . . . . .(Basic)  . . . .
2.07
(Diluted)  . . . .

131,947
30,718
15,977
574
3,063
15,641
9,697
1.55
1.50

109,624
19,829
9,203
1,017
2,848
8,545
5,230
0.84
0.82

B a l a n c e   S h e e t   ( $ 0 0 0 )
Current Assets  . . . . . . . . . . . . . . . . . . . . . . . 47,358
Net Fixed Assets . . . . . . . . . . . . . . . . . . . . . . 29,460
Accumulated Depreciation  . . . . . . . . . . . . . . . 19,063
Total Assets  . . . . . . . . . . . . . . . . . . . . . . . . . 76,818
Current Liabilities  . . . . . . . . . . . . . . . . . . . . . 31,902
Long-Term Debt  . . . . . . . . . . . . . . . . . . . . . .
5,853
Stockholders’ Equity  . . . . . . . . . . . . . . . . . . . 37,012
5.99
Stockholders’ Equity per Share . . . . . . . . . . . .

36,477
22,179
15,650
58,656
17,246
6,630
33,618
5.20

31,953
18,553
12,678
50,506
14,832
10,980
24,411
3.82

81,676
13,071
4,925
687
2,517
4,071
3,022
0.49
0.48

26,225
16,585
9,969
42,810
11,039
12,857
18,873
2.99

62,845
11,048
4,635
838
2,497
3,391
2,075
0.34
0.33

24,581
10,133
7,868
35,569
10,953
8,976
15,640
2.48

F u n d s   F l o w   D a t a   ( $ 0 0 0 )
From (To) Operations . . . . . . . . . . . . . . . . . . . 14,040
From (To) Investment . . . . . . . . . . . . . . . . . . . (10,733)
(3,315)
From (To) Financing  . . . . . . . . . . . . . . . . . . . .
(8)
From (To) Cash  . . . . . . . . . . . . . . . . . . . . . . .

11,953
(6,649)
(5,304)
— 

5,809
(4,767) 
(1,043) 
(1) 

4,772
(8,956)
4,072
(112)

4,079
(2,053) 
(2,551)
(525)

R a t i o   A n a l y s i s
Return on Average Equity . . . . . . . . . . . . . . . .
Return on Average Assets  . . . . . . . . . . . . . . .
Pre-Tax Income on Sales  . . . . . . . . . . . . . . . .
Net Income on Sales . . . . . . . . . . . . . . . . . . .
Total Liabilities to Equity  . . . . . . . . . . . . . . . .
Long-Term Debt to Equity  . . . . . . . . . . . . . . . .
Interest Coverage  . . . . . . . . . . . . . . . . . . . . .
Current Ratio  . . . . . . . . . . . . . . . . . . . . . . . .

36.2%
18.9%
13.1%
8.3%
1.0
0.2
23.5
1.5

33.4%
17.8%
11.9%
7.4%
1.3
0.2
28.2
2.1

24.2%
11.2%
7.8%
4.8%
1.0
0.4
9.4
2.2

17.5%
7.7%
5.0%
3.7%
0.8
0.7
6.9
2.4

14.2%
6.3%
5.4%
3.3%
0.8
0.6
5.0
2.2

= Includes shipping charges for the years of 1998 to 2000 due to FASB (EITF 00-10).

= Reflects reclassification of revolving loan from long term debt to current liabilities for the year 2000.

= Actual dollars and diluted number of shares for all years.

Year 2000 was a banner one for AAON as the
Company posted its fourth straight year of record sales
and its fifth consecutive year of record net income. For the
year ended December 31, 2000, net sales climbed 17.5%
to $155.0 million from $131.9 million in 1999. Gross
profit margins, narrowed slightly to 22.4% of sales or
$34.8 million from 23.3% of sales or $30.7 million.
Operating margins widened, benefiting from the close
scrutiny of SG & A expenses. Income from operations
increased 30.0% to $20.8 million (13.4% of sales) from
$16.0 million (12.1% of sales). Net income advanced
32.0% to $12.8 million (8.3% of sales) or $2.07 per share
from $9.7 million (7.3% of sales) or $1.50 per share. For
the second consecutive year net income margins were the
highest in the Company’s history and we believe, once
again, net income as a percent of sales represents a
record achievement for any major equipment manufacturer
in the HVAC industry during the last four decades.

At year-end 2000, the Company’s financial condition
remained strong. Total current assets were $47.4 million,
with current liabilities of $31.9 million or a current ratio of
1.5:1. Total shareholders’ equity increased to $37.0
million or $5.99 per share. Long-term debt declined to
$5.9 million from $6.6 million a year earlier despite
capital expenditures of $10.7 million and the stock
purchase program in which the Company spent $10.4
million during the year. The long-term debt to equity was
15.8%. In 1999, the return on average shareholders’
equity was 33.4% and for this past year the average ROE
stood at 36.2%. Our ability to sustain this exceptional
return on average shareholders’ equity is an important
indicator as to your management’s adherence to operate
efficiently and maximize profitability. Commencing in
October 1999, the Company entered into a stock, buyback
program which was completed in January 2001. During
that period, we purchased 651,800 shares of common
stock at a cost of $11.6 million.

Our exceptional financial performance has not gone

without recognition within the financial community.
Business Week Magazine (5/29/00) listed AAON among
the nation’s top 100 “Hot Growth Companies”. It is
interesting to note that financial data on 10,000 publicly
traded corporations provided the pool of companies from
which winners were selected. In addition, Forbes
Magazine (10/30/00) in an article, “200 Best Small
Companies” rated us fifty-second and highlighted AAON
as one of 11 “Companies to Watch”. Finally, Investor’s
Business Daily (12/4/00) provided an in-depth look at

AAON and its management’s commitment to excellence.
The records attained in the past five years leave little

doubt that we have gained a significant level of
momentum. The challenge before us is to maintain and
sustain this motion, which, as achieved and recognized,
should translate to enhanced shareholder value. We have
made significant commitments of capital in order to
automate and enlarge our manufacturing facilities. Over
the past five years we expended more than $32 million
on capital improvements and have budgeted $9 million in
the current year for additional improvements. In 1996,
our manufacturing plants in Tulsa, Oklahoma, and
Longview, Texas, had a combined total of 475,000
square feet. At the end of 2000, the two locations had a
combined total of 1.1 million square feet.

As volume grows, we expect that our overhead will

continue to be absorbed at a rate greater than its
increase, resulting in continued productivity gains. In the
upcoming years, we anticipate improved performance out
of our manufacturing process as we more fully utilize the
capital equipment acquired during the past few years. We
have completed all major plant expansions and most
renovations during 2000. Our currently utilized facilities
are capable of handling sales in excess of $275 million.
While we have substantial additional facilities leased out,
we believe that we have most of our facility needs met for
the foreseeable future. During the first half of 2001, we
will complete the majority of equipment purchases
required to take us to a production capability of
approximately $225 million per year. These expansions
and expenditures have allowed us to create substantial
efficiency improvements by developing dedicated
production lines for all rooftop products in our Tulsa
facility. In our Longview plant, we have added capacity to
enable efficiency improvements to be made in sheet
metal fabrication as well as creating separate production
lines for air handlers and condensing units. Dedicated
lines enable us to focus assembly methodology upon the
unique characteristics of each product to improve
production efficiency. 

Our investment in manufacturing capacity will also
allow us to exploit opportunities we have not pursued in
the past due to manufacturing constraints. While our
success in serving our customers and a strong economy
in 2000 resulted in proportional growth in sales to all
markets, we believe that we have significant
opportunities to grow in the new markets we are
beginning to enter. In my letter to you last year, I spoke of

1996

>>2000

E X P A N S I O N S

C O M P L E T E D

New West Tulsa Plant
Addition - January 2001

replacing our larger rooftop units with a newly developed
version, the introduction of air handlers, condensing
units and wall-mounted products. Currently, we are
involved in the introduction of our RL series rooftop
product capable of more than 200 tons of cooling. This
represents an increase of roughly 60% in maximum
cooling capacity for the top end of our product line.
Sales of air handlers and condensing units increased
more than 75%, yet they remain a small contributor to
overall sales. The wall-mounted product will address the
needs of additional markets, particularly within the
telecommunications industry. The markets we are
entering are larger than the historic commercial rooftop
air conditioning market. While we believe we will have
continued penetration with our smaller rooftop product
line, the greater percentage increases will come from
these new products. In 2001, we will continue our trend
of improving and expanding our product offerings by
initiating production of chillers. The chillers may be used
alone or in conjunction with the air handlers in either the
replacement or new construction markets.

Recruitment and retention of skilled personnel have
been high on our list of priorities. Our efforts to nurture
and grow talent from within our Company have paid off
handsomely with highly trained and loyal employees. We
are constantly reviewing and improving our compensation
structure. Since 1993, we have been matching employee
contributions to their 401(k) accounts, with company
stock purchased in the open market. More recently, as a
further incentive to retain skilled employees, the
Company began providing discretionary contributions to
all employees eligible for our 401(k) retirement plan. The

investment by our employees’ retirement plan in AAON
common stock has beneficially influenced our employee
turnover rate while aligning employee interests with those
of our other shareholders. It is worthy of note that our
employee retirement accounts aggregate to be our third
largest shareholder. Improved retention of personnel has
materially affected productivity while reducing recruitment
and training costs. The combination of these factors, in
tandem with the manufacturing efficiencies garnered
from our investments in manufacturing equipment, has
made a dramatic and impressive contribution to our
overall profitability.

While 2000 was a record year for AAON, we began to

witness some softening in demand toward year-end.
Many parts of the economy, notably manufacturing, have
been hurt by the economic slowdown. The softness
continued into 2001. Despite the clouded economic
atmosphere, we believe that the Company can achieve
another record year of sales and earnings. We recognize,
particularly during difficult times, the importance of our
devoted and loyal customers, sales representatives and
shareholders, as well as our outstanding employees all of
whose names appear at the end of this report. Thank you
all for enabling AAON to attain the premier position it
enjoys today and for your continuing support.

Norman H. Asbjornson
President/CEO

April 10, 2001

S A L E S  
[$000]

O R D E R S  
[$000]

18000

16000

14000

12000

10000

8000

6000

4000

2000

0

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

NOV DEC

18000

16000

14000

12000

10000

8000

6000

4000

2000

0

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

NOV DEC

M A R K E T S

P R O D U C T S

1999
2000

1999
2000

New AAON RL Product
And Features

P E O P L E

E Q U I P M E N T

C O M PA N Y   T I M E L I N E

August 1988
AAON, an Oklahoma corporation, was founded. 

September 1988
Purchase of John Zink Air Conditioning Division. 

Spring 1989
• AAON purchased, renovated and moved into a

184,000 square foot plant in Tulsa, Oklahoma.
• Introduced a new product line of rooftop heating

and air conditioning units 2-140 tons.

Summer 1989
Became a publicly traded company with the reverse
acquisition of Diamond Head Resources (now
“AAON, Inc.”), a Nevada corporation.

December 1990
Listed on NASDAQ Small Cap–Symbol “AAON”.

December 1991
Formed AAON Coil Products, a Texas Corporation,
as a subsidiary to AAON, Inc. (Nevada) and
purchased coil making assets of Coils Plus.

Spring 1993
AAON Coil Products purchased, renovated and 
moved into a 110,000 square foot plant in
Longview, Texas.

September 1993
One-for-four reverse stock split. Retired $1,927,000
of subordinated debt.

November 1993
Listed on the NASDAQ National Market System.

January 1995
Introduced a desiccant heat recovery wheel option
available on all AAON rooftop units.

March 1995
• Purchase of property with 26,000 square ft.

building adjacent to AAON Coil Products plant in
Longview, TX. 

• Issued a ten percent stock dividend.

September 1995
Completed expansion of the Tulsa facility to
332,000 square feet.

December 1997
Purchased 40 acres with 457,000 square foot
plant and 22,000 square foot office space located
across from Tulsa facility.

April 1998
AAON receives U.S. patent for Blower Housing
assembly.

October 1998
U.S. patent is granted to AAON for air conditioner
with energy recovery heat wheel.

November 1998
• AAON yearly shipments exceed $100 million.
• Received U.S. patent for Dimpled 

Heat Exchanger Tube.

Spring 2000
Completed Tulsa, Oklahoma and Longview, Texas
plant additions yield a total exceeding 1 million
square feet.