May 25, 2006
Room 7010
Kathy I. Sheffield
Treasurer
Aaon, Inc.
2425 South Yukon Avenue
Tulsa, Oklahoma 74107
Re: Aaon, Inc.
Form 10-K for Fiscal Year Ended December 31, 2005
Forms 10-Q for the Fiscal Quarter Ended March 31, 2006
File No. 000-18953
Dear Ms. Sheffield:
We have reviewed the above referenced filing and have the
following comments. Please note that we have limited our review
to
only your financial statements and related disclosures and do not
intend to expand our review to other portions of your document. We
may ask you to provide us with supplemental information so we may
better understand your disclosure. Please be as detailed as
necessary in your explanation. After reviewing this information,
we
may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for Fiscal Year Ended December 31, 2005
Note 1. Business, Summary of Significant Accounting Policies and
Other Financial Data
Warranties, page 35
1. We note your rollforward of warranty activity for the years
ended
December 31, 2005, 2004 and 2003 which includes your warranty
expense
provision recorded during each of those years. Revise your
disclosure in future filings to separately present the amount of
the
provision recorded that represents the aggregate changes in the
liability for accruals related to preexisting warranties
(including
adjustments related to changes in estimates) for each of the years
presented. Refer to paragraph 14b of FIN45. In your response,
please show us what your revised disclosures will look like.
Segments, page 38
2. You disclose that you operate in one operating segment,
however,
we note in your business section you separately discuss your
various
products. For example, you refer to the fact that your RN product
line constituted 25% of total dollar shipments in your annual
report.
We further note that you have sales in different geographies and
that
your MD&A section refers to the impact Aaon Canada had on margins.
Finally we note that you have various distribution channels in
that
you sell to property owners and manufacturer`s representatives.
With
the above being said, tell us the factors used to identify your
reportable segments and explain why you believe your products,
geographies and/or customer bases are not separate reportable
segments pursuant to paragraphs 10-17 of SFAS No. 131.
Additionally
provide for us the internal financial information that is
regularly
provided to the chief operating decision maker as of December 31,
2005 and March 31, 2006.
To the extent you are aggregating any operating segments, please
explain to us, in detail, the basis for the aggregation of your
operating segments into one reportable segment. This explanation
should address Aaon Canada margins compared to US gross margins.
To
the extent you are aggregating operating segments because you
believe
your segments are economically similar, please provide us with an
analysis that includes historical revenues, gross profits, gross
profit margins, operating profits, and operating profit margins,
along with any other information you believe would be useful for
each
of your operating segments to help us understand how these
operations
are economically similar. Please also address any differences in
the
trends these financial indicators depict (e.g. if gross profit
margin
is decreasing for one operation and increasing for another).
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please submit all correspondence and supplemental materials on
EDGAR
as required by Rule 101 of Regulation S-T. Detailed cover letters
greatly facilitate our review. Please understand that we may have
additional comments after reviewing your responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Melissa Rocha at (202) 551-3854 or me at
(202)
551-3255 if you have questions regarding comments on the financial
statements and related matters.
Sincerely,
Nili N. Shah
Branch Chief
Kathy I. Sheffield
Aaon, Inc.
May 25, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE