A. O. Smith Third Quarter Earnings Increase 13 Percent to $.52 Per Share MILWAUKEE, Wis., Oct. 18 -- A. O. Smith Corporation's (NYSE: AOS; Amex: SMCA) third quarter earnings increased 13 percent over the 1998 third quarter to $.52 per share, bolstered by the continued strong performance of its electric motor business.

Net earnings for the quarter ended September 30 were $12.4 million, compared with 1998 third quarter net earnings of $11.0 million. Third quarter sales reached $318 million, more than 30 percent higher than 1998 third-quarter sales of $243 million.

"Demand in our principal motor markets remained strong throughout the quarter, sustained by a healthy domestic economy," Robert J. O'Toole, chairman and chief executive officer, observed.

"Electrical Products' results also reflected the first two months' contribution from the MagneTek motors acquisition completed in early August," O'Toole continued.

A. O. Smith's sales for the first nine months of 1999 were $838 million, $145 million higher than the $693 million sales reported for the first nine months of last year. Nine months earnings of $37.7 million or $1.59 per share were higher than the $33.8 million or $1.39 per share earned during the same period last year.

The Electric Motor Technologies platform, A. O. Smith's largest operating unit, benefited from higher demand in the heating, ventilating, and air conditioning (HVAC) market, increased export motor volume, and expanded sales in the garage door opener market segment. Third quarter sales increased 56 percent to $212 million, compared with 1998 third quarter sales of $135 million. The MagneTek electric motor operations, acquired on August 2, contributed $66 million to third quarter revenues. Operating profits increased significantly due to the higher volumes.

Water Systems Technologies' third quarter sales of $76 million were approximately $4 million higher than the same period in 1998. The company benefited from increased sales in China, which helped to offset relatively flat third-quarter domestic demand for commercial and residential water heaters. Third quarter profits were lower than the 1998 third quarter, as a result of the sluggish demand in domestic markets, and costs associated with the expansion of the Chinese water heater business.

The Storage & Fluid Handling Technologies platform reported sales of $31 million, a decrease of approximately 15 percent compared with the third quarter of 1998. Demand for storage tanks and fiberglass pipe continues to be adversely affected by weak capital spending in the industrial markets served by the platform. Operating profits were lower in the quarter, due to the lower volumes.

A. O. Smith Corporation is a diversified manufacturer with headquarters in Milwaukee, Wis. Its major product lines include fractional horsepower, hermetic, and integral horsepower electric motors; commercial and residential water heaters; municipal, industrial, and agricultural storage tanks; and fiberglass piping systems.

                  A. O.  SMITH CORPORATION AND SUBSIDIARIES
                (condensed consolidated financial statements -
                     $000 omitted except per share data)

                            Statement of Earnings

                                    Three Months ended     Nine Months ended
                                       September 30           September 30

    Sales                             1999       1998       1999       1998
      Electric Motor Technologies   $211,609   $135,309   $516,148   $360,913
      Water Systems Technologies      75,797     71,685    236,536    220,534
      Storage & Fluid Handling
       Technologies                   30,901     36,260     85,729    111,442
    Net Sales                        318,307    243,254    838,413    692,889

    Costs and Expenses
      Cost of Products Sold          258,445    196,232    674,292    552,245
      Selling, General and
       Administrative                 35,578     26,324     92,544     80,605
      Interest Expense                 4,380      1,974      8,879      5,191
      Interest Income                   (512)      (258)    (1,066)    (3,279)
      Other Expense                    2,073        927      5,612      2,341
      Tax Provision                    5,977      6,356     20,469     19,587
        Total Costs and Expenses     305,941    231,555    800,730    656,690

    Earnings Before Equity in
     Loss of Joint Ventures           12,366     11,699     37,683     36,199
      Equity in Loss of Joint Ventures    --       (725)        --     (2,418)
    Net Earnings                     $12,366    $10,974    $37,683    $33,781

    Net Earnings Per Share of
     Common Stock (Diluted)             $.52       $.46      $1.59      $1.39

      Average Common Shares
       Outstanding (000's omitted)    23,845     23,958     23,771     24,316


                           A. O. SMITH CORPORATION
                                Balance Sheet

                                                   September 30    December 31
                                                       1999           1998
    ASSETS:
      Cash and cash equivalents                      $10,079         $37,666
      Receivables                                    226,120         133,764
      Inventories                                    162,225          99,984
      Deferred income taxes                           10,310          11,376
      Other current assets                             8,084           4,599

        Total Current Assets                         416,818         287,389

      Net property, plant and equipment              331,533         248,770
      Goodwill and other intangibles                 253,384         149,282
      Other assets                                    95,146          81,991

      Total Assets                                $1,096,881        $767,432


    LIABILITIES AND STOCKHOLDERS' EQUITY:

      Trade payables                                $102,443         $57,429
      Accrued payroll and benefits                    39,254          31,385
      Product warranty                                12,792           7,892
      Income taxes                                     5,207           6,786
      Long-term debt due within one year               4,629           4,629
      Other current liabilities                       39,524          24,036

        Total Current Liabilities                    203,849         132,157

      Long-term debt                                 344,354         131,203
      Other liabilities                               69,803          60,636
      Deferred income taxes                           50,377          42,343
      Stockholders' equity                           428,498         401,093

      Total Liabilities and Stockholders' Equity  $1,096,881        $767,432


                           A. O.  SMITH CORPORATION
                           STATEMENT OF CASH FLOWS

                                                         Nine Months ended
                                                            September 30
                                                        1999            1998
    Operating Activities
    Continuing
      Net earnings                                    $37,683         $33,781

      Adjustments to reconcile net earnings
       to net cash provided by operating activities:
        Depreciation & amortization                    30,014         22,552
        Equity in loss of joint ventures                   --          2,418
        Net change in current assets and liabilities   (5,682)        (6,963)
        Net change in noncurrent assets and
         liabilities                                  (11,250)         2,751
        Other                                            (255)           (99)
    Cash Provided by Operating Activities              50,510         54,440

    Investing Activities
      Capital expenditures                            (26,595)       (20,116)
      Capitalized purchased software costs             (1,187)        (1,308)
      Investment in joint ventures                         --         (8,066)
      Acquisition of business                        (251,892)      (126,456)
    Cash Used by Investing Activities                (279,674)      (155,946)

    Cash Used by Continuing Operations
     before Financing Activities                     (229,164)      (101,506)

    Discontinued
    Cash Used by Discontinued Operations
     before Financing Activities                       (1,761)        (2,095)

    Financing Activities
      Long-term debt incurred                         217,780         30,590
      Long-term debt retired                           (4,629)        (5,590)
      Purchase of common stock held in treasury        (2,745)       (33,244)
      Other stock transactions                          1,296            397
      Dividends paid                                   (8,364)        (8,257)
    Cash Provided / (Used) by Financing Activities    203,338        (16,104)

      Net decrease in cash and cash equivalents       (27,587)      (119,705)
      Cash and cash equivalents - beginning of period  37,666        145,896

    Cash and Cash Equivalents - End of Period         $10,079        $26,191