A.O. Smith First Quarter Earnings Per Share Increase 82% to $.62 Per Share MILWAUKEE, April 15 -- A.O. Smith Corporation (NYSE: AOS) today announced first quarter 1998 continuing earnings of $10.2 million or $.62 per share (diluted), a significant increase over first quarter 1997 continuing earnings of $7.1 million or $.34 per share (diluted).

First quarter sales of $223 million were $27 million or approximately fourteen percent higher than sales of $196 million for the same period the prior year.

"Improved performance on the part of the Storage & Fluid Handling Technologies and Water Systems Technologies platforms contributed to the higher first quarter results," Robert J. O'Toole, chairman and chief executive officer, observed.

"The company also benefited from the addition of the UPPCO subfractional horsepower motor business and higher interest income."

First quarter sales of Electric Motor Technologies, A.O. Smith's largest platform, were nineteen percent higher than the first quarter of 1997, reflecting the impact of the UPPCO acquisition that A.O. Smith acquired on March 31, 1997. Excluding UPPCO, higher sales in both pump and international business units were offset by declines in the company's heating, ventilating, and air conditioning (HVAC) businesses. Because of pricing pressures, operating profits were essentially flat when compared with the first quarter of 1997.

Stronger sales of both residential and commercial water heaters enabled the Water Systems Technology platform to increase its sales five percent to nearly $75 million in the first quarter. Unit volumes for both residential and commercial water heaters rose approximately eight percent during the fourth quarter. Operating profits were modestly higher.

The Storage & Fluid Handling Technologies platform benefited in the first quarter from improved sales of liquid storage tanks, continued strong sales of dry storage and Slurrystore^® tanks, as well as increased sales of fiberglass pipe to the service station and petroleum production markets. First quarter sales of $37 million were seventeen percent higher than sales of $31 million in the first quarter last year. First quarter operating profits were significantly higher than the same period in 1997 due to the higher volumes, improved operating efficiency, and the impact of cost-reduction activities during the second half of last year.

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

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

                            Statement of Earnings

                                                        Three Months ended
    Continuing                                                March 31
    Sales                                                1998          1997
     Electric Motor Technologies                       $111,839       $93,927
     Water Systems Technologies                          74,554        70,972
     Storage & Fluid Handling Technologies               36,562        31,349
    Net Sales                                           222,955       196,248

    Costs and Expenses
     Cost of Products Sold                              177,186       153,450
     Selling, General and Administrative                 27,900        27,393
     Interest Expense                                     1,624         2,244
     Interest Income                                     (1,712)          (58)
     Other Expense                                          722           990
     Tax Provision                                        6,038         4,391
      Total Costs and Expenses                          211,758       188,410

    Earnings Before Equity in Loss of Joint Ventures     11,197         7,838
     Equity in Loss of Joint Ventures                    (1,019)         (717)
    Earnings from Continuing Operations                  10,178         7,121

    Discontinued
    Earnings from Operations (less related
     income tax of $6,324)                                    0        12,790

    Net Earnings                                        $10,178       $19,911

    Basic Earnings Per Share of Common Stock
     Continuing Operations                                 $.63          $.35
     Discontinued Operations                                 --          $.63
      Net Earnings                                         $.63          $.98

    Average Common Shares Outstanding                16,061,964    20,363,777

    Diluted Earnings Per Share of Common Stock
     Continuing Operations                                 $.62          $.34
     Discontinued Operations                                 --          $.62
      Net Earnings                                         $.62          $.96

     Average Common Shares Outstanding               16,475,673    20,711,242



                            A.O. SMITH CORPORATION
                                Balance Sheet

                                                       March 31   December 31
                                                          1998        1997
    ASSETS:

     Cash and cash equivalents                         $110,287      $145,896
     Receivables                                        144,163       126,232
     Inventories                                         79,132        79,049
     Deferred income taxes                               10,937        11,849
     Other current assets                                 4,511         2,702

      Total Current Assets                              349,030       365,728

     Net property, plant and equipment                  208,267       207,756
     Investments in and advances to joint ventures       27,237        25,605
     Goodwill                                            51,354        51,783
     Other assets                                        67,559        65,644

     Total Assets                                      $703,447      $716,516

    LIABILITIES AND STOCKHOLDERS' EQUITY:

     Trade payables                                     $63,718       $61,299
     Accrued payroll and benefits                        22,683        26,397
     Product warranty                                     8,188         7,972
     Income taxes                                         8,044         6,607
     Long-term debt due within one year                   5,598         5,590
     Other current liabilities                           21,850        20,017

      Total Current Liabilities                         130,081       127,882

     Long-term debt                                     101,605       100,972
     Other liabilities                                   56,285        59,515
     Deferred income taxes                               28,650        28,442
     Stockholders' equity                               386,826       399,705

     Total Liabilities and Stockholders' Equity        $703,447      $716,516


                            A.O. SMITH CORPORATION
                           STATEMENT OF CASH FLOWS

                                                          Three Months ended
                                                               March 31
                                                          1998          1997
    Operating Activities
    Continuing
     Net earnings                                       $10,178        $7,121

     Adjustments to reconcile net earnings
      to net cash provided by operating activities:
       Depreciation & amortization                        6,919         6,126
       Deferred income taxes                              1,120        (1,235)
       Equity in loss of joint ventures                   1,019           717
       Net change in current assets and liabilities     (15,631)      (22,927)
       Net change in noncurrent assets and liabilities   (6,423)        4,341
       Other                                                266           130
    Cash Used by Operating Activities                    (2,552)       (5,727)

    Investing Activities
     Capital expenditures                                (6,942)      (11,052)
     Capitalized purchased software costs                  (308)         (240)
     Investment in joint ventures                        (2,652)       (3,451)
     Acquisition of business (net of cash acquired)           0       (60,443)
    Cash Used by Investing Activities                    (9,902)      (75,186)

    Cash Used by Continuing Operations
     before Financing Activities                        (12,454)      (80,913)

    Discontinued
    Cash Used by Discontinued Operations
     before Financing Activities                           (814)     (112,285)

    Financing Activities
     Long-term debt incurred                                641       241,940
     Long-term debt retired                                  --        (4,675)
     Purchase of common stock held in treasury          (20,231)      (46,828)
     Proceeds from common stock options exercised            --         2,432
     Tax benefit from exercise of stock options              --           287
     Dividends paid                                      (2,751)       (3,560)
    Cash Provided/(Used) by Financing Activities        (22,341)      189,596

     Net decrease in cash and cash equivalents          (35,609)       (3,602)
     Cash and cash equivalents - beginning of period    145,896         6,405

    Cash and Cash Equivalents - End of Period          $110,287        $2,803