A.O. Smith Announces First Quarter Earnings of $.48 Per Share, a 17 Percent Increase Over First Quarter of 1998 MILWAUKEE, April 15 -- A.O. Smith Corporation (NYSE: AOS, Amex: SMCA), continuing to benefit from the strong performance of its two largest technology platforms, today announced first quarter earnings of $.48 per share.

Earnings per share increased 17 percent over first quarter 1998 earnings of $.41 per share. Net earnings for the Milwaukee-based manufacturer rose to $11.4 million on a 15 percent increase in sales to $257 million.

"The robust domestic economy continues to have a favorable influence on sales of electric motors and water heaters," Robert J. O'Toole, chairman and chief executive officer, said. "Their growth more than offset the lower sales and profits of our Storage & Fluid Handling Technologies platform, the result of sluggishness in the capital goods industry and ongoing weakness in overseas markets."

First quarter sales of Electric Motor Technologies were $148 million, more than $36 million higher than the same period in 1998. First quarter performance reflected:

• Improved sales of hermetic motors, the result of the ongoing strength of the domestic air conditioning industry;
  
  
• First quarter sales and profits of the Scottsville, Ky., operation acquired in July of 1998; and
  
  
• Higher sales of fractional horsepower fan motors largely derived from the company's Tier One supply agreement with York International.

Operating profits improved significantly compared with the first quarter of 1998, due to the higher volumes and enhanced efficiency throughout the operation.

Increased sales of commercial water heaters and improved residential water heater performance enabled Water Systems Technologies to report a 10 percent first quarter sales increase to $82 million. Water Systems' commercial business continues to benefit from the domestic economy and its impact on commercial construction. A stronger market for standard commercial heaters and sales of new products, most notably the high-efficiency Master-Fit^® line of commercial gas water heaters and the Cyclone XHE^® commercial water heater, contributed to improved first quarter results.

Operating profits increased significantly over the comparable 1998 period, due to the higher commercial volumes and the impact of cost reduction activities throughout the operation.

Continued weakness in the capital goods sector, principally the petroleum production, chemical, and agricultural markets, resulted in significantly lower first quarter sales and profits for the Storage & Fluid Handling Technologies platform.

"Overall, we are quite pleased with our first quarter performance and are off to a good start towards executing our plan for 1999," O'Toole noted.

Forward-Looking Statements

This press release contains forward-looking statements. Although the company believes that its expectations are based upon reasonable assumptions within the bounds of its knowledge of its business, there can be no assurance that its financial goals will be realized. Although a significant portion of the company's sales are derived from the replacement of previously installed product, and such sales are therefore less volatile, numerous factors may affect actual results and cause results to differ materially from those expressed in forward-looking statements made by or on behalf of the company. Among such numerous factors, the company includes: the continued growth of the world-wide air conditioning, heating, and refrigeration market; the weather and its impact on the heating and air conditioning market; the pricing environment for residential water heaters; capital spending trends in the oil, petrochemical, and chemical markets; and the successful development of the company's business venture in China.

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; 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
                                                                 March 31
    Sales                                                   1999        1998
        Electric Motor Technologies                      $147,875    $111,839
        Water Systems Technologies                         81,988      74,554
        Storage & Fluid Handling Technologies              27,473      36,562
    Net Sales                                             257,336     222,955

    Costs and Expenses
        Cost of Products Sold                             207,003     177,186
        Selling, General and Administrative                28,510      27,900
        Interest Expense                                    2,331       1,624
        Interest Income                                      (340)     (1,712)
        Other Expense                                       1,955         722
        Tax Provision                                       6,475       6,038
           Total Costs and Expenses                       245,934     211,758

    Earnings Before Equity in Loss of Joint Ventures       11,402      11,197
        Equity in Loss of Joint Ventures                        0      (1,019)
    Net Earnings                                          $11,402     $10,178

    Net Earnings Per Share of Common Stock (Diluted)         $.48        $.41

       Average Common Shares Outstanding  (000's omitted)  23,742      24,714


                            A.O. SMITH CORPORATION
                                Balance Sheet

                                                      March 31    December 31
                                                        1999         1998
    ASSETS:

        Cash and cash equivalents                     $17,552      $37,666
        Receivables                                   171,441      133,764
        Inventories                                   100,830       99,984
        Deferred income taxes                          10,882       11,376
        Other current assets                            5,058        4,599

           Total Current Assets                       305,763      287,389

        Net property, plant and equipment             253,106      248,770
        Goodwill                                      146,602      146,901
        Other assets                                   89,709       84,372

        Total Assets                                 $795,180     $767,432


    LIABILITIES AND STOCKHOLDERS' EQUITY:

        Trade payables                                $77,244      $57,429
        Accrued payroll and benefits                   24,357       31,385
        Product warranty                                7,491        7,892
        Income taxes                                    9,758        6,786
        Long-term debt due within one year              4,629        4,629
        Other current liabilities                      27,090       24,036

           Total Current Liabilities                  150,569      132,157

        Long-term debt                                131,535      131,203
        Other liabilities                              62,013       60,636
        Deferred income taxes                          44,501       42,343
        Stockholders' equity                          406,562      401,093

        Total Liabilities and Stockholders' Equity   $795,180     $767,432


                            A.O. SMITH CORPORATION
                           STATEMENT OF CASH FLOWS

                                                           Three Months ended
                                                                March 31
                                                            1999       1998
    Operating Activities
    Continuing
      Net earnings                                        $11,402     $10,178

      Adjustments to reconcile net earnings
       to net cash provided by operating activities:
         Depreciation & amortization                        9,003       6,919
         Equity in loss of joint ventures                      --       1,019
         Net change in current assets and liabilities     (17,383)    (14,711)
         Net change in noncurrent assets and liabilities   (5,254)     (6,223)
            Other                                            (139)        266
    Cash Used by Operating Activities                      (2,371)     (2,552)

    Investing Activities
        Capital expenditures                              (10,395)     (6,942)
        Capitalized purchased software costs                 (408)       (308)
        Investment in joint ventures                            0      (2,652)
        Acquisition of business                              (531)          0
    Cash Used by Investing Activities                     (11,334)     (9,902)

    Cash Used by Continuing Operations
     before Financing Activities                          (13,705)    (12,454)

    Discontinued
    Cash Used by Discontinued Operations
     before Financing Activities                           (1,301)       (814)

    Financing Activities
        Long-term debt incurred                               332         641
        Long-term debt retired                                  0           0
        Purchase of common stock held in treasury          (2,691)    (20,231)
        Proceeds from common stock options exercised           42           0
        Tax benefit from exercise of stock options              4           0
        Dividends paid                                     (2,795)     (2,751)
    Cash Used by Financing Activities                      (5,108)    (22,341)

        Net decrease in cash and cash equivalents         (20,114)    (35,609)
        Cash and cash equivalents - beginning of period    37,666     145,896

    Cash and Cash Equivalents - End of Period             $17,552    $110,287