SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report
(Date of earliest
event reported): April 15, 2003
A. O. Smith Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-475 39-0619790
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
P.O. Box 245008, Milwaukee, Wisconsin 53224-9508
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(Address of principal executive offices, including zip code)
(414) 359-4000
(Registrant's telephone number)
1
Item 7. Financial Statements and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibit is being filed herewith:
(99) Press Release of A. O. Smith Corporation, dated April 15, 2003.
Item 9. Regulation FD Disclosures. (Information is being provided under Item
12.)
On April 15, 2003, A. O. Smith Corporation ("the Company") issued a press
release announcing the Company's results for the quarter ended March 31, 2003
and its earnings outlook for 2003. A copy of the Company's press release is
attached as Exhibit 99 to this Current Report on Form 8-K (this "Current
Report") and is incorporated by reference herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
A. O. Smith Corporation
Date: April 15, 2003 By: /s/ Kenneth W. Krueger
Kenneth W. Krueger
Senior Vice President and
Chief Financial Officer
A. O. Smith Corporation
Exhibit Index to Current Report on Form 8-K Dated April 15, 2003
Exhibit
Number Description
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(99) Press Release of A. O. Smith Corporation dated April 15, 2003.
A. O. SMITH CORPORATON
NEWS RELEASE For further information contact:
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MEDIA INQUIRES: ANALYST/INVESTOR INQUIRES: A.O. Smith Corporation
Edward J. O'Connor Craig Watson P.O. Box 245008
414-359-4100 414-359-4009 Milwaukee, WI 53224-9508
414-359-4000
NYSE: AOS
Milwaukee, Wis.--First quarter 2003 net earnings for A. O. Smith
Corporation (AOS-NYSE) increased 13 percent to $13.7 million compared with the
$12.1 million earned during the same period in 2002.
While net earnings improved 13 percent, the $.46 per share earnings in the
first quarter fell below last year's $.50 per share. This difference is due to
the impact of the 4.8 million shares issued in the May 2002 stock offering. Both
earnings and earnings per share were at the high end of the company's forecast.
Revenues for the quarter ended March 31 increased four percent to $387.9
million compared with 2002 first quarter revenues of $371.9 million.
"Earnings were positively influenced by improved operating performance in
our Electrical Products business as well as lower interest expense," Robert J.
O'Toole, chairman and chief executive officer, pointed out.
Electrical Products
Electrical Products reported first quarter sales of $213.1 million, nearly
nine percent higher than first quarter sales in 2002. The sales increase was the
result of the July 2002 acquisition of Athens Products, higher sales in the pump
and after-market businesses, as well as additional sales from the company's
recently acquired Chinese motor operations. Sales to the heating, ventilating,
and air conditioning (HVAC) market were flat.
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a. o. smith first quarter earnings add l
The higher volumes and improved operating expenses contributed to first
quarter operating profit of $17.7 million, a 16 percent increase compared with
the first quarter of 2002. Electrical Products' cost reduction and product
repositioning initiatives continue, and during the quarter, the company closed
its Monticello, Ind., assembly facility. Production from that plant was
transferred to company operations in Mexico.
Water Systems
Water Systems' first quarter sales of $174.8 million were essentially flat
compared with the same period in 2002. A price increase to offset higher steel
costs took effect in the last half of the quarter. This net cost increase
coupled with lower unit sales, caused first quarter operating profit to decline
to $12.0 million from the $13.6 million earned last year.
On July 1, new regulatory standards go into effect that impact gas-fired
residential water heaters, and Water Systems remains on schedule with plans to
introduce new products that comply with these standards. The new regulations
mandate that gas residential water heaters resist accidentally igniting
flammable vapors that may be caused by spilled gasoline or other flammable
materials ill-advisedly taken into the home. The standards will be phased in
over a two-year period, beginning with 30, 40, and 50-gallon products this year.
Company discusses outlook
"Our customers remain very cautious due to weakening consumer demand and
the general uncertainty in the U.S. economy," O'Toole commented. "In spite of
these concerns, we remain comfortable with our 2003 forecast of earnings in the
range of $2.05 and $2.25 per share."
"As we have stated before, lower pension income and cost increases in areas
such as medical benefits, liability insurance, and steel will impact us during
the full year, while the benefits of repositioning at Electrical Products, the
integration of State Industries, and the introduction of new water heater
products are weighted to the last half of the year.
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a. o. smith first quarter earnings add 2
Consequently, we expect year-over-year comparisons to improve in the last half
of the year. For the second quarter of 2003, we estimate net income will be
modestly better than last year, with earnings per share in a range of $.64 to
$.68 per share."
A. O. Smith will broadcast a live conference call beginning at 1:30 p.m.
(Eastern Time) today. The call can be heard on the company's web site,
www.aosmith.com. An audio replay of the call will be available on the company's
web site after the live event.
Forward-looking statements
This release contains statements that we believe are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements generally can be identified by the use of
words such as "may," "will," "expect," "intend," "estimate," "anticipate,"
"believe," "continue," or words of similar meaning. These forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those anticipated as of the date of this
release. Factors that could cause such a variance include the following:
instability in the company's electric motor and water products markets;
inability to generate the synergistic cost savings from the acquisition of State
Industries; the inability to implement cost-reduction programs; adverse changes
in general economic conditions; significant increases in raw material prices; a
failure to comply with new flammable vapor prevention standards in the
residential gas water heater industry; competitive pressures on the company's
businesses; and the potential that assumptions on which the company based its
expectations are inaccurate or will prove to be incorrect.
Forward-looking statements included in this press release are made only as
of the date of this release, and the company is under no obligation to update
these statements to reflect subsequent events or circumstances. All subsequent
written and oral forward-looking statements attributable to the company, or
persons acting on its behalf, are qualified in their entirety by these
cautionary statements.
A. O. Smith Corporation, with headquarters in Milwaukee, Wis., is one of North
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a. o. smith first quarter earnings add 3
America's largest manufacturers of electric motors, with a comprehensive line of
hermetic motors, fractional horsepower alternating current (AC) and direct
current (DC) motors, and integral horsepower motors, as well as one of North
America's largest manufacturers of residential and commercial water heating
equipment. A. O. Smith Corporation has facilities in the United States, Mexico,
Canada, England, Ireland, Hungary, the Netherlands, and China and employs
approximately 17,000 people.
A. O. SMITH CORPORATION AND SUBSIDIARIES
(condensed consolidated financial statements -
$000 omitted except per share data)
Statement of Earnings
Three Months ended
March 31
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2003 2002
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Electrical Products $ 213,091 $ 196,234
Water Systems 174,821 175,693
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Net sales 387,912 371,927
Cost of products sold 309,719 295,026
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Gross profit 78,193 76,901
Selling, general and administrative 54,023 53,204
Interest expense 2,908 4,177
Other expense 336 870
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20,926 18,650
Tax provision 7,220 6,528
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Net Earnings $ 13,706 $ 12,122
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Net Earnings Per Share of Common Stock (Diluted) $ 0.46 $ 0.50
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Average Common Shares Outstanding (000's omitted) 29,522 24,317
A. O. SMITH CORPORATION
Balance Sheet
March 31 December 31
2003 2002
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ASSETS:
Cash and cash equivalents $ 27,501 $ 32,847
Receivables 246,129 215,481
Inventories 217,689 200,351
Deferred income taxes 26,008 26,714
Other current assets 18,289 12,858
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Total Current Assets 535,616 488,251
Net property, plant and equipment 355,107 362,730
Goodwill and other intangibles 309,084 309,151
Other assets 65,840 64,725
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Total Assets $ 1,265,647 $ 1,224,857
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Trade payables $ 150,870 $ 131,423
Accrued payroll and benefits 35,715 38,745
Product warranty 19,405 19,478
Income taxes 3,764 1,786
Long-term debt due within one year 11,671 11,671
Other current liabilities 56,731 58,576
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Total Current Liabilities 278,156 261,679
Long-term debt 253,438 239,084
Other liabilities 113,192 114,694
Pension liability 88,323 90,836
Deferred income taxes 10,496 7,512
Stockholders' equity 522,042 511,052
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Total Liabilities and Stockholders' Equity $ 1,265,647 $ 1,224,857
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A. O. SMITH CORPORATION
STATEMENT OF CASH FLOWS
Three Months ended
March 31
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2003 2002
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Operating Activities
Continuing
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Net earnings $ 13,706 $ 12,122
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation & amortization 12,789 12,297
Net change in current assets and liabilities (36,024) 3,024
Net change in noncurrent assets and liabilities (143) (5,516)
Other (1,007) 927
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Cash Provided by (Used in) Operating Activities (10,679) 22,854
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Investing Activities
Capital expenditures (5,423) (7,080)
Acquisitions - (2,050)
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Cash Used in Investing Activities (5,423) (9,130)
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Financing Activities
Debt incurred 16,497 -
Debt retired (2,143) (14,798)
Other stock transactions - 815
Dividends paid (4,059) (3,094)
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Cash Provided by (Used in) Financing Activities 10,295 (17,077)
Discontinued
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Cash Provided by Discontinued Operations 461 4,445
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Net increase / (decrease) in cash and cash equivalents (5,346) 1,092
Cash and cash equivalents - beginning of period 32,847 20,759
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Cash and Cash Equivalents - End of Period $ 27,501 $ 21,851
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