The company reported full year sales of
Fourth quarter sales of
"2008 was a solid year for our business, in spite of the rapid
deterioration of the global economy in the fourth quarter,"
"Despite these incredible headwinds, I am proud of our employees' ability to navigate the challenges that we encountered in 2008. As a result of the hard work of our experienced team, we ended the year with a strong balance sheet and debt to capital ratio of 34 percent," Jones continued. "We are in a good financial position in spite of the recession. We continue to focus on preserving cash and reducing our cost structure to maintain our solid financial position."
Water Products Company
Water Products sales of
Operating profit decreased approximately 10 percent to
Fourth quarter sales were
In late December, Water Products received a land allotment near
Electrical Products Company
Electrical Products 2008 sales of
Operating earnings of
Fourth quarter sales were
At the end of 2008, Electrical Products completed the announced closings
of the
Cash flow and Leverage
Cash flow from operating activities in 2008 of
Smith Investment Company transaction
On
-- The number of shares of
-- The transaction will involve several corporate governance enhancements including one additional board seat elected by common stock shareholders, a "sunset" provision on Class A Common Stock shares based on a percentage of ownership, and a requirement that Class A shares convert automatically to Common Stock shares upon transfer to unaffiliated third parties; and
-- The number of
"We are pleased with the milestone in our history that this merger represents," Jones commented. "We have worked hard to ensure this is a good deal for our shareholders. It will improve our corporate governance, has the potential to increase the public float, and will result in a small reduction of total shares outstanding."
The transaction is subject to regulatory review and votes by
Outlook
"Given the deteriorating global economic environment that intensified
during the fourth quarter, we are taking a more cautious approach to our
expectations for 2009. At this time, we are forecasting significantly lower
volumes for both our residential and commercial businesses in both operating
companies," Jones commented. "Also, we expect an increase of more than
"In addition, there are a number of factors that we believe will
contribute to earnings this year, including improvement in water heater
pricing, continued growth-although at a slower rate-in
"Notwithstanding these earnings enhancers, the weak economy will challenge
us throughout the year," Jones continued. "Consequently, we expect 2009
earnings will be in a range between
Forward-looking statements
This release contains statements that the company believes 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," "forecast," 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: significant volatility in raw material prices; competitive pressures on the company's businesses; inability to implement pricing actions; negative impact of future pension contributions on the company's ability to generate cash flow; instability in the company's electric motor and water products markets; further weakening in housing construction; further weakening in commercial construction; a further slowdown in the Chinese economy; expected restructuring savings realized; further adverse changes in customer liquidity and general economic and capital market conditions; any failures to realize the anticipated benefits of the proposed Smith Investment transaction; the ability to obtain regulatory approvals for the Smith Investment transaction; or the risk of an unfavorable judgment or ruling in any Smith Investment transaction - related litigation.
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 attributed to the company, or persons acting on its behalf, are qualified entirely by these cautionary statements.
A. O. Smith Corporation, with 2008 sales of
Additional information and where you can find it
In connection with the proposed transaction between A. O. Smith
Corporation ("A. O. Smith") and Smith Investment Company ("SICO"), the parties
intend to file a registration statement on Form S-4 with the SEC containing a
joint proxy statement/ prospectus. Such documents, however, are not currently
available. The joint proxy statement/prospectus will be mailed to
stockholders of
A. O. SMITH CORPORATION (condensed consolidated financial statements - dollars in millions, except per share data) Statement of Earnings (unaudited) Three Months ended Year ended December 31 December 31 2008 2007 2008 2007 Net sales $508.6 $569.9 $2,304.9 $2,312.1 Cost of products sold 409.0 434.2 1,807.4 1,798.7 Gross profit 99.6 135.7 497.5 513.4 Selling, general and administrative 82.8 99.6 357.4 363.0 Restructuring and other charges 3.0 21.6 9.2 24.7 Interest expense 4.2 6.2 19.2 26.7 Other expense / (income) 0.2 0.1 1.6 (0.9) 9.4 8.2 110.1 99.9 Tax provision / (credit) 2.8 (8.8) 27.9 11.7 Earnings before equity loss in joint venture 6.6 17.0 82.2 88.2 Equity loss in joint venture -- -- (0.3) -- Net Earnings $6.6 $17.0 $81.9 $88.2 Diluted Earnings Per Share of Common Stock $0.22 $0.55 $2.70 $2.85 Average Common Shares Outstanding (000's omitted) 30,321 30,633 30,290 30,973 A. O. SMITH CORPORATION Balance Sheet (dollars in millions) (unaudited) December 31 December 31 2008 2007 ASSETS: Cash and cash equivalents $29.4 $37.2 Receivables 363.5 415.1 Inventories 282.0 261.8 Deferred income taxes 63.2 34.0 Other current assets 43.2 19.5 Total Current Assets 781.3 767.6 Net property, plant and equipment 418.9 421.1 Goodwill and other intangibles 583.4 599.5 Deferred income taxes 49.8 -- Other assets 50.5 66.2 Total Assets $1,883.9 $1,854.4 LIABILITIES AND STOCKHOLDERS' EQUITY: Trade payables $274.7 $305.6 Accrued payroll and benefits 43.8 48.4 Product warranties 40.2 35.9 Long-term debt due within one year 12.5 15.6 Derivative contracts liability 73.0 1.4 Other current liabilities 55.8 65.7 Total Current Liabilities 500.0 472.6 Long-term debt 322.3 379.6 Other liabilities 156.5 170.2 Pension liabilities 264.0 39.7 Deferred income taxes -- 34.5 Stockholders' equity 641.1 757.8 Total Liabilities and Stockholders' Equity $1,883.9 $1,854.4 A. O. SMITH CORPORATION STATEMENT OF CASH FLOWS (dollars in millions) (unaudited) Year ended December 31 2008 2007 Operating Activities Net Earnings $81.9 $88.2 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation & amortization 66.3 67.5 Net changes in operating assets and liabilities, net of acquisitions: Current assets and liabilities (34.4) 26.4 Noncurrent assets and liabilities (11.6) 3.7 Other 4.4 4.7 Cash Provided by Operating Activities 106.6 190.5 Investing Activities Capital expenditures (66.1) (71.4) Proceeds from sale of restricted marketable securities 12.0 -- Cash Used in Investing Activities (54.1) (71.4) Financing Activities Long-term debt repaid (40.1) (61.0) Purchases of treasury stock -- (36.6) Net proceeds from stock option activity 2.1 11.4 Dividends paid (22.3) (21.5) Cash Used in Financing Activities (60.3) (107.7) Net increase / (decrease) in cash and cash equivalents (7.8) 11.4 Cash and cash equivalents - beginning of period 37.2 25.8 Cash and Cash Equivalents - End of Period $29.4 $37.2 A. O. SMITH CORPORATION Business Segments (dollars in millions) (unaudited) Three Months ended Year ended December 31 December 31 2008 2007 2008 2007 Net sales Water Products $346.2 $379.0 $1,451.3 $1,423.1 Electrical Products 163.2 192.4 858.1 894.0 Inter-Segment Sales (0.8) (1.5) (4.5) (5.0) $508.6 $569.9 $2,304.9 $2,312.1 Operating earnings Water Products (1) $29.5 $45.1 $134.7 $150.0 Electrical Products (2) (5.2) (18.0) 39.1 23.1 Inter-Segment earnings -- (0.1) (0.1) (0.2) 24.3 27.0 173.7 172.9 Corporate expenses (3) (10.7) (12.6) (44.7) (46.3) Interest expense (4.2) (6.2) (19.2) (26.7) Earnings before income taxes 9.4 8.2 109.8 99.9 Tax provision 2.8 (8.8) 27.9 11.7 Net Earnings $6.6 $17.0 $81.9 $88.2 (1) includes equity loss in joint venture of: $-- $-- $(0.3) $-- (2) includes pretax restructuring and other charges of: $2.9 $21.2 $8.7 $22.8 (3) includes pretax restructuring and other charges of: $0.1 $0.4 $0.5 $1.9
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