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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002.

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934

For the transition period from ________________ to _______________

Commission File Number 1-475


A.O. SMITH CORPORATION

Delaware 39-0619790
(State of Incorporation) (IRS Employer ID Number)

P. O. Box 245008, Milwaukee, Wisconsin 53224-9508
Telephone: (414) 359-4000


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No ___


Class A Common Stock Outstanding as of September 30, 2002 -- 8,566,034 shares

Common Stock Outstanding as of September 30, 2002 -- 20,390,814 shares

Exhibit Index Page 22

Index


A. O. Smith Corporation



Part I. Financial Information

Item 1. Financial Statements (Unaudited)

Condensed Consolidated Statements of Earnings
- Three and nine months ended September 30, 2002 and 2001 3

Condensed Consolidated Balance Sheets
- September 30, 2002 and December 31, 2001 4

Condensed Consolidated Statements of Cash Flows
- Nine months ended September 30, 2002 and 2001 5

Notes to Condensed Consolidated Financial Statements
- September 30, 2002 6-11

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12-15

Item 3. Quantitative and Qualitative Disclosure of Market Risk 15

Item 4. Controls and Procedures 15

Part II. Other Information

Item 1. Legal Proceedings 16

Item 5. Other Information 16

Item 6. Exhibits and Reports on Form 8-K 16

Signatures 17

Certification of Periodic Report 18-21

Index to Exhibits 22
Exhibit 99 23

2

PART I-FINANCIAL INFORMATION
ITEM 1-FINANCIAL STATEMENTS


A.O. SMITH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three and Nine Months ended September 30, 2002 and 2001
(000 omitted except for per share data)
(unaudited)

Three Months Ended Nine Months Ended
September 30 September 30
--------------------------- -------------------------------
2002 2001 2002 2001
------------ ------------ --------------- -------------

Electrical Products $ 197,458 $ 186,535 $ 612,891 $ 634,418
Water Systems 154,941 82,597 497,719 261,197
------------ ------------ --------------- -------------
Net sales 352,399 269,132 1,110,610 895,615
Cost of products sold 286,054 226,496 885,936 735,599
------------ ------------ --------------- -------------
Gross profit 66,345 42,636 224,674 160,016
Selling, general and administrative expenses 48,327 35,376 151,729 109,837
Interest expense 3,184 4,165 11,044 12,867
Amortization of intangibles 71 1,733 212 5,200
Other (income) expense - net (183) 763 413 1,711
------------ ------------ --------------- -------------
14,946 599 61,276 30,401
Provision for income taxes 4,924 213 21,140 10,793
------------ ------------ --------------- -------------

Net Earnings $ 10,022 $ 386 $ 40,136 $ 19,608
============ ============ =============== =============


Earnings per Common Share
Basic $0.35 $0.02 $1.52 $0.83
===== ===== ===== =====
Diluted $0.34 $0.02 $1.49 $0.82
===== ===== ===== =====

Dividends per Common Share $0.14 $0.13 $0.40 $0.39
===== ===== ===== =====



See accompanying notes to unaudited condensed consolidated financial statements.

3

PART I--FINANCIAL INFORMATION
ITEM 1--FINANCIAL STATEMENTS


A.O. SMITH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2002 and December 31, 2001
(000 omitted)

(unaudited)
September 30, 2002 December 31, 2001
------------------ -----------------

Assets
Current Assets
Cash and cash equivalents $ 32,942 $ 20,759
Receivables 208,258 209,871
Inventories 196,696 194,706
Deferred income taxes 24,707 22,403
Other current assets 13,634 28,039
Net current assets - discontinued operations - 1,796
-------------- ----------------
Total Current Assets 476,237 477,574

Property, plant and equipment 668,150 637,503
Less accumulated depreciation 316,612 282,205
-------------- ----------------
Net property, plant and equipment 351,538 355,298
Goodwill 295,709 295,073
Other intangibles 6,339 6,851
Prepaid Pension 118,158 103,272
Other assets 59,457 55,855
-------------- ----------------
Total Assets $ 1,307,438 $ 1,293,923
============== ================

Liabilities
Current Liabilities
Notes payable $ - $ 3,280
Trade payables 130,059 135,684
Accrued payroll and benefits 39,539 29,525
Accrued liabilities 61,724 53,832
Product warranty 19,817 19,470
Income taxes 334 887
Long-term debt due within one year 11,671 13,272
Net current liabilities - discontinued operations 2,105 -
-------------- ----------------
Total Current Liabilities 265,249 255,950

Long-term debt 220,360 390,385
Other liabilities 129,072 133,556
Deferred income taxes 78,764 62,154
-------------- ----------------

Total Liabilities 693,445 842,045

Stockholders' Equity
Class A common stock, $5 par value: authorized
14,000,000 shares; issued 8,598,629 42,993 43,432
Common stock, $1 par value: authorized 60,000,000
shares; issued 23,950,733 23,951 23,863
Capital in excess of par value 73,494 54,785
Retained earnings 581,334 551,420
Accumulated other comprehensive loss (9,885) (6,858)
Treasury stock at cost (97,894) (214,764)
-------------- ----------------

Total Stockholders' Equity 613,993 451,878
-------------- ----------------
Total Liabilities and Stockholders' Equity $ 1,307,438 $ 1,293,923
============== ================



See accompanying notes to unaudited condensed consolidated financial statements

4

PART I-FINANCIAL INFORMATION
ITEM 1-FINANCIAL STATEMENTS


A.O. SMITH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2002 and 2001
(000 omitted)
(unaudited)
Nine Months Ended
September 30
----------------------------------------
2002 2001
--------------- --------------
Operating Activities
Continuing

Net earnings $ 40,136 $ 19,608
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation 36,604 28,427
Amortization 1,124 6,407
Net change in current assets and liabilities 22,117 (2,569)
Net change in other noncurrent assets and liabilities (814) (13,036)
Other (761) 496
--------------- --------------

Cash Provided by Operating Activities 98,406 39,333

Investing Activities
Capital expenditures (25,814) (23,395)
Acquisition of business (11,757) -
--------------- --------------

Cash Used in Investing Activities (37,571) (23,395)

Cash Flow before Financing Activities 60,835 15,938

Financing Activities
Long-term debt retired (174,906) (53,721)
Net proceeds from sale of common stock 127,480 -
Other stock transactions 5,344 1,238
Dividends paid (10,222) (9,228)
--------------- --------------

Cash Used in Financing Activities (52,304) (61,711)

Cash Provided by Discontinued Operations 3,652 43,327
--------------- --------------

Net increase (decrease) in cash and cash equivalents 12,183 (2,446)
Cash and cash equivalents-beginning of period 20,759 15,287
--------------- --------------

Cash and Cash Equivalents - End of Period $ 32,942 $ 12,841
=============== ==============



See accompanying notes to unaudited condensed consolidated financial statements.

5

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS

A. O. SMITH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2002
(unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three- and nine-month periods ended September 30, 2002 are
not necessarily indicative of the results expected for the full year. It
is suggested that the accompanying condensed consolidated financial
statements be read in conjunction with the audited consolidated financial
statements and the notes thereto included in the company's latest Annual
Report on Form 10-K. Certain prior year amounts have been reclassified to
conform to the 2002 presentation.

2. Acquisitions
On July 1, 2002, A. O. Smith Corporation (the company) completed the
purchase of the hermetic motor assets of the Athens Products (Athens)
division of Electrolux Group for cash consideration of $9.6 million. The
purchase price was allocated to the assets acquired and liabilities
assumed based upon current estimates of their respective fair values at
the date of acquisition.

On December 28, 2001, the company acquired all of the outstanding stock of
State Industries, Inc. (State) for an aggregate purchase price of $117.6
million. This was comprised of $57.8 million for the outstanding stock,
assumption of $56.3 million of debt, and $3.5 million of acquisition
costs, of which $2.2 million were paid during the nine-month period ended
September 30, 2002. The purchase price was allocated to the assets
acquired and liabilities assumed based upon current estimates of their
respective fair values at the date of acquisition.

In connection with our acquisition of Athens in July 2002, we recorded
additional purchase liabilities of approximately $4.2 million primarily
for employee severance costs associated with product manufacturing
repositioning. As of September 30, 2002, we have charged $0.7 million
against this reserve.

In connection with the Athens acquisition and certain other acquisitions
by the company, aggregate additional purchase liabilities of $26.0 million
were recorded at the respective acquisition dates for employee severance
and relocation, as well as certain facility exit costs. As of September
30, 2002, costs incurred and charged against these liabilities to date
totaled $15.4 million.

6


3. Business Improvement Programs
In the fourth quarter of 2001, the company recorded restructuring and
other charges of $9.4 million. The charges included employee separation
costs of $7.7 million associated with product or component manufacturing
repositioning and the realignment of certain administrative functions. The
resulting reduction of workforce is approximately 150 salaried and 775
hourly employees. In addition, the company recorded facility impairment
and lease charges of $1.7 million representing estimated costs of
facilities to be vacated. The company spent $2.9 million through September
30, 2002. At September 30, 2002, the company estimates approximately 520
employees are yet to be impacted and plans to be substantially completed
with the realignment activities prior to June 30, 2003.

4. Inventories (000 omitted)
September 30, 2002 December 31, 2001
------------------ -----------------
Finished products $ 130,289 $ 120,231
Work in process 36,255 40,210
Raw materials 54,262 58,375
----------- -----------
220,806 218,816
LIFO reserve 24,110 24,110
----------- -----------
$ 196,696 $ 194,706
=========== ===========

5. Goodwill and Other Intangible Assets
The company adopted Statement of Financial Accounting Standards (SFAS) No.
142, "Goodwill and Other Intangible Assets", effective January 1, 2002.
Under SFAS No. 142, goodwill and certain other intangible assets are no
longer amortized but are reviewed for impairment. In connection with the
adoption of SFAS No. 142, the company has completed the first step of the
transitional goodwill impairment test, which requires the company to
compare the fair value of its reporting units to the carrying value of the
net assets of the respective reporting units as of January 1, 2002. Based
on this analysis, the company has concluded that no impairment existed at
the time of adoption, and, accordingly, the company has not recognized any
transitional impairment loss.

Changes in the carrying amount of goodwill during the nine-month period
ended September 30, 2002 consist of the following (000 omitted):



Electrical Water
Products Systems Total
------------ --------- ------------

Balance at December 31, 2001 $ 230,004 $ 65,069 $ 295,073
Adjustment to property, plant and equipment
and other assets (22) 260 238
Additional acquisition costs - 398 398
---------- --------- ----------
Balance at September 30, 2002 $ 229,982 $ 65,727 $ 295,709
======= ========= =======


As required by SFAS No. 142, the results of operations for periods prior
to its adoption have not been restated. The following table reconciles
reported net earnings and earnings per share to pro forma net earnings and
earnings per share that would have resulted for

7

the three- and nine-month periods ended September 30, 2001 if SFAS No. 142
had been adopted effective January 1, 2001 (000 omitted, except per share
amounts):


Three Months Ended Nine Months Ended
September 30 September 30
---------------------- -----------------------

Net earnings as reported $ 386 $ 19,608
Goodwill amortization - after tax 1,019 3,058
Assembled workforce amortization - after tax 60 179
--------- ---------
Net earnings - pro forma 1,465 22,845
========= =========

Basic earnings per share:
As reported $ .02 $ 0.83
========= =========
Pro forma $ .06 $ 0.97
========= =========

Diluted earnings per share:
As reported $ .02 $ 0.82
========= =========
Pro forma $ .06 $ 0.96
========= =========


6. Long-Term Debt
The company's credit agreement and term notes contain certain conditions
and provisions which restrict the company's payment of dividends. Under
the most restrictive of these provisions, retained earnings of $200.6
million were unrestricted as of September 30, 2002.

7. Common Stock Issuance
On May 10, 2002, the company completed the sale of 4,776,065 shares of its
common stock held in treasury. The $127.5 million net proceeds from the
offering were used to reduce long-term debt.

8. Comprehensive Earnings (000 omitted)
The company's comprehensive earnings are comprised of net earnings,
foreign currency translation adjustments, and realized and unrealized
gains and losses on cash flow derivative instruments. Also included in
comprehensive earnings for the nine-month period ended September 30, 2001
was a cumulative loss adjustment on cash flow hedges of approximately $0.6
million in connection with the adoption of Statement of Financial
Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended, on January 1, 2001.



Three Months Ended Nine Months Ended
September 30 September 30
------------------------- ---------------------------
2002 2001 2002 2001
------------ ---------- ----------- ----------

Net Earnings $ 10,022 $ 386 $ 40,136 $ 19,608

Other comprehensive earnings (loss):
Foreign currency translation adjustments (271) 502 1,828 (665)
Unrealized net losses on cash flow
derivative instruments less related income
tax benefit: 2002 - $2,038 and
$3,098; 2001 - $3,243 and $2,106 (3,187) (5,004) (4,855) (3,225)
---------- ---------- --------- ----------

Comprehensive Earnings (Loss) $ 6,564 $ (4,116) $ 37,109 $ 15,718
========== ========== ======== =========


8

9. Earnings per Share of Common Stock
The numerator for the calculation of basic and diluted earnings per share
is net earnings. The following table sets forth the computation of basic
and diluted weighted-average shares used in the earnings per share
calculations:


Three Months Ended Nine Months Ended
September 30 September 30
-------------------------------- ------------------------------
2002 2001 2002 2001
-------------------------------- -------------- --------------

Denominator for basic earnings
per share
- weighted-average shares 28,752,219 23,707,974 26,355,164 23,622,093

Effect of dilutive stock options 698,739 217,383 663,251 267,212
------------ ------------ ------------ -------------

Denominator for diluted earnings
per share 29,450,958 23,925,357 27,018,415 23,889,305
========== ========== ========== ==========


10. Operations by Segment (000 omitted)


Three Months Ended Nine Months Ended
September 30 September 30
----------------------------- ----------------------------
2002 2001 2002 2001
------------ ----------- ------------ -----------
Net sales

Electrical Products $ 197,458 $ 186,535 $ 612,891 $ 634,418
Water Systems 154,941 82,597 497,719 261,197
---------- ---------- ------------ ----------
$ 352,399 $ 269,132 $ 1,110,610 $ 895,615
========== ========== ============ ==========

Earnings before interest and taxes
Electrical Products $ 10,290 $ 1,622 $ 45,976 $ 31,025
Water Systems 13,398 8,824 43,570 28,560
---------- ---------- ---------- ----------
23,688 10,446 89,546 59,585

Corporate expenses (5,558) (5,682) (17,226) (16,317)
Interest expense (3,184) (4,165) (11,044) (12,867)
---------- ---------- ---------- ----------
Earnings before income taxes 14,946 599 61,276 30,401
Provision for income taxes (4,924) (213) (21,140) (10,793)
---------- ---------- ---------- --------
Net earnings $ 10,022 $ 386 $ 40,136 $ 19,608
========== ========== ============ ==========


Intersegment sales, which are immaterial, have been excluded from segment
revenues.

9


11. Accounting for Derivative Instruments
The company utilizes certain derivative instruments to enhance its ability
to manage currency exposures and raw materials price risks. Derivative
instruments are entered into for periods consistent with the related
underlying exposures and do not constitute positions independent of those
exposures. The company does not enter into contracts for speculative
purposes. The company has hedged certain of its forecasted exposures.
Approximately 89 percent of these contracts expire by December 31, 2003.
The contracts are executed with major financial institutions with no
credit loss anticipated for failure of the counterparties to perform.

Foreign Currency Forward Contracts
The company is exposed to foreign currency exchange risk as a result of
transactions in currencies other than the functional currency of certain
subsidiaries. The company utilizes foreign currency forward purchase and
sale contracts to manage the volatility associated with foreign currency
purchases and certain inter-company transactions in the normal course of
business. Contracts typically have maturities of a year or less. Principal
currencies include the Mexican peso, Hungarian forint, British pound, Euro
and U.S. dollar.

Forward contracts are accounted for as cash flow hedges of a forecasted
transaction. The fair value of these currency derivatives of $4.9 million
has been recorded in accrued liabilities as of September 30, 2002. A fair
value of $6.6 million for currency derivatives has been recorded in other
current assets as of December 31, 2001. Gains and losses on these
instruments are initially recorded in other comprehensive income (loss)
and subsequently reclassified into earnings when the underlying
transaction affects income. The assessment of effectiveness for forward
contracts is based on changes in the forward rates. These hedges have been
determined to be perfectly effective.

Commodity Future Contracts
In addition to entering into supply arrangements in the normal course of
business, the company also enters into future contracts to fix the cost of
certain raw material purchases, principally copper and aluminum, with the
objective of minimizing changes in inventory cost due to market price
fluctuations.

The commodity future contracts are designated as cash flow hedges of a
forecasted transaction. Derivative commodity liabilities for copper of
$3.6 million and $6.2 million are recorded in other current liabilities as
of September 30, 2002 and December 31, 2001, respectively. Derivative
commodity liabilities for aluminum of $0.3 million and $0.7 million are
recorded in accrued liabilities as of September 30, 2002 and December 31,
2001, respectively. Overall, the value of the effective portions of the
commodity contracts of ($3.3) million and ($6.9) million are recorded in
accumulated other comprehensive income (loss) as of September 30, 2002 and
December 31, 2001, respectively, and subsequently reclassified into cost
of products sold in the period in which the underlying transaction is
recorded in earnings. Ineffective portions of the commodity hedges are
recorded into earnings in the period in which the ineffectiveness occurs.
Hedge ineffectiveness and impact on earnings was not material for the
three- and nine-month periods ended September 30, 2002 and 2001,
respectively.


10


The majority of the amounts in accumulated other comprehensive earnings
(loss) for cash flow hedges are expected to be reclassified into earnings
within one year.









11


PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
THIRD QUARTER AND FIRST NINE MONTHS OF 2002 COMPARED TO 2001

Our sales were $352.4 million in the third quarter of 2002 or 31 percent higher
than sales of $269.1 million in last year's third quarter. Sales for the first
nine months of the year were $1.11 billion or 24 percent higher than sales of
$895.6 million in the same period last year. The increase in third quarter sales
was due to our acquisitions of State Industries Inc. (State) in December 2001
and Athens Products (Athens) in July 2002 as well as higher sales in the base
water heater business. The increase in year-to-date sales was due to the
acquisitions partially offset by lower sales of electric motors in the first
half of the year.

Our gross profit margin for the third quarter of 2002 increased from 15.8
percent in 2001 to 18.8 percent. Our year-to-date gross profit margin in 2002
was 20.2 percent compared with 17.9 percent in the same period in 2001. The
improved margins in both the third quarter and first nine months of 2002
resulted from product repositioning at Electrical Products, the addition of
State Industries, and material cost savings at both businesses.

Our selling, general and administrative (SG&A) expenses in the third quarter and
first nine months of 2002 were higher than the same periods in 2001 by $13.0
million and $41.9 million, respectively, primarily as a result of the
incremental SG&A associated with our State acquisition. On a year-to-date basis
SG&A was 13.7 percent of sales compared with 12.3 percent of sales for the first
nine months of 2001. The increase in SG&A relative to sales resulted from our
Water Systems business which has higher SG&A levels and has grown from 29.2
percent of our total company sales in the first nine months of 2001 to 44.8
percent of total company sales in the same period of 2002.

Interest expense for the third quarter and first nine months of 2002 was lower
than the comparable periods in 2001 by $1.0 million and $1.8 million,
respectively, due to lower interest rates and reduced debt levels resulting from
our stock offering (see Note 7 of Notes to Condensed Consolidated Financial
Statements).

We have significant pension benefit costs and credits that are developed from
actuarial valuation. The valuations reflect key assumptions regarding, among
other things, discount rates, expected return on plan assets, retirement ages,
and years of service. Consideration is given to current market conditions,
including changes in interest rates, in making these assumptions. During the
second quarter of 2002, we reduced our assumption for expected rate of return on
plan assets from 10.0 percent to 9.75 percent. The amount of pension credit
recognized in the third quarter and first nine months of 2002 was $4.1 million
and $12.7 million, respectively, and compared with $5.0 million and $15.1
million in the comparable periods of 2001. The third quarter and first nine
months of 2002 included $.5 million and $1.7 million for pension expense
associated

12

with our State acquisition. The pension credits are reflected as offsets to cost
of products sold and SG&A.

Our year-to-date effective tax rate was 34.5 percent compared with 35.5 percent
for the first nine months of 2001. The effective rate in 2002 benefited from the
implementation of a more efficient tax structure for international operations
which was initially implemented in the second quarter of 2001 with additional
favorable impacts being recognized commencing with the third quarter of 2002.

Net earnings for the third quarter improved significantly to $10.0 million from
$.4 million in last year's third quarter. Net earnings of $40.1 million for the
first nine months of 2002 were more than double the net earnings of $19.6
million recognized in the same period of 2001. The increase in earnings was
attributable to lower manufacturing costs and the elimination of goodwill
amortization at Electrical Products; synergies from our State acquisition; and
higher sales volume in our base Water Systems business. On a diluted per share
basis, third quarter earnings increased from $.02 in 2001 to $.34 in 2002, while
for the first nine months per share earnings increased from $.82 in 2001 to
$1.49 in 2002. The 2002 third quarter and year-to-date earnings per share
amounts were diluted by approximately $.04 and $.11, respectively, as a result
of increased shares outstanding associated with our stock offering.

Electrical Products
Third quarter sales for our Electrical Products segment were $197.5 million or
$10.9 million higher than the same period last year with the increase
attributable to the Athens acquisition at the beginning of the quarter. Sales to
the domestic heating, ventilation and air conditioning (HVAC) market were 8
percent lower than in the third quarter of 2001 while sales of motors for pumps,
after-market and general industry applications improved more than 10 percent
compared with the same period last year. Year-to-date sales for this segment
were $612.9 million, a decline of $21.5 million from 2001 nine month sales of
$634.4 million. The year-to-date decline occurred mostly in sales to the
commercial air conditioning market.

Third quarter operating earnings for our Electrical Products segment increased
from $3.3 million (as adjusted to exclude $1.7 million of goodwill amortization)
to $10.3 million in 2002. Earnings for the first nine months were $46.0 million
or $10.0 million higher than 2001 nine month earnings of $35.9 million (as
adjusted to exclude $4.9 million of goodwill amortization). The favorable trend
in earnings reflects the impact of product repositioning and other cost
reduction programs.

Water Systems
Third quarter and nine month sales for our Water Systems segment increased by
$72.3 million and $236.5 million, respectively over the comparable periods in
2001. Sales in 2002 associated with our State acquisition were $68.9 million for
the second quarter and $230.9 million for the first nine months, accounting for
most of the year over year increase. The remaining increase in sales was
attributable to modestly higher volume for the base residential and commercial
business and the China operation.

Operating earnings for Water Systems were $13.4 million in the third quarter of
2002 reflecting a $4.6 million increase over the same period last year. For the
first nine months of 2002, earnings were $43.6 million as compared to $28.6
million for the same period last year. The improved earnings performance in the
third quarter and first nine months of 2002 compared with the same

13


periods in 2001 was the result of State Industries and the synergies associated
with this acquisition and improved profitability in our China operation.

Critical Accounting Policies
Our accounting policies are described in Note 1 of Notes to Consolidated
Financial Statements as disclosed in the Form 10-K for the fiscal year ended
December 31, 2001. Also as disclosed in Note 1, the preparation of financial
statements in conformity with accounting principles generally accepted in the
United States requires the use of estimates and assumptions about future events
that affect the amounts reported in the financial statements and accompanying
notes. Future events and their effects cannot be determined with absolute
certainty. Therefore, the determination of estimates requires the exercise of
judgment. Actual results inevitably will differ from those estimates, and such
differences may be material to the financial statements.

The most significant accounting estimates inherent in the preparation of our
financial statements include estimates associated with the evaluation of the
recoverability of certain assets including goodwill and receivables resulting
from the payment of claims associated with the dip tube class action lawsuit
(see Note 13 of notes to consolidated financial statements in the Form 10-K for
the fiscal year ended December 31, 2001) as well as those estimates used in the
determination of liabilities related to warranty activity, litigation, product
liability, environmental matters and pensions and other post-retirement
benefits. Various assumptions and other factors underlie the determination of
these significant estimates. The process of determining significant estimates is
fact-specific and takes into account factors such as historical experience and
trends, and in some cases, actuarial techniques. We constantly reevaluate these
significant factors and adjustments are made when facts and circumstances
dictate. Historically, actual results have not significantly deviated from those
determined using the estimates described above.

Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement
Obligations", SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," and SFAS No. 146, "Accounting for Costs Associated with Exit
or Disposal Activities." SFAS No. 143 will become effective for us on January 1,
2003. Adoption of this statement is not expected to have a material impact on
our consolidated financial statements. SFAS No. 144, which was adopted on
January 1, 2002, has not had a material impact on our consolidated financial
statements since its adoption. SFAS No. 146 will be effective for exit or
disposal activities initiated after December 31, 2002. Management is currently
assessing the provisions of SFAS No. 146 but believes there will be no effect on
the company's financial position or results of operations at the time of
adoption.

Outlook
The improved margin performance of our operating units is having a positive
effect on earnings per share, and consequently, we expect 2002 earnings will
range between $1.80 and $1.85 per share.

Looking ahead, we believe the challenging market conditions we are now
experiencing will continue into 2003, particularly in our electric motor
markets. However, the ongoing impact of Electrical Products' cost-reduction
actions, combined with the continued benefits of the State integration into
Water Systems will have a positive impact on 2003 earnings. Consequently, we
estimate that next year's earnings will range between $2.05 and $2.25 per share.


14

Liquidity & Capital Resources
Our working capital for continuing operations was $213.1 million at September
30, 2002, $6.7 million lower than at December 31, 2001. The most significant
factor impacting working capital was the reduction in our other current assets
account as a result of receiving an expected $12.4 million tax refund. Cash
provided by our operations during the first nine months of 2002 was $98.4
million compared with $39.3 million during the same period one year ago. We
attribute the higher cash flow provided by operations to higher earnings and
improved working capital management during the first nine months of 2002
compared with the first nine months of 2001. We project operating cash flow for
the full year to approximate current levels.

Our 2002 capital expenditures through September 30 totaled $25.8 million, which
was slightly higher than the $23.4 million spent in the same period of 2001. The
increase in capital spending is associated with our recent acquisition of State
Industries. Our company is projecting 2002 capital expenditures of approximately
$40 to $45 million, an increase over 2001 capital expenditures of $35.3 million
primarily due to the acquisition of State. We believe that our facilities and
planned capital expenditures are sufficient to provide capacity for our
operations in the near term.

With the net proceeds from our stock offering completed earlier this year,
coupled with strong operating cash flow, we reduced our total debt by $174.9
million to $232.0 million at September 30, 2002. Our leverage as measured by the
ratio of total debt to total capitalization was 27 percent, down significantly
from 47 percent at the end of 2001. We did not enter into any significant
operating leases during the first nine months of 2002. At September 30, 2002,
our company had available borrowing capacity of $247.4 million under our credit
facilities. We believe that the combination of available borrowing capacity and
operating cash flow will provide sufficient funds to finance our existing
operations for the foreseeable future.

In connection with our acquisition of Athens in July 2002, we recorded
additional purchase liabilities of approximately $4.2 million primarily for
employee severance costs associated with product manufacturing repositioning. As
of September 30, 2002, we have charged $0.7 million against this reserve. In
connection with the Athens acquisition and certain other acquisitions by the
company, aggregate additional purchase liabilities of $26.0 million were
recorded at the respective acquisition dates for employee severance and
relocation, as well as certain facility exit costs. As of September 30, 2002,
costs incurred and charged against these liabilities to date totaled $15.4
million. We expect the majority of the respective activities to be completed
within the next year.

The recent decline in the U.S. equity markets has resulted in a decrease in the
value of the assets of our pension plan. We currently estimate that the
accumulated benefit obligation of our primary defined benefit pension plan
exceeds the fair value of plan assets by approximately $40 million. If the U.S.
equity markets do not recover by the plan's measurement date in the fourth
quarter, and we choose not to fund the difference between the accumulated
benefit obligation and the fair value of plan assets, we will be required to
record a charge to stockholders' equity for that difference as well as the
elimination of the current prepaid pension asset. This direct charge to equity,
which would be approximately $100 million net of tax, would have no impact on
cash or net income. If the charge is recorded it will result in an increase to
our leverage ratio from 27 percent to approximately 31 percent.

15


On October 11, 2002, our board of directors declared a quarterly dividend on our
Common Stock and Class A Common Stock of $.14 per share. The dividend is payable
on November 15, 2002 to stockholders of record on October 31, 2002.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
As is more fully described in our annual report on Form 10-K for the year ended
December 31, 2001, we are exposed to various types of market risks, primarily
currency and certain commodities. We monitor our risks in these areas on a
continuous basis and generally enter into forward and futures contracts to
minimize these exposures for periods of less than one year. Our company does not
engage in speculation in our derivative strategies. It is important to note that
gains and losses from our forward and futures contract activities are offset by
changes in the underlying costs of the transactions being hedged.

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures
Our chief executive officer and chief financial officer, after evaluating the
effectiveness of the company's disclosure controls and procedures, have
concluded that these disclosure controls and procedures were adequate and
effective to ensure that material information relating to the company and its
consolidated subsidiaries would be made known to them by others within those
entities.

Changes in internal controls
There were no significant changes in our internal controls or in other factors
that could significantly affect our disclosure controls and procedures
subsequent to the date of their evaluation, nor were there any significant
deficiencies or material weaknesses in our internal controls. As a result, no
corrective actions were required or undertaken.

Forward Looking Statements
This document 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 timely and properly integrate the acquisition of State Industries;
the inability to implement cost-reduction programs; adverse changes in general
economic conditions; significant increases in raw material prices; 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 document are made only as of the
date of this filing, 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.


16

PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS

There have been no material changes in the legal and environmental matters
previously reported in Part 1, Item 3 and Note 12 of the Notes to Consolidated
Financial Statements in the company's Form 10-K Report for the year ended
December 31, 2001, and Part 2, Item 1 in the quarterly report on Form 10-Q for
the quarter ended March 31, 2002.

ITEM 5 - OTHER INFORMATION

Effective August 7, 2002, the listing of our Class A Common Stock on the
American Stock Exchange LLC was withdrawn. Class A Common Stock is now traded on
the Over-the-Counter Bulletin Board and is also convertible to Common Stock.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

None



17

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has authorized this report to be signed on its behalf by the
undersigned.


A. O. SMITH CORPORATION




November 5, 2002 /s/John J. Kita
John J. Kita
Vice President,
Treasurer and Controller




November 5, 2002 /s/Kenneth W. Krueger
Kenneth W. Krueger
Senior Vice President
and Chief Financial Officer



18


CERTIFICATION OF PERIODIC REPORT


I, Robert J. O'Toole, Chairmen, President, and Chief Executive Officer, certify
that:

1. I have reviewed this quarterly report on Form 10-Q of A. O. Smith
Corporation (the "company");

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the company as of, and for, the periods presented in this
quarterly report;

4. The company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the company and we
have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;

b) evaluated the effectiveness of the company's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;

5. The company's other certifying officer and I have disclosed, based on our
most recent evaluation, to the company's auditors and the audit committee
of the company's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the company's
ability to record, process, summarize and report financial data
and have identified for the company's auditors any material
weaknesses in internal controls; and

19


b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the company's
internal controls; and

6. The company's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.


Date: November 5, 2002


/s/ Robert J. O'Toole
Robert J. O'Toole
Chairman, President, and Chief Executive Officer




20

CERTIFICATION OF PERIODIC REPORT


I, Kenneth W. Krueger, Senior Vice President and Chief Financial Officer,
certify that:

1. I have reviewed this quarterly report on Form 10-Q of A. O. Smith
Corporation (the "company");

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the company as of, and for, the periods presented in this
quarterly report;

4. The company's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the company and we
have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the company, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;

b) evaluated the effectiveness of the company's disclosure controls
and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;

5. The company's other certifying officer and I have disclosed, based on our
most recent evaluation, to the company's auditors and the audit committee
of the company's board of directors (or persons performing the equivalent
function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the company's
ability to record, process, summarize and report financial data
and have identified for the company's auditors any material
weaknesses in internal controls; and

21


b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the company's
internal controls; and

6. The company's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.


Date: November 5, 2002


/s/ Kenneth W. Krueger
Kenneth W. Krueger
Senior Vice President and Chief Financial Officer


22


INDEX TO EXHIBITS


Exhibit
Number Description

10 Material contracts (a) A. O. Smith Combined Executive Incentive
Compensation Plan, incorporated by reference to the Form S-8
Registration filed by the corporation on July 16, 2002, (Req. No.
333-92428)

99 Written Statement of the Chief Executive Officer and the Chief
Financial Officer pursuant to 18 U.S.C. Section 1350.







23