FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
--------------- ---------------
Commission file number 1-475
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
A. O. Smith Profit Sharing Retirement Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
A. O. Smith Corporation
11270 West Park Place
Milwaukee, WI 53224
REQUIRED INFORMATION
1. Not Applicable.
2. Not Applicable.
3. Not Applicable.
4. The A. O. Smith Profit Sharing Retirement Plan (the "Plan") is subject to
the requirements of the Employee Retirement Income Security Act of 1974
("ERISA"). Attached hereto is a copy of the most recent financial
statements and schedules of the Plan prepared in accordance with the
financial reporting requirements of ERISA.
Exhibits
23.1 Consent of Independent Auditors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
A. O. Smith Profit Sharing
Retirement Plan
Date: 06/19/2002 By: /s/ Duane R. Carlson
------------------------ ------------------------
Duane R. Carlson
Manager Pension and Savings
Plan
TABLE OF CONTENTS
A. O. SMITH PROFIT SHARING RETIREMENT PLAN:
Page
Independent Auditors' Report 1
Financial Statements
Exhibit "A" - Statements of Net Assets Available for Benefits 2
Exhibit "B" - Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4 - 8
INDEPENDENT AUDITORS' REPORT
Benefits Committee
A. O. Smith Profit Sharing Retirement Plan
Milwaukee, Wisconsin
We have audited the accompanying statements of net assets available for
benefits of the A. O. Smith Profit Sharing Retirement Plan as of December 31,
2001 and 2000, and the related statement of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements, referred to above, present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 2001 and 2000, and the changes in its net assets
available for benefits for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
May 23, 2002
Milwaukee, Wisconsin REILLY, PENNER & BENTON LLP
1
A. O. SMITH PROFIT SHARING RETIREMENT PLAN Exhibit "A"
Milwaukee, Wisconsin
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2 0 0 1 2 0 0 0
------- -------
Assets:
Investments in Master Trust (Note 2):
Investment options at fair value $206,647,774 $224,580,200
Participant loans receivable 2,474,030 3,195,483
------------ ------------
Total investments 209,121,804 227,775,683
Receivables:
Company contributions 1,413,020 2,136,502
Due from brokers for securities transactions 549,521 90,119
------------ ------------
Total receivables 1,962,541 2,226,621
------------ ------------
Net assets available for benefits $211,084,345 $230,002,304
============ ============
The accompanying notes to the financial statements
are an integral part of this statement.
2
A. O. SMITH PROFIT SHARING RETIREMENT PLAN Exhibit "B"
Milwaukee, Wisconsin
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2001 and 2000
2 0 0 1 2 0 0 0
------- -------
Increases:
Net income (loss) from the Master Trust:
Investments $ (17,388,233) $ (3,737,341)
Interest income from participant loans 264,639 294,330
------------- -------------
Total income (loss) (17,123,594) (3,443,011)
Contributions:
Company 1,413,047 2,138,785
Participants 5,450,562 5,604,338
Rollovers 221,453 546,079
------------- -------------
Total contributions 7,085,062 8,289,202
------------- -------------
Total (decreases) increases (10,038,532) 4,846,191
Decreases:
Benefit and withdrawal payments 25,040,817 24,130,510
------------- -------------
Change in net assets before transfers (35,079,349) (19,284,319)
Transfers from other plans 16,161,390 6,329,584
------------- -------------
Change in net assets available for benefits (18,917,959) (12,954,735)
Net assets available for benefits:
Beginning of year 230,002,304 242,957,039
------------- -------------
End of year $ 211,084,345 $ 230,002,304
============= =============
The accompanying notes to the financial statements
are an integral part of this statement.
3
A. O. SMITH PROFIT SHARING RETIREMENT PLAN
Milwaukee, Wisconsin
Notes to Financial Statements
December 31, 2001 and 2000
1. Basis of Presentation and Significant Accounting Policies
General
The A. O. Smith Profit Sharing Retirement Plan was established in 1956 to
cover salaried or commissioned employees of the A. O. Smith Corporation, its
subsidiaries and affiliates. Employees are eligible to participate in the Plan
if they are scheduled to complete 1,000 hours of service in a Plan year.
Employees elect to participate by designating a portion of their salary to be
contributed to an account maintained on behalf of the participant. Participants
direct the investment of their contributions into various investment options
offered by the Plan (see Note 2).
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum of $50,000 or 50 percent of their account balance, whichever is less.
The loans are secured by the balance in the participant's account and bear
interest at rates which are commensurate with local prevailing rates as
determined by the Plan's Trustee.
Investment Valuation
All of the Plan's assets are held in the A. O. Smith Profit Sharing
Retirement Master Trust (Master Trust) (Note 2) which are recorded at fair
value. The financial statements of the Master Trust are presented separately and
are incorporated by reference to the financial statements of this Plan.
Contributions and Benefit and Withdrawal Payments
The Plan is a defined contribution plan to which participants may make
contributions of not less than 1% or more than 16% of their compensation. The
Plan provides for all participant contributions to be made with tax-deferred
dollars under Section 401(k) of the Internal Revenue Code. These contributions
are excluded from the participant's current wages for federal income tax
purposes. The Internal Revenue Code has set a maximum of $10,500 and $10,000 for
tax-deferred contributions that may be excluded for any individual participant
in both 2001 and 2000, respectively. No federal income tax is paid on the
tax-deferred contributions and growth thereon until the participant withdraws
them from the Plan.
Contributions from participants are recorded when A. O. Smith Corporation
(the Company) makes payroll deductions from Plan participants. Contributions
from the Company are accrued in the period in which they become obligations of
the Company in accordance with terms of the Plan.
For each $1.00 of 401(k) Tax-Deferred contributions, up to 6% of a
participant's salary, the Company guarantees a contribution of $.35. Additional
Company contributions in excess of $.35 will be based on the Company's return on
net worth. The additional Company matching contribution amount is $.05 times the
return on net worth between 5% and 10%, plus $.10 times the return on net worth
in excess of 10% up to a maximum of 18%. Therefore, the guaranteed and
additional contributions can combine for a maximum Company contribution of $1.40
of participant contributions up to 6% of salary.
Vesting
Participants of the Plan are 0% vested in employer contributions with less
than two years of participation, 40% vested after two years, 60% after three
years, 80% after four years and fully vested after five years of participation.
Participants are always fully vested in their own contributions.
4
A. O. SMITH PROFIT SHARING RETIREMENT PLAN
Milwaukee, Wisconsin
Notes to Financial Statements
December 31, 2001 and 2000
(Continued)
1. Basis of Presentation and Significant Accounting Policies (Continued)
Administrative Expense
Administrative expenses are paid by the Plan and included as part of the
net income (loss) from investments.
Participant Account Provisions
A separate account is maintained for each participant. The separate
account balances are adjusted periodically as follows:
a. Semi-monthly for participant's contributions.
b. Annually for Company contributions.
c. Daily for a proportionate share of increases and decreases in the
fair value of Plan assets.
d. The accounts are periodically adjusted for forfeitures, which are
reallocated to participants in the same manner as if they were a
Company matching contribution for the Plan year. Forfeiture
allocations for 2001 and 2000 amounted to $13,129 and $22,847,
respectively.
e. Daily for benefit and withdrawal payments which consist of the
following:
i. Upon retirement, death, disability, or termination of
employment resulting from permanent reduction of personnel, an
employee may withdraw any amount or the entire account balance
for any reason. At age 70 1/2, an account distribution
election must be made.
ii. Upon termination of employment for other reasons, the balance
in the separate account (reduced for nonvested Company
contributions and growth thereon based on years of service)
may be paid in a lump sum.
iii. An active participant age 59 1/2 or older may withdraw the
balance in the separate account. The balance in the separate
account is paid to the participant in a lump sum.
iv. A participant may withdraw all or any portion of the principal
balance attributable to after-tax contributions and earnings
and rollover contributions and earnings. All or any portion of
the balance attributable to Company contributions and earnings
may also be withdrawn if the participant has five full years
of employment with the Company.
v. A participant may withdraw at any time any amount attributable
to participant contributions and growth to purchase, prevent
eviction from or foreclosure on, a principal residence or to
pay certain expenses (namely post-secondary education and
unreimbursed medical expenses). Withdrawals may not include
earnings on 401(k) contributions posted to a participant's
account after 1988.
vi. No lump sum cash distribution in excess of $5,000 will be made
without the consent of the participant.
f. Daily for investment allocation changes made by participants.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
5
A. O. SMITH PROFIT SHARING RETIREMENT PLAN
Milwaukee, Wisconsin
Notes to Financial Statements
December 31, 2001 and 2000
(Continued)
2. A. O. Smith Profit Sharing Retirement Master Trust
The Plan assets are held in the A. O. Smith Profit Sharing Retirement
Master Trust at the Marshall and Ilsley Trust Company. The Plan offers eight
investment vehicles in which participants may invest their account balances.
Shares of mutual funds are valued at the net asset value of shares held at year
end. Shares of common/collective trust funds are valued at the redemption price
established by the Trustee at year end. Participant loans receivable are valued
at cost which approximates fair value.
The amount of Master Trust assets, income and change in value which is
allocated to the Plan is determined by the ratio of participant account balances
in the Plan to the total participant account balances of all participating
plans. The defined contribution plans participating in the Master Trust at
December 31, 2001, are the A. O. Smith Profit Sharing Retirement Plan, the A. O.
Smith Corporation Savings Plan and the A. O. Smith Retirement Savings Plan. At
December 31, 2001 and 2000, the Plan was allocated 88.356% and 92.987%,
respectively, of the Master Trust assets.
Significant information related to the investments in the Master Trust as
of and for the year ended December 31, 2001, is as follows:
December 31, 2001 2001 Change in
2001 Balance Income (Loss) Value
------------ ------------- --------------
a. Register Investment Company Mutual Funds:
American EuroPacific Growth Fund $ 5,046,096 $ (754,831) $ (1,848,069)
First American Growth and Income Fund 14,445,928 (3,320,668) 14,445,928
Firstar Growth and Income Fund -- 168,465 (21,534,277)
Fidelity Aggressive Equity Portfolio 66,776,751 (17,812,882) 42,993,512
Vanguard Institutional Index Trust Fund 19,477,210 (2,958,526) (4,306,029)
American Balanced Fund 15,525,668 981,747 5,220,255
First American Bond Fund 5,020,591 74,261 5,020,591
Firstar Bond Fund -- 218,245 (4,852,367)
------------ ------------ ------------
Subtotal 126,292,244 (23,404,189) 35,139,544
b. Common/Collective Trusts:
A.O. Smith Stock Fund 3,046,947 467,377 (937,110)
A.O. Smith Stable Asset Income Fund 103,153,052 5,577,829 29,258,473
------------ ------------ ------------
Subtotal 106,199,999 6,045,206 28,321,363
c. Participant Loans Receivable 4,097,691 394,656 (105,430)
d. Cash 90,949 -- 85,888
------------ ------------ ------------
Total $236,680,883 $(16,964,327) $ 63,441,365
============ ============ ============
6
A. O. SMITH PROFIT SHARING RETIREMENT PLAN
Milwaukee, Wisconsin
Notes to Financial Statements
December 31, 2001 and 2000
(Continued)
2. A. O. Smith Profit Sharing Retirement Master Trust (Continued)
Significant information related to the investments in the Master Trust as
of and for the year ended December 31, 2000, is as follows:
December 31, 2000 2000 Change in
2000 Balance Income (Loss) Value
------------ ------------- --------------
a. Register Investment Company Mutual Funds:
American EuroPacific Growth Fund $ 6,894,165 $ (1,635,840) $ (1,493,985)
Firstar Growth and Income Fund 21,534,277 1,001,425 246,940
Fidelity Aggressive Equity Portfolio 95,498,405 (6,245,939) (8,637,492)
Vanguard Institutional Index Trust Fund 23,783,239 (2,311,113) (1,596,486)
Vanguard Fixed Income Short-Term Corp. Fund -- 2 (189)
American Balanced Fund 10,305,413 1,296,152 772,530
Firstar Bond Fund 4,852,367 457,143 1,297,698
------------ ------------ ------------
Subtotal 162,867,866 (7,438,170) (9,410,984)
b. Common/Collective Trusts:
A.O. Smith Stock Fund 3,984,057 (691,230) 519,435
A.O. Smith Stable Asset Income Fund 73,894,579 4,322,470 (203,859)
------------ ------------ ------------
Subtotal 77,878,636 3,631,240 315,576
c. Participant Loans Receivable 4,203,121 367,066 38,563
d. Cash 5,061 -- (189,985)
------------ ------------ ------------
Total $244,954,684 $ (3,439,864) $ (9,246,830)
============ ============ ============
3. Investments
Investments held by the Plan at December 31, that represents 5% or more of
the Plan's net assets are as follows:
December 31,
------------------------------------
2 0 0 1 2 0 0 0
--------- ---------
Firstar Growth and Income Fund, -0- and 503,487.639 $ --- $ 20,542,296
shares, respectively
Fidelity Aggressive Equity Fund, 112,230.530 65,443,687 92,070,560
and 115,623.460 shares, respectively
Vanguard Institutional Index Fund, 175,458.466 16,746,650 21,181,346
and 170,341.449 shares, respectively
A.O. Smith Stable Asset Income Fund, 4,157,779.835 83,351,313 66,400,799
and 4,541,454.475 shares, respectively
First American Growth and Income Fund, 404,048.963 13,733,624 ---
and -0- shares, respectively
American Balanced Fund, 932,517.173 14,780,397 9,266,926
and 599,025.577 shares, respectively
7
A. O. SMITH PROFIT SHARING RETIREMENT PLAN
Milwaukee, Wisconsin
Notes to Financial Statements
December 31, 2001 and 2000
(Continued)
4. Income Tax Status
The Plan obtained its latest determination letter on October 21, 1999, in
which the Internal Revenue Service stated the Plan as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code. The
Plan administrator and the Plan's tax counsel believe that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
5. Plan Termination
While the Company has not expressed any intent to terminate the Plan, it
is free to do so at any time. In the event of termination, each participant
automatically becomes vested to the extent of the balance in his separate
account.
6. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements. Actual
results could differ from those estimates.
8