View:
Download DOC
Download PDF
Download XLS
Form 11-K
Table of Contents

 

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, 2004

 

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

 

Table of Contents

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
32    Certification

 

2

Table of Contents

A. O. SMITH

PROFIT SHARING RETIREMENT PLAN

Milwaukee, Wisconsin

 

AUDITED FINANCIAL STATEMENTS

 

Years Ended December 31, 2004 and 2003

 

T A B L E   O F   C O N T E N T S

 

     Page

Independent Auditors’ Report

    1

Statements of Net Assets Available for Benefits

    2

Statements of Changes in Net Assets Available for Benefits

    3

Notes to Financial Statements

    4 – 8

Schedule of Assets Held for Investment

    9

 

3

Table of Contents

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, 2004 and 2003, and the related statements of changes in net assets available for benefits and supplemental schedule 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 the standards of the Public Company Accounting Oversight Board (United States). 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, and 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, 2004 and 2003, 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.

 

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets Held for Investment – December 31, 2004, is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

April 1, 2005

    

Milwaukee, Wisconsin

   REILLY, PENNER & BENTON LLP

 

1

Table of Contents

A.O. SMITH PROFIT SHARING RETIREMENT PLAN

Milwaukee, Wisconsin

 

Statements of Net Assets Available for Benefits

December 31, 2004 and 2003

 

     2004
    2003

Assets:

              

Investments in Master Trust:

              

Investment options at fair value

    $ 225,302,566    $ 222,242,579

Participant loans receivable

      2,319,968      2,149,755
    
  

Total investments

      227,622,534      224,392,334

Receivables:

              

Company contributions

      1,666,017      2,518,118

Due from brokers for securities transactions

      15,488      8,405

Accrued Interest

      21,830      23,923
    
  

Total receivables

      1,703,335      2,550,446
    
  

Net assets available for benefits

    $ 229,325,869    $ 226,942,780
    
  

 

The accompanying notes to the financial statements

are an integral part of this statement.

 

2

Table of Contents

A.O. SMITH PROFIT SHARING RETIREMENT PLAN

Milwaukee, Wisconsin

 

Statements of Changes in Net Assets Available for Benefits

Years Ended December 31, 2004 and 2003

 

     2004
     2003

Increases:

               

Net income from the Master Trust:

               

Investments

    $ 12,624,013     $ 35,241,740

Interest income from participant loans

      116,525       162,230
    
 

Net income

      12,740,538       35,403,970

Contributions:

               

Company

      1,666,017       2,508,134

Participants

      6,546,252       6,229,627

Rollovers

      310,441       171,684
    
 

Total contributions

      8,522,710       8,909,445
    
 

Total increases

      21,263,248       44,313,415

Decreases:

               

Benefit and withdrawal payments

      18,735,135       9,223,791
    
 

Change in net assets before transfers

      2,528,113       35,089,624

Transfers from (to) other plans

      (145,024 )     2,140,022
    
 

Change in net assets available for benefits

      2,383,089       37,229,646

Net assets available for benefits:

               

Beginning of year

      226,942,780       189,713,134
    
 

End of year

    $ 229,325,869     $ 226,942,780
    
 

 

The accompanying notes to the financial statement

are an integral part of this statement.

 

3

Table of Contents

A.O. SMITH PROFIT SHARING RETIREMENT PLAN

Milwaukee, Wisconsin

 

Notes to Financial Statements

December 31, 2004 and 2003

 

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.

 

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 25% 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 $13,000 and $12,000 for tax-deferred contributions that may be excluded for any individual participant in 2004 and 2003, respectively. The Internal Revenue Code also allows additional catch-up contributions for participants over age fifty. The maximum additional contribution allowed was $3,000 and $2,000 in 2004 and 2003, respectively. No federal income tax is paid on the tax-deferred contributions and growth thereon until the participant makes withdrawals 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

Table of Contents

A.O. SMITH PROFIT SHARING RETIREMENT PLAN

Milwaukee, Wisconsin

Notes to Financial Statements

December 31, 2004 and 2003

(Continued)

 

1. Basis of Presentation and Significant Accounting Policies (Continued)

 

Administrative Expense

 

Administrative expenses are the responsibility of the Plan and are part of the net income from the master trust.

 

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 2004 and 2003 amounted to $6,701 and $3,676, 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 non-vested 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 and employed for five years may withdraw any amount up to 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 complete description of the Plan’s provisions.

 

5

Table of Contents

A.O. SMITH PROFIT SHARING RETIREMENT PLAN

Milwaukee, Wisconsin

 

Notes to Financial Statements

December 31, 2004 and 2003

(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 nine 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, 2004, are the A. O. Smith Profit Sharing Retirement Plan, the A. O. Smith Corporation Savings Plan, the A.O. Smith Retirement Savings Plan and the APCOM, Inc. Retirement and Savings Plan. At December 31, 2004, the Plan was allocated 81.951% and 86.720%, 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, 2004, is as follows:

 

    

December 31,
2004 Fair

Value

   

2004

Income

     2004 Change
in Fair Value
  

a. Registered Investment Company Mutual Funds:

                        

American EuroPacific Growth Fund

    $ 10,802,251    $ 1,512,257     $ 5,163,709  

First American Equity Income Fund

      15,495,295      1,633,252       3,259,264  

Fidelity Aggressive Equity Portfolio

      60,655,279      1,810,080       (6,218,749 )

Vanguard Institutional Index Trust Fund

      19,683,350      1,974,444       1,535,035  

Evergreen Core Bond Fund

      8,970,717      368,809       1,691,856  

American Balanced Fund

      17,650,075      1,395,047       2,352,059  

Marshall Mid Cap Value Fund

      21,468,022      2,562,404       9,862,900  
    
  
 

Subtotal

      154,724,989      11,256,293       17,646,074  

b. Common/Collective Trusts:

                        

A.O. Smith Stock Fund

      3,364,197      (516,901 )     (709,903 )

A.O. Smith Stable Asset Income Fund

      115,786,594      4,622,719       1,949,032  
    
  
 

Subtotal

      119,150,791      4,105,818       1,239,129  

c. Participant Loans Receivable

      3,863,217      200,203       99,729  

d. Cash

      14,484      —         14,482  
    
  
 

Total

    $ 277,753,481    $ 15,562,314     $ 18,999,414  
    
  
 

 

6

Table of Contents

A.O. SMITH PROFIT SHARING RETIREMENT PLAN

Milwaukee, Wisconsin

 

Notes to Financial Statements

December 31, 2004 and 2003

(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, 2003, is as follows:

 

    

December 31,
2003 Fair

Value

   

2003

Income

    2003 Change
in Fair Value
  

a. Registered Investment Company Mutual Funds:

                       

American EuroPacific Growth Fund

    $ 5,638,542    $ 1,276,474    $ 1,907,422  

First American Equity Income Fund

      12,236,031      2,538,701      2,874,286  

Fidelity Aggressive Equity Portfolio

      66,874,028      18,249,653      19,174,470  

Vanguard Institutional Index Trust Fund

      18,148,315      3,867,231      5,736,307  

American Balanced Fund

      15,298,016      2,683,865      3,164,133  

Evergreen Core Bond Fund

      7,278,861      245,842      7,278,861  

First American Bond Fund

      —        37,607      (6,903,623 )

Marshall Mid Cap Value Fund

      11,605,122      2,748,172      4,321,531  
    
  
  

Subtotal

      137,078,915      31,647,545      37,553,387  

b. Common/Collective Trusts:

                       

A.O. Smith Stock Fund

      4,074,100      1,157,160      425,061  

A.O. Smith Stable Asset Income Fund

      113,837,562      4,999,712      5,328,201  
    
  
  

Subtotal

      117,911,662      6,156,872      5,753,262  

c. Participant Loans Receivable

      3,763,488      262,742      (82,558 )

d. Cash

      2      —        (16,261 )
    
  
  

Total

    $ 258,754,067    $ 38,067,159    $ 43,207,830  
    
  
  

 

7

Table of Contents

A.O. SMITH PROFIT SHARING RETIREMENT PLAN

Milwaukee, Wisconsin

 

Notes to Financial Statements

December 31, 2004 and 2003

(Continued)

 

3. Investments

 

Investments held by the Plan, that represents 5% or more of the Plan’s net assets are as follows:

 

     December 31,
     2004
    2003

Fidelity Aggressive Equity Fund, 73,957.930 and 87,698.815 shares, respectively

    $ 57,125,845    $ 65,186,529

First American Equity Income Fund, 864,364.711 and 886,006.766 shares, respectively

      11,833,153      11,340,887

Vanguard Institutional Index Fund, 150,141.009 and 151,018.647 shares, respectively

      16,622,111      15,370,678

A.O. Smith Stable Asset Income Fund, 4,470,125.590 and 4,760,600.751 shares, respectively

      86,972,446      88,894,288

American Balanced Fund, 905,055.891 and 834,841.698 shares, respectively

      16,300,057      14,434,413

Marshall Mid Cap Value Fund, 1,191,207.271 and 811,553.987 shares, respectively

      17,939,582      N/A

 

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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the financial statements. Actual results could differ from those estimates.

 

8

Table of Contents

A.O. SMITH PROFIT SHARING RETIREMENT PLAN

Milwaukee, Wisconsin

 

EIN 39-0619790, Plan 018

Schedule H, line 4i - Schedule of Assets Held for Investment

 

December 31, 2004

 

(a)

   

(b)

Identity of Issue

   

(c)

Description of

Investment

  

(d)

Cost

   

(e)

Current

Value

*

    Participant Loans    5% - 10%   $ —      $ 2,319,968

 

9

Consent of Independent Auditors

EXHIBIT 23.1

 

CONSENT OF REILLY, PENNER & BENTON LLP

 

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-05799) pertaining to the A. O. Smith Profit Sharing Retirement Plan (the Plan) of our report dated April 1, 2005, with respect to the financial statements and schedules of the Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2004.

 

Milwaukee, Wisconsin   REILLY, PENNER & BENTON LLP
June 23, 2005    
Section 906 Certification

Exhibit 32

 

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

WITH RESPECT TO THE ANNUAL REPORT ON FORM 11-K

FOR THE YEAR ENDED DECEMBER 31, 2004

PERTAINING TO THE

A. O. SMITH PROFIT SHARING RETIREMENT PLAN

 

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, each of the undersigned certifies that to the best of our knowledge:

 

(1) the Annual Report on Form 11-K pertaining to the A. O. Smith Profit Sharing Retirement Plan (the “Plan”) for the year ended December 31, 2004 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities and Exchange Act of 1934; and

 

(2) the information contained in the Report fairly presents, in all material respect, the financial condition and results of the Plan.

 

Dated: June 27, 2004  

/s/ Daniel J. Velicer

    Daniel J. Velicer
    Manager, Group Insurance
    and International Benefits
Dated: June 27, 2004  

/s/ Duane R. Carlson

    Duane R. Carlson
    Manager, Pension and Savings Plan