2010 Annual Report - AO Smith

9. Debt and Lease Commitments
December 31 (dollars in millions) 2010 2009
Bank credit lines, average year-end interest rate of 5.1% for 2010 and
1.5% for 2009 $ 6.5 $ 17.9
Revolving credit agreement borrowings, average year-end interest rate of
1.8% for 2010 and 0.6% for 2009 115.0 70.0
Commercial paper, average year-end interest rate of 1.3% for 2009 - 1.8
Term notes with insurance companies, expiring through 2018, average
year-end interest rate of 5.9% for 2010 and 2009 86.9 108.0
Canadian revolving credit agreement borrowings, average year-end
interest rate of 2.7% for 2010 and 0.8% for 2009 22.6 27.0
Canadian term notes with insurance companies, expiring through 2018,
average year-end interest rate of 5.3% for 2010 and 2009 30.0 28.5
261.0 253.2
Less long-term debt due within one year 18.6 21.1
Long-term debt $ 242.4 $ 232.1
The company has a $425 million multi-year multi-currency revolving credit agreement with a group of nine banks, which
expires on November 13, 2013. The facility has an accordion provision which allows it to be increased up to $525 million if
certain conditions (including lender approval) are satisfied. Borrowings under the company's bank credit lines and commercial
paper borrowings are supported by the revolving credit agreement. As a result of the long-term nature of this facility, the
commercial paper and credit line borrowings are classified as long-term debt at December 31, 2010 and 2009. At its option, the
company maintains either cash balances or pays fees for bank credit and services.
Scheduled maturities of long-term debt within each of the five years subsequent to December 31, 2010, are as follows: 2011 -
$18.6; 2012-$18.6; 2013-$162.6; 2014-$14.6; 2015-$14.6 million.
Future minimum payments under non-cancelable operating leases relating mostly to office, manufacturing and warehouse
facilities total $30.2 million and are due as follows: 2011 -$7.2; 2012$4.6; 2013$3.3; 2014-$2.9; 2015-$2.5, and thereafter
$9.7 million. Rent expense, including payments under operating leases, was $13.9, $12.3 and $11.7 million in 2010, 2009 and
2008, respectively.
Interest paid by the company was $10.5, $11.9 and $19.9 million in 2010, 2009 and 2008, respectively.
10. Redeemable Stock
SICO had an agreement, which was terminated in 2009, with a stockholder to redeem common stock tendered by the estate of
the stockholder, when deceased, sufficient to provide funds for estate taxes and expenses. The redemption price was based on
the valuation used for federal estate tax purposes and could be satisfied in either cash or an equivalent amount of A. O. Smith
Common Stock based on the market value at the date of redemption. The redemption agreement included a provision whereby
SICO was not obligated to make a redemption if it would cause a violation of any provision of the company's credit agreements
or term loans. A debt agreement in place through October 30, 2008 included a covenant that limited SICO's cumulative
redemptions to $0.2 million.
At December 31, 2008, the aggregate number of outstanding shares covered by the redemption agreement was 167,173. In
accordance with EITF Topic D-98, "Classification and Measurement of Redeemable Securities", the redeemable Common
Stock was recorded outside of stockholders' equity at December 31, 2008 based on the closing stock price of SICO's Common
Stock.
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