On January 20, we announced an agreement with the majority shareholders of GSW Inc. to acquire the Canadian-based water heater and building products company. This represents the largest acquisition in company history, and we are very excited about combining GSW’s strength in the U.S. retail water heater channel and the Canadian residential market with our strength in the domestic wholesale channel and growing global presence. The acquisition promises to make A. O. Smith the leading supplier in this industry. We expect to complete the transaction by the end of the first quarter.

One of my expectations for A. O. Smith is that we will deliver on our promises and meet our commitments. To our customers, that means reliably delivering high- quality products on time and providing them with valuable, personalized service. To our employees, this means continuing to treat each other with respect and dignity so that we can work together to achieve our goals. As you no doubt noticed, the A. O. Smith Values represent the foundation of our business model, and we remain committed to living those values every day.

Finally, we expect to meet our financial commitments to you, our shareholders, by consistently achieving our financial plan, increasing shareholder value, and continually delivering better returns on your investment in A. O. Smith Corporation. I think 2006 will be an exciting year with numerous challenges and many opportunities for accomplishment, and I look forward to reporting our progress to you in the future.

Paul W. Jones Chairman and Chief Executive Officer