FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR ALL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT
TO SECTION 15(d) OF THE SECURITIES ACT OF 1934
(Mark One)
[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: Form S-8 Reg. No. 333-17473
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
ITW Bargaining Savings and Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Illinois Tool Works Inc.
3600 West Lake Avenue
Glenview, Illinois 60025
ITW Bargaining Savings and Investment Plan (f/k/a Premark
International, Inc.
Bargaining Employees' Retirement Savings Plan)
Financial Statements
As of December 31, 2001 and 2000
Together With Auditors' Report
Employer Identification Number 36-1258310/36-3461320
Plan Number 039/133
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Employee Benefits Committee of Illinois Tool Works Inc.:
We have audited the accompanying statements of net assets available for benefits
of the ITW Bargaining Savings and Investment Plan, formerly known as the Premark
International, Inc. Bargaining Retirement Savings Plan, as of December 31, 2001
and 2000, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2001. 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. 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 net assets available for benefits
for the year ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
May 9, 2002
ITW BARGAINING
SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 2001 and 2000
Employer Identification Number 36-1258310/36-3461320, Plan Number 039/133
2001 2000
-------------- --------------
ASSETS:
Receivables-
Company contributions $ -- $ 2,471
Participant contributions -- 2,812
Loan payments -- 573
-------------- --------------
Total receivables -- 5,856
Proportionate share of Master Trusts' assets 14,231,433 13,510,842
-------------- --------------
NET ASSETS AVAILABLE FOR BENEFITS $ 14,231,433 $ 13,516,698
============== ==============
The accompanying notes to financial statements
are an integral part of these statements.
ITW BARGAINING
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year Ended December 31, 2001
Employer Identification Number 36-1258310, Plan Number 039
INCREASES (DECREASES):
Contributions-
Company $ 312,112
Participant 1,284,191
Rollover 4,923
---------------
Total contributions 1,601,226
Proportionate share of Master Trust net investment loss (528,265)
Benefits paid to participants (1,348,487)
Deemed distributions of participant loans (15,516)
Transfers from other plans (Note 10) 1,005,777
---------------
Net increase 714,735
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 13,516,698
---------------
End of year $ 14,231,433
===============
The accompanying notes to financial statements
are an integral part of this statement.
ITW BARGAINING
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2001 and 2000
Employer Identification Number 36-1258310/36-3461320, Plan Number 039/133
1. DESCRIPTION OF THE PLAN AND INVESTMENT PROGRAM
The following describes the major provisions of the ITW Bargaining Savings and
Investment Plan (the "Plan") which was previously known as the Premark
International, Inc. Bargaining Employees' Retirement Savings Plan prior to
January 1, 2001. Participants should refer to the plan document for a more
complete description of the Plan's provisions.
General
The Plan is a defined contribution plan in which employees covered by collective
bargaining agreements of participating business units of Illinois Tool Works
Inc. and its subsidiaries (the "Company") are eligible to participate in the
Plan on the first day of the month following the completion of six months of
service. Established on January 1, 1991 and as subsequently amended, the Plan is
subject to provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
Effective January 1, 2001, the funding vehicle for the Plan is the ITW Savings
and Investment Trust (the "ITW Master Trust") at Putnam Fiduciary Trust Company
(the "Trustee"). Prior to January 1, 2001, the investment assets of the Plan
were held in the Premark International, Inc. Master Defined Contribution Trust
(the "Premark Master Trust") at The Northern Trust Company, the former trustee.
Collectively, the ITW Master Trust and the Premark Master Trust are referred to
as the "Master Trusts".
Participant and Company Contributions
Participants may contribute amounts from a minimum of 1% to a maximum of 16% of
eligible compensation to their pre-tax and after-tax accounts. Separately, the
maximum pre-tax account contribution is 16% of eligible compensation, while the
maximum after-tax account contribution is 10%. The combined pre-tax and
after-tax contributions cannot exceed 16% of eligible compensation. Participants
may change their contribution percentages with each payroll. Prior to January 1,
2001, the percentage of compensation contributed could be increased or
decreased, at the election of the employee, any time during the year, up to four
times per year.
Participant and Company contributions may begin with the attainment of the
eligibility requirements of the Plan. The Company provides a contribution based
on formulas set forth for each participating business unit of the Company.
Investment Funds
Effective January 1, 2001, there are thirty investment options in which
participants may choose to invest. Prior to that date, the participants could
choose to invest in four core investment funds. Investment income in each fund
is allocated daily among the participants' balances in each fund, except for the
Putnam Money Market Fund and the Stable Asset Fund. These two funds allocate
income to participant account balances monthly.
For each of the funds valued daily, investment income is allocated to
participant accounts based on the previous day's closing share value times the
number of shares in their account. For the monthly valued funds, a month-end
share value is determined by the Trustee from the investments and allocated to
participant accounts based on the number of shares in their account.
Effective January 1, 2001, participants may change their investment elections or
transfer their balances between funds in multiples of 1% on any given day. Prior
to January 1, 2001, participants were allowed to change their investment
elections or transfer their balances between four investment options in
multiples of 1% on any day, but no more than twelve times per year.
Vesting
Participants' interest in their employee contribution accounts are fully vested
at all times. Participants' interest in their Company contribution accounts vest
as shown in the following table:
Years of Vested
Vesting Service Percentage
- ----------------- ----------
Less than 1 0
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
Participants who terminate their participation in the Plan due to retirement,
death or become permanently and totally disabled are granted full vesting in
their Company contribution accounts.
Participant Loans
Participants may borrow up to 50% of their vested account balance, up to
$50,000, with a minimum loan amount of $1,000 from the vested portion of their
accounts. Loans bear a reasonable rate of interest, are secured by a portion of
the participants' accounts and are repayable over a period not to exceed five
years. Amounts borrowed do not share in the earnings of the investment funds but
are credited with the interest payments made pursuant to the loan agreements.
Benefits
Upon termination of employment, participants may receive a lump-sum payment of
their account balances, subject to the vesting provisions described above.
Additional optional payment forms are available at the election of the
participant.
Forfeitures
Forfeitures, representing the unvested portion of the Company's contributions,
amounting to $373 as of December 31, 2001, will be used to reduce future Company
contributions pursuant to the terms of the Plan. Also, in 2001, Company
contributions were reduced by $403 from forfeited nonvested accounts.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared on the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
changes therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
Investment Valuation and Income Recognition
Investments (other than those of the Stable Asset Fund) are reported at fair
values based on quoted market prices of the underlying securities in which each
fund invests. Investments of the Stable Asset Fund consist of fully
benefit-responsive investment contracts and are reported at contract value,
which approximates fair market value.
Purchases and sales of securities are recorded on a trade date basis. Dividend
income is recorded on the ex-dividend date.
The Plan provides for investments that, in general, are exposed to various
risks, such as interest rate, credit, and overall market volatility risks. Due
to the level of risk associated with certain investment securities, it is
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect the amounts
reported in the statement of net assets available for benefits.
Net Appreciation/Depreciation
Net appreciation/depreciation on investments is based on the value of the assets
at the beginning of the year or at the date of purchase during the year, rather
than the original cost at the time of purchase. The Plan's unrealized
appreciation (depreciation) and realized gain (loss) are included in the Plan's
proportionate share of the ITW Master Trust's net investment income or loss.
3. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Plan has benefit-responsive investment contracts. The accounts for these
contracts are credited with earnings on the underlying investments and charged
for participant withdrawals and administrative expenses. The contracts are
included in the financial statements at contract value. Contract value
represents contributions made under the contract, plus earnings, less
participant withdrawals and administrative expenses.
There are no reserves against contract value for credit risk of the contract
issuer or otherwise. The average yield and crediting interest rates were
approximately 6 percent for 2001.
In 2000, two investment contracts with wrapper agreements were terminated prior
to maturity due to the merger of the Plan. At the time of termination, the
market value of the assets underlying the wrapper agreements was significantly
less than the book value. In October 2000, the Company made a restorative
payment to the Plan on behalf of these investment contracts. The payment was
made to restore the difference between the market value and book value of the
assets underlying the wrapper (benefit responsive) agreements held in the Fixed
Income Fund.
4. ADMINISTRATIVE EXPENSES
Investment management, agent and professional fees, brokerage commissions and
administrative services are paid by the Plan. Other outside professional and
administrative services are paid by or provided by the Company.
Plan expenses are paid through the ITW Master Trust. For the year ended December
31, 2001, none of the fees paid through the ITW Master Trust were allocated to
the Plan.
5. ADMINISTRATION
All funds are deposited with and held for safekeeping by the Trustee under a
master trust agreement with the Company. The master trust agreement provides,
among other things, that the Trustee shall keep accounts of all trust
transactions and report them periodically to the Company. Investment decisions,
within the guidelines of the investment funds, are made by the Trustee and
investment managers. The Trustee may use an independent agent to effect
purchases and sales of common stock of the Company for the Illinois Tool Works
Inc. Common Stock Fund. Other administrative services, such as participant
recordkeeping, are performed by the Trustee. Prior to January 1, 2001, the
administrative services were performed by Hewitt Associates.
6. RELATED PARTY TRANSACTIONS
The Trustee is a party-in-interest according to Section 3(14) of ERISA. Through
the ITW Master Trust, the Trustee serves as plan fiduciary and investment
manager to the Plan. As defined by ERISA, any person or organization which
provides these services to the Plan is a related party-in-interest. Fees paid by
the ITW Master Trust to the Trustee were $393,144 for the year ended December
31, 2001.
The Company is also a party-in-interest according to Section 3(14) of ERISA. The
Illinois Tool Works Inc. Common Stock Fund is a Plan investment option.
7. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
8. TAX STATUS
The Plan obtained its latest determination letter on January 15, 1998, in which
the Internal Revenue Service stated that the Plan, as adopted, was designed in
accordance with the applicable requirements of the Internal Revenue Code.
Effective January 1, 1997, the Plan was amended and restated. The Company has
not yet received a determination letter for the amended and restated plan. The
plan administrator believes that the Plan is currently being operated in
compliance with the applicable requirements of the Internal Revenue Code.
Therefore, the plan administrator believes that the Plan was qualified and the
related trust was tax-exempt as of the financial statement dates.
9. MASTER TRUSTS
Certain amounts in the Plan's financial statements represent the Plan's
proportionate share of the corresponding total of the Master Trusts.
The net Master Trusts' assets as of December 31, 2001 and 2000, are a follows:
ITW Master Trust Premark Master
2001 Trust 2000
---------------- ---------------
Assets-
Non-interest bearing cash $ -- $ 113,258
-------------- --------------
Receivables-
Interest and dividends -- 2,196,531
-------------- --------------
Investments, at fair value-
Interest bearing cash 23,814,926 --
Company common stock 409,166,071 409,967,732
Participant loans 53,947,526 15,332,727
Value of interest in common/collective
trusts 74,025,136 191,095,758
Value of interest in registered investment
companies 939,722,911 192,190,597
Other 201,743,550 --
-------------- --------------
Total investments 1,702,420,120 808,586,814
-------------- --------------
Net Master Trust assets $1,702,420,120 $ 810,896,603
============== ==============
The Plan's proportionate share of the Master Trusts' assets represents the
specific assets which are identifiable to the Plan and an allocation of the
common assets. The Plan's proportionate share of the ITW Master Trust's assets
were 1% at December 31, 2001. The Plan's proportionate share of the Premark
Master Trust's assets were 2% at December 31, 2000.
For the year ended December 31, 2001, the earnings on investments of the ITW
Master Trust are as follows:
Investment income-
Interest-
Interest-bearing cash $ 278
Participant loans 4,301,286
------------
Total interest 4,301,564
Dividends on Company common stock 4,691,352
Net loss on sale of assets (92,209,793)
Unrealized appreciation of assets 155,823,283
Net investment loss from common/collective trusts (9,230,658)
Net investment loss from registered investment companies (137,037,904)
Other income 12,917,123
------------
Net investment loss $(60,745,033)
============
10. TRANSFERS FROM OTHER PLANS
Effective July 31, 2001, the Kairak 401(k) Plan was merged into the Plan.
Substantially all of the assets were transferred on August 30, 2001. The assets
transferred to the Plan totaled $60,088.
Effective October 31, 2001, the Stanley Knight Union 401(k) Plan was merged into
the Plan. Substantially all of the assets were transferred on November 1, 2001.
The assets transferred to the Plan totaled $945,689.
11. SUBSEQUENT EVENTS
Effective January 1, 2002, the maximum pre-tax contribution is increased to 50%
of eligible compensation, subject to the IRS maximum deferral limit, while the
maximum after-tax contribution remains at 10%. The combined pre-tax and
after-tax contributions cannot exceed 50%.
Effective January 1, 2002, the Plan's vesting schedule for Company contributions
will be shortened to immediate vesting for all employees who are active on or
after January 1, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on May 16, 2002.
ITW BARGAINING SAVINGS AND
INVESTMENT PLAN
By: /s/ John Karpan
-----------------------------------------
John Karpan,
Member of Employee Benefits Committee and
Senior Vice President, Human Resources
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report, included or incorporated by reference in this Form 11-K, into the
Illinois Tool Works Inc.'s previously filed registration statements on Form S-8
(File Nos. 333-22035, 333-37068, 333-75767 and 333-69542), Form S-4, (File Nos.
333-02671, 333-25471 and 333-88801) and Form S-3 (File Nos. 33-5780 and
333-70691) and Premark International, Inc.'s previously filed registration
statements on Form S-3 (File No.'s 33-35137 and 333-62105).
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
May 16, 2002
EXHIBIT 99.1
May 16, 2002
Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir/Madam:
Arthur Andersen LLP has represented to Illinois Tool Works Inc. that the audit
completed for the ITW Bargaining Savings and Investment Plan for the year ending
December 31, 2001 was subject to Arthur Andersen LLP's quality control system
for the United States accounting and auditing practice. Arthur Andersen LLP has
provided assurance to Illinois Tool Works Inc. that the audit engagement was
conducted in compliance with professional standards. The audit was conducted
with the appropriate continuity and availability of personnel, in the United
States, as well as the appropriate availability of national office consultation.
Very truly yours,
/s/ Jon C. Kinney
Jon C. Kinney,
Senior Vice President and Chief Financial Officer, Illinois Tool Works Inc.
