Exhibit 99.1
ITW NEWS RELEASE
________________________________________________________________________________
ITW Reports a 3 Percent Increase in Diluted Income Per Share from
Continuing Operations in the 2003 First Quarter; Revenues Grow 5 Percent
GLENVIEW, ILLINOIS-(April 16, 2003)-Illinois Tool Works Inc. (NYSE:ITW) today
reported that 2003 first quarter diluted income per share from continuing
operations increased 3 percent compared with the 2002 first quarter. During the
most recent quarter, operating revenues grew 5 percent while operating income
increased 4 percent. Income from continuing operations in the 2003 first quarter
totaled $199.5 million, or 65 cents per diluted share, versus $194.4 million, or
63 cents per diluted share, in the year earlier period.
The growth in the first quarter income from continuing operations took place
amidst an environment where worldwide end market conditions remained mixed.
While the Company's short lead-time engineered products have outperformed the
longer lead-time systems businesses, international end markets continued to be
better than their North American counterparts. For the 2003 first quarter,
operating revenues were $2.314 billion compared with $2.205 billion for the year
earlier period. Operating income improved to $321.0 million in the most recent
quarter versus $309.9 million in the prior year period. The Company's overall
operating margins of 13.9 percent were basically flat in the 2003 first quarter.
Net income for the most recent quarter was $195.4 million, or 63 cents per
share, on a fully diluted basis. This is significantly higher than the year
earlier period when the Company changed its accounting method for evaluating
goodwill for impairment based on the fair value method required by Statement of
Financial Accounting Standards 142. As a result of the cumulative effect of this
required accounting change, the Company recorded a net loss of $23.4 million for
the 2002 first quarter.
The Company continued to generate considerable free operating cash flow in the
most recent quarter due to strong profitability. For the 2003 first quarter,
free operating cash flow was $176.7 million compared with $230.7 million in the
year earlier period. The decrease in cash flow was due to an increase in working
capital resulting from translation.
"We view our first quarter financial results as solid performance in a time
where North American end markets were mixed and our margins were negatively
impacted by pension and restricted share expenses," said W. James Farrell, ITW's
chairman and chief executive officer. "Our base business performance of minus
two percent in the first quarter is a direct reflection of persistent slowing in
a number of North American end markets. Fortunately, the results of our
international businesses helped mitigate some of the weaker activity in North
America."
First quarter 2003 segment highlights include:
North American Engineered Products revenues increased 2 percent in the first
quarter mainly due to contributions from acquisitions and base revenue growth
from businesses serving automotive customers. Operating income decreased 11
percent largely as a result of slower base business income growth in the
construction, automotive and industrial products businesses as well as higher
pension and restructuring expenses. As a result, operating margins declined 210
basis points to 14.8 percent.
International Engineered Products first quarter revenues were up 22 percent
principally as a result of the positive impact of currency translation and base
business growth from businesses serving customers in the construction,
automotive and general industrial sectors. Operating income grew 50 percent due
to contributions from the already mentioned businesses and the benefits of
currency translation. First quarter operating margins of 10.4 percent were 190
basis points higher than the year ago period.
North American Specialty Systems revenues declined 5 percent in the quarter
largely due to base revenue decreases in the food equipment, welding, and
marking and decorating businesses. Even with base revenue declines, operating
income was flat due to higher restructuring expense in the year earlier period.
As a result, operating margins improved 80 basis points to 14.2 percent in the
first quarter.
International Specialty Systems revenues increased 16 percent mainly due to the
positive impact of currency translation. Operating income grew 34 percent
largely as a result of the benefits of currency translation and strong base
business growth in the food equipment and packaging areas. Accordingly,
operating margins improved 120 basis points to 9.1 percent in the first quarter.
Leasing and Investments first quarter operating income of $17.4 million
represented a 4 percent increase compared with the prior year period.
Looking ahead, the Company continues to be uncertain about economic conditions
for the remainder of 2003 and its impact on worldwide end markets and
profitability. For full-year 2003, the Company is maintaining its wide range of
earnings, with income per diluted share from continuing operations forecasted to
be in the range of $3.02 to $3.42. For the 2003 second quarter, the Company is
forecasting income per diluted share from continuing operations to be in the
range of 83 cents to 93 cents.
This First Quarter 2003 Earnings Release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995
including, without limitation, statements regarding end market conditions and
base business expectations for full year 2003 and the Company's related earnings
forecasts. These statements are subject to certain risks, uncertainties, and
other factors, which could cause actual results to differ materially from those
anticipated. Important factors that could cause actual results to differ
materially from the Company's expectations are set forth in ITW's Form 10-K.
ITW is a $9.5 billion diversified manufacturer of highly engineered components
and industrial systems and consumables. The Company consists of approximately
600 decentralized operations in 44 countries and employs some 48,700 people.
CONTACT: John Brooklier, 847-657-4104
ILLINOIS TOOL WORKS INC.
(In thousands except per share data)
STATEMENT OF INCOME
THREE MONTHS ENDED
MARCH 31,
---------------------------
2003 2002
----------- -----------
Operating Revenues $ 2,313,790 $ 2,204,654
Cost of revenues 1,513,792 1,475,119
Selling, administrative, and R+D expenses 469,688 414,764
Amortization and impairment of goodwill
and other intangibles 9,310 4,872
----------- -----------
Operating Income 321,000 309,899
Interest expense (17,432) (17,503)
Other income 3,316 2,076
----------- -----------
Income From Continuing Operations Before Income Taxes 306,884 294,472
Income taxes 107,400 100,100
----------- -----------
Income From Continuing Operations 199,484 194,372
Income (Loss) From Discontinued Operations (4,107) 4,075
Cumulative Effect of Change in Accounting Principle -- (221,890)
----------- -----------
Net Income(Loss) $ 195,377 $ (23,443)
=========== ===========
Income Per Share from Continuing Operations:
Basic $ 0.65 $ 0.64
Diluted $ 0.65 $ 0.63
Income (Loss) Per Share from Discontinued Operations:
Basic $ (0.01) $ 0.01
Diluted $ (0.01) $ 0.01
Cumulative Effect Per Share of Change in Accounting
Principle:
Basic $ -- $ (0.73)
Diluted $ -- $ (0.72)
Net Income (Loss) Per Share:
Basic $ 0.64 $ (0.08)
Diluted $ 0.63 $ (0.08)
Shares outstanding during the period :
Average 306,622 305,532
Average assuming dilution 307,772 307,985
ESTIMATED FREE OPERATING CASH FLOW
THREE MONTHS ENDED
MARCH 31,
---------------------------
2003 2002
----------- -----------
Net cash provided by operating activities $ 217,174 $ 282,894
Plus: Proceeds from investments 15,665 11,827
Less: Additions to PP+E (56,173) (64,051)
----------- -----------
Free operating cash flow $ 176,666 $ 230,670
=========== ===========
ILLINOIS TOOL WORKS INC.
(In thousands)
STATEMENT OF FINANCIAL POSITION
MAR 31, DEC 31,
2003 2002
----------- -----------
ASSETS
Cash and equivalents $ 1,125,550 $ 1,057,687
Trade receivables 1,562,330 1,500,031
Inventories 1,008,967 962,746
Deferred income taxes 219,681 217,738
Prepaids and other current assets 134,878 136,563
----------- -----------
Total current assets 4,051,406 3,874,765
Net plant and equipment 1,657,462 1,631,249
Investments 1,388,496 1,392,410
Goodwill 2,417,046 2,394,519
Intangible assets 223,467 230,291
Deferred income taxes 558,625 541,625
Other assets 501,901 506,552
Net assets of discontinued operations 48,006 51,690
----------- -----------
$10,846,409 $10,623,101
=========== ===========
LIABILITIES and STOCKHOLDERS' EQUITY
Short-term debt $ 100,998 $ 121,604
Accounts payable 425,791 416,958
Accrued expenses 709,926 833,689
Cash dividends payable 70,535 70,514
Income taxes payable 177,571 124,397
----------- -----------
Total current liabilities 1,484,821 1,567,162
----------- -----------
Long-term debt 1,451,785 1,460,381
Other liabilities 990,721 946,487
----------- -----------
Total non-current liabilities 2,442,506 2,406,868
----------- -----------
Common stock 3,077 3,068
Additional paid-in capital 754,137 747,778
Income reinvested in the business 6,327,105 6,202,263
Common stock held in treasury (1,662) (1,662)
Accumulated other comprehensive income (163,575) (302,376)
----------- -----------
Total stockholders' equity 6,919,082 6,649,071
----------- -----------
$10,846,409 $10,623,101
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