EXHIBIT 99.2
ITW CONFERENCE CALL - FIRST QUARTER 2003
ITW Agenda
1. Introduction..............John Brooklier
2. Financial Overview........Jon Kinney
3. Manufacturing Segments....John Brooklier
4. Forecast..................Jon Kinney
5. Q and A...................Kinney/Brooklier
ITW Forward-Looking Statements
Statements regarding the company's earnings estimates contain forward-looking
statements within the meaning of the private securities Litigation Reform act of
1995, including, without limitation, statements regarding the company's 2003
forecasts. These statements are subject to certain risks, uncertainties, and
other factors, which could cause actual results to differ materially from those
anticipated, including, without limitation, the following risks:1)a downturn in
the construction, automotive, general industrial, food service and retail, or
real estate markets; 2)deterioration in global and domestic businesses and
economic conditions, particularly in North America, the European community and
Australia; 3) the unfavorable impact of foreign currency fluctuations; 4) an
interruption in , or reduction in, introducing new products into the Company's
product lines; and 5)an unfavorable environment for making acquisitions or
dispositions, domestic and international, including adverse accounting or
regulatory requirements and market value of candidates.
Conference Call Playback
Replay number: 402-220-6032
Replay available through midnight of April 30
No pass code necessary
ITW Quarterly Highlights
2002 2003 F(U) Last Year
--------------
Q1 Q1 Amount %
-------- -------- ------ ------
Operating Revenues 2,204.7 2,313.8 109.1 4.9%
Operating Income 309.9 321.0 11.1 3.6%
% of Revenues 14.1% 13.9% -0.2%
Income From Continuing Operations
Income Amount 194.4 199.5 5.1 2.6%
Income Per Share-Diluted 0.63 0.65 0.02 3.2%
Average Invested Capital 6,506.6 6,468.7 (37.9) -0.6%
Return on Invested Capital 12.4% 12.9% 0.5%
Free Cash 230.7 176.7 (54.0) -23.4%
ITW Quarterly Operating Analysis
% F(U) Prior Year
-------------------------------------------
Operating Operating Operating
Revenue Income Margins
--------- --------- ---------
Base Manufacturing Business
Operating Leverage -1.7% -5.2% -0.5%
Non Volume Related 3.0% 0.4%
----- ----- -----
Total -1.7% -2.2% -0.1%
Acquisitions / Divestitures 1.9% 1.1% -0.1%
Translation 4.8% 4.0% -0.1%
Restructuring 0.5% 0.1%
Leasing and Investments -0.1% 0.2% 0.0%
----- ----- -----
Total 4.9% 3.6% -0.2%
===== ===== =====
ITW Leasing and Investment
2002 2003 F(U) Last Year
---------------------- ---------------------
Q1 Q1 Amount %
----- ----- ------ ----
Operating Revenues 32.1 30.4 (1.7) -5.3%
Operating Income 16.8 17.4 0.6 3.6%
Operating Margins 52.3% 57.2% 4.9%
ITW Non Operating and Taxes
2002 2003 F(U) Last Year
---------------
Q1 Q1 Amount %
------ ------ ------ ------
Operating Income 309.9 321.0 11.1 3.6%
Interest Expense (17.5) (17.4) 0.1
Other Income (Expense)
2.1 3.3 1.2
----- ----- ---- ----
Income From Continuing Operations-P/T 294.5 306.9 12.4 4.2%
Income Taxes 100.1 107.4 7.3
% to Pre Tax Income 34% 35% -1.0%
Income From Continuing Operations-A/T 194.4 199.5 5.1 2.6%
===== ===== === ====
ITW Invested Capital
3/31/02 12/31/02 3/31/03
------- ------- -------
Trade Receivables 1,486.8 1,500.0 1,562.3
Days Sales Outstanding 60.7 60.8 55.6
Inventories 964.9 962.7 1,009.0
Months on Hand 2.0 1.8 2.0
Other Current Assets 328.7 354.3 354.6
Accounts Payable and Accruals (1,279.5) (1,445.6) (1,383.8)
------- ------- -------
Operating Working Capital 1,500.9 1,371.4 1,542.1
% to Revenue(Prior 4 Qtrs.) 16% 14% 16%
Net plant and Equipment 1,605.2 1,631.2 1,657.5
Investments, net of L+I Debt 569.1 622.3 576.4
Goodwill 2,281.6 2,394.5 2,417.0
Other net 424.2 383.8 341.3
------- ------- -------
Invested Capital 6,381.0 6,403.2 6,534.3
======= ======= =======
ITW Debt and Equity
3/31/02 12/31/02 3/31/03
------- ------- -------
Total Capital
Short Term Debt 276.5 121.6 101.0
Long Term Debt 1,249.7 1,460.4 1,451.8
------- ------- -------
Total Debt 1,526.2 1,582.0 1,552.8
Stockholders Equity 5,945.9 6,649.0 6,919.1
------- ------- -------
Total Capital 7,472.1 8,231.0 8,471.9
Less:
Leasing and Investment Debt (810.1) (770.1) (812.0)
Cash (281.0) (1,057.7) (1,125.6)
------- ------- -------
Net Debt and Equity 6,381.0 6,403.2 6,534.3
======= ======= =======
Debt to Total Capital 20% 19% 18%
======= ======= =======
Debt to Total Capital (x L+I) 12% 11% 10%
======= ======= =======
ITW Cash Flow
2002 2003
Q1 Q1
----- -----
Net Income (23.4) 195.4
Adjust for Non Cash Items 272.6 64.3
Changes in Operating Assets and Liab. 33.7 (42.5)
----- -----
Net Cash From Operating Activities 282.9 217.2
Additions to Plant and Equipment (64.0) (56.2)
Proceeds from investments 11.8 15.7
----- -----
Free Cash 230.7 176.7
Acquisitions (35.3) (14.8)
Investments (115.0) (29.1)
Dividends (67.1) (70.5)
Debt (40.9) (32.7)
Other 26.4 38.3
----- -----
Net Cash Increase(Decrease) (1.2) 67.9
----- -----
ITW Return on Invested Capital
2002 2003 F(U)
Current Quarter Q1 Q1 Prior Yr.
------- ------- --------
Operating Income after taxes 201.4 208.7 7.3
Operating Margins 9.1% 9.0% -0.1%
Average Invested Capital 6,506.6 6,468.7 (37.9)
Capital Turnover 1.36 1.43 0.1
Return on Average Invested Capital 12.4% 12.9% 0.5%
======= ======= =======
2002 2003 F(U)
Year to Date Q1 Q1 Prior Yr.
------- ------- --------
Operating Income after taxes 201.4 208.7 7.3
Operating Margins 9.1% 9.0% -0.1%
Average Invested Capital 6,506.6 6,468.7 (37.9)
Operating Margins 1.36 1.43 0.1
Return on Average Invested Capital 12.4% 12.9% 0.5%
======= ======= =======
ITW Acquisitions
Q1 Q2 Q3 Q4 Q1
---- ---- ---- ---- ----
Annual Revenues Acquired 31 59 33 72 49
---- ---- ---- ---- ----
Purchase Price
Cash Paid 35 57 14 82 44
Stock Issued - - - - -
---- ---- ---- ---- ----
Total 35 57 14 82 44
==== ==== ==== ==== ====
Number of Acquisitions
North America
Engineered Products 2 1 1 1 1
Specialty Systems - 2 1 2 -
International
Engineered Products 1 2 1 -
Specialty Systems 2 2 2 1 7
---- ---- ---- ---- ----
Total 5 7 5 4 8
==== ==== ==== ==== ====
Key Economic Data
March ISM: 46.2% is first under 50 showing since Nov. 2002
US Industrial Production (ex. Tech.): +0.2% in Feb 2003. vs. +0.5% in Jan. 2003
Euro-Zone Production Index: 48.4% in March 2003 vs. 50.1% in Feb. 2003
ITW Engineered Products - North America
2002 2003 F(U) Last Year
------------------
Q1 Q1 Amount %
----- ----- ----- -----
Operating Revenues 736.5 748.8 12.3 1.7%
Operating Income 124.7 111.1 (13.6) -10.9%
Operating Margins 16.9% 14.8% -2.1%
Engineered Products - North America
Quarterly Analysis
% F(U) Prior Year
---------------------------------------
Operating Operating Operating
Revenue Income Margins
-------- -------- --------
Base Business
Operating Leverage -1.7% -4.2% -0.5%
Non Volume Related -2.4% -0.4%
----- ----- -----
Total -1.7% -6.6% -0.9%
Acquisitions/Divestitures 3.4% 0.5% -0.4%
Translation 0.0% 0.0% 0.0%
Restructuring -4.8% -0.8%
----- ----- -----
Total 1.7% -10.9% -2.1%
===== ====== =====
Engineered Products - North America
Key Points
ITW construction base revenues: -5% for Q1
-Commercial construction: -5% to -10%
-New housing: -2%
-Renovation/rehab: +10%
Commercial construction bottomed but not expected to materially improve in 2003
New housing starts expected to decline 3% to 4% in 2003
Renovation/rehab sales look more stable for 2003
Auto base revenues = +3% for Q1
Big 3 build rates at +1% for Q1
GM at +6%; Ford -3%; Chrysler -5%
ITW and Ward's estimates 2ndQ builds at -11%
ITW and Ward's estimates FY 2003 builds at -7%
March Big 3 inventories at 81 days - the best level since November
ITW Engineered Products - International
2002 2003 F(U) Last Year
---------------------
Q1 Q1 Amount %
----- ----- ----------- -------
Operating Revenues 332.0 405.5 73.5 22.1%
Operating Income 28.2 42.3 14.1 50.0%
Operating Margins 8.5% 10.4% 1.9%
Engineered Products - International
Quarterly Analysis
% F(U) Prior Year
------------------------------------------
Operating Operating Operating
Revenue Income Margins
-------- -------- --------
Base Business
Operating Leverage 5.2% 22.9% 1.4%
Non Volume Related 9.6% 0.8%
----- ----- -----
Total 5.2% 32.5% 2.2%
Acquisitions/Divestitures 1.7% 1.1% -0.1%
Translation 15.2% 21.0% 0.2%
Restructuring -4.6% -0.4%
----- ----- -----
Total 22.1% 50.0% 1.9%
===== ===== =====
Engineered Products - International
Key Points
Construction base revenues: +3% in Q1
Europe +2% growth (strength in UK, France and Italy)
Australia +3% growth (strength in new housing/Siddons Ramset 80/20 programs)
Automotive base revenues: +4% in Q1
Builds decline 2% in Q1
GM +6%; Ford +4%; BMW -2%; Renault -3%; VW -4%
Forecasting FY 2003 builds to be flat
ITW Specialty Systems - North America
2002 2003 F(U) Last Year
-----------------
Q1 Q1 Amount %
----- ----- ------ ------
Operating Revenues 827.2 785.7 (41.5) -5.0%
Operating Income 111.1 111.3 0.2 0.2%
Operating Margins 13.4% 14.2% 0.8%
Specialty Systems - North America
Quarterly Analysis
% F(U) Prior Year
------------------------------------------
Operating Operating Operating
Revenue Income Margins
Base Business
Base Operating Leverage -6.1% -18.6% -1.7%
Base Non Volume 7.4% 1.1%
----- ----- -----
Total -6.1% -11.2% -0.6%
Acquisitions / Divestitures 1.1% 1.7% 0.1%
Translation 0.0% 0.1% 0.0%
Restructuring 9.6% 1.3%
----- ----- -----
Total -5.0% 0.2% 0.8%
===== ===== =====
Specialty Systems - North America
Key Points
Food Equipment base revenues: -12% in Q1; restaurants and supermarkets still weak
Food Equipment op. income and margins improve in Q1 due to 80/20 programs
Industrial packaging: Signode had flat base revenues..consumables continue to
outperform "cap ex" machinery
Welding base revenues down 5% in Q1
Finishing base revenues flat in Q1
ITW Specialty Systems - International
2002 2003 F(U) Last Year
-----------------
Q1 Q1 Amount %
------ ------ ------ ------
Operating Revenues 365.6 425.4 59.8 16.4%
Operating Income 29.0 38.8 9.8 33.8%
Operating Margins 7.9% 9.1% 1.2%
Specialty Systems - International
Quarterly Analysis
% F(U) Prior Year
-------------------------------------------
Operating Operating Operating
Revenue Income Margins
--------- --------- ---------
Base Business
Base Operating Leverage 0.6% 2.2% 0.1%
Base Non Volume 13.8% 1.1%
------ ------ ------
Total 0.6% 16.0% 1.2%
Acquisitions/Divestitures 0.2% 2.5% 0.2%
Translation 15.6% 21.7% 0.3%
Restructuring -6.4% -0.5%
Total 16.4% 33.8% 1.2%
====== ====== ======
Specialty Systems - International
Key Points
Industrial packaging: +2% base revenues in Q1
Signode led the way for industrial packaging:
-Europe +3%; Asia/Pacific +10%
-growth due to consumables not machinery
Food Equipment: base revenues flat, but op. income/margins up significantly
Finishing: base revenues +2% due to auto penetration
ITW 2003 Forecast
Mid %F(U)
Low High Point 2002
2nd Quarter ----- ----- ----- -----
Base Revenues -5% -1% -3%
Income Per Share-Diluted $0.83 $0.93 $0.88 2%
Full Year
Base Revenues -3% 1% -1%
Income Per Share-Diluted $3.02 $3.42 $3.22 7%
ITW 2003 Forecast Key Assumptions
Exchange rates hold at March 31, 2003 levels.
Acquired revenues in the $200 to $600 million range.
Restructuring cost of $55 to $60 million.
No further goodwill or intangible impairment cost for the balance of the year.
Tax rate of 35%
ITW Conference Call - Q and A - First Quarter
