ITW Conference Call
Fourth Quarter
2005
Exhibit 99.2
Â
ITW
Agenda
1.
Introduction……………………..John Brooklier
2.
Financial Overview……………...Ron Kropp
3.
Manufacturing Segments……… John Brooklier
4.
Forecast 2006………………….… Ron Kropp
4.
Q & A………………......…………John Brooklier/Ron Kropp
Â
ITW
Forward - Looking Statements
This conference call 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 operating
results for the first quarter and full-year 2006 and the company’s earnings
and acquired revenue forecasts.  These statements are subject to certain
risks, uncertainties, and other factors, which could cause actual results to
differ materially from those anticipated.  Important risks that may
influence future results include (1) a downturn in the construction,
automotive, general industrial, food retail and service, or real estate
markets, (2) deterioration in business and economic conditions,
particularly in North America, the European Community and Australia,
(3) the unfavorable impact of foreign currency fluctuations and costs of
raw materials, (4) an interruption in, or reduction in, introducing new
products into the Company’s product lines, (5) an unfavorable
environment for making acquisitions, domestic and international,
including adverse accounting or regulatory requirements and market
values of candidates, and (6) unfavorable tax law changes and tax
authority rulings.  The risks covered here are not all inclusive and given
these and other possible risks and uncertainties, investors should not place
undue reliance on forward-looking statements as a prediction
of actual results.
Â
Conference Call Playback
Replay number: 203-369-0128
No pass code necessary
Telephone replay available through midnight of
February 14, 2006
Webcast / PowerPoint replay available at itw.com
website
Â
ITW
Quarterly Highlights
2004
2005
Q4
Q4
Amount
%
Operating Revenues
3,051.6
        Â
3,294.3
        Â
242.7
        Â
8.0%
Operating Income
535.2
           Â
595.2
           Â
60.0
           Â
11.2%
% of Revenues
17.5%
18.1%
0.6%
Income From Continuing Operations
Income Amount
359.2
           Â
400.6
           Â
41.4
           Â
11.5%
Income Per Share-Diluted
1.21
              Â
1.42
              Â
0.21
           Â
17.4%
Average Invested Capital
7,859.5
        Â
8,330.8
        Â
(471.3)
        Â
-6.0%
Return on Average Invested Capital
19.0%
20.0%
1.0%
Free Operating Cash Flow
298.3
           ��
408.9
           Â
110.6
        Â
37.1%
F(U) Last Year
Â
ITW
Quarterly Operating Analysis
Revenue
Income
Margins
Base Manufacturing Business
Operating Leverage
3.6%
8.3%
0.8%
Nonvolume-related
-
             Â
-1.3%
-0.2%
Total
3.6%
7.0%
0.6%
Acquisitions / Divestitures
5.5%
2.7%
-0.4%
Translation
-0.7%
-0.1%
0.1%
Impairment
-
             Â
-0.6%
-0.1%
Restructuring
-
             Â
0.4%
0.1%
Leasing & Investments
0.3%
1.8%
0.2%
Intercompany
-0.7%
-
             Â
0.1%
Total
8.0%
11.2%
0.6%
Â
ITW
Leasing & Investments
2004
2005
Q4
Q4
Amount
%
Operating Revenues
33.3
     Â
42.2
     Â
8.9
        Â
26.6%
Operating Income
27.9
     Â
37.5
     Â
9.6
        Â
34.7%
Operating Margins
83.7%
89.0%
5.3%
F(U) Last Year
Â
ITW
Non Operating & Taxes
2004
2005
Q4
Q4
Amount
%
Operating Income
535.2
       Â
595.2
       Â
60.0
          Â
11.2%
Interest Expense
(15.8)
        Â
(22.7)
        Â
(6.9)
           Â
Other Expense
(5.5)
          Â
(0.1)
          Â
5.4
           Â
Income From Continuing Operations-P/T
513.9
       Â
572.4
       Â
58.5
          Â
11.4%
Income Taxes
154.7
       Â
171.8
       Â
(17.1)
        Â
% to Pre Tax Income
30.1%
30.0%
0.1%
Income From Continuing Operations-A/T
359.2
       Â
400.6
       Â
41.4
          Â
11.5%
F(U) Last Year
Â
ITW
Invested Capital
12/31/04
9/30/05
12/31/05
Trade Receivables
2,054.6
          Â
2,168.6
          Â
2,098.3
          Â
Days Sales Outstanding
60.6
              Â
59.9
              Â
57.3
              Â
Inventories
1,281.2
          Â
1,229.7
          Â
1,203.1
          Â
Months on Hand
1.9
                Â
1.8
                 Â
1.7
                 Â
Other Current Assets
319.0
             Â
303.2
             Â
439.8
             Â
Accounts Payable & Accruals
(1,647.4)
        Â
(1,641.8)
        Â
(1,747.8)
        Â
Operating Working Capital
2,007.4
          Â
2,059.7
          Â
1,993.4
          Â
% to Revenue(Prior 4 Qtrs.)
17%
16%
15%
Net Plant & Equipment
1,876.9
          Â
1,825.5
          Â
1,807.1
          Â
Investments
912.5
             Â
1,021.2
          Â
896.5
             Â
Goodwill
2,753.1
          Â
2,877.8
          Â
3,009.0
          Â
Other, net
534.9
             Â
489.7
             Â
681.7
             Â
Invested Capital
8,084.8
          Â
8,273.9
          Â
8,387.7
          Â
Â
ITW
Debt & Equity
12/31/04
9/30/05
12/31/05
Total Capital
Short Term Debt
203.5
     Â
378.6
     Â
252.9
     Â
Long Term Debt
921.1
     Â
965.5
     Â
958.3
     Â
Total Debt
1,124.6
  Â
1,344.1
  Â
1,211.2
  Â
Stockholders' Equity
7,627.6
  Â
7,281.1
  Â
7,546.9
  Â
Total Capital
8,752.2
  Â
8,625.2
  Â
8,758.1
  Â
Less:
Cash
(667.4)
     Â
(351.3)
     Â
(370.4)
     Â
Net Debt & Equity
8,084.8
  Â
8,273.9
  Â
8,387.7
  Â
Debt to Total Capital
13%
16%
14%
Â
ITW
Cash Flow
2004
2005
Q4
Q4
Net Income
358.1
       Â
400.6
        Â
Adjust for Non-Cash Items
276.7
       Â
34.7
          Â
Changes in Operating Assets & Liabilities
(251.8)
     Â
50.7
          Â
Net Cash From Operating Activities
383.0
       Â
486.0
        Â
Additions to Plant & Equipment
(84.7)
       Â
(77.1)
        Â
Free Operating Cash Flow
298.3
       Â
408.9
        Â
Stock Repurchase
(527.7)
     Â
-
           Â
Acquisitions
(148.9)
     Â
(314.2)
       Â
Purchase of Investments
(28.8)
       Â
(29.0)
        Â
Dividends
(83.0)
       Â
(92.4)
        Â
Debt
100.6
       Â
(131.6)
       Â
Proceeds from Investments
28.1
        Â
173.9
        Â
Other
98.5
        Â
3.5
           Â
Net Cash Increase(Decrease)
(262.9)
     Â
19.1
          Â
Â
ITW
Return on Average Invested Capital
2004
2005
F(U)
Current Quarter
Q4
Q4
Prior Yr.
Operating Income after Taxes
374.1
        Â
416.7
             Â
42.6
           Â
Operating Margins
12.3%
12.6%
0.3%
Average Invested Capital
7,859.5
     Â
8,330.8
          Â
(471.3)
        Â
Capital Turnover
1.55
          Â
1.58
              Â
0.03
Return on Average Invested Capital
19.0%
20.0%
1.0%
2004
2005
F(U)
Year to Date
Q4
Q4
Prior Yr.
Operating Income after Taxes
1,377.9
     Â
1,547.6
          Â
169.7
          Â
Operating Margins
11.7%
12.0%
0.3%
Average Invested Capital
7,603.8
     Â
8,277.7
          Â
(673.9)
        Â
Capital Turnover
1.54
       Â
1.56
           Â
0.02
Return on Average Invested Capital
18.1%
18.7%
0.6%
Â
ITW
Acquisitions
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Annual Revenues Acquired
247
  Â
168
 Â
78
 Â
131
 Â
151
  Â
36
  Â
105
 Â
292
 Â
Purchase Price
Cash Paid
184
  Â
193
 Â
62
 Â
149
 Â
188
  Â
12
  Â
113
 Â
314
 Â
Stock Issued
2
     Â
-
-
-
-
-
-
-
Total
186
  Â
193
 Â
62
 Â
149
 Â
188
  Â
12
  Â
113
 Â
314
 Â
Number of Acquisitions
North America
Engineered Products
2
     Â
1
    Â
1
  Â
1
    Â
1
     Â
1
    Â
5
    Â
4
    Â
Specialty Systems
-
1
    Â
1
  Â
1
    Â
1
     Â
-
3
    Â
1
    Â
International
Engineered Products
5
     Â
2
    Â
-
1
    Â
-
1
    Â
-
-
Specialty Systems
3
     Â
4
    Â
1
  Â
-
1
     Â
1
    Â
3
    Â
-
Total
10
    Â
8
    Â
3
  Â
3
    Â
3
     Â
3
    Â
11
  Â
5
    Â
2004
2005
Â
Key Economic Data
December ’05 ISM Index: reasonably strong at
54.2%; December ’05 new order index at 55.5%
US Industrial Production (ex. Tech.): +2.4% in
December ’05 compared to +1.6% in September ’05
Weaker fundamentals in Europe
UK industrial production: -2.4%
France industrial production: +1.3%
Euro-Zone ISM: slightly above 50% level
Â
ITW
Engineered Products - North America
2004
2005
Q4
Q4
Amount
%
Operating Revenues
832.6
       Â
916.7
        Â
84.1
       Â
10.1%
Operating Income
130.9
       Â
156.9
        Â
26.0
       Â
19.9%
Operating Margins
15.7%
17.1%
1.4%
F(U) Last Year
Â
Engineered Products - North America
Quarterly Analysis
Operating
Operating
Operating
Revenue
Income
Margins
Base Business
Operating Leverage
2.8%
7.2%
0.7%
Nonvolume-related
-
       Â
3.4%
0.5%
Total
2.8%
10.6%
1.2%
Acquisitions / Divestitures
7.1%
5.8%
-0.3%
Translation
0.2%
0.2%
-
        Â
Impairment
-
       Â
-
        Â
-
        Â
Restructuring
-
       Â
3.3%
0.5%
Total
10.1%
19.9%
1.4%
% F(U) Prior Year
Â
Engineered Products - North America
Key Points
Total construction: -1% for Q4 ’05
Wilsonart (high pressure laminate): base revenues -7% in Q4 ’05
            - largely due to volume issues from flooring unit; focusing on
      new product development
ITW construction (tools and fasteners) base revenues: +5% for Q4
’05
            - new housing: +4% in Q4 ’05
            - renovation: +5% in Q4 ’05
            - commercial: +5% in Q4 ’05
                                                                       Â
Â
Engineered Products - North America
Key Points
Auto base revenues: +5% for Q4 ’05
Big 3 build rates: -1% for Q4 ’05
GM: +1%
Ford: -7%
Chrysler: +2%
New domestics: +15%
Big 3 inventories: 77 days at 12-31-05
GM: 71 days
Ford: 79 days
Chrysler: 86 days
New domestics’ inventories: 48 days at 12-31-05
ITW Big 3 auto build forecast for 2006:
Down 2% to 4% for full year ’05
Industrial: base revenues +6% for Q4 ’05               Â
Top performers: Valeron, Fibre Glass Evercoat,
Minigrip/ZipPak, Polymers     Â
Â
ITW
Engineered Products - International
2004
2005
Q4
Q4
Amount
%
Operating Revenues
691.3
       Â
716.5
       Â
25.2
        Â
3.6%
Operating Income
109.8
       Â
117.2
       Â
7.4
          Â
6.7%
Operating Margins
15.9%
16.4%
0.5%
F(U) Last Year
Â
Engineered Products - International
Quarterly Analysis
Operating
Operating
Operating
Revenue
Income
Margins
Base Business
Operating Leverage
0.5%
1.2%
0.1%
Nonvolume-related
-
       Â
0.4%
0.1%
Total
0.5%
1.6%
0.2%
Acquisitions / Divestitures
4.7%
3.3%
-0.2%
Translation
-1.6%
-0.1%
0.2%
Impairment
-
       Â
-
       Â
-
     Â
Restructuring
-
       Â
1.9%
0.3%
Total
3.6%
6.7%
0.5%
% F(U) Prior Year
Â
Engineered Products - International
Key Points
Construction base revenues: +1% in Q4 ’05  Â
Europe: +2% (growth in France & Nordic countries)
Austral-Asia: -1% (commercial/retail weakness in
Australia)
Wilsonart Intl.: -2% (weakness in UK offset growth in Asia
& Germany)
Automotive base revenues: -1% in Q4 ’05
Builds: -3% in Q4 ’05
Daimler/Chrysler: -9.6%; Renault: -6.7%;
Citroen/Peugeot: -5.2%; GM Group: -2.7%; BMW: +5.7%
ITW FY ’06 forecast: flat
Industrial base revenues: +2% in Q4 ’05
Industrial plastics: +2%; polymers: +1%; electronic
component packaging: +13%
Â
ITW
Specialty Systems - North America
2004
2005
Q4
Q4
Amount
%
Operating Revenues
952.2
        Â
1,070.4
 Â
118.2
       Â
12.4%
Operating Income
179.1
        Â
199.1
  Â
20.0
        Â
11.1%
Operating Margins
18.8%
18.6%
-0.2%
F(U) Last Year
Â
Specialty Systems - North America
Quarterly Analysis
Operating
Operating
Operating
Revenue
Income
Margins
Base Business
Operating Leverage
7.7%
17.0%
1.6%
Nonvolume-related
-
       Â
-5.3%
-0.9%
Total
7.7%
11.7%
0.7%
Acquisitions / Divestitures
4.4%
2.9%
-0.2%
Translation
0.3%
0.4%
-
     Â
Impairment
-
       Â
-1.9%
-0.3%
Restructuring
-
       Â
-2.0%
-0.4%
Total
12.4%
11.1%
-0.2%
% F(U) Prior Year
Â
Specialty Systems - North America
Key Points
Welding base revenues: 14% growth in Q4 ’05 due
primarily to demand for replacement products and new
product introductions
Food Equipment base revenues: 5% growth in Q4 ’05;
restaurant/institutional customers and parts/service were
strongest contributors
Total Packaging: +5% base revenue growth in Q4 ’05
Signode packaging: +1% base revenue growth
Other industrial packaging units (stretch/paper) grew
base revenues double-digit in the quarter
Finishing: +11% base revenue growth in Q4 ’05
Â
ITW
Specialty Systems - International
2004
2005
Q4
Q4
Amount
%
Operating Revenues
646.3
     Â
673.0
     Â
26.7
        Â
4.1%
Operating Income
87.4
        Â
84.5
        Â
(2.9)
        Â
-3.3%
Operating Margins
13.5%
12.6%
-0.9%
F(U) Last Year
Â
Specialty Systems - International
Quarterly Analysis
Operating
Operating
Operating
Revenue
Income
Margins
Base Business
Operating Leverage
1.7%
4.9%
0.4%
Nonvolume-related
-
       Â
-3.8%
-0.5%
Total
1.7%
1.1%
-0.1%
Acquisitions / Divestitures
4.9%
-1.9%
-0.8%
Translation
-2.5%
-1.5%
0.1%
Impairment
-
       Â
-
       Â
-
     Â
Restructuring
-
       Â
-1.0%
-0.1%
Total
4.1%
-3.3%
-0.9%
% F(U) Prior Year
Â
Specialty Systems - International
Key Points
Total packaging: +1% in Q4 ’05
      -Signode packaging declined 6% in Europe and grew 3% in
      Asia/Pacific
      -Other specialty packaging businesses grew 3% and 17%
Food Equipment: base revenues +2% in Q4 ’05; most growth
emanating from  institutional demand in Europe
Welding: base revenue +15% in Q4 ’05 due to stronger sales in
Asia and Europe
Finishing: base revenues declined 3% in Q4 ’05
Â
ITW
2006 Forecast
Mid
Low
High
Point
1st Quarter
Base Revenues
2.7%
4.7%
3.7%
Income Per Share-Diluted
$1.12
$1.18
$1.15
%F(U) 2005
6%
11%
8%
Full Year
Base Revenues
3.2%
5.2%
4.2%
Income Per Share-Diluted
$5.60
$5.78
$5.69
%F(U) 2005
8%
11%
9%
Â
ITW 2006 Forecast
Key Assumptions
Exchange rates hold at current levels.
Acquired revenues in the $800 million to $1.0 billion range.
Restructuring cost of $30 to $50 million.
Estimated impairment of goodwill/intangibles of $15 to $25
million.
Nonoperating investment income of $45 to $55 million, which
is lower than 2005 by $75 to $85 million.
Tax rate of 31.5% for the first quarter and the full year.
Â
ITW Conference Call
Q & A
Fourth Quarter
2005