SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 29, 2002
ILLINOIS TOOL WORKS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-4797 36-1258310
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
3600 West Lake Avenue, Glenview, Illinois 60025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 724-7500
None
-------------------------------------------------
(Former name or former address, if
changed since last report.)
Item 5. Other events
Illinois Tool Works Inc. announced its 2001 fourth quarter and 2001 full year
results in the press release filed as Exhibits 99.1.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
99.1 Text of Press Release issued by Illinois Tool Works Inc. dated
January 29, 2002.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ILLINOIS TOOL WORKS INC.
Date: January 30, 2002 By: /s/ Jon C. Kinney
-------------------------------------
Name: Jon C. Kinney
Title: Senior Vice President and
Chief Financial Officer
Exhibit 99.1
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ITW Reports 5% Decrease in Operating Revenues and 6% Decline in
Diluted Earnings Per Share for 2001 Fourth Quarter; Full Year
Revenues Drop 2% and Diluted Earnings Per Share Fall 17%
GLENVIEW, Ill. -- (January 29, 2002) -- Illinois Tool Works Inc. (NYSE:
ITW) today reported that 2001 fourth quarter diluted earnings per share
decreased 6 percent versus the prior year period due to continued weakness
in many of the Company's North American and international end markets.
Operating revenues were down 5 percent, operating income dropped 9 percent
and net income declined 5 percent in the recently ended fourth quarter. The
Company's operating results were restated for the fourth quarter and full
year to reflect the pending divestiture of all of the businesses in the
Consumer Products Segment. Results for these businesses have been
reclassified as discontinued operations.
Net income for the 2001 fourth quarter fell to $191.1 million from $201.5
million in the 2000 fourth quarter. Diluted earnings per share for the 2001
fourth quarter was 62 cents versus 66 cents for the year earlier period.
The decrease in fourth quarter net income and diluted earnings per share
was mitigated by the significant write-downs and restructuring taken in the
fourth quarter of 2000.
The decline in fourth quarter earnings was principally the result of
ongoing weakness in North American end markets and softening in some
international end markets. Total Company base business revenues, which were
at minus 9 percent for the fourth quarter, consisted of minus 10 percent in
North America and minus 6 percent internationally. For the 2001 fourth
quarter, operating revenues were $2.3 billion versus $2.4 billion for the
year earlier period. Operating income was $305.3 million compared to $335.1
million for the same period.
Full year 2001 net income of $805.7 million decreased 16 percent compared
with $958 million for the 2000 period. Diluted earnings per share of $2.63
was 17 percent lower than the $3.15 for the year earlier period. Operating
revenues of $9.3 billion declined 2 percent and operating income of $1.3
billion fell 17 percent versus the year earlier period.
The Company's cash generation from operations continued to be strong in the
quarter and reflected reduced working capital and capital expenditures as a
result of the slower economy. On a year to date basis, ITW's invested
capital declined $422 million, excluding the effect of acquisitions.
Coupled with $806 million of net income, ITW had free cash of $1.2 billion.
As a result, the Company has been able to fund a $556 million acquisition
program, pay dividends of $249 million and reduce debt levels.
"Major ITW initiatives continued in the fourth quarter and included
programs designed to soften the impact of current economic weakness and to
improve our long-term operating performance," said W. James Farrell,
Chairman and Chief Executive Officer. "For the short-term, our businesses
continued to carry out cost reduction programs to help offset weak end
market conditions. Thanks to those efforts, our fourth quarter SG&A costs
declined 9 percent and our cost of goods sold decreased 1 percent. To help
us achieve future growth, we invested nearly $8 million in restructuring
projects. We believe these investments will have significant payback,
especially as our end markets improve as the year progresses."
Segment highlights include:
North American Engineered Products fourth quarter revenues and operating
income declined 6 percent and 9 percent, respectively, primarily due to the
slowdown in ITW businesses manufacturing short-lead time products for the
construction, industrial plastics/electronics, electronic component
packaging and automotive sectors. Lower margins of acquired businesses
accounted for most of the 40 basis point decline in fourth quarter
operating margins. For the full year, revenues were down 7 percent and
operating income fell 22 percent. Full year operating margins were down 310
basis points.
International Engineered Products fourth quarter revenues declined 3
percent as base business contributions from the fluid products and
construction-related businesses were more than offset by weakness in the
electronic component packaging, automotive and industrial
plastics/electronics businesses. Operating income improved 114 percent due
to major asset write- downs recorded in the fourth quarter of 2000
associated with Wilsonart. As a result, operating margins were 700 basis
points higher than the prior year period. For the full year, revenues were
flat and operating income increased 6 percent. Operating margins for 2001
were up 60 basis points.
Specialty Systems North America fourth quarter revenues were down 3 percent
largely due to base business weakness in the food equipment, industrial
packaging and welding businesses. Operating income was down 32 percent as
demand for both systems and consumables in a number of our capital goods
businesses slackened in the fourth quarter. Revenue declines and the impact
of acquisitions were primarily responsible for an operating margin decrease
of 460 basis points for the fourth quarter. For 2001, revenues were up 1
percent and operating income fell 24 percent. Full year operating margins
declined 430 basis points.
International Specialty Systems fourth quarter revenues declined 6 percent
due principally to base business weakness in the industrial packaging and
food equipment businesses. The 26 percent increase in operating income for
the quarter was due to restructuring charges taken in the fourth quarter of
2000 for Food Equipment businesses. As a result, operating margins improved
250 basis points for the quarter. For the full year, revenues and operating
income were down 4 percent and 5 percent, respectively. Operating margins
in 2001 were essentially flat with the prior year.
Leasing and Investments operating income was down 46 percent for the fourth
quarter as a result of large gains on sales of assets from the mortgage
portfolio in the fourth quarter of 2000. For the full year, operating
income was down 5 percent.
Looking ahead, the Company is forecasting virtually no improvement in end
markets for the 2002 first quarter. As a result, the Company projects first
quarter 2002 diluted earnings per share to be in the range of 53 cents to
63 cents. For full-year 2002, the Company is forecasting diluted earnings
per share to be in the range of $2.95 to $3.25 based on expected improving
economic trends in the second half of the year.
This Fourth Quarter 2001 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 in the first quarter of 2002 and the Company's earnings
forecast. 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-Q for the Third Quarter.
ITW is a $9.3 billion diversified manufacturer of highly engineered
components and industrial systems and consumables. The Company consists of
approximately 600 decentralized operations in 43 countries and employs
approximately 52,000 people.
CONTACT: John Brooklier, 847-657-4104
ILLINOIS TOOL WORKS INC.
(In thousands except per share data)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
STATEMENT OF INCOME (a) 2001 2000 2001 2000
Operating Revenues $2,278,281 $2,390,220 $9,292,791 $9,511,647
Cost of revenues 1,530,776 1,544,978 6,191,253 6,111,392
Selling,
administrative, and
R&D expenses 414,825 456,142 1,690,850 1,703,897
Amortization of
goodwill & other
intangibles 27,371 54,040 104,585 118,905
Operating Income 305,309 335,060 1,306,103 1,577,453
Interest expense (14,740) (19,407) (68,051) (69,995)
Other expense (4,723) (7,574) (7,203) (11,456)
Income From Continuing
Operations Before
Income Taxes 285,846 308,079 1,230,849 1,496,002
Income taxes 98,137 99,176 428,400 526,551
Income From Continuing
Operations $187,709 $208,903 $802,449 $969,451
Income (Loss) From
Discontinued Operations 3,361 (7,409) 3,210 (11,471)
Net Income 191,070 $201,494 $805,659 $957,980
Income Per Share from
Continuing Operations:
Basic $0.62 $0.69 $2.64 $3.21
Diluted $0.61 $0.69 $2.62 $3.18
Income Per Share from
Discontinued Operations:
Basic $0.01 $(0.02) $0.01 $(0.04)
Diluted $0.01 $(0.02) $0.01 $(0.04)
Net Income Per Share :
Basic $0.63 $0.67 $2.65 $3.18
Diluted $0.62 $0.66 $2.63 $3.15
Shares outstanding during
the period :
Average 304,732 302,199 304,112 301,573
Average assuming
dilution 306,621 304,715 306,306 304,414
DEC 31, SEPT 30, DEC 31,
STATEMENT OF FINANCIAL POSITION (a) 2001 2001 2000
ASSETS
Cash & equivalents $282,224 $229,313 $151,295
Trade receivables 1,450,029 1,571,170 1,583,389
Inventories 994,156 1,082,458 1,107,734
Deferred income taxes 197,428 187,312 175,892
Prepaids and other current assets 139,226 132,302 147,798
Net current assets of discontinued
operations 100,181 92,386 102,040
Total current assets 3,163,244 3,294,941 3,268,148
Plant & equipment 4,103,960 4,111,156 3,889,643
Less: accumulated depreciation (2,470,270) (2,459,628) (2,259,760)
Net plant & equipment 1,633,690 1,651,528 1,629,883
Investments 1,151,525 1,294,550 1,170,392
Goodwill & other intangibles 2,738,694 2,743,445 2,413,248
Deferred income taxes 439,278 499,966 474,001
Other assets 459,429 456,807 418,461
Net noncurrent assets of discontinued
operations 109,729 128,127 140,714
$9,695,589 $10,069,364 $9,514,847
LIABILITIES and STOCKHOLDERS' EQUITY
Short-term debt $313,447 $584,130 $425,789
Accounts payable 367,249 393,193 438,436
Accrued expenses 737,456 748,996 782,669
Cash dividends payable 67,084 67,001 60,490
Income taxes payable 32,922 108,757 49,313
Total current liabilities 1,518,158 1,902,077 1,756,697
Long-term debt 1,267,141 1,380,371 1,549,038
Other liabilities 869,552 896,075 808,125
Total non-current liabilities 2,136,693 2,276,446 2,357,163
Common stock 3,052 3,048 3,027
Additional paid-in capital 675,856 631,414 584,357
Income reinvested in the business 5,765,421 5,641,435 5,214,098
Common stock held in treasury (1,666) (1,666) (1,783)
Cumulative translation adjustment (401,925) (383,390) (398,712)
Total stockholders' equity 6,040,738 5,890,841 5,400,987
$9,695,589 $10,069,364 $9,514,847
(a) Restated to reflect the Consumer Products segment as a discontinued
operation