GLENVIEW, Ill., July 22 /PRNewswire-FirstCall/ -- Illinois Tool
Works Inc. (NYSE:ITW) today reported diluted income per share from
continuing operations of $0.36 in the 2009 second quarter as
cumulative restructuring activities helped drive income and
operating margins to significantly higher levels versus the 2009
first quarter. In the 2009 second quarter, operating income of
$334.8 million equated to operating margins of 9.9 percent.
Excluding the impact of impairment charges in the 2009 first
quarter, second quarter operating margins were 410 basis points
higher than the preceding quarter. Second quarter 2009 operating
revenues of $3.393 billion were 25.5 percent lower than the
year-ago period as end markets stabilized but remained weak around
the world. As a result, the Company's base revenues declined 22.2
percent in the 2009 second quarter versus a year ago, with North
American base revenues decreasing 26.8 percent and international
base revenues declining 17.3 percent. Second quarter operating
margins of 9.9 percent were 670 basis points lower than the
year-ago quarter, with base margins declining 400 basis points.
Diluted income per share from continuing operations of $0.36 was
64.4 percent lower than the year-ago period. However, the Company's
effective tax rate of 34.0 percent in the second quarter was higher
than the April 2009 forecasted second quarter tax rate of 25.0
percent, resulting in five cents of reduced earnings. The higher
tax rate in the second quarter was due to discrete tax adjustments
related to German tax audits and the previously announced
reclassification of Decorative Surfaces to continuing operations.
The Company's strong second quarter free operating cash flow of
$567 million was $213 million higher than the year-ago period and
was largely driven by reductions in working capital. In the
quarter, the net income to free operating cash flow conversion rate
was 321 percent. First half 2009 free operating cash flow totaled
$950 million. "We are pleased the Company's base revenues appear to
have stabilized during the second quarter as well as with the
significant improvement in our operating performance compared to
the 2009 first quarter," said David B. Speer, ITW's chairman and
chief executive officer. "Notably, our operating margins of nearly
10 percent in the second quarter were driven by improved margin
performance in all eight of our operating segments. These segments
all benefited from our aggressive and targeted restructuring
programs. We incurred $65 million of restructuring in the quarter,
bringing our year-to-date total to $98 million. And we expect to
incur an additional $50 million to $70 million of restructuring
dollars in the second half of 2009. These decentralized
restructuring activities will have both short-term and long-term
benefits for our Company and our earnings profile in 2009 and
beyond." Highlights for the 2009 second quarter include: *Worldwide
revenues for the Power Systems and Electronics segment declined
38.6 percent in the quarter, with base revenues decreasing 36.5
percent. Total worldwide welding base revenues fell 37.0 percent as
demand for capital equipment was weak in the quarter. The PC board
fabrication businesses' base revenues declined 59.2 percent in the
quarter. Ground support equipment's base revenues increased 4.0
percent in the quarter. Segment operating margins of 15.3 percent
were 660 basis points lower than the year-ago period. Excluding the
impact of impairment charges in the 2009 first quarter, second
quarter operating margins were 260 basis points higher than the
preceding quarter. *Worldwide revenues for the Transportation
segment declined 20.3 percent in the quarter, with base revenues
decreasing 23.7 percent. Both metrics were significantly better
than the 2009 first quarter. The sequential quarter-to-quarter
improvement in base revenues was largely attributable to increased
auto builds in Europe. Worldwide automotive base revenues declined
30.2 percent in the second quarter as North American auto builds
fell 49 percent and international auto builds decreased 31 percent.
Comparable North American and international first quarter 2009 auto
builds declined 51 percent and 43 percent, respectively. Automotive
aftermarket base revenues decreased 12.7 percent in the quarter.
Operating margins of 4.8 percent were 1100 basis points lower than
the year-ago period. Excluding the impact of impairment charges in
the 2009 first quarter, second quarter operating margins were 800
basis points higher than the preceding quarter. *Worldwide revenues
for the Food Equipment segment declined 16.2 percent in the second
quarter, with base revenues decreasing 8.5 percent. North American
food equipment base revenues decreased 8.4 percent while
international food equipment base revenues declined 10.2 percent in
the quarter. Operating margins of 12.9 percent were 80 basis points
lower than the year ago period but 260 basis points higher than the
2009 first quarter. Looking ahead, the Company still believes it
has limited visibility as to worldwide end markets. As a result,
the Company is limiting its current forecast to the 2009 third
quarter. The Company is forecasting third quarter 2009 diluted
income per share from continuing operations to be in a range of
$0.39 to $0.51. The 2009 third quarter forecast range assumes a
total revenue range of -2 percent to +4 percent versus the 2009
second quarter. The Company expects to reinstate full-year guidance
when longer-term visibility becomes more reliable. This Earnings
Release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including,
without limitation, statements regarding operating performance,
revenue growth, diluted income per share from continuing
operations, restructuring expenses and related benefits, end market
conditions and the Company's related 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 contained in
ITW's Form 10-K for 2008. With $15.9 billion in 2008 revenues, ITW
is a multinational manufacturer of a diversified range of
value-adding and short lead-time industrial products and equipment.
The Company consists of 875 business units in 54 countries and
employs some 59,000 people. ILLINOIS TOOL WORKS INC. (In thousands
except per share data) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30,
JUNE 30, -------- -------- STATEMENT OF INCOME 2009 2008 2009 2008
------------------- ---- ---- ---- ---- Operating Revenues
$3,392,906 $4,555,881 $6,539,285 $8,681,691 Cost of revenues
2,248,253 2,941,457 4,401,080 5,633,942 Selling, administrative,
and R&D expenses 757,871 814,962 1,519,562 1,588,079
Amortization of intangible assets 51,947 42,303 102,517 82,442
Impairment of goodwill and other intangible assets - - 89,997 1,438
--- --- ------ ----- Operating Income 334,835 757,159 426,129
1,375,790 Interest expense (43,886) (36,588) (75,322) (74,055)
Other income/ (expense) (19,839) 24,294 (24,180) 3,161 -------
------ ------- ----- Income from Continuing Operations Before Taxes
271,110 744,865 326,627 1,304,896 Income taxes 92,167 216,161
155,700 380,854 ------ ------- ------- ------- Income from
Continuing Operations $178,943 $528,704 $170,927 $924,042 Loss from
Discontinued Operations (2,378) (614) (33,736) (92,331) ------ ----
------- ------- Net Income $176,565 $528,090 $137,191 $831,711
======== ======== ======== ======== Income Per Share from
Continuing Operations: Basic $0.36 $1.01 $0.34 $1.76 Diluted $0.36
$1.01 $0.34 $1.75 Loss Per Share from Discontinued Operations:
Basic $(0.00) $(0.00) $(0.07) $(0.18) Diluted $(0.00) $(0.00)
$(0.07) $(0.18) Net Income Per Share: Basic $0.35 $1.01 $0.27 $1.59
Diluted $0.35 $1.01 $0.27 $1.58 Shares outstanding during the
period: Average 499,389 521,488 499,290 523,894 Average assuming
dilution 500,875 525,209 500,617 527,467 ESTIMATED FREE OPERATING
CASH FLOW THREE MONTHS ENDED SIX MONTHS ENDED --------------------
JUNE 30, JUNE 30, -------- -------- 2009 2008 2009 2008 ---- ----
---- ---- Net cash provided by operating activities $624,082
$450,104 $1,071,083 $944,028 Less: Additions to PP&E (57,402)
(95,982) (121,338) (184,987) ------- ------- -------- -------- Free
operating cash flow $566,680 $354,122 $949,745 $759,041 ========
======== ======== ======== ILLINOIS TOOL WORKS INC. (In thousands)
STATEMENT OF JUNE 30, MAR 31, DEC 31, FINANCIAL POSITION 2009 2009
2008 ------------------- ---- ---- ---- ASSETS ------ Cash &
equivalents $616,403 $1,121,099 $742,950 Trade receivables
2,393,176 2,209,690 2,571,987 Inventories 1,438,637 1,566,564
1,774,697 Deferred income taxes 218,125 208,018 206,496 Prepaids
and other current assets 453,424 372,234 375,778 Assets held for
sale 12,229 45,369 82,071 ------ ------ ------ Total current assets
5,131,994 5,522,974 5,753,979 --------- --------- --------- Net
plant & equipment 2,137,982 2,068,742 2,109,432 Investments
450,889 458,502 465,894 Goodwill 4,677,193 4,410,202 4,517,550
Intangible assets 1,696,585 1,707,910 1,779,669 Deferred income
taxes 82,448 80,460 75,999 Other assets 564,584 506,893 501,028
------- ------- ------- $14,741,675 $14,755,683 $15,203,551
=========== =========== =========== LIABILITIES and STOCKHOLDERS'
EQUITY ------------------------------------ Short-term debt
$180,511 $1,131,173 $2,433,973 Accounts payable 575,001 532,653
683,991 Accrued expenses 1,326,115 1,179,359 1,315,106 Cash
dividends payable 154,892 154,781 154,726 Income taxes payable
206,219 173,416 216,751 Liabilities held for sale 5,454 20,140
20,546 ----- ------ ------ Total current liabilities 2,448,192
3,191,522 4,825,093 --------- --------- --------- Long-term debt
2,855,812 2,744,403 1,247,883 Deferred income taxes 139,167 90,306
125,089 Other liabilities 1,372,380 1,355,785 1,330,395 ---------
--------- --------- Total noncurrent liabilities 4,367,359
4,190,494 2,703,367 --------- --------- --------- Common stock
5,323 5,320 5,318 Additional paid-in capital 146,116 122,511
105,497 Income reinvested in the business 9,022,927 9,001,254
9,196,465 Common stock held in treasury (1,390,594) (1,390,594)
(1,390,594) Accumulated other comprehensive income 130,361
(376,219) (253,211) Noncontrolling interest 11,991 11,395 11,616
------ ------ ------ Total stockholders' equity 7,926,124 7,373,667
7,675,091 --------- --------- --------- $14,741,675 $14,755,683
$15,203,551 =========== =========== =========== Total Debt % to
Total Capitalization 27.7% 34.5% 32.4% DATASOURCE: Illinois Tool
Works Inc. CONTACT: John Brooklier of Illinois Tool Works Inc.,
+1-847-657-4104, Web Site: http://www.itw.com/
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