ITW Reports 2011 Fourth Quarter Diluted Income Per Share from Continuing Operations of $0.90, a 36 Percent Increase; Total Revenues Grow 10.4 Percent and Organic Revenues Increase 5.9 Percent in the Quarter; Company Achieves Record Full-Year Revenues and Operating Earnings; Company Forecasts 2012 Full-Year Earnings Range of $4.02 to $4.26

Jan 31, 2012, 08:00 ET from Illinois Tool Works Inc.

GLENVIEW, Ill., Jan. 31, 2012 /PRNewswire/ -- Illinois Tool Works Inc. (NYSE: ITW) today reported fourth quarter 2011 diluted income per share from continuing operations of $0.90, a 36 percent increase compared to the 2010 fourth quarter. Total revenues of $4.319 billion in the 2011 fourth quarter were 10.4 percent higher than the year-ago period.

Fourth quarter 2011 financial highlights versus the prior-year period included:

  • Organic or base revenues grew 5.9 percent, with North American organic revenues increasing 8.7 percent and international organic revenues growing 3.0 percent. Notably, European organic revenues grew 2.6 percent while China organic revenues increased 9.8 percent.
  • Acquisitions net of divestitures added 4.7 percent to revenues while currency translation negatively impacted revenues by 0.4 percent.
  • The Company's fourth quarter operating income of $647.1 million and income from continuing operations of $437.1 million increased 34 percent and 33 percent, respectively. The fourth quarter income tax rate of 27.2 percent was lower than the forecasted rate of 29.0 percent, resulting in an additional $0.02 of diluted earnings per share.
  • Total Company operating margins of 15.0 percent were 270 basis points higher due to the improvement in base operating margins of 330 basis points. Restructuring, acquisitions and currency translation modestly offset margin gains. Seven of the Company's eight reporting segments reported operating margin improvement in the quarter.
  • Free operating cash flow totaled $617 million in the fourth quarter, representing a free operating cash flow conversion ratio of 140 percent versus net income.

Operating highlights for the 2011 fourth quarter compared to the year-ago period featured:

  • Total revenues for the Power Systems and Electronics segment increased 16.0 percent. Segment organic revenues grew 10.2 percent mainly due to contributions from the worldwide welding equipment and consumables businesses. The worldwide welding businesses' organic revenues increased 22.8 percent, with North American welding growing organic revenues 25.2 percent. Organic revenues for international welding increased 16.4 percent, with China and Europe contributing to growth.  Key worldwide end markets for the welding businesses continued to include oil and gas as well as heavy equipment manufacturers. Organic revenues for the total electronics businesses declined 7.7 percent. Both the PC board fabrication and other electronics businesses were hampered by slowing consumer demand and customer inventory corrections in the quarter. Total segment operating margins of 19.5 percent were 190 basis points higher than the year-ago period.
  • Total revenues for the Transportation segment increased 20.9 percent. Segment organic revenues grew 8.7 percent in part due to ongoing strength in automotive OEM car builds and related product penetration. The Company's worldwide automotive OEM organic revenues increased 7.9 percent compared to a fourth quarter worldwide car build growth rate of 1 percent. North American and European automotive organic revenues increased 8.0 percent and 7.7 percent, respectively. The Company's automotive aftermarket and truck remanufacturing businesses also contributed to revenue growth, with organic revenues growing 5.6 percent and 19.5 percent, respectively. Total segment operating margins of 15.0 percent were 200 basis points higher than the year-earlier period.

"Our fourth quarter financial performance was a solid effort by the ITW team," said Chairman and Chief Executive Officer David B. Speer. "We produced strong top line growth, solid margin improvement and impressive free operating cash flow. The fourth quarter capped off very strong full-year performance, with 2011 revenues growing 15.4 percent and organic revenues increasing 7.5 percent.  This helped us achieve record 2011 full-year revenues as well as record operating earnings.  We also delivered 15.4 percent operating margins that were 80 basis points higher than 2010."

Looking ahead to 2012, the Company is forecasting 2012 full-year diluted income per share from continuing operations to be in a range of $4.02 to $4.26 and assumes a total revenue growth range of 5.0 percent to 8.0 percent. For the 2012 first quarter, the Company is forecasting diluted income per share from continuing operations to be in a range of $0.89 to $0.97 and assumes a total revenue growth range of 6.0 percent to 9.0 percent.

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding diluted income per share from continuing operations and total revenue growth. These statements are subject to certain risks, uncertainties and other factors which could cause actual results to differ materially from those anticipated. Such factors include those contained in ITW's 2010 Form 10-K.

Celebrating its 100-year anniversary in 2012, ITW (NYSE: ITW) is a Fortune 200 global diversified industrial manufacturer of value-added consumables and specialty equipment with related service businesses. The company focuses on profitable growth and strong returns across worldwide platforms and businesses. These businesses serve local customers and markets around the globe, with a significant presence in developed as well as emerging markets. ITW's revenues totaled $17.8 billion in 2011, with more than half of these revenues generated outside of the United States.

ILLINOIS TOOL WORKS INC. AND SUBSIDIARIES

STATEMENT OF INCOME (UNAUDITED)

(In thousands except per share amounts)

THREE MONTHS ENDED

TWELVE MONTHS ENDED

DECEMBER 31,

DECEMBER 31,

2011

2010

2011

2010

Operating Revenues

$

4,319,308

$

3,913,748

$

17,786,583

$

15,415,692

Cost of revenues

2,798,365

2,606,132

11,517,885

9,996,668

Selling, administrative, and research and development expenses

804,774

772,307

3,282,352

2,956,574

Amortization of intangible assets

69,087

52,727

255,338

207,427

Impairment of goodwill and other intangible assets

1,006

Operating Income

647,082

482,582

2,731,008

2,254,017

Interest expense

(54,172)

(44,109)

(192,133)

(175,163)

Other income (expense)

7,905

2,938

53,839

9,984

Income from Continuing Operations Before Income Taxes

600,815

441,411

2,592,714

2,088,838

Income Taxes

163,700

113,115

575,700

636,400

Income from Continuing Operations

437,115

328,296

2,017,014

1,452,438

Income from Discontinued Operations

5,082

7,367

54,370

50,514

Net Income

$

442,197

$

335,663

$

2,071,384

$

1,502,952

Income Per Share from Continuing

Operations:

Basic

$0.90

$0.66

$4.10

$2.90

Diluted

$0.90

$0.66

$4.08

$2.89

Income Per Share from Discontinued

Operations:

Basic

$0.01

$0.01

$0.11

$0.10

Diluted

$0.01

$0.01

$0.11

$0.10

Net Income Per Share:

Basic

$0.91

$0.68

$4.21

$3.00

Diluted

$0.91

$0.67

$4.19

$2.99

Shares outstanding during the period:

Average

483,367

496,710

491,439

500,772

Average assuming dilution

485,639

499,898

494,646

503,350

ESTIMATED FREE OPERATING CASH FLOW

THREE MONTHS ENDED

TWELVE MONTHS ENDED

DECEMBER 31,

DECEMBER 31,

2011

2010

2011

2010

Net cash provided by operating activities

$

711,663

$

356,174

$

1,956,008

$

1,488,313

Less:  Additions to plant and equipment

(94,494)

(88,144)

(353,408)

(287,759)

Free operating cash flow

$

617,169

$

268,030

$

1,602,600

$

1,200,554

ILLINOIS TOOL WORKS INC. AND SUBSIDIARIES

STATEMENT OF FINANCIAL POSITION (UNAUDITED)

(In thousands)

DECEMBER 31,

DECEMBER 31,

ASSETS

2011

2010

Current Assets:

Cash and equivalents

$

1,177,875

$

1,186,367

Trade receivables

2,818,892

2,581,592

Inventories

1,715,859

1,634,856

Deferred income taxes

365,905

301,486

Prepaid expenses and other current assets

384,491

266,187

Assets held for sale

386,324

Total current assets

6,849,346

5,970,488

Noncurrent Assets:

Net plant and equipment

2,025,396

2,066,156

Investments

408,906

440,760

Goodwill

5,197,601

4,971,818

Intangible assets

2,233,378

1,731,016

Deferred income taxes

633,832

615,326

Other assets

635,055

616,747

$

17,983,514

$

16,412,311

LIABILITIES and STOCKHOLDERS’ EQUITY

Current Liabilities:

Short-term debt

$

502,063

$

326,236

Accounts payable

696,776

749,489

Accrued expenses

1,435,603

1,391,396

Cash dividends payable

174,099

169,233

Income taxes payable

56,517

386,498

Deferred income taxes

4,821

Liabilities held for sale

106,848

Total current liabilities

2,976,727

3,022,852

Noncurrent Liabilities:

Long-term debt

3,488,198

2,542,087

Deferred income taxes

116,954

194,590

Other liabilities

1,367,571

1,080,783

Total noncurrent liabilities

4,972,723

3,817,460

Stockholders’ Equity:

Common stock

5,425

5,385

Additional paid-in-capital

686,155

460,806

Income reinvested in the business

11,794,184

10,407,946

Common stock held in treasury

(2,692,196)

(1,740,682)

Accumulated other comprehensive income

224,223

427,155

Noncontrolling interest

16,273

11,389

Total stockholders' equity

10,034,064

9,571,999

$

17,983,514

$

16,412,311

SOURCE Illinois Tool Works Inc.



RELATED LINKS

http://www.itw.com