ITW Reports Diluted Income Per Share from Continuing Operations of $0.83 in the 2010 Third Quarter, a 38 Percent Increase Versus the Year-Ago Period; Total Revenues Increase 12.2 Percent and Organic Revenues Grow 11.2 Percent in the Quarter; Third Quarter Operating Margins Total 15.9 Percent; Company Repurchases $350 Million or 8.1 Million Shares in the 2010 Third Quarter

Oct 19, 2010, 08:00 ET from Illinois Tool Works Inc.

GLENVIEW, Ill., Oct. 19 /PRNewswire-FirstCall/ -- Illinois Tool Works Inc. (NYSE: ITW) today reported 2010 third quarter diluted income per share from continuing operations of $0.83, a 38 percent increase versus the year-ago period. The growth in earnings was largely driven by strong organic revenue performance and ongoing contributions from restructuring activities.

The Company's third quarter revenues of $4.018 billion were 12.2 percent higher than the year-earlier period. Organic or base revenues grew 11.2 percent in the quarter, with North American base revenues increasing 11.5 percent and international base revenues growing 10.8 percent.  While all of the reporting segments produced positive organic revenue growth in the third quarter, the strongest organic revenue increases were produced by the Power Systems and Electronics, Industrial Packaging and Transportation segments. Acquisitions added 3.6 percent to third quarter revenues. Currency translation negatively impacted revenues by 2.4 percent.

Third quarter operating income of $640.5 million was 32 percent higher than the year-ago period. Income from continuing operations was $419.3 million, a 38 percent improvement versus a year ago. Third quarter operating margins of 15.9 percent were 240 basis points higher than the year-ago period, with organic revenues and restructuring activities accounting for 160 basis points and 60 basis points of improvement, respectively. Notably, third quarter operating margins were only 10 basis points lower than the 16.0 percent operating margins produced in the 2010 second quarter.

"ITW's third quarter financial results represented strong operating performance amid end markets that largely performed to our expectations," said David B. Speer, chairman and chief executive officer. "We were pleased, however, that both our organic revenues and operating margins came in at higher than expected levels.  While acquired revenues in the third quarter were relatively modest, we remain optimistic that acquisition activity will continue to improve as the year progresses and we move into 2011.  Given our existing cash position, we repurchased 8.1 million shares for $350 million in the quarter. We consider our share repurchase program an ongoing part of our capital allocation process and we remain committed to being opportunistic as to its use."

Segment highlights for the 2010 third quarter include:

Total worldwide revenues for the Power Systems and Electronics segment increased 23.7 percent in the third quarter versus the year-ago period. Organic revenues grew 23.8 percent in the quarter due to strong end market demand associated with the welding and electronics businesses. Worldwide welding organic revenues increased 14.8 percent in the third quarter, with North American welding organic revenues growing 19.4 percent.  The North American businesses continued to be helped by strong demand for welding products from heavy equipment OEM's as well as other manufacturing customers. International welding organic revenues increased 5.3 percent in the quarter. The PC board fabrication businesses continued to benefit from robust consumer electronics demand. As a result, organic revenues grew 68.6 percent versus the year-ago period. Segment operating margins of 22.0 percent were 460 basis points higher than the year-earlier period.

Total worldwide revenues for the Industrial Packaging segment increased 16.4 percent in the third quarter compared to the year-earlier period. Organic revenues grew a similar 16.4 percent in the quarter as a result of strong customer demand for consumable-related products such as plastic strap, steel strap and protective packaging products. As a result, North American industrial packaging organic revenues grew 19.5 percent while international industrial packaging organic revenues increased 13.0 percent in the quarter. Segment operating margins of 11.6 percent were 410 basis points higher than the year-ago period.

The Company is forecasting fourth quarter 2010 diluted income per share from continuing operations to be in a range of $0.74 to $0.82. The 2010 fourth quarter forecast assumes a total revenue growth range of 7 percent to 9 percent. For full-year 2010, the Company is forecasting diluted income per share from continuing operations to be in a range of $2.99 to $3.07. The 2010 full-year forecast assumes a total revenue growth range of 13 percent to 14 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, end markets, total revenue growth, organic or base revenue growth, acquired revenues and the share repurchase program.  The statements are subject to certain risks, uncertainties and other factors which could cause actual results to differ materially from those anticipated. Such factors are contained in ITW's Form 10-K for 2009.

With $13.9 billion in 2009 revenues, ITW is a multi-national manufacturer of a diversified range of value adding and short-lead time industrial products and equipment. The Company consists of nearly 800 business units in 57 countries and employs approximately 59,000 people.

ILLINOIS TOOL WORKS INC.

(In thousands except per share data)

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

STATEMENT OF INCOME

2010

2009

2010

2009

Operating Revenues

$       4,018,466

$ 3,580,354

$11,701,107

$10,119,639

  Cost of revenues

2,584,901

2,315,175

7,501,607

6,716,255

  Selling, administrative, and R&D expenses

739,984

720,042

2,262,237

2,239,604

  Amortization of intangible assets

52,053

49,542

159,067

152,059

  Impairment of goodwill and other intangible assets

1,006

12,000

1,006

101,997

Operating Income

640,522

483,595

1,777,190

909,724

  Interest expense

(43,166)

(45,670)

(131,430)

(120,992)

  Other income (expense)

15,920

11,139

27,639

(13,041)

Income from Continuing Operations Before Taxes

613,276

449,064

1,673,399

775,691

  Income taxes

194,000

146,100

539,000

301,800

Income  from Continuing Operations

$          419,276

$    302,964

$ 1,134,399

$    473,891

Loss from Discontinued Operations

-

(546)

-

(34,282)

Net Income

$          419,276

$    302,418

$ 1,134,399

$    439,609

Income Per Share from Continuing Operations:

   Basic

$                0.84

$          0.61

$          2.26

$          0.95

   Diluted

$                0.83

$          0.60

$          2.25

$          0.95

Loss Per Share from Discontinued Operations:

   Basic

$                      -

$         (0.00)

$               -

$         (0.07)

   Diluted

$                      -

$         (0.00)

$               -

$         (0.07)

Net Income Per Share:

   Basic

$                0.84

$          0.60

$          2.26

$          0.88

   Diluted

$                0.83

$          0.60

$          2.25

$          0.88

Shares outstanding during the period:

    Average

500,751

500,313

502,141

499,635

    Average assuming dilution

503,149

502,187

504,690

501,184

ESTIMATED FREE OPERATING CASH FLOW

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2010

2009

2010

2009

Net cash provided by operating activities

$          483,930

$    569,196

$ 1,101,778

$ 1,640,279

Less:  Additions to PP&E

(72,154)

(53,015)

(195,539)

(174,353)

Free operating cash flow

$          411,776

$    516,181

$    906,239

$ 1,465,926

SEPTEMBER 30,

JUNE 30,

DEC 31,

STATEMENT OF FINANCIAL POSITION

2010

2010

2009

ASSETS

Cash & equivalents

$          1,649,101

$    1,265,237

$    1,318,772

Trade receivables

2,627,696

2,582,663

2,491,492

Inventories

1,544,728

1,458,179

1,356,233

Deferred income taxes

227,338

217,032

231,858

Prepaids and other current assets

285,977

243,359

276,240

  Total current assets

6,334,840

5,766,470

5,674,595

Net plant & equipment

1,952,567

1,943,878

2,136,527

Investments

437,967

445,156

451,293

Goodwill

4,729,679

4,672,253

4,860,732

Intangible assets

1,669,529

1,712,933

1,723,417

Deferred income taxes

594,044

589,752

673,044

Other assets

585,098

541,517

562,376

$        16,303,724

$  15,671,959

$  16,081,984

LIABILITIES and STOCKHOLDERS' EQUITY

Short-term debt

$             644,883

$       305,917

$       213,681

Accounts payable

722,923

731,714

689,572

Accrued expenses

1,392,438

1,273,037

1,359,394

Cash dividends payable

168,617

156,088

155,724

Income taxes payable

292,480

309,804

417,267

  Total current liabilities

3,221,341

2,776,560

2,835,638

Long-term debt

2,737,374

2,724,342

2,914,874

Deferred income taxes

182,329

179,674

207,677

Other liabilities

1,271,918

1,259,519

1,305,919

  Total noncurrent liabilities

4,191,621

4,163,535

4,428,470

Common stock

5,367

5,362

5,350

Additional paid-in capital

377,412

344,473

270,985

Income reinvested in the business

10,175,663

9,925,004

9,521,740

Common stock held in treasury

(1,740,682)

(1,390,594)

(1,390,594)

Accumulated other comprehensive income

62,670

(162,181)

400,726

Noncontrolling interest

10,332

9,800

9,669

    Total stockholders' equity

8,890,762

8,731,864

8,817,876

$        16,303,724

$  15,671,959

$  16,081,984

SOURCE Illinois Tool Works Inc.



RELATED LINKS

http://www.itw.com