ITW Reports Flat Revenues and a 17 Percent Decrease in Net Income and Diluted Earnings Per Share for 2001 First Quarter

Apr 19, 2001, 01:00 ET from Illinois Tool Works, Inc.

    GLENVIEW, Ill., April 19 /PRNewswire/ -- Illinois Tool Works Inc.
 (NYSE:   ITW) today reported that 2001 first quarter net income and diluted
 earnings per share decreased 17 percent largely due to widespread slowing in
 the company's North American end markets. While operating revenues were
 essentially flat due to acquisitions, operating income declined 17 percent in
 the first quarter.
     Net income for the 2001 first quarter fell to $182.8 million from
 $219.1 million for the 2000 first quarter. Diluted earnings per share was
 60 cents for the 2001 first quarter compared to 72 cents for the year earlier
 period.
     The decrease in first quarter earnings was driven by declines in North
 American base business revenues and accelerated restructuring at the Premark
 businesses. For the 2001 first quarter, operating revenues were $2.397 billion
 compared with $2.405 billion from the year earlier period. Operating income
 was $297.5 million versus $358.3 million for the same periods.
     "Our performance in the first quarter was not surprising given the overall
 magnitude of slowing in most of our North American end markets, especially the
 automotive and the general industrial sectors," said W. James Farrell,
 Chairman and Chief Executive Officer. "We believe many sectors of the North
 American economy are entering recessionary territory and we do not anticipate
 any appreciable improvement in our various end markets until much later in the
 year. While we benefited from positive contributions from our international
 businesses, the falloff in North American sales volume was the principal
 reason our base business revenues were at minus six percent and our operating
 margins declined 250 basis points in the first quarter."
     Segment highlights for the 2001 first quarter include:
     North American Engineered Products revenues and operating income declined
 8 percent and 29 percent, respectively, due to a falloff in sales volumes
 associated with significant cutbacks in automotive builds and general slowing
 in the industrial and construction end markets. The decrease in revenues and
 the impact of acquisitions and restructuring costs translated into a 410 basis
 point decline in operating margins.
     International Engineered Products revenues increased 10 percent mainly due
 to contributions from the construction, automotive and industrial plastics
 businesses. Operating income improved 5 percent as the construction,
 automotive and polymers/fluid products businesses benefited from relatively
 strong economies in Europe and Australia. Operating margins declined 40 basis
 points due to the impact of acquisitions in this segment.
     North American Specialty Systems revenues increased 3 percent largely due
 to acquisition contributions in the industrial packaging businesses. Operating
 income declined 22 percent as demand for industrial packaging and welding
 products slackened in the first quarter. Sales volume declines and acquisition
 and restructuring costs translated into an operating margin decrease of 380
 basis points for the quarter.
     International Specialty Systems revenues and operating income increased
 7 percent and 15 percent, respectively, due to contributions from the
 industrial packaging, finishing and decorating businesses. As a result,
 operating margins improved 60 basis points versus the prior year period.
     Consumer Products revenues and operating income declined 13 percent and
 34 percent, respectively, as profitability in the specialty exercise business
 was offset by weakness in both the consumer small appliance sector of West
 Bend and Florida Tile.
     Leasing and Investments operating income was up 31 percent in the first
 quarter due to gains on sales of investment properties.
     Looking ahead, the company is forecasting second quarter earnings per
 share on a fully diluted basis to be in the range of 76 cents to 82 cents. For
 the full year, the company continues to forecast earnings per share on a fully
 diluted basis to be in the range of $3.00 to $3.20.
     This First 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 the Company's 2001
 forecasts. 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 on page 26 of the
 Company's 2000 Annual Report to Shareholders.
     ITW is a $10 billion diversified manufacturer of highly engineered
 components and industrial systems. The company consists of approximately 600
 decentralized operations in 43 countries and employs 55,300 people.
 
    ILLINOIS TOOL WORKS INC.
    (In thousands except per share data)
                                               THREE MONTHS ENDED
                                                     MARCH 31
    STATEMENT OF INCOME                      2001             2000
 
     Operating Revenues                   $2,396,834       $2,404,960
        Cost of revenues                   1,613,042        1,571,930
        Selling, administrative, and
        R&D expenses                        461,774          454,171
       Amortization of goodwill &
        other intangibles                    24,539           20,556
    Operating Income                        297,479          358,303
       Interest expense                     (18,711)         (16,083)
       Other income                           2,390              209
    Income Before Income Taxes              281,158          342,429
       Income taxes                          98,400          123,300
    Net Income                             $182,758         $219,129
 
    Net Income Per Share :
        Basic                                 $0.60            $0.73
        Diluted                               $0.60            $0.72
 
 
    Shares outstanding during the period :
         Average                            303,151          300,746
         Average assuming dilution          305,731          304,019
 
                                              MAR 31,          DEC 31,
     STATEMENT OF FINANCIAL POSITION            2001             2000
      ASSETS
      Cash & equivalents                     $149,492         $151,295
      Trade receivables                     1,644,660        1,654,632
      Inventories                           1,192,882        1,181,385
      Deferred income taxes                   184,981          183,823
      Prepaids and other current
       assets                                 144,182          157,926
         Total current assets               3,316,197        3,329,061
 
      Plant & equipment                     4,266,995        4,199,610
      Less: accumulated depreciation       (2,537,638)      (2,477,086)
         Net plant & equipment              1,729,357        1,722,524
 
      Investments                           1,163,254        1,170,392
      Goodwill & other intangibles          2,506,828        2,483,882
      Deferred income taxes                   481,079          478,420
      Other assets                            429,002          419,177
                                           $9,625,717       $9,603,456
 
     LIABILITIES and STOCKHOLDERS' EQUITY
      Short-term debt                        $466,665          $425,789
      Accounts payable                        429,665           455,417
      Accrued expenses                        731,615           826,107
      Cash dividends payable                   60,752            60,490
      Income taxes payable                    122,007            49,807
         Total current liabilities          1,810,704         1,817,610
      Long-term debt                        1,393,347         1,549,038
      Other liabilities                       837,749           835,821
        Total non-current
          liabilities                       2,231,096         2,384,859
 
      Common stock                              3,038             3,027
      Additional paid-in capital              611,823           584,357
      Income reinvested in the
       business                             5,337,503         5,214,098
      Common stock held in treasury            (1,666)           (1,783)
       Cumulative translation
       adjustment                            (366,781)         (398,712)
        Total stockholders' equity          5,583,917         5,400,987
                                           $9,625,717        $9,603,456
 
 
 

SOURCE Illinois Tool Works, Inc.
    GLENVIEW, Ill., April 19 /PRNewswire/ -- Illinois Tool Works Inc.
 (NYSE:   ITW) today reported that 2001 first quarter net income and diluted
 earnings per share decreased 17 percent largely due to widespread slowing in
 the company's North American end markets. While operating revenues were
 essentially flat due to acquisitions, operating income declined 17 percent in
 the first quarter.
     Net income for the 2001 first quarter fell to $182.8 million from
 $219.1 million for the 2000 first quarter. Diluted earnings per share was
 60 cents for the 2001 first quarter compared to 72 cents for the year earlier
 period.
     The decrease in first quarter earnings was driven by declines in North
 American base business revenues and accelerated restructuring at the Premark
 businesses. For the 2001 first quarter, operating revenues were $2.397 billion
 compared with $2.405 billion from the year earlier period. Operating income
 was $297.5 million versus $358.3 million for the same periods.
     "Our performance in the first quarter was not surprising given the overall
 magnitude of slowing in most of our North American end markets, especially the
 automotive and the general industrial sectors," said W. James Farrell,
 Chairman and Chief Executive Officer. "We believe many sectors of the North
 American economy are entering recessionary territory and we do not anticipate
 any appreciable improvement in our various end markets until much later in the
 year. While we benefited from positive contributions from our international
 businesses, the falloff in North American sales volume was the principal
 reason our base business revenues were at minus six percent and our operating
 margins declined 250 basis points in the first quarter."
     Segment highlights for the 2001 first quarter include:
     North American Engineered Products revenues and operating income declined
 8 percent and 29 percent, respectively, due to a falloff in sales volumes
 associated with significant cutbacks in automotive builds and general slowing
 in the industrial and construction end markets. The decrease in revenues and
 the impact of acquisitions and restructuring costs translated into a 410 basis
 point decline in operating margins.
     International Engineered Products revenues increased 10 percent mainly due
 to contributions from the construction, automotive and industrial plastics
 businesses. Operating income improved 5 percent as the construction,
 automotive and polymers/fluid products businesses benefited from relatively
 strong economies in Europe and Australia. Operating margins declined 40 basis
 points due to the impact of acquisitions in this segment.
     North American Specialty Systems revenues increased 3 percent largely due
 to acquisition contributions in the industrial packaging businesses. Operating
 income declined 22 percent as demand for industrial packaging and welding
 products slackened in the first quarter. Sales volume declines and acquisition
 and restructuring costs translated into an operating margin decrease of 380
 basis points for the quarter.
     International Specialty Systems revenues and operating income increased
 7 percent and 15 percent, respectively, due to contributions from the
 industrial packaging, finishing and decorating businesses. As a result,
 operating margins improved 60 basis points versus the prior year period.
     Consumer Products revenues and operating income declined 13 percent and
 34 percent, respectively, as profitability in the specialty exercise business
 was offset by weakness in both the consumer small appliance sector of West
 Bend and Florida Tile.
     Leasing and Investments operating income was up 31 percent in the first
 quarter due to gains on sales of investment properties.
     Looking ahead, the company is forecasting second quarter earnings per
 share on a fully diluted basis to be in the range of 76 cents to 82 cents. For
 the full year, the company continues to forecast earnings per share on a fully
 diluted basis to be in the range of $3.00 to $3.20.
     This First 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 the Company's 2001
 forecasts. 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 on page 26 of the
 Company's 2000 Annual Report to Shareholders.
     ITW is a $10 billion diversified manufacturer of highly engineered
 components and industrial systems. The company consists of approximately 600
 decentralized operations in 43 countries and employs 55,300 people.
 
    ILLINOIS TOOL WORKS INC.
    (In thousands except per share data)
                                               THREE MONTHS ENDED
                                                     MARCH 31
    STATEMENT OF INCOME                      2001             2000
 
     Operating Revenues                   $2,396,834       $2,404,960
        Cost of revenues                   1,613,042        1,571,930
        Selling, administrative, and
        R&D expenses                        461,774          454,171
       Amortization of goodwill &
        other intangibles                    24,539           20,556
    Operating Income                        297,479          358,303
       Interest expense                     (18,711)         (16,083)
       Other income                           2,390              209
    Income Before Income Taxes              281,158          342,429
       Income taxes                          98,400          123,300
    Net Income                             $182,758         $219,129
 
    Net Income Per Share :
        Basic                                 $0.60            $0.73
        Diluted                               $0.60            $0.72
 
 
    Shares outstanding during the period :
         Average                            303,151          300,746
         Average assuming dilution          305,731          304,019
 
                                              MAR 31,          DEC 31,
     STATEMENT OF FINANCIAL POSITION            2001             2000
      ASSETS
      Cash & equivalents                     $149,492         $151,295
      Trade receivables                     1,644,660        1,654,632
      Inventories                           1,192,882        1,181,385
      Deferred income taxes                   184,981          183,823
      Prepaids and other current
       assets                                 144,182          157,926
         Total current assets               3,316,197        3,329,061
 
      Plant & equipment                     4,266,995        4,199,610
      Less: accumulated depreciation       (2,537,638)      (2,477,086)
         Net plant & equipment              1,729,357        1,722,524
 
      Investments                           1,163,254        1,170,392
      Goodwill & other intangibles          2,506,828        2,483,882
      Deferred income taxes                   481,079          478,420
      Other assets                            429,002          419,177
                                           $9,625,717       $9,603,456
 
     LIABILITIES and STOCKHOLDERS' EQUITY
      Short-term debt                        $466,665          $425,789
      Accounts payable                        429,665           455,417
      Accrued expenses                        731,615           826,107
      Cash dividends payable                   60,752            60,490
      Income taxes payable                    122,007            49,807
         Total current liabilities          1,810,704         1,817,610
      Long-term debt                        1,393,347         1,549,038
      Other liabilities                       837,749           835,821
        Total non-current
          liabilities                       2,231,096         2,384,859
 
      Common stock                              3,038             3,027
      Additional paid-in capital              611,823           584,357
      Income reinvested in the
       business                             5,337,503         5,214,098
      Common stock held in treasury            (1,666)           (1,783)
       Cumulative translation
       adjustment                            (366,781)         (398,712)
        Total stockholders' equity          5,583,917         5,400,987
                                           $9,625,717        $9,603,456
 
 
 SOURCE  Illinois Tool Works, Inc.