What are ITW's main business segments and end markets?

ITW's business is organized into five segments: Engineered Products (North America and International) and Specialty Systems (North America and International), along with Leasing and Investments. The primary end markets served by its manufacturing segments include construction, automotive, general industrial, food retail and service, consumer durables, and electronics.

How is ITW addressing operational efficiency and complexity?

ITW employs a strategic '80/20 Simplification Process,' which involves focusing resources on the most critical 20% of items that drive 80% of the value. This process is applied across operations to simplify product lines, customer bases, supplier relationships, and business processes, with the goal of improving operating and financial performance.

What significant accounting changes were adopted in 2003?

In July 2003, ITW adopted FASB Interpretation No. 46 (FIN 46) concerning the consolidation of variable interest entities. This led to the deconsolidation of ITW's investments in mortgage entities, and these investments are now accounted for using the equity method. The company also adopted SFAS No. 142, 'Goodwill and Other Intangible Assets,' effective January 1, 2002.

What is the status of ITW's divestitures?

ITW completed the divestiture of its Consumer Products segment, which included businesses acquired through the Premark merger. The sales of Precor and West Bend were finalized in October 2002, and Florida Tile was sold in November 2003, resulting in a net loss on disposal of the segment.

ITW 10-K FY2003 Annual Report — Revenue, Net Income, EPS

Summary

Illinois Tool Works Inc. (ITW) presented its 2003 annual report, detailing a diversified business model across five segments: Engineered Products (North America and International) and Specialty Systems (North America and International), along with Leasing and Investments. The company operates approximately 625 facilities in 44 countries, manufacturing highly engineered products and specialty systems for a broad range of industries including construction, automotive, and general industrial markets. A key strategic element is the company's "80/20 Simplification Process," aimed at enhancing operational and financial performance by focusing on core value drivers. The report also addresses the divestiture of its Consumer Products segment in 2002 and 2003 and the adoption of new accounting standards like FIN 46, which impacted its mortgage-related investments. ITW maintains a robust patent portfolio and a strong brand presence with numerous trademarks, underscoring its commitment to innovation and market leadership.

Key Highlights

1ITW operates a diversified global business with 625 operations in 44 countries, organized into five segments: Engineered Products (North America and International) and Specialty Systems (North America and International), plus Leasing and Investments.

2The company serves a wide array of end markets, including construction (46% of NA Engineered Products revenue), automotive (30% of NA Engineered Products revenue), and general industrial, with international operations contributing approximately 41% of revenues in 2003.

3ITW's strategic "80/20 Simplification Process" focuses on optimizing operations by concentrating on high-value activities and customers, aiming to improve operating and financial performance and reduce complexity.

4The company completed the divestiture of its Consumer Products segment in 2002 and 2003, which was acquired through the Premark merger, indicating a strategic shift towards its core industrial businesses.

5ITW adopted FASB Interpretation No. 46 (FIN 46) in July 2003, leading to the deconsolidation of its mortgage entity investments and a change in accounting method to the equity method for these net investments.

6Backlog is generally not a significant factor due to short delivery periods, though total backlog increased from $672 million in 2002 to $756 million in 2003 across its manufacturing segments.

7The company highlights its strong intellectual property with approximately 2,700 unexpired patents and 950 pending applications, noting that the expiration of any single patent would not materially impact financial results.

ILLINOIS TOOL WORKS INC Annual Report, Year Ended Dec 31, 2003

Summary

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