What drove the revenue growth in the second quarter of 2008?

Revenue growth was primarily driven by the favorable effect of currency translation due to a weakening U.S. dollar and contributions from recent acquisitions. However, the company noted that total base revenues were flat in the second quarter, with international base revenues showing modest growth while North American base revenues declined.

What was the impact of the goodwill impairment charge?

In the first quarter of 2008, ITW recorded a goodwill impairment charge of $98.6 million, predominantly related to its worldwide software business within the 'All Other' segment. This charge negatively impacted year-to-date operating income and reduced the overall operating margin by 1.4% for the first six months of the year.

How is the company managing its liquidity and capital resources?

The company's primary source of liquidity is free operating cash flow, which management believes will be sufficient to service debt, pay dividends, finance internal growth, acquisitions, and share repurchases. Despite a decrease in free operating cash flow for the first six months of 2008 compared to 2007, the company had $640.2 million in cash and equivalents as of June 30, 2008, and significant available credit lines.

What are the primary challenges or headwinds the company is facing?

The company highlighted declines in North American revenues, particularly in the residential construction and automotive sectors, as well as weak industrial production. Additionally, increased interest expense due to new debt issuances and the impact of raw material costs and price pressures in certain segments were noted as challenges.

ITW 10-Q Quarterly Report Q2 FY2008 — Revenue, Net Income, EPS

Summary

Illinois Tool Works Inc. (ITW) reported solid revenue growth of 10.5% for the second quarter of 2008, reaching $4.57 billion, driven by acquisitions and favorable currency translation, though base revenues remained flat. Net income increased to $528.1 million, or $1.01 per diluted share, up from $505.6 million ($0.90 per diluted share) in the prior year's quarter. Despite overall positive financial performance, the company's year-to-date results were impacted by a significant $98.6 million goodwill impairment charge in the first quarter, primarily affecting its software business. This impairment contributed to a decrease in year-to-date operating income and a decline in overall operating margins.

Financial Highlights

29 data points

Beta

Revenue

$4.56B

0.4% Gross Margin

Net Income

$528.09M

0.1% Net Margin

EPS (Diluted)

$1.01

Cash & Equivalents

$640.17M

Free Cash Flow

$759.04M

Financial Statements

Beta

Revenue	$4.56B
Cost of Revenue	$2.94B
Gross Profit	$1.61B
Operating Income	$757.16M
Interest Expense	-$36.59M
Net Income	$528.09M
EPS (Basic)	$1.01
EPS (Diluted)	$1.01
Shares Outstanding (Basic)	521.49M
Shares Outstanding (Diluted)	525.21M

Key Highlights

1Total operating revenues for the second quarter of 2008 increased by 10.5% to $4.57 billion, compared to $4.14 billion in the prior year period.
2Net income for the second quarter rose to $528.1 million, or $1.01 per diluted share, from $505.6 million, or $0.90 per diluted share, in Q2 2007.
3A significant goodwill impairment charge of $98.6 million was recorded in the first quarter of 2008, primarily impacting the 'All Other' segment's software business.
4Free operating cash flow for the six months ended June 30, 2008, was $759.0 million, a decrease from $780.1 million in the same period of 2007.
5The company repurchased approximately $585.6 million of its common stock during the first six months of 2008 as part of its $3 billion repurchase program.
6Operating income in the Transportation segment decreased by 6.9% in the second quarter, largely due to a decline in base revenue and increased operating expenses, despite revenue growth from acquisitions and currency translation.

ILLINOIS TOOL WORKS INC Quarterly Report for Q2 Ended Jun 30, 2008

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions