8-KOther Events

ILLINOIS TOOL WORKS INC 8-K Report (Jan 30, 2002)

Filed January 30, 2002For Securities:ITW

Summary

Illinois Tool Works Inc. (ITW) reported its fourth quarter and full-year 2001 results, reflecting a challenging economic environment. For the fourth quarter of 2001, operating revenues decreased by 5% and diluted earnings per share (EPS) fell by 6% compared to the prior year. The full year 2001 saw operating revenues decline by 2% and diluted EPS drop by 17%. These results were significantly impacted by continued weakness in North American and international end markets. The company has also reclassified its Consumer Products Segment as discontinued operations. Despite the revenue and earnings declines, ITW demonstrated strong cash generation from operations, enabling it to fund acquisitions, pay dividends, and reduce debt. The company provided guidance for the first quarter of 2002, projecting diluted EPS between $0.53 to $0.63, and for the full year 2002, estimating diluted EPS in the range of $2.95 to $3.25, contingent on improving economic trends in the latter half of the year.

Key Highlights

  • 1Fourth quarter 2001 diluted EPS decreased 6% to $0.62 from $0.66 in the prior year, driven by weak end markets.
  • 2Full year 2001 diluted EPS fell 17% to $2.63 from $3.15 in 2000, reflecting a challenging economic climate.
  • 3Operating revenues for the full year 2001 decreased 2% to $9.3 billion.
  • 4The Consumer Products Segment has been reclassified as discontinued operations, impacting the reported results.
  • 5Despite revenue declines, ITW generated strong operating cash flow of $1.2 billion for the year, allowing for debt reduction, dividends, and acquisitions.
  • 6The company forecasts first quarter 2002 diluted EPS to be between $0.53 and $0.63.
  • 7Full-year 2002 diluted EPS is projected to be in the range of $2.95 to $3.25, with expectations of improving economic conditions.

Frequently Asked Questions

The primary drivers for the decrease in ITW's earnings were continued weakness in many of the company's North American and international end markets, compounded by a general economic slowdown. This led to a decline in operating revenues and income across several business segments.

The Consumer Products Segment's results for the fourth quarter and full year have been reclassified as discontinued operations. This means their revenues and profits (or losses) are presented separately from the company's continuing operations, providing a clearer view of the performance of the ongoing core businesses.

ITW projects a challenging first quarter for 2002 with diluted EPS expected between $0.53 to $0.63. For the full year 2002, the company forecasts diluted EPS between $2.95 to $3.25. This projection is based on an expectation of improving economic trends, particularly in the second half of the year, which would benefit ITW's end markets.

ITW demonstrated strong cash generation from operations in 2001, which was bolstered by reduced working capital and capital expenditures due to the slower economy. This resulted in approximately $1.2 billion in free cash, which was sufficient to fund a $556 million acquisition program, pay $249 million in dividends, and reduce debt levels.