ITW Reports Record Earnings as Diluted Net Income Per Share Grew 31 Percent for the 2005 Third Quarter; Revenues Increased 10 Percent, Operating Income Grew 21 Percent and Operating Margins Improved 170 Basis Points to 19.0 Percent in the Quarter

GLENVIEW, Ill., Oct. 19, 2005 -- Illinois Tool Works Inc. today reported record earnings as diluted net income per share grew 31 percent in the 2005 third quarter. Diluted net income per share was $1.43 versus $1.09 in the 2004 third quarter. In addition, the Company's revenues increased 10 percent, operating income grew 21 percent and net income rose 24 percent.

The significant growth in earnings took place as base revenues grew 4.1 percent in the quarter, with the majority of that contribution coming from North American end markets. Largely as a result of improved base margin performance and higher than anticipated Leasing and Investments income, diluted net income per share was seven cents higher than the Company's most recent forecast. Base margin improvement added three cents, Leasing and Investments contributed three cents, and earlier than expected completion of the share repurchase program added 1 cent.

For the 2005 third quarter, operating revenues were $3.258 billion compared to $2.967 billion for the year earlier period. Operating income increased to $619.2 million from $512.2 million in the prior year period. Net income was $408.2 million compared to $330.1 million a year ago. The Company's third quarter overall operating margin of 19.0 percent was 170 basis points higher than the year ago period.

For the first nine months of 2005, diluted net income per share of $3.78 was 18 percent higher than the $3.19 diluted net income per share for the year earlier period. In this same period, revenues grew 11 percent to $9.628 billion from $8.680 billion, operating income increased 9 percent to $1.664 billion from $1.521 billion, and net income of $1.094 billion was 12 percent higher than the $980.6 million for the 2004 nine month period. Operating margins of 17.3 were 20 basis points lower than the year ago period.

The Company's free operating cash flow continued to be strong in the 2005 third quarter at $506.6 million. The generation of free cash allowed the Company to complete its $2.8 billion share repurchase program and to fund improving acquisition activity. Acquisitions in the third quarter had $105 million of annualized revenues. In addition, in early October the Company completed its previously announced acquisition of Instron Corporation. Year to date, the Company has completed acquisitions with annualized revenues of $532 million. Based on a robust pipeline of potential acquisitions, the Company continues to forecast acquired revenues of $600 to $800 million of annualized revenues for full-year 2005.

"Our strong across-the-board financial performance in the third quarter underscores ITW's ability to maximize income and margins even though our base revenue growth was essentially the same as the second quarter," said David B. Speer, President and Chief Executive Officer. "We also remain encouraged by what we believe to be an improving acquisition environment both in terms of the quantity and quality of opportunities we are reviewing."

Segment highlights for the 2005 third quarter include:

North American Engineered Products third quarter revenues increased 10 percent largely as a result of contributions from acquisitions as well as base revenue growth from the construction, industrial and automotive business units. Operating income increased 21 percent mainly due to base income growth from construction and automotive combined with contributions from acquisitions. As a result, operating margins of 18.9 percent were 170 basis points higher than the prior year period. For the nine month period, revenues and operating income grew 12 percent and 14 percent, respectively, and operating margins of 17.6 percent were 20 basis points higher than the year ago period.

International Engineered Products third quarter revenues grew 5 percent mainly as a result of contributions from acquisitions and currency translation. Base revenues declined 1 percent in the quarter. Operating income increased 4.5 percent in the quarter as contributions from acquisitions, currency translation and base revenues were moderated by restructuring costs. Operating margins of 15.3 percent were 10 basis points lower than the year ago period. For the nine month period, revenues and operating income grew 12 percent and 9 percent, respectively, and operating margins of 14.2 percent were 40 basis points lower than a year ago.

North American Specialty Systems third quarter operating revenues increased 9 percent largely due to base revenue growth from the welding, marking and decorating, and finishing units. Operating income grew 28 percent mainly as a result of base income contributions from welding and food equipment. Operating margins of 20.1 percent were 290 basis points higher than the year earlier period. For the nine month period, revenues and operating income grew 10 percent and 18 percent, respectively. Operating margins of 18.6 percent were 130 basis points higher than a year ago.

International Specialty Systems third quarter revenues increased 8 percent primarily due to base revenue contributions from the industrial and consumer packaging units in Europe and Asia, welding, food equipment and finishing. Acquisitions also added to revenue growth. Operating income declined 10 percent in the quarter mainly due to a 14 percent income decline related to higher restructuring charges in the quarter. As a result, operating margins of 11.4 percent were 230 basis points lower than the year earlier period. For the nine month period, revenues increased 12 percent and operating income declined 2 percent. Operating margins of 11.5 percent were 170 basis points lower than a year ago.

Leasing and Investments third quarter operating income of $53.5 million was significantly higher than the year earlier period due to higher than expected income from gains on sales in the commercial mortgage portfolio and mark-to-market income on venture capital investments.

Looking ahead, the Company expects its base revenues to moderate to 3.0 percent growth in the fourth quarter due to anticipated higher energy costs and their impact on end markets and raw materials. As a result, the Company is forecasting an earnings range of $1.34 to $1.40 for the fourth quarter. For full-year 2005, the Company is forecasting an earnings range of $5.12 to $5.18. The midpoint of the 2005 forecast is predicated on base revenue growth of 4.3 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 end market conditions, base revenue growth, higher energy costs and potential acquisitions for the fourth quarter and full-year 2005 and the Company's related 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 in ITW's Form 10-Q for the 2005 Second Quarter.

ITW is an $11.7 billion in revenues diversified manufacturer of highly engineered components and industrial systems and consumables. The Company consists of approximately 650 decentralized operations in 45 countries and employs some 49,000 people.

      ILLINOIS TOOL WORKS INC.
      (In thousands except per share data)

                                THREE MONTHS ENDED       NINE MONTHS ENDED
                                   SEPTEMBER 30,           SEPTEMBER 30,
      STATEMENT OF INCOME        2005        2004        2005        2004

      Operating Revenues     $3,257,600  $2,967,168  $9,627,535  $8,679,788
         Cost of revenues     2,081,272   1,934,831   6,260,211   5,614,977
         Selling,
          administrative,
          and R&D expenses      541,338     509,482   1,646,388   1,495,703
         Amortization and
          impairment of
          goodwill & other
          intangibles            15,770      10,617      56,973      47,692
      Operating Income          619,220     512,238   1,663,963   1,521,416
         Interest expense       (18,243)    (18,512)    (64,322)    (53,385)
         Other income (expense)    (775)      6,325       9,549      17,495
      Income From Continuing
       Operations Before
       Income Taxes             600,202     500,051   1,609,190   1,485,526
         Income taxes           192,000     170,000     514,900     505,100
      Income From Continuing
       Operations               408,202     330,051   1,094,290     980,426
      Income From
       Discontinued
       Operations                     -           -           -         171
      Net Income               $408,202    $330,051  $1,094,290    $980,597

      Income Per Share from
       Continuing
       Operations:
          Basic                   $1.44       $1.10       $3.81       $3.21
          Diluted                 $1.43       $1.09       $3.78       $3.19

      Income Per Share from
       Discontinued
       Operations:
          Basic                    $-          $-          $-         $0.00
          Diluted                  $-          $-          $-         $0.00

      Net Income Per Share:
          Basic                   $1.44       $1.10       $3.81       $3.21
          Diluted                 $1.43       $1.09       $3.78       $3.19

      Shares outstanding
       during the period :
           Average              282,798     301,390     287,333     305,222
           Average assuming
            dilution            285,009     303,966     289,510     307,657

      ESTIMATED FREE OPERATING
      CASH FLOW
                                   THREE MONTHS ENDED    NINE MONTHS ENDED
                                     SEPTEMBER 30,         SEPTEMBER 30,
                                    2005      2004       2005        2004

          Net cash provided by
           operating activities  $559,308  $452,084  $1,360,583  $1,148,602
          Plus:  Proceeds from
           investments             18,580    18,837      46,218      57,289
          Less:  Additions to
           PP&E                   (71,316)  (67,670)   (216,025)   (197,442)
          Free operating cash
           flow                  $506,572  $403,251  $1,190,776  $1,008,449

       ILLINOIS TOOL WORKS INC.
       (In thousands)

                                         SEPT 30,     JUNE 30,     DEC 31,
      STATEMENT OF FINANCIAL POSITION      2005         2005         2004
       ASSETS
       Cash & equivalents               $351,345     $858,679     $667,390
       Trade receivables               2,168,592    2,134,215    2,054,624
       Inventories                     1,229,667    1,274,538    1,281,156
       Deferred income taxes             158,953      156,664      147,416
       Prepaids and other current
        assets                           144,268      143,020      171,612
          Total current assets         4,052,825    4,567,116    4,322,198

       Net plant & equipment           1,825,459    1,822,236    1,876,875
       Investments                     1,021,199      971,354      912,483
       Goodwill                        2,877,750    2,834,779    2,753,053
       Intangible assets                 499,463      477,328      440,002
       Deferred income taxes              50,049      121,159      233,172
       Other assets                      908,462      835,143      814,151
                                     $11,235,207  $11,629,115  $11,351,934

       LIABILITIES and STOCKHOLDERS' EQUITY
       Short-term debt                  $378,609     $696,788     $203,523
       Accounts payable                  543,897      555,804      603,811
       Accrued expenses                  975,001      946,668      959,380
       Cash dividends payable             92,383       79,909       81,653
       Income taxes payable               30,511        1,213        2,604
          Total current liabilities    2,020,401    2,280,382    1,850,971

       Long-term debt                    965,535      967,208      921,098
       Other liabilities                 968,145      954,324      952,255
          Total non-current
           liabilities                 1,933,680    1,921,532    1,873,353

       Common stock                        3,117        3,117        3,114
       Additional paid-in capital      1,042,495    1,025,034      978,941
       Income reinvested in the
        business                       8,804,369    8,488,550    7,963,518
       Common stock held in treasury  (2,773,176)  (2,304,064)  (1,731,378)
       Accumulated other
        comprehensive income             204,321      214,564      413,415
            Total stockholders'
             equity                    7,281,126    7,427,201    7,627,610
                                     $11,235,207  $11,629,115  $11,351,934