ITW Reports Flat Revenues and a 17 Percent
Decrease in Net Income and Diluted Earnings Per Share for
2001 First Quarter
GLENVIEW, Ill., April 19 Illinois Tool Works Inc.
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
