GLENVIEW, Ill., Oct. 7 /PRNewswire-FirstCall/ -- As previously announced, Illinois Tool Works Inc. approved a plan to divest its Decorative Surfaces segment and Click Commerce business. Accordingly, the Company has reclassified the results of these businesses to discontinued operations. The effect of the reclassification is as follows:
Diluted Income Per Share
From Continuing Operations
First Half 2008 First Half 2007 % Change
As Previously Reported $1.57 $1.54 2%
Reclassification of Discontinued
Operations 0.07 (0.11)
As Adjusted (Reclassified) $1.64 $1.43 15%
The Decorative Surfaces segment consists of the Wilsonart and related high-pressure laminate businesses around the world. In 2007, the Decorative Surfaces segment had revenues of $1.2 billion and operating margins of 13 percent. ITW has retained Goldman Sachs to advise on the divestiture process for these businesses. Click Commerce, a supplier of software solutions and consulting services to a number of large, international companies, offers advanced software solutions in key categories such as supply chain and parts optimization, clinical research, contingent labor management and commerce.
Looking forward, the Company experienced a slowdown in North America in September as industrial production and end market fundamentals weakened in the month. Margins also compressed, in part, due to the more difficult environment to recover raw material price increases. As a result of slowing end markets and the discontinued operations reclassification, the Company has lowered its third quarter and full-year forecasts. The Company is now forecasting the third quarter 2008 income per share from continuing operations to be in a range of $0.82 to $0.86. This forecast assumes a total Company revenue growth range of 9 percent to 11 percent. The new forecasted range compares to a third quarter 2007 adjusted income per share from continuing operations of $0.84. Excluding the accounting for discontinued operations, the third quarter would be in a range of $0.86 to $0.90. For the full-year, the Company is now forecasting income per share from continuing operations to be in a range of $3.22 to $3.34. This forecast assumes a total Company revenue growth range of 9 percent to 11 percent. The new forecasted range compares to a full-year 2007 adjusted income per share for continuing operations of $3.08.
The statements regarding the Company's 2008 third quarter and full-year forecasts are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 2008 second quarter.
With $16.2 billion in revenues, ITW is a diversified and value added manufacturer of highly engineered components and industrial systems and consumables. The Company consists of approximately 825 business units in 52 countries and employs some 60,000 people.
Exhibit 99.2
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
2008 STATEMENT OF INCOME RESTATED FOR DISCONTINUED OPERATIONS
(UNAUDITED)
(In thousands except per share amounts)
1Q 2008 2Q 2008 YTD
Operating Revenues $3,823,278 $4,219,925 $8,043,203
Cost of revenues 2,465,943 2,694,930 5,160,873
Selling, administrative,
and R&D expenses 736,591 777,129 1,513,720
Amortization and impairment of
goodwill and other intangible
assets 41,363 42,087 83,450
Operating Income 579,381 705,779 1,285,160
Interest expense (37,427) (36,530) (73,957)
Other income (expense) (20,688) 24,848 4,160
Income from Continuing
Operations Before Income
Taxes 521,266 694,097 1,215,363
Income taxes 151,405 197,291 348,696
Income from Continuing
Operations 369,861 496,806 866,667
Income (Loss) from Discontinued
Operations (66,240) 31,284 (34,956)
Net Income $303,621 $528,090 $831,711
Income Per Share from
Continuing Operations:
Basic $0.70 $0.95 $1.65
Diluted $0.70 $0.95 $1.64
Income (Loss) Per Share from
Discontinued Operations:
Basic $(0.13) $0.06 $(0.07)
Diluted $(0.13) $0.06 $(0.07)
Net Income Per Share:
Basic $0.58 $1.01 $1.59
Diluted $0.57 $1.01 $1.58
Shares of Common Stock
Outstanding During the Period:
Average 526,299 521,488 523,894
Average assuming dilution 529,725 525,209 527,467
ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
2007 STATEMENT OF INCOME RESTATED FOR DISCONTINUED OPERATIONS
(UNAUDITED)
(In thousands except per share amounts)
1Q 2007 2Q 2007 3Q 2007 4Q 2007 YTD
Operating
Revenues $3,420,745 $3,797,496 $3,744,402 $3,908,433 $14,871,076
Cost of
revenues 2,201,143 2,423,219 2,389,520 2,518,959 9,532,841
Selling,
administrative,
and R&D
expenses 644,114 696,799 669,563 731,875 2,742,351
Amortization
and
impairment
of goodwill
and other
intangible
assets 35,928 36,419 35,762 38,887 146,996
Operating
Income 539,560 641,059 649,557 618,712 2,448,888
Interest
expense (24,354) (25,597) (25,783) (26,242) (101,976)
Other income 7,540 23,018 23,024 4,205 57,787
Income from
Continuing
Operations
Before Income
Taxes 522,746 638,480 646,798 596,675 2,404,699
Income taxes 164,170 192,749 182,697 153,147 692,763
Income from
Continuing
Operations 358,576 445,731 464,101 443,528 1,711,936
Income from
Discontinued
Operations 43,859 59,875 26,987 27,205 157,926
Net Income $402,435 $505,606 $491,088 $470,733 $1,869,862
Income Per
Share from
Continuing
Operations:
Basic $0.64 $0.80 $0.84 $0.82 $3.10
Diluted $0.64 $0.79 $0.84 $0.82 $3.08
Income Per
Share from
Discontinued
Operations:
Basic $0.08 $0.11 $0.05 $0.05 $0.29
Diluted $0.08 $0.11 $0.05 $0.05 $0.28
Net Income
Per Share:
Basic $0.72 $0.91 $0.89 $0.87 $3.39
Diluted $0.71 $0.90 $0.89 $0.87 $3.36
Shares of
Common Stock
Outstanding
During the
Period:
Average 559,001 556,793 549,561 538,466 551,549
Average
assuming
dilution 563,280 561,244 554,255 542,965 556,030
ILLINOIS TOOL WORKS INC.
SEGMENT DATA
2007 & 2008 Restatement
(IN THOUSANDS)
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Year
2007 2007 2007 2007 2007
INDUSTRIAL
PACKAGING
REVENUES 555,054 621,092 599,655 626,857 2,402,658
OPERATING
INCOME 64,300 79,104 78,532 76,830 298,766
% TO REVENUE 11.6% 12.7% 13.1% 12.3% 12.4%
POWER SYSTEMS
& ELECTRONICS
REVENUES 554,420 565,256 567,479 558,358 2,245,513
OPERATING
INCOME 115,485 115,479 110,772 107,464 449,200
% TO REVENUE 20.8% 20.4% 19.5% 19.2% 20.0%
TRANSPORTATION
REVENUES 529,136 583,625 534,494 567,664 2,214,919
OPERATING
INCOME 83,653 106,542 88,859 94,393 373,447
% TO REVENUE 15.8% 18.3% 16.6% 16.6% 16.9%
CONSTRUCTION
PRODUCTS
REVENUES 474,536 541,227 516,432 532,282 2,064,477
OPERATING
INCOME 51,831 80,481 77,027 73,722 283,061
% TO REVENUE 10.9% 14.9% 14.9% 13.9% 13.7%
FOOD EQUIPMENT
REVENUES 390,554 473,599 500,419 565,710 1,930,282
OPERATING
INCOME 67,736 63,940 88,882 80,155 300,713
% TO REVENUE 17.3% 13.5% 17.8% 14.2% 15.6%
POLYMERS & FLUIDS
REVENUES 202,207 229,975 252,507 261,924 946,613
OPERATING
INCOME 30,470 40,724 43,785 40,805 155,784
% TO REVENUE 15.1% 17.7% 17.3% 15.6% 16.5%
ALL OTHER
REVENUES 727,481 795,123 786,935 807,852 3,117,391
OPERATING
INCOME 126,085 154,789 161,700 145,343 587,917
% TO REVENUE 17.3% 19.5% 20.5% 18.0% 18.9%
INTERCOMPANY
REVENUE (12,643) (12,401) (13,519) (12,214) (50,777)
AS REPORTED
ON THE
STATEMENT
OF INCOME
REVENUES 3,420,745 3,797,496 3,744,402 3,908,433 14,871,076
OPERATING
INCOME 539,560 641,059 649,557 618,712 2,448,888
% TO REVENUE 15.8% 16.9% 17.3% 15.8% 16.5%
Quarter 1 Quarter 2 YTD
2008 2008 2008
INDUSTRIAL PACKAGING
REVENUES 623,290 711,447 1,334,737
OPERATING INCOME 68,035 92,947 160,982
% TO REVENUE 10.9% 13.1% 12.1%
POWER SYSTEMS & ELECTRONICS
REVENUES 582,391 648,785 1,231,176
OPERATING INCOME 124,065 141,475 265,540
% TO REVENUE 21.3% 21.8% 21.6%
TRANSPORTATION
REVENUES 594,261 630,650 1,224,911
OPERATING INCOME 91,834 99,949 191,783
% TO REVENUE 15.5% 15.8% 15.7%
CONSTRUCTION PRODUCTS
REVENUES 484,034 566,172 1,050,206
OPERATING INCOME 50,564 78,498 129,062
% TO REVENUE 10.4% 13.9% 12.3%
FOOD EQUIPMENT
REVENUES 509,739 538,479 1,048,218
OPERATING INCOME 69,592 72,996 142,588
% TO REVENUE 13.7% 13.6% 13.6%
POLYMERS & FLUIDS
REVENUES 256,817 300,835 557,652
OPERATING INCOME 35,673 53,530 89,203
% TO REVENUE 13.9% 17.8% 16.0%
ALL OTHER
REVENUES 786,876 838,516 1,625,392
OPERATING INCOME 139,618 166,384 306,002
% TO REVENUE 17.7% 19.8% 18.8%
INTERCOMPANY REVENUE (14,130) (14,959) (29,089)
AS REPORTED ON THE STATEMENT
OF INCOME
REVENUES 3,823,278 4,219,925 8,043,203
OPERATING INCOME 579,381 705,779 1,285,160
% TO REVENUE 15.2% 16.7% 16.0%
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