ITW Reports Fourth Quarter and Full Year 2012 Results and Issues 2013 Guidance

ITW Reports Fourth Quarter and Full Year 2012 Results and Issues 2013 Guidance

- Fourth quarter GAAP earnings per share (EPS) from continuing operations of
$2.10 up significantly versus prior year quarter GAAP EPS of $0.90

- Fourth quarter Non-GAAP EPS from continuing operations of $0.89 up modestly
versus prior year quarter Non-GAAP EPS of $0.88

- Free operating cash flow of $497 million generated during the quarter; $1.7
billion for the year

- 2013 full year EPS forecast range of $4.13 to $4.37, midpoint represents 13
percent EPS growth versus Pro Forma 2012 EPS

PR Newswire

GLENVIEW, Ill., Jan. 29, 2013

GLENVIEW, Ill., Jan. 29, 2013 /PRNewswire/ -- Illinois Tool Works Inc. (NYSE:
ITW) today reported fourth quarter 2012 diluted income per share from
continuing operations of $2.10, an increase versus 2011 fourth quarter
earnings of $0.90. Excluding certain discrete items shown in the table below,
adjusted EPS of $0.89 per share for the 2012 fourth quarter increased 1
percent compared to an adjusted EPS of $0.88 for the year-ago period.

Q4 2012 Results (GAAP vs. Non-GAAP)
2012 Actual Results (GAAP)                 $2.10
Gain on divestiture of Decorative Surfaces $1.37
Decorative Surfaces equity Interest        $(0.04)
Q4 discrete corporate items                $(0.04)
Q4 discrete tax items                      $(0.08)
2012 Results (Non-GAAP)                    $0.89

Fourth quarter 2012 financial and operating results versus the prior-year
period included:

*Total revenues of $4.221 billion declined 2.3 percent largely due to the
impact of the Decorative Surfaces divestiture and the negative impact of
currency translation. Excluding the impact of divestitures, total revenues
would have grown approximately 2 percent. Organic, or base revenues, increased
60 basis points, in line with Company expectations. By region, North American
organic revenues grew 1.6 percent and international organic revenues decreased
0.5 percent. European organic revenues decreased 2.6 percent while Asia
Pacific organic revenues increased 3.7 percent.

*The Transportation segment led the Company in organic growth, increasing 4.2
percent in the quarter. Notably, the worldwide automotive OEM business
produced organic revenue growth of 10.9 percent, including organic growth of
12.4 percent in North America and 1.8 percent organic growth in Europe. The
increase in European organic growth took place even as car builds in that
region fell 7 percent in the quarter.

*Free operating cash flow totaled $497 million in the quarter. That represents
a free cash to adjusted income from continuing operations conversion rate of
139 percent. The Company returned $954 million to shareholders via share
repurchases of $604 million and dividend payments of $350 million.

"In 2012, we grew our adjusted earnings per share 10 percent and improved
operating margins by 50 basis points," said E. Scott Santi, president and
chief executive officer. "We also invested nearly $100 million in
restructuring projects, many of which were related to the execution of our
enterprise strategy and related initiatives - portfolio management, business
structure simplification and strategic sourcing. As we detailed at our
investor meeting in New York last month, through our enterprise strategy we
are positioning the company to deliver solid growth as well as very strong
operating margin and return on invested capital performance over the next five
years."

Looking ahead, the Company believes full-year 2013 will be characterized by
modest growth for both North American and international geographies. Total
Company organic revenue growth is expected to be in a range of 1 percent to 3
percent. As part of its enterprise strategy in 2013, the Company also
expects to spend $120 million to $140 million for restructuring activities. As
a result, the Company is forecasting full-year diluted income per share from
continuing operations to be in a range of $4.13 to $4.37. The midpoint of this
earnings range would represent a 13 percent increase versus pro forma EPS of
$3.76 for 2012. Full year total revenue growth is forecasted to be in a range
of 3 percent to 5 percent. For the 2013 first quarter, the Company is
forecasting diluted income per share from continuing operations to be in a
range of $0.91 to $0.99. The midpoint of this earnings range would represent a
4 percent increase versus pro forma EPS of $0.91 for the first quarter of
2012. First quarter total revenue growth is forecasted to be in a range of
flat to -2 percent. All 2013 revenue and EPS metrics compare to the Company's
2012 pro forma results, which are included in the attached exhibits.

This earnings release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including, without
limitation, statements regarding diluted income per share from continuing
operations, total revenue and margin growth, restructuring expenses, the
impact of currency translation and North American and international end market
conditions. These statements are subject to certain risks, uncertainties and
other factors which could cause actual results to differ materially from those
anticipated. Such factors include those contained in ITW's 2011 Form 10-K and
2012 third quarter 10-Q.

ITW is a Fortune 150 global diversified industrial manufacturer of value-added
consumables and specialty equipment with related service businesses. The
Company focuses on solid growth and strong returns across its worldwide
platforms and businesses. The businesses serve local customers and markets
around the globe, with a significant presence in developed as well as emerging
markets. ITW's pro forma revenues totaled $17.0 billion in 2012, with more
than half of the revenues generated outside of the United States.

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF INCOME (UNAUDITED)
                                       Three Months Ended  Twelve Months Ended
(In millions except per share amounts) December 31,        December 31,
                                       2012       2011     2012      2011
Operating Revenues                     $  4,221   $ 4,320  $ 17,924  $ 17,787
Cost of revenues                       2,725      2,798    11,455    11,518
Selling, administrative, and research
and development expenses               816        806      3,332     3,283
Amortization of intangible assets      71         69       288       255
Impairment of goodwill and other       —          —        2         —
intangible assets
Operating Income                       609        647      2,847     2,731
Interest expense                       (61)       (54)     (214)     (192)
Gain on sale of interest in Decorative 933        —        933       —
Surfaces
Other income (expense)                 (23)       8        37        54
Income from Continuing Operations
Before Income Taxes                    1,458      601      3,603     2,593
Income taxes                           486        164      1,108     576
Income from Continuing Operations      972        437      2,495     2,017
Income from Discontinued Operations    7          5        375       54
Net Income                             $  979     $ 442    $ 2,870   $ 2,071
Income Per Share from Continuing
Operations:
Basic                                  $  2.12    $ 0.90   $ 5.31    $ 4.10
Diluted                                $  2.10    $ 0.90   $ 5.27    $ 4.08
Income Per Share from Discontinued
Operations:
Basic                                  $  0.01    $ 0.01   $ 0.80    $ 0.11
Diluted                                $  0.01    $ 0.01   $ 0.79    $ 0.11
Net Income Per Share:
Basic                                  $  2.13    $ 0.91   $ 6.11    $ 4.21
Diluted                                $  2.11    $ 0.91   $ 6.06    $ 4.19
Shares of Common Stock Outstanding
During the Period:
Average                                459.7      483.4    469.8     491.4
Average assuming dilution              463.1      485.6    473.2     494.6

FREE OPERATING CASH FLOW               Three Months Ended  Twelve Months Ended
                                       December 31,        December 31,
                                       2012      2011      2012     2011
Net cash provided by operating         $  605    $  712    $ 2,072  $ 1,956
activities
Less: Additions to plant and equipment (108)     (94)      (382)    (353)
Free operating cash flow               $  497    $  618    $ 1,690  $ 1,603



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION (UNAUDITED)
(In millions)                             December 31, 2012  December 31, 2011
ASSETS
Current Assets:
Cash and equivalents                      $      2,779       $      1,178
Trade receivables                         2,742              2,819
Inventories                               1,585              1,716
Deferred income taxes                     332                366
Prepaid expenses and other current assets 522                384
Assets held for sale                      —                  386
Total current assets                      7,960              6,849
Net Plant and Equipment                   1,994              2,025
Investments                               146                409
Goodwill                                  5,530              5,198
Intangible Assets                         2,258              2,233
Deferred Income Taxes                     391                634
Other Assets                              1,030              636
                                          $      19,309      $      17,984
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term debt                           $      459         $      502
Accounts payable                          676                697
Accrued expenses                          1,392              1,435
Cash dividends payable                    —                  174
Income taxes payable                      116                57
Deferred income taxes                     8                  5
Liabilities held for sale                 —                  107
Total current liabilities                 2,651              2,977
Noncurrent Liabilities:
Long-term debt                            4,589              3,488
Deferred income taxes                     244                117
Other liabilities                         1,255              1,368
Total noncurrent liabilities              6,088              4,973
Stockholders' Equity:
Common stock                              5                  5
Additional paid-in-capital                1,012              686
Income reinvested in the business         13,973             11,794
Common stock held in treasury             (4,722)            (2,692)
Accumulated other comprehensive income    293                224
Noncontrolling interest                   9                  17
Total stockholders' equity                10,570             10,034
                                          $      19,309      $      17,984

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES
SEGMENT DATA (UNAUDITED)
Three Months Ended December 31, 2012       % F(U) vs.
                                           prior year
                                                                               Organic
               Total   Operating Operating Total   Organic Operating Operating (Base)
$ in Millions  Revenue Income    Margin    Revenue (Base)  Income    Margin
                                                   Revenue                     Op
                                                                               Margin
Transportation $ 873   $   132   15.1   %  4.8   % 4.2   % 2.5     % (0.3)  %  (0.8) %
Power Systems  737     122       16.6   %  (1.2) % (1.2) % (16.5)  % (3.0)  %  (2.5) %
& Electronics
Industrial     575     62        10.7   %  (1.2) % (0.7  % 13.9    % 1.4    %  1.6   %
Packaging
Food Equipment 498     80        16.1   %  (1.8) % (0.8  % (7.2)   % (1.0)  %  (0.4  %
Construction   467     44        9.5    %  1.3   % 1.1   % (14.4)  % (1.8)  %  (1.3) %
Polymers &     285     38        13.4   %  (2.9) % (7.1) % 10.1    % 1.5    %  3.2   %
Fluids
All Other      708     121       17.0   %  6.9   % 3.3   % 3.2     % (0.6)  %  0.1   %
Intersegment   (15)
Total Segments 4,128   599       14.5   %  1.4   % 0.6   % (3.2)   % (0.7)  %  (0.3) %
Decorative     93      10        10.8   %
Surfaces
Total Company  $ 4,221 $   609   14.4   %  (2.3) % 0.6   % (5.9)   % (0.6)  %  (0.4) %

Twelve Months Ended December 31, 2012       % F(U) vs.
                                            prior year
                                                                                Organic
               Total    Operating Operating Total   Organic Operating Operating (Base)
$ in Millions  Revenue  Income    Margin    Revenue (Base)  Income    Margin
                                                    Revenue                     Op
                                                                                Margin
Transportation $ 3,550  $  560    15.8   %  3.1   % 3.5   % 3.8     % 0.1    %  0.5   %
Power Systems  3,151    643       20.4   %  5.5   % 3.8   % 6.2     % 0.2    %  1.1   %
& Electronics
Industrial     2,412    282       11.7   %  (2.0) % 0.4   % 13.4    % 1.6    %  1.8   %
Packaging
Food Equipment 1,939    324       16.7   %  (2.3) % 0.6   % 6.7     % 1.4    %  1.4   %
Construction   1,902    200       10.5   %  (2.9) % (0.5) % (11.3)  % (1.0)  %  (0.2) %
Polymers &     1,230    195       15.8   %  (1.6) % (3.1) % 3.7     % 0.8    %  1.7   %
Fluids
All Other      2,883    521       18.1   %  7.2   % 2.9   % 6.7     % (0.1)  %  1.6   %
Intersegment   (64)
Total Segments 17,003   2,725     16.0   %  1.8   % 1.7   % 4.8     % 0.4    %  1.1   %
Decorative     921      122       13.3   %
Surfaces
Total Company  $ 17,924 $  2,847  15.9   %  0.8   % 1.7   % 4.2     % 0.5    %  1.1   %

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION (UNAUDITED)
(In millions except    Total Revenue      Operating Income  Earnings Per Share
per share amounts)
For the three months   2012     2011      2012      2011    2012       2011
ended December 31,
Actual Results (GAAP)  $ 4,221  $ 4,320   $  609    $ 647   $  2.10    $ 0.90
Gain on Divestiture
of Decorative          —        —         —         —       1.37       —
Surfaces
Decorative Surfaces    —        —         —         —       (0.04)     —
Equity Interest
Discrete Corporate     —        —         (16)      —       (0.04)     —
Items
Discrete Tax Items     —        —         —         —       (0.08)     —
Decorative Surfaces    —        159       —         18      —          0.02
Business*
Adjusted Results       $ 4,221  $ 4,161   $  625    $ 629   $  0.89    $ 0.88
(Non-GAAP)

(In millions
except per share    Total Revenue        Operating Income   Earnings Per Share
amounts)
For the twelve
months ended        2012      2011       2012     2011      2012       2011
December 31,
Actual Results      $ 17,924  $ 17,787   $ 2,847  $ 2,731   $  5.27    $ 4.08
(GAAP)
Gain on
Divestiture of      —         —          —        —         1.34       —
Decorative
Surfaces
Decorative
Surfaces Equity     —         —          —        —         (0.04)     —
Interest
Discrete Corporate  —         —          (16)     —         (0.04)     —
Items
Discrete Tax Items  —         —          —        —         (0.08)     —
Decorative          —         159        —        18        —          0.03
Surfaces Business*
Australian Tax      —         —          —        —         —          0.33
Matter
Adjusted Results    $ 17,924  $ 17,628   $ 2,863  $ 2,713   $  4.09    $ 3.72
(Non-GAAP)

* Excludes November and December 2011 for comparative purposes as the
divestiture closed on October 31, 2012. Also excludes corporate expense
allocations that remain with ITW.

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION (UNAUDITED)
Free Operating Cash Flow Conversion Rate
(In millions)                             Three Months Ended December 31, 2012
Free Operating Cash Flow                  $                   497
Income from Continuing Operations (GAAP)  $                   972
Decorative Surfaces gain on sale, after   632
tax
Decorative Surfaces equity interest,      (19)
after tax
Adjusted Income from Continuing           $                   359
Operations
Free Operating Cash Flow to Adjusted      139%
Income from Continuing Operations

ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

GAAP TO PRO FORMA RECONCILIATION (UNAUDITED)
(In millions except   Total Revenue                Earnings Per Share
per share amounts)
                      Three Months Twelve Months   Three Months Twelve Months
                      Ended        Ended December  Ended        Ended December
                                   31,                          31,
                      March 31,                    March 31,
                      2012         2012            2012         2012
Actual Results (GAAP) $   4,547    $   17,924      $   0.97     $    5.27
Gain on Divestiture
of Decorative         —            —               —            1.34
Surfaces
Decorative Surfaces   —            —               —            (0.04)
Equity Interest
Decorative Surfaces   275          921             0.06         0.21
Business*
Adjusted Results      $   4,272    $   17,003      $   0.91     $    3.76
(Proforma)

*Excludes 1Q12 results for the three months ended March 31, 2012 and January
through October 2012 results for the twelve months ended December 31, 2012.
Pro forma impact excludes corporate expense allocations that remain with ITW.

SOURCE Illinois Tool Works Inc.

Website: http://www.itw.com
Contact: John L. Brooklier, +1-847-657-4104 or jbrooklier@itw.com