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ITW Reports 2013 First Quarter Results and Updates 2013 Earnings Guidance

  ITW Reports 2013 First Quarter Results and Updates 2013 Earnings Guidance

- First quarter GAAP diluted earnings per share (EPS) from continuing
operations of $1.01 increases 6 percent

- First quarter Non-GAAP diluted EPS of $0.96 grows 8 percent vs. pro forma
first quarter 2012

- Company moves businesses with more than $600 million of revenues to
discontinued operations in Q1

- First quarter operating margins of 16.5 percent improve 60 basis points vs.
prior year quarter

- Company launches new reporting segments

- Company maintains full-year EPS midpoint of $4.25

PR Newswire

GLENVIEW, Ill., April 23, 2013

GLENVIEW, Ill., April 23, 2013 /PRNewswire/ --Illinois Tool Works Inc. (NYSE:
ITW) today reported first quarter 2013 diluted income per share from
continuing operations of $1.01, an increase of 6 percent versus 2012 first
quarter earnings of $0.95. Excluding the one-time impact of a $30 million
pretax gain associated with the acquisition of the majority interest in a
consumer packaging joint venture, adjusted EPS of $0.96 was 8 percent higher
than pro forma first quarter 2012 earnings. The adjusted EPS of $0.96 also
was $0.01 higher than the Company's original mid-point forecast issued in
January 2013. Reconciliations of GAAP to adjusted results, which also exclude
the 2012 impact of the Decorative Surfaces business, are included in the
attached exhibits.

As part of the first quarter 2013, results of several existing and previously
divested businesses were reclassified to discontinued operations. These
businesses represent more than $600 million in annual revenues and reduced
first quarter 2013 diluted income per share from continuing operations by
$0.01. The Company expects an additional $0.06 of EPS dilution from these
discontinued businesses for the remainder of the year. Also, as previously
announced, the Company has realigned its reporting segments and has restated
segment results for prior periods.

Highlights of the 2013 first quarter versus the prior-year period included:

*Total revenues of $4.0 billion declined 8.0 percent due to the Decorative
Surfaces segment results included in 2012 and weaker than expected organic
revenue activity. Excluding the impact of Decorative Surfaces, total revenues
declined 1.8 percent. Total Company organic revenues declined 2.7 percent in
the first quarter, a result that was lower than the Company's original
forecast in January 2013. By geography, North American organic revenues
decreased 1.9 percent and international organic revenues declined 3.5 percent.
While European organic revenues fell 5.8 percent, Asia Pacific organic
revenues grew 0.5 percent. Notably, China organic revenues increased 10.2
percent.

*The Automotive OEM segment led the Company in organic growth, increasing 4.0
percent. North American automotive organic revenues grew 3 percent, outpacing
a North American auto build increase of 1 percent. While European organic
revenues declined 2 percent, European auto builds fell 8 percent. Asia Pacific
organic revenues increased 24 percent as a result of ITW's growing product
penetration amid a robust auto build environment in China.

*Total Company operating margins were 16.5 percent, a 60 basis point
improvement versus the year-ago period. Notably, six of the Company's eight
reporting segments produced gains in operating margin.

"Despite softer than anticipated demand in many of our end markets, we
delivered very solid operating results in the quarter," said E. Scott Santi,
president and chief executive officer. "Our above-forecast EPS results and 60
basis point year-on-year operating margin improvement were due to strong
contributions from our operating leadership and the early stage benefits of
our enterprise strategy initiatives. While the capital goods portion of our
overall product portfolio was particularly soft early in the year, we were
pleased to see noticeable improvement in demand rates for these products both
sequentially and year over year as we moved through the quarter. In addition,
we continued to make significant progress with respect to our portfolio
management initiative in the quarter as we announced the strategic review of
our Industrial Packaging segment and moved more than $600 million of other
non-core revenues to discontinued operations. With these two moves, we have
largely completed the process of identifying the core businesses that will
constitute our faster growing and more profitable portfolio moving
forward."

Incorporating first quarter actual results, the Company is now forecasting
full-year organic growth to be in a range of 0 percent to 2 percent versus
full-year 2012. The Company is maintaining its $4.25 midpoint forecast for
full-year diluted income per share from continuing operations. The full-year
diluted income per share from continuing operations forecast range is now
$4.15 to$4.35 and assumes a total revenue growth range of 2 percent to 4
percent. For the 2013 second quarter, the Company is forecasting diluted
income per share from continuing operations to be in a range of $1.04 to $1.12
and assumes a total revenue growth range of 2.5 percent to 3.5 percent. The
full-year and second quarter forecasts include the EPS dilution of
discontinued operations described above.

This earnings release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including, without
limitation, statements regarding organic and total revenue growth, diluted
income per share from continuing operations, operating margin growth, and 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 2012 Form 10-K.

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 $16.3 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
(In millions except per share amounts)                     March31
                                                           2013       2012
Operating Revenues                                         $ 4,009    $ 4,358
Cost of revenues                                           2,502      2,763
Selling, administrative, and research and development      779        832
expenses
Amortization of intangible assets                          68         69
Operating Income                                           660        694
Interest expense                                           (60)       (50)
Other income (expense)                                     46         8
Income from Continuing Operations Before Income Taxes      646        652
Income Taxes                                               187        188
Income from Continuing Operations                          459        464
Income (Loss) from Discontinued Operations                 (105)      22
Net Income                                                 $ 354      $ 486
Income Per Share from Continuing Operations:
Basic                                                      $ 1.02     $ 0.96
Diluted                                                    $ 1.01     $ 0.95
Income (Loss) Per Share from Discontinued Operations:
Basic                                                      $ (0.23)   $ 0.05
Diluted                                                    $ (0.23)   $ 0.05
Net Income Per Share:
Basic                                                      $ 0.78     $ 1.01
Diluted                                                    $ 0.78     $ 1.00
Shares of Common Stock Outstanding
During the Period:
Average                                                    451.7      482.0
Average assuming dilution                                  454.8      485.6
FREE OPERATING CASH FLOW                                   Three Months Ended
                                                           March31,
                                                           2013       2012
Net cash provided by operating activities                  $ 366      $ 323
Less: Additions to plant and equipment                     (89)       (84)
Free operating cash flow                                   $ 277      $ 239



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

STATEMENT OF FINANCIAL POSITION (UNAUDITED)
(In millions)
                                             March31, 2013  December31, 2012

ASSETS
Current Assets:
 Cash and equivalents                    $   2,662       $    2,779
 Trade receivables                       2,789           2,742
 Inventories                             1,514           1,585
 Deferred income taxes                   343             332
 Prepaid expenses and other current      486             522
assets
 Assets held for sale                    316             —
 Total current assets                  8,110           7,960
Net Plant and Equipment                      1,960           1,994
Goodwill                                     5,392           5,530
Intangible Assets                            2,182           2,258
Deferred Income Taxes                        390             391
Other Assets                                 1,172           1,176
                                             $   19,206      $    19,309
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Short-term debt                         $   456         $    459
 Accounts payable                        749             676
 Accrued expenses                        1,235           1,392
 Cash dividends payable                  171             —
 Income taxes payable                    99              116
 Deferred income taxes                   8               8
 Liabilities held for sale               84              —
 Total current liabilities             2,802           2,651
Noncurrent Liabilities:
 Long-term debt                          4,556           4,589
 Deferred income taxes                   309             244
 Other liabilities                       1,260           1,255
 Total noncurrent liabilities          6,125           6,088
Stockholders' Equity:
Common stock                                 6               5
Additional paid-in-capital                   1,012           1,012
Income reinvested in the business            14,156          13,973
Common stock held in treasury                (5,055)         (4,722)
Accumulated other comprehensive income       155             293
Noncontrolling interest                      5               9
Total stockholders' equity                   10,279          10,570
                                             $   19,206      $    19,309



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

SEGMENT DATA (UNAUDITED)
Three Months Ended March 31, 2013                          % F(U) vs. prior year
(Dollars in  Total    Operating  Operating    Adjusted     Total    Organic  Operating
millions)    Revenue  Income     Margin       Operating    Revenue  (Base)   Margin
                                              Margin*               Revenue
Test &
Measurement  $ 520    $   68     13.0      %  17.2      %  (2.1)%   (3.4)%   120 bps
and
Electronics
Automotive   589      117        19.8      %  19.9      %  4.0%     4.0%     10 bps
OEM
Polymers &   495      72         14.6      %  18.7      %  (5.9)%   (6.7)%   (30) bps
Fluids
Food         467      78         16.7      %  17.4      %  (1.2)%   (2.5)%   70 bps
Equipment
Welding      472      122        26.0      %  26.5      %  (4.8)%   (5.5)%   (200) bps
Construction 418      49         11.7      %  12.7      %  (3.3)%   (3.4)%   320 bps
Products
Specialty    481      96         19.9      %  21.6      %  3.6%     0.3%     80 bps
Products
Industrial   579      72         12.4      %  13.5      %  (4.7)%   (4.4)%   130 bps
Packaging
Intersegment (12)
Total        4,009    674        16.8      %  18.5      %  (1.8)%   (2.7)%   60 bps
Segments
Unallocated  —        (14)       n/a
Total        $ 4,009  $   660    16.5      %  18.2      %  (8.0)%   (2.7)%   60 bps
Company

* Adjusted operating margin excludes intangible amortization and other
non-cash acquisition accounting items.



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

PRO FORMA RESULTS NON-GAAP (UNAUDITED)
(In millions
except per   Three Months Ended                                                                                                      Twelve Months Ended
share
amounts)
             March 31, 2012                June 30, 2012                 September 30, 2012            December 31, 2012             December 31, 2012
             Total    Operating  Diluted   Total    Operating  Diluted   Total    Operating  Diluted   Total    Operating  Diluted   Total     Operating  Diluted
             Revenue  Income     EPS       Revenue  Income     EPS       Revenue  Income     EPS       Revenue  Income     EPS       Revenue   Income     EPS
Actual
Results      $ 4,358  $   694    $  0.95   $ 4,463  $   758    $  1.09   $ 4,337  $   752    $  1.08   $ 4,066  $   602    $  2.11   $ 17,224  $  2,806   $  5.21
(GAAP)
Decorative
Surfaces     —        —          —         —        —          —         —        —          —         —        —          1.37      —         —          1.34
net gain
Decorative
Surfaces     —        —          —         —        —          —         —        —          —         —        —          (0.04)    —         —          (0.04)
equity
interest
Decorative
Surfaces     275      42         0.06      286      48         0.07      267      41         0.06      93       12         0.01      921       143        0.21
segment
Adjusted
Results      $ 4,083  $   652    $  0.89   $ 4,177  $   710    $  1.02   $ 4,070  $   711    $  1.02   $ 3,973  $   590    $  0.77   $ 16,303  $  2,663   $  3.70
(Pro-forma)



(In millions except per share      Three Months Ended
amounts)
                                   March 31, 2013
                                   Total Revenue Operating Income Diluted EPS
Actual Results (GAAP)              $4,009        $660             $1.01
Gain on incremental 51%            —             —                0.05
acquisition
Adjusted Results (Pro-forma)       $4,009        $660             $0.96



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

OPERATING MARGIN % RECONCILIATION (UNAUDITED)
Three Months Ended
March 31, 2013
                        Test &
             Industrial Measurement Automotive Polymers Food      Welding Construction Specialty
             Packaging  and         OEM        & Fluids Equipment         Products     Products
                        Electronics
Operating    12.4   %   13.0    %   19.8   %   14.6  %  16.7   %  26.0  % 11.7    %    19.9   %
Margin %
Amortization
of
intangible
assets and
other        1.1    %   4.2     %   0.1    %   4.1   %  0.7    %  0.5   % 1.0     %    1.7    %
non-cash
acquisition
accounting
items
Adjusted
Operating    13.5   %   17.2    %   19.9   %   18.7  %  17.4   %  26.5  % 12.7    %    21.6   %
Margin %



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

STATEMENT OF INCOME RESTATED FOR DISCONTINUED OPERATIONS (UNAUDITED)
(In millions
except per
share amounts)
                 1Q 2012   2Q 2012    3Q 2012   4Q 2012   2012 YTD   2011 YTD
Operating        $ 4,358   $ 4,463    $ 4,337   $ 4,066   $ 17,224   $ 16,991
Revenues
Cost of          2,763     2,814      2,728     2,600     10,905     10,916
revenues
Selling,
administrative,
and research     832       819        788       796       3,235      3,162
and
development
expenses
Amortization of
intangible       69        72         67        68        276        244
assets
Impairment of
goodwill and
other            —         —          2         —         2          —
intangible
assets
Operating        694       758        752       602       2,806      2,669
Income
Interest         (50)      (50)       (52)      (61)      (213)      (191)
expense
Gain on sale of
interest in      —         —          —         933       933        —
Decorative
Surfaces
Other income     8         24         1         (19)      14         54
(expense)
Income from
Continuing
Operations       652       732        701       1,455     3,540      2,532
before Income
Taxes
Income taxes     188       213        196       479       1,076      555
Income from
Continuing       464       519        505       976       2,464      1,977
Operations
Income from
Discontinued     22        362        19        3         406        94
Operations
Net Income       $ 486     $ 881      $ 524     $ 979     $ 2,870    $ 2,071
Income Per
Share from
Continuing
Operations:
Basic            $ 0.96    $ 1.10     $ 1.09    $ 2.12    $ 5.24     $ 4.02
Diluted          $ 0.95    $ 1.09     $ 1.08    $ 2.11    $ 5.21     $ 4.00
Income Per
Share from
Discontinued
Operations:
Basic            $ 0.05    $ 0.76     $ 0.04    $ 0.01    $ 0.86     $ 0.19
Diluted          $ 0.05    $ 0.76     $ 0.04    $ 0.01    $ 0.86     $ 0.19
Net Income Per
Share:
Basic            $ 1.01    $ 1.86     $ 1.13    $ 2.13    $ 6.11     $ 4.21
Diluted          $ 1.00    $ 1.85     $ 1.12    $ 2.11    $ 6.06     $ 4.19
Shares of
Common Stock
Outstanding
During the
Period:
Average          482.0     472.9      464.8     459.7     469.8      491.4
Average
assuming         485.6     476.1      468.1     463.1     473.2      494.6
dilution



ILLINOIS TOOL WORKS INC. and SUBSIDIARIES

SEGMENT DATA RESTATED FOR SEGMENT CHANGES AND DISCONTINUED OPERATIONS (UNAUDITED)
(Dollars in  Q1 2012                     Q2 2012                     Q3 2012                     Q4 2012                     2012 Full Year                2011 Full Year
millions)
             Total   Operating Operating Total   Operating Operating Total   Operating Operating Total   Operating Operating Total    Operating Operating  Total    Operating Operating

             Revenue Income    Margin %  Revenue Income    Margin %  Revenue Income    Margin %  Revenue Income    Margin %  Revenue  Income    Margin %   Revenue  Income    Margin %
Industrial   $  608  $   68    11.1   %  $  622  $   78    12.6   %  $  595  $   76    12.8   %  $  571  $   66    11.6   %  $ 2,396  $   288   12.0   %   $ 2,436  $   270   11.1   %
Packaging
Test &
Measurement  530     62        11.8   %  593     93        15.7   %  623     114       18.2   %  553     73        13.2   %  2,299    342       14.9   %   2,011    300       14.9   %
and
Electronics
Automotive   566     112       19.7   %  547     109       19.9   %  521     99        19.1   %  537     101       18.8   %  2,171    421       19.4   %   2,092    386       18.4   %
OEM
Polymers &   526     78        14.9   %  550     91        16.6   %  510     81        15.8   %  485     76        15.7   %  2,071    326       15.8   %   2,069    329       15.9   %
Fluids
Food         473     76        16.0   %  476     78        16.4   %  491     93        19.0   %  499     85        17.0   %  1,939    332       17.1   %   1,985    311       15.7   %
Equipment
Welding      495     139       28.0   %  469     121       25.9   %  443     109       24.5   %  440     101       23.0   %  1,847    470       25.4   %   1,724    440       25.5   %
Construction 433     37        8.5    %  453     61        13.4   %  442     60        13.7   %  433     47        10.8   %  1,761    205       11.6   %   1,792    226       12.6   %
Products
Specialty    465     88        19.1   %  481     106       22.0   %  458     90        19.6   %  467     81        17.4   %  1,871    365       19.5   %   1,856    383       20.6   %
Products
Intersegment (13)                        (14)                        (13)                        (12)                        (52)                          (58)
Total        $4,083  $660      16.2   %  $4,177  $737      17.6   %  $4,070  $722      17.7   %  $3,973  $630      15.9   %  $16,303  $2,749    16.9   %   $15,907  $2,645    16.6   %
Segments
Unallocated  —       (8)       n/a       —       (27)      n/a       —       (11)      n/a       —       (40)      n/a       —        (86)      n/a        —        (130)     n/a
Decorative   275     42        15.3   %  286     48        16.8   %  267     41        15.4   %  93      12        12.9   %  921      143       15.5   %   1,084    154       14.2   %
Surfaces
Total        $4,358  $694      15.9   %  $4,463  $758      17.0   %  $4,337  $752      17.3   %  $4,066  $602      14.8   %  $17,224  $2,806    16.3   %   $16,991  $2,669    15.7   %
Company











SOURCE Illinois Tool Works Inc.

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