-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VkwBuH++Rl+syezjY9NalZzc1lz9Uxiqy/jHhWjzFy2ysfTdkW/VTu65RWiC9SsA fpXDj4zo8Mq7f2zBw/Ad8Q== 0000049826-94-000004.txt : 19940525 0000049826-94-000004.hdr.sgml : 19940525 ACCESSION NUMBER: 0000049826-94-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ILLINOIS TOOL WORKS INC CENTRAL INDEX KEY: 0000049826 STANDARD INDUSTRIAL CLASSIFICATION: 3089 IRS NUMBER: 361258310 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04797 FILM NUMBER: 94528832 BUSINESS ADDRESS: STREET 1: 3600 W LAKE AVE CITY: GLENVIEW STATE: IL ZIP: 60025 BUSINESS PHONE: 7087247500 MAIL ADDRESS: STREET 1: 3600 WEST LAKE AVENUE CITY: GLENVIEW STATE: IL ZIP: 60025-5811 10-Q 1 FIRST QUARTER 1994 FORM 10-Q FORM l0-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION l3 OR l5(d) OF THE SECURITIES EXCHANGE ACT OF l934 For the quarterly period ended March 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION l3 OR l5(d) OF THE SECURITIES EXCHANGE ACT OF l934 For the transition period from to For Quarter Ended Commission file number l-4797 ILLINOIS TOOL WORKS INC. (Exact name of registrant as specified in its charter) Delaware 36-l2583l0 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3600 West Lake Avenue, Glenview, IL 60025-5811 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (708) 724-7500 Former address: (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section l3 or l5(d) of the Securities Exchange Act of 1934 during the preceding l2 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . The number of shares of registrant's common stock, without par value, outstanding at May 6, 1994: 113,255,026. Part I - Financial Information Item l ILLINOIS TOOL WORKS INC. and SUBSIDIARIES FINANCIAL STATEMENTS The unaudited financial statements included herein have been prepared by Illinois Tool Works Inc. and Subsidiaries (the "Company"). In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. It is suggested that these financial statements be read in conjunction with the financial statements and comments on financial statements included in the Company's annual report on Form 10-K. ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF FINANCIAL POSITION (UNAUDITED) (In Thousands) ASSETS March 31, 1994 December 31, 1993 Current Assets: Cash and equivalents $ 38,184 $ 35,395 Trade receivables 579,451 544,226 Inventories 419,952 403,902 Deferred income taxes 60,751 57,764 Prepaid expenses and other current assets 55,066 52,361 ---------- ---------- Total current assets 1,153,404 1,093,648 Plant and Equipment: Land 59,422 65,134 Buildings 289,434 282,104 Machinery and equipment 790,414 771,066 Equipment leased to others 61,877 62,857 Construction in progress 29,515 24,718 ---------- ---------- 1,230,662 1,205,879 Accumulated depreciation (650,412) (622,114) ---------- ---------- Net plant and equipment 580,250 583,765 ---------- ---------- Investment in Leveraged Leases 59,528 60,088 Goodwill 361,940 363,769 Other Assets 234,585 235,621 ---------- ---------- Total Assets $2,389,707 $2,336,891 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short-term debt $ 86,715 $ 107,073 Accounts payable 146,307 149,205 Accrued expenses 249,735 233,932 Cash dividends payable 14,721 14,710 Income taxes payable 53,223 41,222 ---------- ---------- Total current liabilities 550,701 546,142 ---------- ---------- Non-current Liabilities: Long-term debt 375,323 375,641 Deferred income taxes 94,615 92,470 Other 66,853 63,969 ---------- ---------- Total non-current liabilities 536,791 532,080 ---------- ---------- Stockholders' Equity: Preferred stock -- -- Common stock 172,010 170,185 Income reinvested in the business 1,165,622 1,129,435 Common stock held in treasury (1,952) (1,955) Equity adjustment from foreign currency translation (33,465) (38,996) ---------- ---------- Total stockholders' equity 1,302,215 1,258,669 ---------- ---------- Total Liabilities and Stockholders' Equity $2,389,707 $2,336,891 ========== ========== ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF INCOME (UNAUDITED) (In Thousands Except for Per Share Amounts) Three Months Ended March 31 1994 1993 Operating Revenues $771,439 $750,022 Operating costs 520,264 508,887 Selling, administrative, and research and development expenses 154,366 158,315 Amortization of goodwill and other intangible assets 5,493 5,235 -------- -------- Operating Income 91,316 77,585 Interest expense (7,536) (8,044) Amortization of retiree health care (1,742) (1,742) Other income 750 28 -------- -------- Income Before Income Taxes 82,788 67,827 Income taxes 31,873 25,800 -------- -------- Net Income $ 50,915 $ 42,027 ======== ======== Per share of common stock: Net income $ .45 $ .37 (A) ===== ===== Cash dividends: Paid $ .13 $ .12 (A) ===== ===== Declared $ .13 $ .12 (A) ===== ===== Average number of shares of common stock outstanding during the period 113,200 112,828 (A) ======= ======= (A) Restated for two-for-one stock split in June, 1993. ILLINOIS TOOL WORKS INC. and SUBSIDIARIES STATEMENT OF CASH FLOWS (UNAUDITED) (In Thousands) Three Months Ended March 31 1994 1993 Cash Provided by (Used for) Operating Activities: Net Income $ 50,915 $ 42,027 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 33,743 31,362 Change in deferred income taxes (1,145) (2,107) (Gain) loss on sale of plant and equipment, and investment properties (1,802) 785 Gain on sale of operating affiliates (447) -- Other non-cash items, net 2,577 (1,196) -------- -------- Cash provided by operating activities 83,841 70,871 Change in operating assets and liabilities: (Increase) decrease in-- Trade receivables (32,867) (17,827) Inventories (18,021) (14,184) Prepaid expenses and other assets (1,754) (6,175) Increase (decrease) in-- Accounts payable (1,369) (536) Accrued expenses 15,059 13,358 Income taxes payable 12,541 (7,906) Other, net 4,344 1,352 -------- -------- Net cash provided by operating activities 61,774 38,953 -------- -------- Cash Provided by (Used for) Investing Activities: Acquisition of subsidiaries (excluding cash and equivalents) and additional interest in affiliates (4,716) (235,523) Additions to plant and equipment (27,835) (26,034) Proceeds from sale of plant and equipment, and investment properties 7,518 2,360 Proceeds from sale of operating affiliates 1,760 -- Other, net 168 (946) -------- -------- Net cash used for investing activities (23,105) (260,143) -------- -------- Cash Provided by (Used for) Financing Activities: Cash dividends paid (14,716) (13,452) Issuance of common stock 1,828 2,814 Net proceeds (repayments) of short-term debt (20,335) 145,613 Proceeds from long-term debt 217 125,595 Repayments of long-term debt (213) (1,061) -------- -------- Net cash provided by (used for) financing activities (33,219) 259,509 -------- -------- Effect of Exchange Rate Changes on Cash and Equivalents (2,661) (2,682) -------- -------- Cash and Equivalents: Increase during the period 2,789 35,637 Beginning of the period 35,395 31,193 -------- -------- End of the period $ 38,184 $ 66,830 ======== ======== Cash Paid During the Period for Interest $ 7,133 $ 4,544 ======== ======== Cash Paid During the Period for Income Taxes $ 23,554 $ 30,411 ======== ======== Liabilities Assumed from Acquisitions $ -- $ 80,482 ======== ======== ILLINOIS TOOL WORKS INC. and SUBSIDIARIES COMMENTS ON FINANCIAL STATEMENTS (UNAUDITED) (1) INVENTORIES at March 31, 1994 and December 31, 1993 were as follows: (In Thousands) March 31, Dec. 31, 1994 1993 Raw Materials $ 101,189 $ 94,105 Work-in-process 66,681 61,314 Finished goods 252,082 248,483 --------- --------- $ 419,952 $ 403,902 ========= ========= (2) OTHER INCOME (EXPENSE), consists of the following: (In Thousands) Three Months Ended March 31, 1994 1993 Interest income $ 876 $ 2,080 Income from unconsolidated affiliates 355 485 Net reserves for disposition and relocation of certain facilities, restructuring costs, revaluation of non-operating assets to realizable value, and nonrecurring costs unrelated to operations (2,027) (387) Loss on sale of investment properties (166) 0 Gain on sale of operating affiliates 447 0 Gain (loss) on sale of fixed assets 1,968 (734) Other, net (703) (1,416) -------- --------- $ 750 $ 28 ======== ========= Item 2 - Management's Discussion and Analysis ENGINEERED COMPONENTS SEGMENT Businesses in this segment manufacture short lead-time plastic and metal components and assemblies; industrial fluids and adhesives; plastic and metal fasteners, and fastening tools and equipment. This segment primarily serves the construction, automotive and general industrial markets. (Dollars in millions) Three months ended March 31, Operating Revenues 1994 1993 Domestic $ 283 $ 276 International 128 127 ----- ----- Total $ 411 $ 403 ===== ===== Three months ended March 31, Operating 1994 1993 Income Income Margin % Income Margin % Domestic $ 40 14 % $ 34 12 % International 11 9 % 9 7 % ---- ---- Total $ 51 13 % $ 43 11 % ==== ==== The increase in domestic revenues was due to improved volume in the automotive and construction markets. Operating income and margins increased compared with last year largely due to the increased sales volume and cost reductions in the automotive and general industrial businesses. Internationally, increases in operating income and margins occurred, while revenues were flat. Soft European construction markets led to lower revenues versus last year which offset revenue gains in the automotive and appliance businesses. Operating income and margins improved due to increased penetration in the European automotive markets and cost reductions in the construction businesses. INDUSTRIAL SYSTEMS AND CONSUMABLES SEGMENT Businesses in this segment manufacture longer lead-time systems and related consumables for consumer and industrial packaging, finishing, furniture, inspection and quality assurance applications. The largest markets served by this segment are general industrial, food and beverage, construction and industrial capital goods. (Dollars in millions) Three months ended March 31, Operating Revenues 1994 1993 Domestic $ 229 $ 216 International 131 131 ----- ----- Total $ 360 $ 347 ===== ===== Three months ended March 31, Operating 1994 1993 Income Income Margin % Income Margin % Domestic $ 32 14 % $ 26 12 % International 8 6 % 9 7 % ---- ---- Total $ 40 11 % $ 35 10 % ==== ==== Domestic revenues and operating income increased compared with the first quarter of 1993, led by increased volume in the consumer and industrial packaging businesses. The longer lead-time products manufactured in this segment benefited this quarter from the continued steady growth in the domestic economy. New product introductions in the industrial packaging and finishing systems businesses led to improved operating income and margins. Internationally, revenue gains in industrial packaging were offset by declines in the German consumer packaging businesses. Operating income and margins were down primarily as a result of price pressure in European industrial packaging markets. Operating Expenses Operating costs as a percentage of revenues decreased to 67.4% in the first quarter of 1994 versus 67.8% in the first quarter of 1993. Selling, administrative, and research and development expenses were 20.0% of revenues in the first quarter of 1994 versus 21.1% in the first quarter of 1993. These ratios were lower because of cost reductions as a result of a Company-wide objective to reduce costs. Interest Expense Interest expense declined to $7.5 million in the first quarter of 1994 from $8.0 million in the first quarter of 1993, primarily due to a reduction in foreign borrowings and lower foreign interest rates. Other Income Other income increased to $750,000 in the first quarter of 1994 from $28,000 in the first quarter of 1993. This increase is mainly due to gains on sales of fixed assets in 1994 versus losses in 1993, partially offset by higher nonrecurring costs and lower interest income. Net Income Net income of $50.9 million ($0.45 per share) in the first quarter of 1994 was 21.1% higher than the 1993 first quarter net income of $42.0 million ($0.37 per share). The Company declared a two-for-one stock split in June 1993 that doubled the outstanding shares. Net income per share for 1993 has been restated for the stock split. Foreign currency had no material impact on earnings in the first quarter of 1994 versus 1993. Financial Position Net working capital at March 31, 1994 and December 31, 1993 is summarized as follows: (In Thousands) March 31, Dec. 31, Increase/ 1994 1993 (Decrease) Current Assets: Cash and equivalents $ 38,184 $ 35,395 $ 2,789 Trade receivables 579,451 544,226 35,225 Inventories 419,952 403,902 16,050 Other 115,817 110,125 5,692 ---------- ---------- ----------- $1,153,404 $1,093,648 $ 59,756 ---------- ---------- ----------- Current Liabilities: Short-term debt $ 86,715 $ 107,073 $ (20,358) Accounts payable and accrued expenses 396,042 383,137 12,905 Other 67,944 55,932 12,012 ---------- ---------- ----------- 550,701 546,142 4,559 ---------- ---------- ----------- Net Working Capital $ 602,703 $ 547,506 $ $55,197 ========== ========== =========== Current Ratio 2.09 2.0 ========== ========== Trade receivables increased primarily due to seasonally stronger domestic revenues in the first quarter of 1994 versus the fourth quarter of 1993. Short term debt decreased during the first quarter of 1994 mainly due to the use of cash provided by operations to reduce commercial paper borrowings. Part II - Other Information Item 6 - Exhibits and Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of l934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ILLINOIS TOOL WORKS INC. Dated: May 13, 1994 By: /s/ Michael W. Gregg Michael W. Gregg, Senior Vice President and Controller (Principal Accounting Officer) Dated: May 13, 1994 By: /s/ Steward S. Hudnut Stewart S. Hudnut, Senior Vice President and Secretary -----END PRIVACY-ENHANCED MESSAGE-----