10-K 1 FORM 10-K -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD FROM ____________ TO ____________ COMMISSION FILE NUMBER 1-4797 ILLINOIS TOOL WORKS INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 36-1258310 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 3600 W. LAKE AVENUE, GLENVIEW, ILLINOIS 60025-5811 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (708) 724-7500 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED --------------------------------------------------- --------------------------------------------------- COMMON STOCK NEW YORK STOCK EXCHANGE CHICAGO STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 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 ____________ INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. / / THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT AS OF MARCH 7, 1995, WAS APPROXIMATELY $3,600,000,000. SHARES OF COMMON STOCK OUTSTANDING AT MARCH 7, 1995 - 114,066,300. ------------------------ DOCUMENTS INCORPORATED BY REFERENCE PARTS I, II, 1994 ANNUAL REPORT TO STOCKHOLDERS........................................... IV PROXY STATEMENT DATED MARCH 27, 1995, FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 5, 1995...................................................... PART III
-------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS GENERAL -- Illinois Tool Works Inc. (the "Company") manufactures and markets a variety of products and systems that provide specific, problem-solving solutions for a diverse customer base worldwide. The Company has more than 260 operations in 33 countries. The Company's business units are divided into two segments: Engineered Components, and Industrial Systems and Consumables. Products in the Company's Engineered Components segment include short lead-time plastic and metal components, fasteners and assemblies; industrial fluids and adhesives; fastening tools and welding equipment. Industrial Systems and Consumables' products include longer lead-time systems and related consumables for consumer and industrial packaging; industrial spray coating equipment and systems and quality assurance applications equipment and systems. In March 1993, the Company acquired the Miller Group Ltd., a manufacturer of arc welding equipment, through an exchange of ITW voting Common Stock for all of the voting Common Stock of Miller. As a result, the acquisition has been accounted for as a pooling of interests in conformity with Generally Accepted Accounting Principles, specifically paragraphs 46 through 48 of Accounting Principles Board Opinion No. 16. Accordingly, the results of operations have been included in the Statement of Income as of the beginning of 1993. The impact of Miller on consolidated operating revenues, net income and net income per share for 1993 and 1992 was not significant. Therefore, the 1992 financial statements have not been restated to reflect the acquisition of Miller. In 1990, the Company acquired substantially all of the net assets of the DeVilbiss Industrial/Commercial businesses of Eagle Industries, Inc. ("DeVilbiss"). The DeVilbiss businesses manufacture products and engineered systems used for product finishing and coating applications, including conventional air spray equipment, powder-coating devices and robotic finishing systems. The acquisition has been accounted for as a purchase and, accordingly, the results of operations have been included in the Statement of Income from the acquisition date. In 1991, the Company sold certain net assets and technology related to the automotive finishing systems business. The revenues, income and net assets related to the automotive finishing systems business were not material. During the five-year period ending December 31, 1994, the Company acquired and disposed of a number of other businesses, none of which individually had a material impact on consolidated results. CURRENT YEAR DEVELOPMENTS -- Refer to pages 19 through 21, Management's Discussion and Analysis, in the Company's 1994 Annual Report to Stockholders. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS -- The percentage contributions to operating revenues for the last three years by industry segment are as follows:
INDUSTRIAL ENGINEERED SYSTEMS AND COMPONENTS CONSUMABLES ---------- ----------- 1994.................................... 53% 47% 1993.................................... 52% 48% 1992.................................... 46% 54%
Segment and geographic data are included on pages 19, 20 and 25 of the Company's 1994 Annual Report to Stockholders. 1 The principal markets served by the Company's two segments are as follows:
% OF OPERATING REVENUES ------------------------ INDUSTRIAL ENGINEERED SYSTEMS AND COMPONENTS CONSUMABLES ---------- ----------- Construction............................ 36% 10% Automotive.............................. 27 9 General Industrial...................... 17 27 Food and Beverage....................... 2 18 Industrial Capital Goods................ 3 11 Consumer Durables....................... 6 3 Paper Products.......................... -- 10 Electronics............................. 5 2 Other................................... 4 10 ----- ----- 100% 100% ----- ----- ----- -----
Operating results of the segments are described on pages 19, 20 and 25 of the Company's 1994 Annual Report to Stockholders. BACKLOG -- Backlog generally is not considered a significant factor in the Company's businesses as relatively short delivery periods and rapid inventory turnover are characteristic of many of its products. The following summarizes backlog by industry segment as of December 31, 1994 and 1993:
BACKLOG IN THOUSANDS OF DOLLARS ------------------------------------- INDUSTRIAL ENGINEERED SYSTEMS AND COMPONENTS CONSUMABLES TOTAL ----------- ------------ ---------- 1994.................................................. $ 199,000 $ 156,000 $ 355,000 1993.................................................. $ 159,000 $ 142,000 $ 301,000
Backlog orders scheduled for shipment beyond calendar year 1995 were not material in either industry segment as of December 31, 1994. The following information is equally applicable to both industry segments of the business unless otherwise noted: COMPETITION -- The Company's global competitive environment is complex because of the wide diversity of products the Company manufactures and the markets it serves. Depending on the product or market, the Company may compete with few other companies or with many firms, some of which may be the Company's own licensees. The Company is a leading producer of plastic and metal fastening components and assemblies; adhesives and fluids; packaging systems and related consumables; finishing and static control systems and products; quality assurance equipment; tooling for specialty applications; and arc welding equipment. RAW MATERIALS -- The Company uses raw materials of various types, primarily metals and plastics that are available from numerous commercial sources. The availability of materials and energy has not resulted in any business interruptions or other major problems, nor are any such problems anticipated. RESEARCH AND DEVELOPMENT -- The Company's growth has resulted from developing new and improved products, broadening the application of established products, continuing efforts to improve and develop new methods, processes and 2 equipment, and from acquisitions. Many new products are designed to reduce customers' costs by eliminating steps in their manufacturing processes, reducing the number of parts in an assembly, or by improving the quality of customers' assembled products. Typically, the development of such products is accomplished by working closely with customers on specific applications. Identifiable research and development costs are set forth on page 26 of the Company's 1994 Annual Report to Stockholders. The Company owns approximately 1,640 unexpired United States patents covering articles, methods and machines. Many counterparts of these patents have also been obtained in various foreign countries. In addition, the Company has approximately 333 applications for patents pending in the United States Patent Office, but there is no assurance that any patent will be issued. The Company maintains an active patent department for the administration of patents and processing of patent applications. The Company licenses some of its patents to other companies, from which the Company collects royalties. The Company believes that many of its patents are valuable and important. Nevertheless, the Company credits its leadership in the markets it serves to engineering capability; manufacturing techniques, skills and efficiency; marketing and sales promotion; and service and delivery of quality products to its customers. TRADEMARKS -- Many of the Company's products are sold under various trademarks owned or licensed by the Company. Among the most significant are: ITW, Signode, Apex, Buildex, Deltar, Devcon, DeVilbiss, Fastex, Hi-Cone, Keps, Magnaflux, Miller, Minigrip, Paslode, Ransburg, Ramset, Shakeproof, Teks, Tenax, and Zip-Pak. ENVIRONMENTAL PROTECTION -- The Company believes that its plants and equipment are in substantial compliance with applicable environmental regulations. Additional measures to maintain compliance are not expected to materially affect the Company's capital expenditures, competitive position, financial position or results of operations. Various legislative and administrative regulations concerning environmental issues have become effective or are under consideration in many parts of the world relating to manufacturing processes, and the sale or use of certain products. To date, such developments have not had a substantial adverse impact on the Company's sales or earnings. The Company has made considerable efforts to develop and sell environmentally compatible products resulting in new and expanding marketing opportunities. EMPLOYEES -- The Company employed approximately 19,500 persons as of December 31, 1994 and considers its employee relations to be excellent. INTERNATIONAL -- The Company's international operations include subsidiaries, joint ventures and licensees in 33 countries on six continents. These operations serve such markets as automotive, beverage and food, construction, general industrial, packaging and others on a worldwide basis. The Company's international subsidiaries contributed approximately 36% of operating revenues in both 1994 and 1993. Refer to pages 19 and 20 in the Company's 1994 Annual Report to Stockholders for additional information on international activities. International operations are subject to certain risks inherent in conducting business in foreign countries, including price controls, exchange controls, limitations on participation in local enterprises, nationalization, expropriation and other governmental action, and changes in currency exchange rates. 3 EXECUTIVE OFFICERS -- Executive Officers of the Company as of March 7, 1995:
NAME OFFICE AGE --------------------------------- -------------------------------------------------------------- --- Gunter A. Berlin Executive Vice President 62 Thomas W. Buckman Vice President, Patents and Technology 57 H. Richard Crowther Vice Chairman 62 W. James Farrell President 52 Russell M. Flaum Executive Vice President 44 Michael W. Gregg Senior Vice President and Controller, Accounting 59 Stewart S. Hudnut Senior Vice President, General Counsel and Secretary 55 Robert H. Jenkins Executive Vice President 52 John Karpan Senior Vice President, Human Resources 54 John D. Nichols Chairman and Chief Executive Officer 64 Frank S. Ptak Executive Vice President 51 F. Ronald Seager Executive Vice President 54 Harold B. Smith Chairman of the Executive Committee 61 Donald L. VanErden Vice President, Research and Advanced Development 59
Except for Messrs. Hudnut and Karpan, each of the foregoing officers has been employed by the Company in various executive capacities for more than five years. The executive officers of the Company serve at the pleasure of the Board of Directors. Mr. Hudnut joined the Company in January 1992 having previously served as Senior Vice President, General Counsel and Secretary of MBIA Inc., a financial guarantor, and Vice President, General Counsel and Secretary of Scovill Inc., a diversified manufacturer. Mr. Karpan joined the Company in June 1990 having previously served as President and Chief Operating Officer of Butler Fixture Company, a manufacturer of commercial fixtures, and Vice President, Human Resources and Planning for Borg Warner Automotive, Inc., a manufacturer of automotive components. ITEM 2. PROPERTIES As of December 31, 1994 the Company operated 172 plants and office facilities in the United States, excluding regional sales offices and warehouse facilities. Of the total U.S. floor space of 11.4 million square feet, 7.7 million is owned by the Company, with the remaining 3.7 million being leased. Internationally, the Company operated 89 plants and office facilities excluding regional sales offices and warehouse facilities. Of the total international floor space of 5.3 million square feet, 3.8 million is owned by the Company, with the remaining 1.5 million being leased. The principal international plants and office facilities are in Australia, Belgium, Canada, France, Germany, Ireland, Italy, Japan, Malaysia, Spain, Switzerland and the United Kingdom. Of the worldwide plants and office facilities, 133 were operated by businesses in the Engineered Components segment, 123 by businesses in the Industrial Systems and Consumables segment, and 5 by corporate-related entities. Of the company-wide square footage, 8.0 million are used by businesses in the Engineered Components segment and 7.7 million are used by businesses in the Industrial Systems and Consumables segment, with the remaining square footage used as corporate-related facilities. The Company's properties are primarily of steel, brick or concrete construction and are maintained in good operating condition. Productive capacity, in general, currently exceeds operating levels. Capacity levels are somewhat flexible based on the number of shifts operated and on the number of overtime hours worked. The Company adds productive capacity from time to time as required by increased demand. Additions to capacity can be made within a reasonable period of time due to the nature of the businesses. ITEM 3. LEGAL PROCEEDINGS Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 4 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS This information is incorporated by reference to page 38 of the Company's 1994 Annual Report to Stockholders. ITEM 6. SELECTED FINANCIAL DATA This information is incorporated by reference to pages 36 and 37 of the Company's 1994 Annual Report to Stockholders. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This information is incorporated by reference to pages 19 through 21 of the Company's 1994 Annual Report to Stockholders. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and report thereon of Arthur Andersen LLP dated January 31, 1995, as found on pages 22 through 35 and page 38 of the Company's 1994 Annual Report to Stockholders, are incorporated by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY Information regarding the Directors of the Company is incorporated by reference to the information under the caption "Election of Directors" in the Company's Proxy Statement for the 1995 Annual Meeting of Stockholders. Information regarding the Executive Officers of the Company can be found in Part I of this Annual Report on Form 10-K on page 4. ITEM 11. EXECUTIVE COMPENSATION This information is incorporated by reference to the information under the caption "Executive Compensation" in the Company's Proxy Statement for the 1995 Annual Meeting of Stockholders. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT This information is incorporated by reference to the information under the caption "Security Ownership" in the Company's Proxy Statement for the 1995 Annual Meeting of Stockholders. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable. 5 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Financial Statements The financial statements and report thereon of Arthur Andersen LLP dated January 31, 1995 as found on pages 22 through 35 and page 38 of the Company's 1994 Annual Report to Stockholders, are incorporated by reference. (2) Financial Statement Schedules The following supplementary financial data should be read in conjunction with the financial statements and comments thereto as presented in the Company's 1994 Annual Report to Stockholders. Schedules not included with this supplementary financial data have been omitted because they are not applicable, immaterial or the required information is included in the financial statements or the related comments on financial statements.
SCHEDULE NO. PAGE NO. ------------ --------- Valuation and Qualifying Accounts.......................... II 9
(b) Reports on Form 8-K No reports on Form 8-K have been filed during the period for which this report is filed. 6 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE To Illinois Tool Works Inc.: We have audited, in accordance with generally accepted auditing standards, the financial statements included in Illinois Tool Works Inc.'s 1994 Annual Report to Stockholders, incorporated by reference in this Form 10-K, and have issued our report thereon dated January 31, 1995. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the accompanying index is the responsibility of the Company's management and is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. The schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Chicago, Illinois, January 31, 1995 7 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 24th day of March, 1995. ILLINOIS TOOL WORKS INC. By /s/ JOHN D. NICHOLS ------------------------------------ John D. Nichols Director, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on this 24th day of March, 1995. SIGNATURES TITLE --------------------------------- --------------------------------------------- /s/ MICHAEL W. GREGG Senior Vice President and Controller, --------------------------------- Accounting (Principal Accounting and Michael W. Gregg Financial Officer) Julius W. Becton, Jr. Director Silas S. Cathcart Director Susan Crown Director Richard M. Jones Director George D. Kennedy Director Richard H. Leet Director John D. Nichols Director Robert C. McCormack Director Phillip B. Rooney Director Harold B. Smith Director Ormand J. Wade Director By /s/ JOHN D. NICHOLS ------------------------------------------ (John D. Nichols as Attorney-in-Fact) Original powers of attorney authorizing John D. Nichols to sign this Annual Report on Form 10-K and amendments thereto on behalf of the above-named directors of the registrant have been filed with the Securities and Exchange Commission as part of this Annual Report on Form 10-K (Exhibit 24). 8 ILLINOIS TOOL WORKS INC. VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994 SCHEDULE II
DEDUCTIONS ------------------------------------- RECEIVABLES BALANCE AT PROVISIONS WRITTEN BALANCE BEGINNING CHARGED TO OFF, NET OF AT END OF OF PERIOD INCOME ACQUISITIONS RECOVERIES DISPOSITIONS OTHER PERIOD ----------- ----------- ----------- ----------- ------------- --------- --------- (IN THOUSANDS) Year Ended December 31, 1992: Allowances for uncollectible accounts.......................... $ 18,900 $ 6,804 $ 528 $ (7,896) $ (140) $ (396) $ 17,800 Year Ended December 31, 1993: Allowances for uncollectible accounts.......................... 17,800 8,233 740 (7,496) -- (1,277) 18,000 Year Ended December 31, 1994: Allowances for uncollectible accounts.......................... 18,000 7,191 1,234 (6,983) (131) 289 19,600
9 EXHIBIT INDEX ANNUAL REPORT ON FORM 10-K 1994
EXHIBIT NUMBER DESCRIPTION ------------- -------------------------------------------------------------------------------------------------------- 3(a) Restated Certificate of Incorporation of Illinois Tool Works Inc., as amended, filed as Exhibit 4(a) to the Company's Registration Statement on Form S-8 (Registration Statement No. 33-53517) filed with the Securities and Exchange Commission on May 6, 1994 and incorporated herein by reference. 3(b) By-laws of Illinois Tool Works Inc., as amended. 4(a) Indenture, dated as of November 1, 1986, between Illinois Tool Works Inc. and The First National Bank of Chicago, as Trustee, filed as Exhibit 4 to the Company's Registration Statement on Form S-3 (Registration Statement No. 33-5780) filed with the Securities and Exchange Commission on May 14, 1986 and incorporated herein by reference. 4(b) Resignation of Trustee and Appointment of Successor under Indenture (Exhibit 4(a)), filed as Exhibit 4(b) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (Commission File No. 1-4797) and incorporated herein by reference. 4(c) First Supplemental Indenture, dated as of May 1, 1990 between Illinois Tool Works Inc. and Harris Trust and Savings Bank, as Trustee, filed as Exhibit 4-3 to the Company's Post-Effective Amendment No. 1 to Registration Statement on Form S-3 (Registration Statement No. 33-5780) filed with the Securities and Exchange Commission on May 8, 1990 and incorporated herein by reference. 4(d) Credit agreement, dated as of August 14, 1992, among the Company, the Banks listed therein and the First National Bank of Chicago, as agent, filed as Exhibit 4(d) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (Commission File No. 1-4797) and incorporated herein by reference. 4(e) Officers' Certificate Pursuant to Sections 2.01 and 2.04 of the Indenture (Exhibit 4(a) as amended by Exhibit 4(c)) related to the 5 7/8% Notes due March 1, 2000, filed as Exhibit 4(e) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (Commission File No. 1-4797) and incorporated herein by reference. 4(f) Form of 7 1/2% notes due December 1, 1998, filed as Exhibit 4 to the Company's Current Report on Form 8-K dated December 2, 1991 and incorporated herein by reference. 4(g) Form of 5 7/8% Notes due March 1, 2000, filed as Exhibit 4(f) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (Commission File No. 1-4797) and incorporated herein by reference. 4(h) Amendment I to the Credit Agreement dated August 14, 1992 (Exhibit 4(d)), filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1993 (Commission File No. 1-4797) and incorporated herein by reference. 10(a) Illinois Tool Works Inc. Stock Incentive Plan and amendments thereto filed as Exhibit 10(a) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988 (Commission File No. 1-4797) and incorporated herein by reference. 10(b) Amendment to the Illinois Tool Works Inc. Stock Incentive Plan dated December 8, 1994. 10(c) Contracts between Illinois Tool Works Inc. and John D. Nichols filed as Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990 (Commission File No. 1-4797) and incorporated herein by reference.
10
EXHIBIT NUMBER DESCRIPTION ------------- -------------------------------------------------------------------------------------------------------- 10(d) Illinois Tool Works Inc. 1982 Executive Contributory Retirement Income Plan adopted December 13, 1982, filed as Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990 (Commission File No. 1-4797) and incorporated herein by reference. 10(e) Illinois Tool Works Inc. 1985 Executive Contributory Retirement Income Plan adopted December 1985, filed as Exhibit 10(d) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990 (Commission File No. 1-4797) and incorporated herein by reference. 10(f) Illinois Tool Works Inc. Executive Incentive Program adopted August 1, 1979 and amendments thereto, filed as Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991 (Commission File No. 1-4797) and incorporated herein by reference. 10(g) Supplemental Plan for Employees of Illinois Tool Works Inc., effective January 1, 1989, filed as Exhibit 10(d) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989 (Commission File No. 1-4797) and incorporated herein by reference. 10(h) Phantom stock agreement between Illinois Tool Works Inc. and John D. Nichols dated January 1, 1986, October 17, 1986 and January 1, 1991, respectively, filed as Exhibit 10(g) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991 (Commission File No. 1-4797) and incorporated herein by reference. 10(i) Amendment to the Phantom stock agreement between Illinois Tool Works Inc. and John D. Nichols, dated January 1, 1991 (see 10(h) above), filed as Exhibit 10(h) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 (Commission File No. 1-4797) and incorporated herein by reference. 10(j) Directors' deferred fee plan, retired directors' fee plan and non-officer directors' restricted stock program, descriptions of which are under the caption "Directors' Compensation" in the Company's Proxy Statement for the 1995 Annual Meeting of Stockholders, and incorporated herein by reference. 10(k) Underwriting Agreement dated November 20, 1991, related to the 7 1/2% Notes due December 1, 1998, filed as Exhibit 1 to the Company's Current Report on Form 8-K dated December 2, 1991 and incorporated herein by reference. 10(l) Underwriting Agreement dated February 23, 1993, related to the 5 7/8% Notes due March 1, 2000, filed as Exhibit 10(j) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (Commission File No. 1-4797) and incorporated herein by reference. 10(m) Illinois Tool Works Inc. 1993 Executive Contributory Retirement Income Plan, filed as Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1993 (Commission File No. 1-4797) and incorporated herein by reference. 10(n) Amendment to the Illinois Tool Works Inc. 1993 Executive Contributory Retirement Income Plan dated December 5, 1994. 13 The Company's 1994 Annual Report to Stockholders, pages 19 - 38. 21 Subsidiaries of the Company. 22 Information under the captions "Election of Directors," "Security Ownership" and "Executive Compensation" in the Company's Proxy Statement for the 1995 Annual Meeting of Stockholders. 23 Consent of Arthur Andersen LLP. 24 Powers of Attorney. 27 Financial Data Schedule.
11 [LOGO] THIS REPORT HAS BEEN PRINTED ON RECYCLED PAPER. [LOGO] EX-3.B 2 EXHIBIT 3(B) - BYLAWS Exhibit 3(b) BY-LAWS OF ILLINOIS TOOL WORKS INC. ARTICLE I Offices SECTION 1. Registered Office. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. SECTION 2. Other Offices. The corporation may also have offices in Chicago, Illinois, and offices at such other places as the Board of Directors or officers may from time to time determine. ARTICLE II Stockholders SECTION 1. Annual Meeting. The annual meeting of the stockholders shall be in the month of April or May of each year. The place, date and time of the meeting shall be fixed by the Board of Directors and stated in the notice of the meeting. SECTION 2. Special Meetings. Special meetings of the stockholders may be called by the chairman or by a majority of the Board of Directors. SECTION 3. Place of Meeting. The Board of Directors may designate any place, either within or without Delaware, as the place of meeting for any meeting of the stockholders (annual or special) called by the Board of Directors. If a special meeting is otherwise called, the place of meeting shall be in Chicago, Illinois as designated in the notice. SECTION 4. Notice of Meetings. Written or printed notice stating the place, day and hour of the meeting shall be delivered either personally or by mail, by or at the direction of the chairman or persons calling the meeting to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mails in a sealed envelope addressed to the stockholder at his address as it appears on the records of the corporation, with postage thereon prepaid. SECTION 5. Voting of Shares by Certain Holders. Shares of stock standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine. 1 Shares of stock standing in the name of a deceased person may be voted by his administrator or executor, either in person or by proxy. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held. Persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the corporation he has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent such stock and vote thereon. Shares of stock standing in the name of a receiver may be voted by such receiver, and shares of stock held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed. SECTION 6. Fixing of Record Date. Unless any statute requires otherwise, for the purpose of determining (a) stockholders entitled to notice of or to vote at any meeting of stockholders, or (b) stockholders entitled to receive payment of any dividend, or (c) stockholders, with respect to any lawful action, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty days and, in case of a meeting of stockholders, not less than ten days. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 7. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute, by the Certificate of Incorporation or by these by-laws. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time until a quorum shall be present or represented. No notice other than an announcement at the meeting need be given unless the adjournment is for more than thirty days or a new record date is to be fixed for the adjourned meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. 2 When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Certificate of Incorporation or of these by-laws, a different vote is required in which case such express provision shall govern and control the decision of such question. SECTION 8. Proxies. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. Proxies shall be valid only with respect to the meeting or meetings and any adjournment thereof, for which they are given. SECTION 9. Voting. Each stockholder shall have one vote in person or by proxy for each share of stock having voting power registered in his name on the books of the corporation at the record date. SECTION 10. Stockholder Nominations for Directors. Any stockholder entitled to vote in the election of directors may nominate one or more persons for election as directors, provided written notice of such stockholder's nomination has been received by the Secretary of the Company not later than (i) the close of business on the last business day of December prior to the annual meeting of stockholders in April or May, or (ii) the close of business on the tenth day following the date on which notice of a special meeting of stockholders is first given to stockholders for an election of directors to be held at such meeting. Such notice must contain: (a) the name and address of the stockholder who intends to make the nomination; (b) the name, age, and business and residential addresses of each person to be nominated; (c) the principal occupation or employment of each nominee; (d) the number of shares of capital stock of the corporation beneficially owned by each nominee; (e) a statement that the nominee is willing to be nominated and serve as a director; and (f) such other information regarding each nominee as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the Board of Directors nominated such nominee. Nothing in this Section shall preclude the Board of Directors or the Nominating Committee either from making nominations for the election of directors or from excluding the person nominated by a stockholder from the slate of directors presented to the meeting. SECTION 11. Election of Directors. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at a meeting of stockholders and entitled to voted on the election of directors. 3 ARTICLE III Directors SECTION 1. General Powers. The business and affairs of the corporation shall be managed by its Board of Directors. SECTION 2. Number, Tenure and Qualifications. The number of Directors of the corporation is established at fourteen. Each Director shall hold office for the term for which such Director is elected or until a successor shall have been chosen and shall have qualified or until such Director's earlier death, resignation, retirement, disqualification or removal. SECTION 3. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law, immediately after, and at the same place as, the annual meeting of stockholders. The Board of Directors may provide, by resolution, the time and place, either within or without Delaware, for the holding of additional regular meetings without other notice than such resolution. SECTION 4. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the chairman or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without Delaware, as the place for holding any special meeting of the Board of Directors called by them. SECTION 5. Notice. Notice of any special meeting shall be given at least two days previously thereto by written notice delivered personally, by mail or telegram, to each Director at his business address or at such other address as he shall have previously requested in writing. If mailed, such notice shall be deemed to be delivered two days after being deposited in the United States mails in a sealed envelope so addressed, with postage thereon prepaid. If notice is given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting, unless otherwise required by law. SECTION 6. Quorum. A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, provided that if less than a majority of the Directors are present at said meeting, a majority of the Directors present may adjourn the meeting from time to time without further notice. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless a greater number is required by the Certificate of Incorporation or these by-laws. 4 SECTION 7. Interested Directors. Except as may otherwise be provided in the Certificate of Incorporation, no contract or transaction between the corporation and one or more of its Directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its Directors or officers are Directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the Director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (a) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested Directors, even though the disinterested Directors be less than a quorum; or (b) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by the vote of the stockholders; or (c) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. SECTION 8. Vacancies. If vacancies occur in the Board of Directors caused by death, resignation, retirement, disqualification or removal from office of any Director or Directors or otherwise, or if any new Directorship is created by any increase in the authorized number of Directors, a majority of the Directors then in office, though less than a quorum, may choose a successor or successors, or fill the newly created Directorship and the Directors so chosen shall hold office until the next annual election of Directors and until their successors shall be duly elected and qualified, unless sooner displaced. 5 SECTION 9. Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the Directors of the corporation. (a) The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member, at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. (b) Executive Committee. The Board of Directors, by resolution adopted by a majority of the whole Board, may designate two or more Directors to constitute an Executive Committee and one or more Directors as alternates thereof. Subject to the limitations provided in these by-laws and such further limitation as might be required by law or by the Certificate of Incorporation or by further resolution of the Board of 6 Directors, the Executive Committee may, during intervals between meetings of the Board of Directors, exercise the powers of the Board of Directors in the management of the business and affairs of the corporation (including the corporation's dealings with its foreign subsidiaries, affiliates, and licensees) and may authorize the seal of the corporation to be affixed to all papers which may require it. The Committee shall not be empowered to take action with respect to: issuing bonds, debentures; increasing or reducing the capital of the corporation; authorizing commitments and expenditures in excess of the total amount or amounts provided in the capital budgets approved or otherwise authorized by the Board of Directors; borrowing of monies, except within limits expressly approved by the Board of Directors; electing officers; fixing the compensation of officers; establishment of stock option plans, profit sharing or similar types of compensation plans, filling vacancies or newly-created directorships on the Board of Directors; removing officers or directors of the corporation; dissolution, or any other action specifically reserved to the Board of Directors including all matters requiring the approval of stockholders. The Committee may also from time to time formulate and recommend to the Board for approval general policies regarding management of the business and affairs of the corporation. The designation of the Committee and the delegation thereto of authority shall not operate to relieve the Board of Directors or any member thereof of any responsibility imposed upon it or him by operation of law. The secretary of the corporation (or in his absence a person designated by the Executive Committee) shall act as secretary at all meetings of the Executive Committee. A majority of the Committee, from time to time, shall constitute a quorum for the transaction of business and the act of a majority of the Directors present at a meeting in which a quorum is present shall be the act of the Committee, provided that in the absence or disqualification of any member of the Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Regular 7 meetings of the Committee may be held without notice at such times and at such places as shall be fixed by resolution adopted by a majority of the Committee. Special meetings may be called by any member of the Committee on twenty-four hours' prior written or telegraphic notice. (c) Compensation Committee. The Board of Directors, by resolution adopted by a majority of the whole Board, may designate not less than two Directors to constitute a Compensation Committee and one or more directors as alternate members thereof, none of whom shall be employees of the corporation. In the absence or disqualification of any member of the Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member, provided that the majority of the Committee, as then constituted, shall not be employees of the corporation. The Compensation Committee shall review and determine from time to time the salaries and other compensation of all elected officers of the corporation and shall submit to the Board of Directors such reports in such form and at such time as the Board of Directors may request. The Compensation Committee shall also submit recommendations from time to time to the Board of Directors as to the granting of stock options. (d) Audit Committee. The Board of Directors, by resolution adopted by a majority of the whole Board, may designate two or more Directors who are not employees of the corporation to constitute an Audit Committee and one or more Directors who are not employees of the corporation as alternate members thereof, which Committee shall review the selection and qualifications of the independent public accountants employed from time to time to audit the financial statements of the corporation and the scope and adequacy of their audits. The Committee shall also consider recommendations made by such independent public accountants. The Committee may also make such review of the internal financial audits of the corporation as it considers desirable and shall report to the Board any additions or changes which it 8 deems advisable. In the absence or disqualification of any member of the Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors who is not an employee of the corporation to act at the meeting in the place of any such absent or disqualified member. (e) Employee Benefits Committee. The Board of Directors, by resolution adopted by a majority of the whole Board, may designate three (3) or more individuals, any or all of whom may be non-director employees of the Company, to constitute an Employee Benefits Committee. The Committee shall select, retain or remove the investment managers, advisors, consultants and persons otherwise employed by the Company as named fiduciaries under the Company's employee benefit plans, which actions it shall report to the Board of Directors. The Committee shall review the performance of the trustee or trustees, investment managers, advisors and consultants under said plans with respect to the investment of plan assets. The Committee shall be responsible for the administration of the Company's employee benefit plans and, in fulfilling that responsibility, may delegate to others, whether Company employees or otherwise, specific assignments in administering the plans. (f) Nominating Committee. The Board of Directors, by resolution adopted by a majority vote of the whole Board, may designate two or more Directors to constitute a Nominating Committee. This Committee shall establish procedures for the receipt and evaluation of suggestions of candidates for membership on the Board of Directors and shall make recommendations to the Board concerning nominees for such membership. The Committee may evaluate the various committees of the Board and make recommendations to the Board of Directors concerning the number, size, membership and responsibilities of such committees. The Committee may also make recommendations to the Board of Directors concerning the number of Directors to serve on the Board and may establish standards for evaluation of the performance of the Directors in order to make recommendations with regard thereto. 9 SECTION 10. Consent in Lieu of Meeting. Unless otherwise restricted by the Certificate of Incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or committee thereof, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of the Board or committee. SECTION 11. Compensation. Directors who are also full time employees of the corporation shall not receive any compensation for their services as Directors but they may be reimbursed for reasonable expenses of attendance. By resolution of the Board of Directors, all other Directors may receive, as compensation for their services any combination of: an annual fee; a fee for each meeting attended; shares of stock; or other forms of compensation; together with reimbursement of expenses of attendance, if any, at each regular or special meeting of the Board of Directors or any committee of the Board of Directors; provided, that nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. SECTION 12. Meeting by Conference Telephone. Unless otherwise restricted by the Certificate of Incorporation, members of the Board of Directors or any committee designated by such Board may participate in a meeting of such Board or committee by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant hereto shall constitute presence in person at such meeting. Unless otherwise required by law, no notice shall be required if a quorum of the Board or any committee is participating. ARTICLE IV Officers SECTION 1. Number. The officers of the corporation shall be a chairman, vice chairman, president, chairman of the Executive Committee, one or several vice presidents or executive vice presidents (the number thereof to be determined by the Board of Directors), one or several of the vice presidents may be designated "senior vice president" by the Board of Directors and one of whom may be elected as chief financial officer of the corporation, a treasurer, a controller, a secretary, and other such officers as may be elected in accordance with the provisions of this article. Any two or more offices may be held by the same person. SECTION 2. Election and Term of Office. The officers of the corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Vacancies may be filled 10 or new offices created and filled at any meeting of the Board of Directors. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. SECTION 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. SECTION 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 5. Chairman. The chairman shall be the chief executive officer of the corporation and shall have general supervision over all of the affairs of the corporation and shall determine and administer the policies of the corporation as established by the Board of Directors or by the Executive Committee. The chairman shall preside at all meetings of the stockholders, and of the Board of Directors; and in the absence of the chairman of the Executive Committee shall also preside at all meetings of the Executive Committee; the chairman shall provide leadership to the Board in reviewing and advising upon matters which exert major influence on the manner in which the corporation's business is conducted; and he shall perform such other duties as may be conferred by law or assigned to him by the Board of Directors. The chairman may sign, with the secretary or other proper officer of the corporation thereunto authorized by the Board of Directors, stock certificates of the corporation, any deeds, mortgages, bonds, contracts, or other instruments, except in cases where the signing or execution thereof shall be expressly delegated by the Board of Directors or by these by-laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed. The chairman may also execute proxies on behalf of the corporation with respect to the voting of any shares of stock owned by the corporation. He shall have the power to appoint agents or employees as in his judgment may be necessary or appropriate for the transaction of the business of the corporation, and in general shall perform all duties incident to the office of chairman, and such other duties as may be prescribed by the Board of Directors. SECTION 6. Vice Chairman. The vice chairman shall assist the chairman in supervising the affairs of the corporation, with special responsibility for integrating acquired businesses into the corporation. In the absence of the chairman, the vice chairman shall preside at all meetings of the stockholders and the Board of Directors. In the event of the absence or disability of the chairman, the vice chairman shall assume all of 11 the duties and responsibilities of that office. The vice chairman may sign any deeds, mortgages, bonds, contracts or other instruments, except in cases where the signing is required to be by some other officer or agent of the corporation. The vice chairman shall perform such other duties as may be designated by the chairman of the Board of Directors. SECTION 7. President. The president shall undertake and faithfully discharge such duties as assigned by the Chairman and shall administer the policies of the Company as established by the Board or by the Executive Committee. In the absence of the chairman and the vice chairman, the president shall preside at all meetings of the stockholders and of the Board and shall perform the duties and exercise the authority of the chairman. In the absence of the chairman of the Executive Committee, the president shall preside at all meetings of the Executive Committee. The president may sign, with the secretary or other proper officer of the corporation thereunto authorized by the Board, stock certificates of the Company, any deeds, mortgages, bonds, contracts or other instruments, except in cases where the signing or execution thereof shall be expressly delegated by the Board or by these by-laws to some other officer or agent of the Company, or shall be required by law to be otherwise signed or executed. The president may also execute proxies on behalf of the Company with respect to the voting of any shares of stock owned by the Company. The president shall have the power to appoint agents or employees as in his/her judgment may be necessary or appropriate for the transaction of the business of the Company and in general shall perform all duties incident to the office of president, and such other duties as may be prescribed by the Chairman or the Board. SECTION 8. Chairman of the Executive Committee. The chairman of the Executive Committee shall preside at all meetings of the Executive Committee; in the absence of the chairman and vice chairman, he shall preside at all meetings of the stockholders and the Board of Directors; he shall act in an advisory capacity to the chairman in all matters concerning the interest and management of the corporation, and he shall perform such other duties as may be assigned to him by the Board of Directors, the Executive Committee or the chairman. In the event of the absence or disability of the chairman and vice chairman, he shall assume all the duties and responsibilities of the office of the chairman. The chairman of the Executive Committee may sign, with the secretary or other proper officer of the corporation thereunto authorized by the Board of Directors, stock certificates of the corporation, any deeds, mortgages, bonds, contracts, or other instruments delegated by the Board of Directors or by these by-laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed. The chairman of the Executive Committee may also execute proxies on behalf of the corporation with respect to the voting of any shares of stock owned by the corporation. 12 SECTION 9. Executive Vice President(s). The executive vice president or executive vice presidents (if elected by the Board of Directors) shall perform such duties not inconsistent with these by-laws as may be assigned to him or them by the chairman or the Board of Directors. In the event of absence or disability of the chairman, and vice chairman and chairman of the Executive Committee, the executive vice president (or in the event there be more than one, the executive vice president determined in the order of election) shall assume all the duties and responsibilities of the office of the chairman. SECTION 10. Chief Financial Officer. The chief financial officer (if elected by the Board of Directors) shall have general supervision over the financial affairs of the corporation. SECTION 11. The Vice President(s). The Board of Directors may designate any vice president as a senior vice president. In the event of absence or disability of the chairman and vice chairman, the chairman of the Executive Committee and all executive vice presidents, the senior vice president)) or the vice president(s) in the order of election, shall assume all the duties and responsibilities of the office of the chairman. Any senior vice president or any vice president may sign, with the secretary or an assistant secretary, stock certificates of the corporation; and shall perform such other duties as from time to time may be assigned to him by the chairman or by the Board of Directors. In general, the vice president (or vice presidents, including the senior vice president or senior vice presidents) shall perform such duties not inconsistent with these by-laws as may be assigned to him (or them) by the chairman, the executive vice presidents or by the Board of Directors. SECTION 12. The Treasurer. If required by the Board of Directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. He shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for monies due and payable to the corporation from any source whatsoever, and deposit all such monies in the name of the corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Article VI of these by-laws; (b) in general perform all duties incident to the office of treasurer and such other duties not inconsistent with these by-laws as from time to time may be assigned to him by the Board of Directors, or by the chairman, or any vice president designated for such purpose by the chairman. SECTION 13. The Secretary. The secretary shall: (a) keep the minutes of the stockholders' and the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all stock certificates prior to the issue thereof and to all documents, the execution of which on 13 behalf of the corporation under its seal is required; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) sign with a vice president, or the chairman, stock certificates of the corporation, the issue of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; (g) act as secretary at all meetings of the Executive Committee; and (h) in general perform all duties incident to the office of secretary and such other duties not inconsistent with these by-laws as from time to time may be assigned to him by the chairman or by the Board of Directors. SECTION 14. The Controller. The controller shall provide guidance and evaluation with respect to the corporation's accounting and related functions, control and procedures systems, budget programs, and coordinate same on a divisional and overall corporate level. The controller shall report to such officer or officers of the corporation and perform such other duties incident to the office of controller as may be prescribed from time to time by the chairman, chief financial officer, or by the Board of Directors. SECTION 15. Assistant Treasurers and Assistant Secretaries. The chairman may appoint one or more assistant treasurers and one or more assistant secretaries who shall serve as such until removed by the chairman or the Board of Directors. The assistant treasurers may be required to give bonds for the faithful discharge of their duties in such sums and with such sureties as the chairman shall determine. The assistant treasurers and assistant secretaries, in general, shall perform such duties as shall be assigned to them by the treasurer or the secretary, respectively, or by the chairman, but shall not be considered to be officers of the corporation solely by reason of such appointments or titles. SECTION 16. Appointive Presidents and Vice Presidents. The chairman may from time to time designate employees of the corporation who are managing one or several groups, divisions, or other operations of the corporation as "President", "Vice President", or similar title, which employees shall not be considered to be officers of the corporation solely by reason of such appointments or titles. The chairman shall report such appointments to the Compensation Committee at least annually. SECTION 17. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors on a monthly basis and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the corporation. 14 ARTICLE V Indemnification of Officers, Directors, Employees and Agents SECTION 1. Non-Derivative Actions and Criminal Prosecutions. To the extent permitted by applicable law from time to time in effect, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a Director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. SECTION 2. Derivative Actions. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a Director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. SECTION 3. Right to Indemnification. To the extent that a Director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, 15 suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, he shall be indemnified by the corporation against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. SECTION 4. Where No Adjudication. Any indemnification under Sections 1 and 2 of this Article (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the Director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in said Sections 1 and 2. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable and a quorum of disinterested Directors so directs, by independent legal counsel (compensated by the corporation) in a written opinion, or (iii) by the stockholders. SECTION 5. Expenses. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the Director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the corporation as authorized in this Article. SECTION 6. Non-exclusive. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by- law, agreement, vote of stockholders or disinterested Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, officer, employee, or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 7. Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article or of applicable law. ARTICLE VI Contracts, Loans, Checks and Deposits 16 SECTION 1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of any on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 2. Loans. No loans shall be contracted on behalf of the corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 4. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as the Board of Directors may select. ARTICLE VII Stock Certificates SECTION 1. Stock Certificates. Certificates representing shares of stock of the corporation shall be in such form as may be determined by the Board of Directors, shall be numbered and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the chairman, the chairman of the Executive Committee, or a vice president and the treasurer or an assistant treasurer or the secretary or an assistant secretary, and shall be sealed with the seal of the corporation. If a stock certificate is countersigned (a) by a transfer agent other than the corporation or its employee, or (b) by a registrar other than the corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or regis-trar at the date of issue. SECTION 2. Lost Certificates. The Board of Directors may from time to time make such provision as it deems appropriate for the replacement of lost, stolen or destroyed stock certificates, including the requirement to furnish an affidavit and an indemnity. SECTION 3. Transfers of Stock. Upon surrender to the corporation of the transfer agent of the corporation of a stock 17 certificate duly endorsed or accompanied by proper evidence of succession, assignment of authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon the books of the corporation. The person in whose name shares of stock stand on the books of the corporation shall be deemed the owner thereof for all purposes as regards the corporation. SECTION 4. Transfer Agents and Registrars. The Board of Directors may appoint one or more transfer agents and registrars and may thereafter require all stock certificates to bear the signature of a transfer agent and registrar. SECTION 5. Rules of Transfer. The Board of Directors shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration of stock certificates of the corporation. ARTICLE VIII Fiscal Year The fiscal year of the corporation shall begin on the first day of January in each year and end on the thirty-first of December in each year. ARTICLE IX Dividends The Board of Directors may from time to time, declare, and the corporation may pay, dividends on its outstanding shares of stock in the manner and upon the terms and conditions provided by law and its Certificate of Incorporation. ARTICLE X Seal The Board of Directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the corporation and the words "Corporate Seal, Delaware". ARTICLE XI Waiver of Notice Whenever any notice whatever is required to be given under the provisions of these by-laws or under the provisions of the Certificate of Incorporation or under the provisions of The General Corporation Law of Delaware, waiver thereof in writing, 18 signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Attendance of any person at a meeting for which any notice whatever is required to be given under the provisions of these by-laws, the Certificate of Incorporation or The General Corporation Law of Delaware shall constitute a waiver of notice of such meeting, except when the person attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. 19 EX-10.B 3 EXHIBIT 10(B) EXHIBIT 10(b) AMENDMENT TO THE ILLINOIS TOOL WORKS INC. STOCK INCENTIVE PLAN December 8, 1994 RESOLVED: that subparagraphs (i) and (ii) of Section 6(e) of the Illinois Tool Works Inc. Stock Incentive Plan (the "Plan") are amended as follows: "(i) If the Optionee dies (x) while in the employ of the Company or a Subsidiary, (y) within three months of the termination of his or her employment with the Company or a Subsidiary by reason of resignation with the Company's prior written consent, or (z) within the period described in subparagraph (e)(ii) below that commences on the date on which his or her employment with the Company or a Subsidiary terminates by reason of retirement, then the Option shall be exercisable by the Optionee's beneficiary designated pursuant to paragraph (h) of Section 12 not later than the earlier of one year after the date of death or the expiration of the term of the Option. (ii) If the employment of the Optionee by the Company or a Subsidiary terminates by reason of retirement and if the Optionee is not then subject to the reporting and liability provisions of Section 16 of the Securities Exchange Act of 1934 (the "Act"), then the Option shall be exercisable by the Optionee not later than the earlier of five years after the date of retirement or the expiration of the term of the Option. If the Optionee is then subject to the reporting and liability provisions of Section 16 of the Act, then the Option shall be exercisable by the Optionee not later than the earlier of three years after the date of retirement or the expiration of the term of the Option."; FURTHER RESOLVED: that subparagraph (i) of Section 7(c) of the Plan is amended as follows: "(i) If granted in connection with an Option, Stock Appreciation Rights are exercisable only at such times and to the extent that the Option to which they relate is exercisable. With respect to Stock Appreciation Rights granted independent of an Option, if the holder thereof dies (x) while in the employ of the Company or a Subsidiary, 1 (y) within three months of the termination of his or her employment with the Company or a Subsidiary by reason of resignation with the Company's prior written consent, or (z) within three years (or five years as provided below) after termination of employment by reason of retirement, then such Stock Appreciation Rights shall be exercisable by the beneficiary designated pursuant to paragraph (h) of Section 12 not later than the earlier of one year after the date of death or the expiration of the term of the Stock Appreciation Rights. If the employment of the holder by the Company or a Subsidiary terminates by reason of retirement and if the holder is not then subject to the reporting and liability provisions of Section 16 of the Act, then the Stock Appreciation rights shall be exercisable by the holder not later than the earlier of five years after the date of retirement or the expiration of the term of the Stock Appreciation Rights. If the holder is then subject to the reporting and liability provisions of Section 16 of the Act, then the Stock Appreciation Rights shall be exercisable by the holder not later than the earlier of three years after the date of retirement or the expiration of the term of the Option."; FURTHER RESOLVED: that Section 6(g) of the Plan is amended by changing the first sentence to read in its entirety as follows: "The Option agreements or Option grants authorized by the Plan may contain such other provisions as the Committee shall deem advisable, and may be amended from time to time with the consent of the Optionee provided that any such amendment is not prohibited by this Plan."; FURTHER RESOLVED: that Section 7 of the Plan is amended by adding the following new subsection (f): "(f) The Stock Appreciation Right agreements or grants authorized by the Plan may contain such other provisions as the Committee shall deem advisable, and may be amended from time to time with the consent of the holder thereof provided that any such amendment is not prohibited by this Plan."; FURTHER RESOLVED: that the foregoing Plan amendments shall be effective with respect to any Options and Stock Appreciation Rights outstanding as of the date of these resolutions and any granted at any time hereafter; and 2 FURTHER RESOLVED: that management is authorized for and on behalf of the Company to take such actions as they deem necessary and appropriate to effectuate the foregoing resolutions. FURTHER RESOLVED: Paragraph (h) of Section 12 of the Company's Stock Incentive Plan be amended to read as follows: "(h) No stock incentive and no rights under the Plan, contingent or otherwise, shall be assignable or subject to any encumbrance, pledge or charge of any nature, except as follows: (i) Under such rules and procedures as the Committee may establish, the holder of a stock incentive may designate a beneficiary to whom any rights with respect to such incentive may be transferred upon the holder's death, or, if such beneficiary is the executor or administrator of the estate of the holder, any rights with respect to the stock incentive may be transferred to the person or persons or entity (including a trust) entitled thereto under the will of the holder of the stock incentive or, in case of intestacy, under the laws relating to intestacy; or (ii) Under such rules and procedures as the Committee may establish, the holder of a stock incentive may transfer such incentive to members of the holder's immediate family; i.e., children, grandchildren and spouse, or to one or more trusts for the benefit of such family members or to partnerships in which such family members are the only partners, provided that (A) the agreement, if any, with respect to such stock incentive, as approved by the Committee, expressly so permits, (B) the holder does not receive any consideration for such transfer, and (C) the holder provides such documentation or other information concerning any such transfer or transferee as the Committee may from time to time reasonably request. Any stock incentives held by such transferees shall continue to be subject to the same terms and conditions that were applicable to such stock incentives immediately prior to their transfer. The Committee may also amend the 3 agreements applicable to any outstanding stock incentives to permit such transfers. Any stock incentive not (A) granted pursuant to any agreement expressly permitting its transfer or (B) amended expressly to permit its transfer shall not be transferable. Such transfer rights shall not apply to any incentive stock option that is intended to qualify under Code Section 422." 4 EX-10.(J) 4 EXHIBIT 10(J) EXHIBIT 10(j) DIRECTORS' COMPENSATION Compensation for non-employee directors consists of a $25,000 annual fee plus $1,000 for each Board of Directors' meeting and committee meeting attended. Committee Chairmen receive an additional $500 for each meeting chaired. The Company's deferred fee plan permits non-employee directors to defer receipt of all or any part of their fees. Amounts deferred are credited with interest at current rates and are paid after an individual ceases to be a director. Retired non-employee directors also receive an annual payment equal to one-half of the annual retainer paid to an active director on the date of retirement so long as the retired director serves the Company in an advisory capacity and refrains from any activity adverse to the best interests of the Company. Harold B. Smith has entered into a one-year agreement with the Company providing for an annual consulting fee of $85,000. In January 1995 incumbent non-officer directors also received, pursuant to a restricted stock grant program, 900 shares of the Company's Common Stock, one-third of which shares vest on the first business day in each of the years 1996 through 1998, except that all shares vest on the date of retirement in accordance with Board policy or on the date of death. The shares granted to the directors pursuant to this program are included in the table under "Security Ownership", as are shares under an earlier tranche of the program effective in 1992. This program is being submitted to stockholders for approval at this Annual Meeting and is further described in the next section. 4 EX-10.(N) 5 EXHIBIT 10(N) EXHIBIT 10(n) AMENDMENTS EFFECTIVE DECEMBER 5, 1994 Pursuant to Section 7.1 of the Illinois Tool Works Inc. 1993 Executive Contributory Retirement Income Plan effective April 1, 1993, Illinois Tool Works Inc. hereby amends Sections 3.2, 3.5 and 4.11 of the Plan to read as follows: 3.2 MINIMUM AND MAXIMUM DEFERRAL AND LENGTH OF PARTICIPATION. A Participant may elect to defer between 5 and 20 percent of his/her Salary in 1% increments during a Deferral Year. In addition, a Participant may elect to defer up to 50% of his/her Bonus in 10% INCREMENTS earned during a Deferral Year. At the time of election, a Participant may elect to defer a different percentage of his/her Salary or Bonus for each Deferral Year and may also elect not to defer any portion of his/her Salary or Bonus in a Deferral Year. The deferral opportunity shall extend through December 31, 1998, however there shall be two separate deferral periods. The initial deferral period shall be from the Plan Effective Date through December 31, 1995. The second deferral period shall be from January 1, 1996 through December 31, 1998. A Participant shall complete a separate Agreement for each deferral period. The deferral of bonus in 10% increments will only apply to the second deferral period affecting bonuses earned in 1996, 1997 and 1998. 3.5 ALTERATION OF SALARY AND BONUS DEFERRAL. Except as provided in this Section 3.5 and in Section 3.6 a Participant's election to defer Salary and Bonus shall be irrevocable. Pursuant to this Section 3.5 a Participant may increase or decrease his/her original Salary and Bonus deferral percentage prior to December 1 of the year preceding the Deferral Year for which such adjustment is requested. A Participant may increase or decrease his/her original Salary deferral percentage by up to 5 percent of Salary in 1% increments. In no event shall the resulting percentage deferred be other than 0% or 5% through 20% of Salary. In addition, a Participant may increase or decrease his/her original Bonus deferral percentage by 10 PERCENT. However, in no event shall the resulting percentage of Bonus deferred be other than 0%, 10, 20, 30, 40 or 50%. THE ALTERATION OF BONUS DEFERRAL AMOUNTS IN 10% INCREMENTS SHALL ONLY APPLY TO THE SECOND DEFERRAL PERIOD AFFECTING BONUSES PAID IN 1997, 1998 AND 1999. 4.11 RECIPIENTS OF PAYMENT: DESIGNATION OF BENEFICIARY. All payments to be made by the Company under the Plan shall be made to the Participant during his/her lifetime, provided that if the Participant dies prior to the completion of such payments, then all subsequent payments under the Plan shall be made by the Company to the Beneficiary determined in accordance with this Section 4.11. The Participant may designate a Beneficiary by filing a written notice of such designation with the Committee in such form as the Company requires and may include contingent Beneficiaries. The Participant may from time-to-time change the designated Beneficiary by filing a new designation in writing with the Committee. IF NO DESIGNATION IS IN EFFECT OR IF AN EXISTING DESIGNATION IS DETERMINED TO BE INVALID AT THE TIME ANY BENEFITS PAYABLE UNDER THIS PLAN SHALL BECOME DUE, THE BENEFICIARY SHALL BE THE SPOUSE OF THE PARTICIPANT, OR IF NO SPOUSE IS THEN LIVING, THE REPRESENTATIVES OF THE PARTICIPANT'S ESTATE. Only Sections 3.2, 3.5 and 4.11 are affected by this Amendment. ILLINOIS TOOL WORKS INC. By: /s/ John Karpan ------------------------------ Its: Senior Vice President, Human Resources ------------------------------ Date: December 5, 1994 ------------------------------ EX-13 6 EXHIBIT 13 EXHIBIT 13 MANAGEMENT'S DISCUSSION AND ANALYSIS Introduction Illinois Tool Works Inc. is a multinational manufacturer of industrial components systems with two business segments: Engineered Components,and Industrial Systems and Consumables. The markets served by these segments are shown on pages six and seven of this report. These segments are described below. Engineered Components Segment Businesses in this segment manufacture short lead-time plastic and metal components, fasteners and assemblies; industrial fluids and adhesives; fastening tools and welding equipment. This segment primarily serves the construction, automotive and general industrial markets. Dollars in millions
Operating Revenues 1994 1993 1992 -------------------------------------------------------------------------------- Domestic $1,204 $1,083 $ 678 International 624 560 603 ------ ------ ------ Total $1,828 $1,643 $1,281 ====== ====== ======
Operating 1994 1993 1992 Income Income Margin Income Margin Income Margin ----------------------------------------------------------------------------------- Domestic $193 16.0% $153 14.1% $ 92 13.6% International 82 13.1 55 9.8 68 11.3 ---- ---- ---- Total $275 15.0 $208 12.7 $160 12.5 ==== ==== ====
Domestically, automotive businesses significantly contributed to the growth in operating revenues in 1994 compared with 1993, followed closely by the construction businesses. The automotive businesses grew as a result of improved penetration with the "Big Three" automotive companies and a stronger domestic car market. Residential and nonresidential construction markets were stronger in 1994, which resulted in increased volume in the construction business. Operating income and margins increased primarily due to sales volume gains in both the automotive and construction businesses. Miller also contributed to the overall improved financial performance due to strong demand in welding markets and internal cost reductions. From 1992 to 1993, domestic operating revenues increased due to the Miller acquisition, along with strengthening automotive and construction markets. Operating income increased due to the Miller acquisition, along with cost reductions in the automotive related businesses. Due mainly to Miller's lower margins relative to the other businesses in this segment, margins improved only slightly. Internationally, the European automotive business mainly contributed to the operating revenue growth in 1994 over 1993. Increased market penetration an an 11% increase in European car builds for the year caused revenues in the European automotive businesses to grow significantly. In 1994, the European economy picked up faster than anticipated, which resulted in larger than expected international revenue growth in this segment. Approximately 76% of internation- al revenues were generated from European operations. Operating income and margins in 1994 were up compared with 1993 primarily due to increased sales volume coupled with improved productivity in automotive businesses. Significant cost reductions and successful product mix marketing in the European construction markets also contributed to operating income and margin growth. International operating revenues were down in 1993 versus 1992 due mainly to a recessionary European economy. Operating income and margins suffered in 1993 due to price pressure and soft European automotive and construction markets, along with nonrecurring costs associated with some business units. Industrial Systems and Consumables Segment Businesses in this segment manufacture longer lead-time systems and related consumables for consumer and industrial packaging, industrial spray coating equipment and systems, and quality assurance application equipment and systems. The largest markets served by this segment are general industrial, food and beverage, and industrial capital goods. Dollars in millions
Operating Revenues 1994 1993 1992 -------------------------------------------------------------------------------- Domestic $1,025 $ 936 $ 878 International 608 580 653 ------ ------ ------ Total $1,633 $1,516 $1,531 ====== ====== ======
Operating 1994 1993 1992 Income Income Margin Income Margin Income Margin ----------------------------------------------------------------------------------- Domestic $168 16.4% $133 14.2% $119 13.6% International 56 9.2 45 7.8 65 10.0 ---- ---- ---- Total $224 13.7 $178 11.7 $184 12.0 ==== ==== ====
19 Domestically, operating revenues increased in 1994 versus 1993 due to increased volume in the industrial packaging group and the finishing systems businesses resulting from new product introductions and a growing U.S. economy. Operating income and margins increased due to volume gains and new product introductions in the industrial packaging and finishing systems businesses. The specialty engineered products businesses, which serve the capital goods markets, slightly moderated operating income growth. Operating revenues increased in 1993 compared with 1992 due to good performances in all domestic markets as a result of an improved U.S. economy. The finishing systems businesses largely contributed to the increase in operating income compared with the previous year due to benefits from significant cost reductions implemented in 1992 and new product introductions in 1993. Internationally, operating revenues in 1994 increased versus 1993 primarily due to higher sales in the industrial packaging group. The consumer packaging group also contri- buted to the revenue growth as beverage markets picked up in Europe. Approximately 73% of international revenues in this segment are derived from European operations. While the industrial packaging group showed revenue growth in 1994, operating income and margins declined due to price belief given to customers during the soft economic period in Europe. Margins are expected to improve as the European economy strengthens and the benefits of cost reductions are realized. The decline in the industrial packaging group's operating income and margins was more than offset by improved profitability for the finishing systems businesses related to new products and cost reductions. International revenues were down in 1993 compared with with 1992 as a result of the European recession, which significantly affected the industrial packaging group. Operating income and margins were lower compared with 1992 as a result of the decline in volume and increased price pressure in European markets. The European finishing systems businesses moderated the decline in international operating income and margins in 1993. Operating Costs Operating costs as a percentage of revenues were 66.2% in 1994 compared with 67.2% in 1993 and 66.1% in 1992. The decrease in 1994 versus 1993 was due to increased sales volume coupled with the overall containment of manufacturing costs. The increase in 1993 from 1992 was a result of European price pressure and the acquisition of Miller, which had higher operating costs than the Company average. 1992. Selling, Administrative and R&D Expenses Selling, administrative, and research and develop- ment expenses were 18.8% of revenues in 1994 versus 19.9% in 1993 and 20.9% in 1992. This ratio was lower because of expense reductions as a result of a Company-wide objective to reduce administrative costs. Interest Expense Interest expense declined to $26.9 million in 1994, versus $35.0 million in 1993, primarily due to a reduction in commercial paper borrowings and foreign borrowings. Interest expense declined in 1993 from $42.9 million in 1992. 1992 due to the reduction of foreign debt with higher interest rates and lower domestic interest rates on commercial paper. Other Income (Expense) Other income(expense) increased to net expense of $14.6 million in 1994 versus $7.7 million in 1993, primarily due to an increase in nonrecurring costs unrelated to operations, partially offset by gains on sales of plant and equipment in 1994 versus losses in 1993. Increased nonrecurring costs and lower interest income resulted in net expense in 1993 compared with net other income of $8.7 million in 1992. Income Taxes The effective tax rate was 38.3% in 1994, 38.5% in 1993 and 38.0% in 1992. See the Provision for Income Taxes footnote for a reconciliation of the Federal statutory rate to the effective tax rate. Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, was adopted in 1993 and had no material impact on earnings. Net Income Net income in 1994 of $277.8 million ($2.45 per share) was 34.5% higher than the 1993 net income of $206.6 million ($1.83 per share). Net income for 1993 was 7.5% higher than 1992 net income of $192.1 million ($1.72 per share). Foreign Currency Foreign currency had no material impact on earnings in 1994 versus 1993. The strong U.S. dollar against European currency resulted in a reduction of net income by 4 cents per share in 1993 compared with 1992. 20 Financial Position Net working capital at December 31, 1994 and 1993 is summarized as follows:
Increase Dollars in thousands 1994 1993 (Decrease) -------------------------------------------------------------------------------- Current Assets: Cash and equivalents $ 76,867 $ 35,395 $ 41,472 Trade receivables 612,638 544,226 68,412 Inventories 439,486 403,902 35,584 Other 133,942 110,125 23,817 ---------- ---------- --------- $1,262,933 $1,093,648 $ 169,285 ---------- ---------- --------- Current Liabilities: Short-term debt 67,002 107,073 (40,071) Accounts payable and accrued expenses 491,779 383,137 108,642 Other 69,652 55,932 13,720 ---------- ---------- --------- 628,433 546,142 82,291 ---------- ---------- --------- Net Working Capital $ 634,500 $ 547,506 $ 86,944 ========== =========== ========= Current Ratio 2.01 2.00 ==== ====
The increase in trade receivables in 1994 was primarily due to higher operating revenues in the fourth quarter of 1994 versus 1993. Inventories increased $35.6 million in 1994 mainly as a result of 1994 acquisitions. Short-term debt decreased in 1994 as a result of the reduction of short-term commercial paper borrowings of $63.9 million, partially offset by an increase in bank overdrafts. Accounts payable and accrued expenses increased at December 31, 1994 versus year-end 1993 due to overall business growth and acquisitions. Long-term debt at December 31, 1994 consisted of $125 million of 7-1/2% notes due in 1998, $125 million of 5-7/8% notes due in 2000 and $23 million of capitalized lease obligations and other debt. Long-term debt decreased $103 million from December 31, 1993, principally as a result of the repayment of all commercial paper borrowings ($164 million) during 1994. The percentage of total debt to total capitalization decreased to 18.1% at December 31, 1994, from 27.7% at December 31, 1993. Stockholders' equity was $1.542 billion at December 31, 1994 compared with $1.259 billion at December 31, 1993. Affecting equity were earnings of $278 million, dividends declared of $64 million and favorable currency translation adjustments of $37 million related to stronger European currencies. The Statement of Cash Flows for the years ended December 31, 1994 and 1993 is summarized below:
Dollars in thousands 1994 1993 -------------------------------------------------------------------------------- Net income $ 277,783 $ 206,570 Depreciation and amortization 132,149 131,726 Acquisitions (43,365) (303,802) Additions to plant and equipment (131,055) (119,931) Cash dividends paid (61,162) (55,175) Net proceeds (repayments) of short-term debt (149,103) 20,906 Proceeds from long-term debt 1,885 128,119 Repayments of long-term debt (4,949) (15,939) Other, net 19,289 11,728 --------- --------- Net increase in cash and equivalents $ 41,472 $ 4,202 ========= =========
Net cash provided by operating activities of $387 million in 1994 and $314 million in 1993 was used mainly for repayment of commercial paper borrowings in 1994 and for additions to plant and equipment and cash dividends in both years. Cash provided by the proceeds from long-term debt in 1993 was used principally to fund acquisitions. Dividends paid per share increased 10.2% to $.54 per share in 1994 from $.49 in 1993. The Company expects to continue to meet its dividend payout objective of 25-30% of the average of the last three years' net income. Management continues to believe that internally generated funds will be adequate to service existing debt and maintain appropriate debt to total capitalization and earnings to fixed charge ratios. Internally generated funds are also expected to be adequate to finance internal growth and small-to-medium sized acquisitions for cash. The Company has additional debt capacity for larger acquisitions. 21 FINANCIAL STATEMENTS
------------------------------------------------------------------------------------------------ Statement of Income Illinois Tool Works Inc. and Subsidiaries For the Years Ended December 31 -------------------------------------------- In thousands except for per share amounts 1994 1993 1992 ------------------------------------------------------------------------------------------------ Operating Revenues $3,461,315 $3,159,181 $2,811,645 Operating costs 2,290,117 2,122,286 1,858,752 Selling, administrative, and research and development expenses 650,069 629,459 586,801 Amortization of goodwill and other intangible assets 22,344 21,874 22,169 ---------- ---------- ---------- Operating Income 498,785 385,562 343,923 Interest expense (26,943) (35,025) (42,852) Amortization of retiree health care (6,968) (6,968) -- Other income(expense) (14,591) (7,699) 8,709 ---------- ---------- ---------- Income Before Income Taxes 450,283 335,870 309,780 Income taxes 172,500 129,300 117,700 ---------- ---------- ---------- Net Income $ 277,783 $ 206,570 $ 192,080 ========== ========== ========== Net Income Per Share of Common Stock $2.45 $1.83 $1.72 ===== ===== =====
Statement of Income Reinvested in the Business Illinois Tool Works Inc. and Subsidiaries ------------------------------------------------------------------------------------------------ For the Years Ended December 31 -------------------------------------------- In thousands 1994 1993 1992 ------------------------------------------------------------------------------------------------ Balance, Beginning of Year $1,129,435 $1,201,537 $1,060,931 Net income 277,783 206,570 192,080 Cash dividends declared (63,546) (56,443) (51,474) Effect of pooling of interests acquisitions 500 (222,229) -- ---------- ---------- ---------- Balance, End of Year $1,344,172 $1,129,435 $1,201,537 ========== ========== ========== The Comments on Financial Statements are an integral part of these statements. ------------------------------------------------------------------------------------------------------
Report of Independent Public Accountants To the Board of Directors of Illinois Tool Works Inc.: We have audited the accompanying statement of financial position of Illinois Tool Works Inc. (a Delaware corporation) and Subsidiaries as of December 31, 1994 and 1993, and the related statements of income, income reinvested in the business and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Illinois Tool Works Inc. and Subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. Arthur Andersen LLP Chicago, Illinois January 31, 1995 22
------------------------------------------------------------------------------------------------ Statement of Financial Position Illinois Tool Works Inc. and Subsidiaries December 31 ------------------------------ In thousands except shares 1994 1993 ------------------------------------------------------------------------------------------------ Assets Current Assets: Cash and equivalents $ 76,867 $ 35,395 Trade receivables 612,638 544,226 Inventories 439,486 403,902 Deferred income taxes 72,728 57,764 Prepaid expenses and other current assets 61,214 52,361 ---------- ---------- Total current assets 1,262,933 1,093,648 ---------- ---------- Plant and Equipment: Land 66,577 65,134 Buildings 317,714 282,104 Machinery and equipment 915,198 771,066 Equipment leased to others 69,162 62,857 Construction in progress 32,143 24,718 ---------- ---------- 1,400,794 1,205,879 Accumulated depreciation (759,559) (622,114) ---------- ---------- Net plant and equipment 641,235 583,765 ---------- ---------- Investment in Leveraged Leases 55,413 60,088 ---------- ---------- Goodwill 394,233 363,769 ---------- ---------- Other Assets 226,684 235,621 ---------- ---------- $2,580,498 $2,336,891 ========== ========== Liabilities and Stockholders' Equity Current Liabilities: Short-term debt $ 67,002 $ 107,073 Accounts payable 174,748 149,205 Accrued expenses 317,031 233,932 Cash dividends payable 17,094 14,710 Income taxes payable 52,558 41,222 ---------- ---------- Total current liabilities 628,433 546,142 ---------- ---------- Non-current Liabilities: Long-term debt 272,987 375,641 Deferred income taxes 69,516 92,470 Other 68,041 63,969 ---------- ---------- Total non-current liabilities 410,544 532,080 ---------- ---------- Stockholders' Equity: Preferred stock -- -- Common stock: Issued-114,100,500 shares in 1994 and 113,292,888 shares in 1993 201,166 170,185 Income reinvested in the business 1,344,172 1,129,435 ---------- --------- 1,545,338 1,299,620 Common stock held in treasury (1,952) (1,955) Equity adjustment from foreign currency translation (1,865) (38,996) ---------- ---------- Total stockholders' equity 1,541,521 1,258,669 ---------- --------- $2,580,498 $2,336,891 ========== ==========
The Comments on Financial Statements are an integral part of this statement. 23
------------------------------------------------------------------------------------------------ Statement of Cash Flows Illinois Tool Works Inc. and Subsidiaries For the Years Ended December 31 ------------------------------------------ In thousands 1994 1993 1992 ------------------------------------------------------------------------------------------------- Cash Provided by (Used for) Operating Activities: Net income $277,783 $206,570 $192,080 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 132,149 131,726 122,631 Change in deferred income taxe (31,686) (13,332) (4,104) (Gain)loss on sale of plant and equipment, and investment 356 2,932 (351) properties (Gain)loss on sale of operations and affiliates (379) 894 (1,973) Other non-cash items, net 16,691 12,093 3,204 -------- --------- -------- Cash provided by operating activities 394,914 340,883 311,487 Change in assets and liabilities: (Increase) decrease in - Trade receivables (81,180) (35,029) (15,807) Inventories (8,053) 23,191 26,661 Prepaid expenses and other assets 9,515 (8,109) (14,114) Increase (decrease) in - Accounts payable 11,718 (3,569) (16,496) Accrued expenses 45,839 (2,954) (16,601) Income taxes payable 10,424 (4,079) 10,229 Other, net 4,280 3,741 1,430 -------- --------- -------- Net cash provided by operating activities 387,457 314,075 286,789 -------- --------- --------- Cash Provided by (Used for) Investing Activities: Acquisition of subsidiaries (excluding cash and equivalents) and additional interest in affiliates (43,365) (303,802) (62,496) Additions to plant and equipment (131,055) (119,931) (115,313) Proceeds from sale of plant and equipment, and investment properties 22,750 14,174 12,975 Proceeds from sale of operations and affiliates 15,721 1,705 3,584 Other, net (6,224) 14,271 5,097 --------- -------- --------- Net cash used for investing activities (142,173) (393,583) (156,153) --------- -------- --------- Cash Provided by (Used for) Financing Activities: Cash dividends paid (61,162) (55,175) (50,290) Issuance of common stock 3,216 8,316 10,962 Net proceeds (repayments) of short-term debt (149,103) 20,906 (96,014) Proceeds from long-term debt 1,885 128,119 102,516 Repayments of long-term debt (4,949) (15,939) (158,274) --------- --------- -------- Net cash provided by (used for) financing activities (210,113) 86,227 (191,100) --------- --------- -------- Effect of Exchange Rate Changes on Cash and Equivalents 6,301 (2,517) (1,445) --------- -------- -------- Cash and Equivalents: Increase (decrease) during the year 41,472 4,202 (61,909) Beginning of year 35,395 31,193 93,102 --------- -------- -------- End of year $ 76,867 $ 35,395 $ 31,193 ========= ======== ======== Cash Paid During the Year for Interest $ 27,257 $ 33,052 $ 39,943 ========= ======== ======== Cash Paid During the Year for Income Taxes $ 194,460 $139,344 $ 80,795 ========= ======== ======== Liabilities Assumed from Acquisitions $ 28,438 $ 90,848 $ 5,094 ========= ======== ========
The Comments on Financial Statements are an integral part of this statement. 24 Comments on Financial Statements -------------------------------------------------------------------------------- Comments and Associated Schedules in this section furnish additional information on items in the financial statements. The comments have been arranged in the same order as the related items appear in the statements. -------------------------------------------------------------------------------- Consolidation and Translation -- The financial statements include the Company and its majority-owned subsidiaries. All significant intercompany transactions are eliminated from the financial statements. The majority of the Company's foreign subsidiaries have November 30 fiscal year-ends to facilitate inclusion of their financial statements in the December 31 financial statements. -------------------------------------------------------------------------------- Industry Segment and Geographic Information -- The Company's operations are divided into two segments: Engineered Components, and Industrial Systems and Consumables. See Management's Discussion and Analysis for a description of the segments and information regarding operating revenues and operating income. Significant accounting principles and policies of Illinois Tool Works Inc. ("the Company") are highlighted in italics. Certain reclassifications of prior years' data have been made to conform with current year reporting. Foreign subsidiaries' assets and liabilities are translated to U.S. dollars at end-of-period exchange rates. Revenues and expenses are translated at average rates for the period. Translation adjustments are not included in income but are reported as a separate component of stockholders' equity. No single customer accounted for more than 10% of consolidated revenues in 1994, 1993 or 1992. Export sales from the United States were less than 10% of total operating revenues during these years. Additional segment and geographic information for 1994, 1993 and 1992 was as follows:
In thousands 1994 1993 1992 ----------------------------------------------------------------------------------------------- Identifiable Assets: Domestic-- Engineered Components $ 551,603 $ 506,850 $ 382,271 Industrial Systems and Consumables 748,463 620,263 617,654 ---------- ---------- ---------- 1,300,066 1,127,113 999,925 ---------- ---------- ---------- International-- Engineered Components 439,813 429,370 434,416 Industrial Systems and Consumables 510,965 517,869 529,808 ---------- ---------- ---------- 950,778 947,239 964,224 ---------- ---------- ---------- Corporate 329,654 262,539 240,038 ---------- ---------- ---------- $2,580,498 $2,336,891 $2,204,187 ========== ========== ========== Plant and Equipment Additions: Engineered Components $ 85,553 $ 80,672 $ 73,226 Industrial Systems and Consumables 45,502 39,259 42,087 ---------- ---------- --------- $ 131,055 $ 119,931 $ 115,313 ========== ========== ========= Depreciation: Engineered Components $ 65,619 $ 67,746 $ 55,992 Industrial Systems and Consumables 44,186 42,106 44,470 ---------- ---------- --------- $ 109,805 $ 109,852 $ 100,462 ========== ========== =========
Identifiable assets by segment and geographic area are those assets that are specifically used in that segment and geographic area. Corporate assets are principally cash and equivalents, investments and other general corporate assets. 25 Acquisitions and Dispositions - In March 1993, the Company acquired the Miller Group Ltd. (Miller), a manufacturer of arc welding equipment. The acquisition has been accounted for as a pooling of interests, and accordingly, the results of operations have been included in the Statement of Income as of the beginning of 1993. The impact of Miller on consolidated revenues, net income and earnings per share for 1993 and 1992 was not significant. Therefore, the 1992 financial statements have not been restated to reflect the acquisition of Miller. During 1994, 1993 and 1992, the Company acquired and disposed of other operations which did not materially affect consolidated results. -------------------------------------------------------------------------------- Depreciation was $109,805,000 in 1994 compared with $109,852,000 in 1993 and $100,462,000 in 1992 and was reflected primarily in operating costs. Depreciation of plant and equipment for financial reporting is computed principally on an accelerated basis. Equipment leased to others is depreciated over the noncancelable period of the related lease. -------------------------------------------------------------------------------- Research and Development Costs are recorded as expense in the year incurred. These costs were $47,500,000 in 1994, $47,200,000 in 1993 and $42,500,000 in 1992. -------------------------------------------------------------------------------- Rental Expense was $29,720,000 in 1994, $30,550,000 in 1993 and $30,613,000 in 1992. -------------------------------------------------------------------------------- Other Income(Expense) consisted of the following:
In thousands 1994 1993 1992 -------------------------------------------------------------------------------------------------------- Interest income $ 5,586 $ 6,596 $ 9,167 Income from unconsolidated affiliates 1,844 1,584 2,888 Net reserves for disposition and relocation of certain facilities, restructuring costs, revaluation of nonoperating assets to realizable value, and nonrecurring costs unrelated to operations (16,527) (9,101) (2,622) Gain(loss) on sale of investment properties (617) -- 1,974 Gain(loss) on sale of operations and affiliates 379 (894) 1,973 Gain(loss) on sale of plant and equipment 261 (2,932) (1,623) Other, net (5,517) (2,952) (3,048) -------- ------- ------- $(14,591) $(7,699) $ 8,709 ======== ======= =======
26 The Provision For Income Taxes - Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, using the current-year recognition approach. SFAS No. 109 utilizes the liability method of accounting for income taxes. Deferred income taxes are determined based on the estimated future tax effects of differences between the financial and tax bases of assets and liabilities given the provisions of the enacted tax laws. Prior to January 1, 1993, the income tax provision was computed using Accounting Principles Board Opinion No. 11, which is based on the income and expense in the Statement of Income. The adoption of SFAS No. 109 had no material impact on the Company's results of operations in 1993. The components of the provision for income taxes were as shown below:
In thousands 1994 1993 1992 ---------------------------------------------------------------------------------------------- U.S. Federal income taxes: Current $120,606 $ 95,406 $ 73,465 Deferred (3,665) (14,383) (4,224) Investment tax credits (810) (727) (544) -------- -------- -------- 116,131 80,296 68,697 -------- -------- -------- Foreign income taxes: Current 40,290 28,239 37,915 Deferred (5,314) 4,515 (1,737) -------- -------- -------- 34,976 32,754 36,178 -------- -------- -------- State income taxes 21,393 16,250 12,825 -------- -------- -------- $172,500 $129,300 $117,700 ======== ======== ========
Income before income taxes for domestic and foreign operations was as follows:
In thousands 1994 1993 1992 ---------------------------------------------------------------------------------------------- Domestic $318,368 $253,068 $224,041 Foreign 131,915 82,802 85,739 -------- -------- -------- $450,283 $335,870 $309,780 ======== ======== ========
The reconciliation between the Federal statutory tax rate and the effective tax rate was as follows:
1994 1993 1992 ---------------------------------------------------------------------------------------------- Federal statutory tax rate 35.0% 35.0% 34.0% Increases(reductions): State income taxes, net of Federal tax benefit 3.1 3.2 2.7 Amortization of goodwill and other intangible assets .8 1.1 1.7 Difference between Federal statutory and foreign tax rates (.4) 1.1 1.4 Other, net (.2) (1.9) (1.8) ---- ---- ---- Effective tax rate 38.3% 38.5% 38.0% ==== ==== ====
27 Deferred U.S. Federal income taxes and foreign withholding taxes have not been provided on $413,100,000 of undistributed earnings of international affiliates as of December 31, 1994. In the event these earnings were distributed to the Company, the Federal income taxes payable would be reduced by foreign tax credits based on income tax laws and circumstances at the time of distribution. The net tax effect would not be expected to be material. The components of deferred income tax assets and liabilities at December 31, 1994 and 1993 were as follows:
In thousands 1994 1993 ---------------------------------------------------------------------------------------------- Deferred income tax assets: Accrued expenses and reserves $ 38,787 $ 30,085 Inventory reserves and capitalized tax cost 17,077 19,022 Employee benefit accruals 31,647 32,224 Net operating loss carryforwards 15,936 15,492 Accumulated depreciation 7,859 4,373 Allowances for uncollectible accounts 5,365 5,069 Other 23,306 8,141 -------- -------- Gross deferred tax assets 139,977 114,406 Valuation allowances (4,279) (8,189) -------- -------- Net deferred tax assets 135,698 106,217 -------- -------- Deferred income tax liabilities: Leveraged leases (40,656) (45,528) Acquisition asset write-ups (21,592) (23,907) Accumulated depreciation (25,648) (27,220) Pension assets (11,904) (12,529) LIFO inventory (9,036) (8,681) Other (23,650) (23,058) -------- -------- Deferred income tax liabilities (132,486) (140,923) -------- -------- Net deferred income tax asset (liability) $ 3,212 $(34,706) ======== ========
-------------------------------------------------------------------------------- Net Income Per Share of Common Stock is computed on the basis of the average number of shares of common stock outstanding. The dilutive effect of shares of common stock subject to issuance under stock option plans are excluded from the computation since the effect is not material. The average number of shares outstanding was 113,387,000, 112,979,000 and 111,746,000 for 1994, 1993, and 1992, respectively. -------------------------------------------------------------------------------- Cash and Equivalents included interest-bearing deposits of $18,702,000 at December 31, 1994 and $28,506,000 at December 31, 1993. Interest-bearing deposits have maturities of 90 days or less and are stated at cost, which approximates market. -------------------------------------------------------------------------------- Trade Receivables as of December 31, 1994 and 1993 were net of allowances for uncollectible accounts of $19,600,000 and $18,000,000, respectively. 28 Inventories at December 31, 1994 and 1993 were as follows:
In thousands 1994 1993 ------------------------------------------------------------------------------------------------------ Raw material $126,730 $ 94,105 Work-in-process 66,505 61,314 Finished goods 246,251 248,483 -------- -------- $439,486 $403,902 ======== ========
Inventories are stated at the lower of cost or market and include material, labor and factory overhead. The last-in, first-out (LIFO) method is used to determine the cost of the inventories of most domestic operations. The first-in, first-out (FIFO) method is used for all other inventories. Inventories priced at LIFO were 43% and 46% of total inventories as of December 31, 1994 and 1993, respectively. Under the FIFO method, which approximates current cost, total inventories would have been approximately $40,700,000 and $42,800,000 higher than reported at December 31, 1994 and 1993, respectively. The LIFO inventory values of certain domestic subsidiaries of the Company differ from the LIFO inventory values for tax purposes because of the application of purchase accounting. Inventories for financial statement purposes exceeded inventories for tax purposes by approximately $21,700,000 and $22,000,000 at December 31, 1994 and 1993, respectively. December 31, 1994 and 1993, respectively. Under the FIFO method, which approximates current cost, total inventories would have been approximately $40,700,000 and $42,800,000 higher than reported at Decemer 31, 1994 and 1993, respectively. -------------------------------------------------------------------------------- Plant and Equipment are stated at cost less accumulated depreciation. Renewals and improvements that increase the useful life of property are capitalized. Maintenance and repairs are charged to expense as incurred. -------------------------------------------------------------------------------- Investment in Leveraged Leases - The Company has investments in leveraged leases of equipment used primarily in the transportation, mining and paper processing industries. The components of the investment in leveraged leases at December 31, 1994 and 1993 were as shown below:
In thousands 1994 1993 ------------------------------------------------------------------------------------------------------ Lease contracts receivable (net of principal and interest on nonrecourse financing) $ 46,798 $ 52,652 Estimated residual value of leased assets 21,548 21,548 Unearned and deferred income (12,933) (14,112) -------- -------- Investment in leveraged leases 55,413 60,088 Deferred taxes arising from leveraged leases (40,656) (45,528) -------- -------- Net investment in leveraged leases $ 14,757 $ 14,560 ======== ========
The components of the income from leveraged leases for the years ended December 31, 1994, 1993 and 1992 were as shown below:
In thousands 1994 1993 1992 ------------------------------------------------------------------------------------------------------- Leveraged lease income (expense) before income taxes $ 65 $ 124 $(76) Investment tax credits recognized 810 727 544 Income tax benefit (expense) 211 (543) 235 ------ ----- ---- $1,086 $ 308 $703 ====== ===== ====
29 Goodwill represents the excess cost over fair value of the net assets of purchased businesses. Goodwill is being amortized on a straight-line basis over 15 to 40 years. The Company assesses the recoverability of unamortized goodwill by reviewing the sufficiency of estimated future operating income or undiscounted cash flows of the related entity to cover the amortization during the remaining amortization period. Amortization expense was $14,031,000 in 1994, $13,268,000 in 1993 and $12,262,000 in 1992. Accumulated goodwill amortization was $79,672,000 and $64,822,000, at December 31, 1994 and 1993, respectively. -------------------------------------------------------------------------------- Other Assets as of December 31, 1994 and 1993 consisted of the following:
In thousands 1994 1993 ------------------------------------------------------------------------------- Other intangible assets $134,083 $126,150 Accumulated amortization of other intangible assets (64,455) (62,395) Investment properties 31,653 39,455 Investment in and advances to unconsolidated affiliates 25,481 31,051 Prepaid pension assets 28,566 33,206 Other 71,356 68,154 -------- -------- $226,684 $235,621 ======== ========
Other intangible assets represent patents, noncompete agreements and other assets acquired with purchased businesses and are being amortized primarily on a straight-line basis over three to 17 years. Amortization expense was $8,313,000 in 1994, $8,606,000 in 1993 and $9,907,000 in 1992. Investment properties consist primarily of assets held for sale. -------------------------------------------------------------------------------- Short-term Debt as of December 31, 1994 and 1993 consisted of the following:
In thousands 1994 1993 ------------------------------------------------------------------------------- Commercial paper $ -- $ 63,881 Current maturities of long-term debt 2,009 2,619 Bank overdrafts 45,968 18,034 Other borrowings by foreign subsidiaries 19,025 22,539 ------- -------- $67,002 $107,073 ======= ========
The weighted average interest rate on other foreign borrowings was 6.1% at December 31, 1994 and 7.2% at December 31, 1993. -------------------------------------------------------------------------------- Accrued Expenses as of December 31, 1994 and 1993 consisted of accruals for:
In thousands 1994 1993 ------------------------------------------------------------------------------------------------------ Compensation $161,728 $135,855 Taxes, other than income taxes 17,727 15,310 Customer deposits 20,019 10,677 Other 117,557 72,090 -------- -------- $317,031 $233,932 ======== ========
30 Retirement Plans - The Company sponsors defined contribution retirement plans covering substantially all domestic employees. The Company's contributions to these plans were $8,400,000 in 1994, $6,900,000 in 1993 and $6,200,000 in 1992. The Company provides substantially all employees with pension benefits. The Company's principal domestic plan provides benefits based on years of service and compensation levels during the latter years of employment. Other domestic and foreign plans provide benefits similar to the principal domestic plan. In late 1992, the principal domestic pension plan was amended to provide an early retirement supplement to be paid to future retirees from their early retirement date to age 65. The pension supplement increased the prior service cost as of December 31, 1992 by $25,700,000. Subject to the limitation on deductibility imposed by Federal income tax laws, the Company's policy has been to contribute funds to the plans annually in amounts required to maintain sufficient plan assets to provide for accrued benefits. Due to the current overfunded status of the principal plan, no contributions to this plan were made in 1994, 1993 or 1992 and none are expected to be made for the next several years. The previously mentioned amendment will not significantly affect the status of future contributions. Other domestic plan contributions were minimal in 1994, 1993 and 1992. Domestic plan assets consist primarily of listed common stocks and debt securities. The components of net pension expense for the years ended December 31, 1994, 1993 and 1992 were as shown below:
In thousands 1994 1993 1992 ------------------------------------------------------------------------------------------------------ Service cost $21,622 $ 21,757 $ 19,889 Interest cost on projected benefit obligation 32,800 29,832 25,348 Actual return on plan assets (4,655) (48,002) (38,009) Net amortization and deferral (38,278) 7,879 (5,560) -------- -------- -------- Net pension expense $11,489 $ 11,466 $ 1,668 ======== ======== ========
The following table sets forth the funded status and amounts recognized in the Company's Statement of Financial Position at December 31, 1994 and 1993:
1994 1993 -------------------------------------------------------- In thousands Domestic Foreign Domestic Foreign ---------------------------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Vested $(244,931) $(65,919) $(271,698) $(47,817) Non-vested (43,866) (13,389) (50,878) (10,262) --------- -------- --------- -------- Accumulated benefit obligation (288,797) (79,308) (322,576) (58,079) Effect of projected wage increases (36,099) (14,013) (38,644) (15,707) --------- -------- --------- -------- Projected benefit obligation (324,896) (93,321) (361,220) (73,786) Plan assets at fair value 375,632 97,771 399,770 87,369 --------- -------- --------- -------- Plan assets in excess of projected benefit obligation 50,736 4,450 38,550 13,583 Unrecognized net gain (56,385) (6,909) (41,364) (4,501) Unrecognized prior service cost 40,620 29 45,667 33 Unrecognized transition asset (24,461) (9,073) (28,534) (10,640) Adjustment to recognize minimum liability (1,140) (587) (5,623) (745) --------- -------- --------- --------- Prepaid (accrued) pension asset (liability) $ 9,370 $(12,090) $ 8,696 $ (2,270) ========= ======== ========= ========
The significant actuarial assumptions at December 31, 1994, 1993 and 1992 were as follows:
1994 1993 1992 ------------------------------------------------------------------------------------------------------ Domestic plans: Discount rate 8.5% 7.6% 8.5% Expected long-term rate of return on plan assets 10.0% 9.0% 9.0% Rate of increase in future compensation levels 4.3% 4.3% 6.1% Foreign plans: Discount rate 5.5 -9.0% 5.5 - 9.0% 5.5 - 9.0% Expected long-term rate of return on plan assets 5.5 -9.0% 5.5 - 9.0% 5.5 - 10.0%
31 Postretirement Health Care Benefits - The Company provides health care benefits to substantially all retired domestic employees and their covered dependents. Generally, employees who have reached age 55 and rendered 10 years of service are eligible for these benefits, which are subject to retiree contributions, deductibles, copayment provisions and other limitations. Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions. This standard requires that the expected cost of health care benefits be charged to expense during the service lives of employees rather than the cash basis method previously used. The Company has elected to amortize the unfunded accumulated postretirement benefit obligation (APBO) of $145,500,000 as of January 1, 1993 over 20 years. A one-percentage point increase in the health care cost trend rate would increase the APBO as of December 31, 1994 by approximately $13,668,000 and the sum of the 1994 annual service and interest cost by approximately $1,666,000. Prior to 1993, the cost of providing postretirement health care benefits net of retiree contributions was recognized as expense as claims were paid and amounted to $8,900,000 in 1992. The costs of postretirement health care benefits under SFAS No. 106 for the years ended December 31, 1994 and 1993 were as shown below:
In thousands 1994 1993 ------------------------------------------------------------------------------------------------------ Service cost $ 2,187 $ 2,312 Interest cost on accumulated postretirement benefit obligation 10,715 11,912 Net amortization and deferral 7,519 6,968 ------- ------- Net postretirement benefit cost $20,421 $21,192 ======= =======
The following table sets forth the amounts recognized in the Company's Statement of Financial Position at December 31, 1994 and 1993:
In thousands 1994 1993 ------------------------------------------------------------------------------------------------------ Accumulated postretirement benefit obligation: Retirees $ (91,691) $(112,876) Active employees (29,661) (31,439) --------- --------- (121,352) (144,315) Unrecognized transition obligation 129,764 137,283 Unrecognized net gain (28,689) (3,470) --------- --------- Accrued postretirement benefit cost $ (20,277) $ (10,502) ========= =========
The significant actuarial assumptions at December 31, 1994 and 1993 were as follows:
1994 1993 ------------------------------------------------------------------------------------------------------ Discount rate 8.5% 7.6% Health care cost trend rate: Current rate 8.0% 10.0% Ultimate rate in 1999 5.0% 5.0%
32 Long-Term Debt at December 31, 1994 and 1993 consisted of the following:
In thousands 1994 1993 ------------------------------------------------------------------------------------------------------ 7-1/2% notes due December 1, 1998 $125,000 $125,000 5-7/8% notes due March 1, 2000 125,000 125,000 Commercial paper -- 100,000 Other, including capitalized lease obligations 24,996 28,260 -------- -------- 274,996 378,260 Current maturities (2,009) (2,619) -------- -------- $272,987 $375,641 ======== ========
In December 1991, the Company issued $125,000,000 of 7-1/2% notes due December 1, 1998 at 99.892% of face value. The notes may not be redeemed by the Company prior to maturity. The effective interest rate of the notes is 7.6%. In March 1993, the Company issued $125,000,000 of 5-7/8% notes due March 1, 2000 at 99.744% of face value. The notes may not be redeemed by the Company prior to maturity. The effective interest rate of the notes is 5.9% At December 31, 1994, the carrying values of the 7-1/2% and 5-7/8% notes exceeded the quoted market prices by approximately $14,000,000. In August 1992, the Company entered into a $300,000,000 revolving credit facility (RCF) expiring on August 14, 1997, which provides for borrowings under a number of options and which may be reduced or canceled at any time at the Company's option. In July 1994, the Company canceled $150,000,000 of the RCF. There were no amounts outstanding under this facility as of December 31, 1994. The RCF contains financial covenants establishing a maximum total debt to total capitalization percentage and a minimum consolidated tangible net worth. The Company was in compliance with these covenants at December 31, 1994. Commercial paper is issued at a discount and generally matures 30 to 90 days from the date of issue. The Company maintains unused commitments under the RCF equal to any commercial paper borrowings. No commercial paper was outstanding at December 31, 1994. The weighted average interest rate on commercial paper outstanding at December 31, 1993 was 3.3%. Other debt bears interest at rates ranging from 3.5% to 13.9%, with maturities through the year 2014. Some of the debt is collateralized by plant and equipment. Scheduled maturities of long-term debt for the years ended December 31 are as follows:
In thousands ------------------------------------------------ 1996 $ 2,560 1997 5,813 1998 126,368 1999 991 2000 and future years 137,255 -------- $272,987 ========
-------------------------------------------------------------------------------- Preferred Stock, without par value, of which 300,000 shares are authorized, is issuable in series. The Board of Directors is authorized to fix by resolution the designation and characteristics of each series of preferred stock. The Company has no present commitments to issue any preferred stock. 33 Common Stock, without par value, and Common Stock Held in Treasury transactions during 1994, 1993 and 1992 were as shown below. On May 7, 1993, the Board of Directors authorized a two-for-one split of the Company's common stock, with a distribution date of June 18, 1993, at a rate of one additional share for each common share held by stockholders of record on June 1, 1993. All per-share data in this report is calculated on a post-split basis.
Common Stock Common Stock Held in Treasury -------------------------------------------- Dollars in thousands Shares Amount Shares Amount ---------------------------------------------------------------------------------------- Balance, December 31, 1991 55,792,374 $139,982 (74,284) $(2,034) During 1992- Stock options exercised 288,917 8,274 5,552 356 Shares surrendered on exercise of stock options (3,000) (190) (5,552) (356) Tax benefits related to stock options exercised -- 2,776 -- -- Restricted stock grant -- 102 2,700 74 ---------- -------- ------- ------- Balance, December 31, 1992 56,078,291 150,944 (71,584) (1,960) During 1993- Adjustment to reflect the June 1993 stock split 56,078,291 -- (71,584) -- Stock options exercised 403,558 5,693 27,348 991 Shares surrendered on exercise of stock options (5,274) (194) (27,348) (991) Tax benefits related to stock options exercised -- 2,114 -- -- Shares issued for acquisitions 718,810 10,931 -- -- Shares issued for stock incentive grants and restricted stock grants 19,212 697 400 5 ----------- --------- --------- ------- Balance, December 31, 1993 113,292,888 170,185 (142,768) (1,955) During 1994- Stock options exercised 199,679 3,851 22,653 994 Shares surrendered on exercise of stock options (14,531) (635) (22,653) (994) Tax benefits related to stock options exercised -- 1,212 -- -- Shares issued for acquisitions 476,464 20,726 -- -- Restricted stock grant 146,000 5,827 200 3 ----------- -------- --------- ------- Balance, December 31, 1994 114,100,500 $201,166 (142,568) $(1,952) =========== ======== ========= ======= Authorized, December 31, 1994 150,000,000 ===========
34 Stock Options have been issued to officers and other employees under the Company's 1979 Stock Incentive Plan. At December 31, 1994, 5,000,793 shares were reserved for issuance under the plans. Option prices are 100% of the common stock fair market value on the date of grant. Stock option transactions during 1994, 1993 and 1992 were as shown below:
Number of Shares Price per Share ---------------------------------------------------------------------------------------- Under option at December 31, 1991 2,727,584 $ 1.38 to 29.75 During 1992- Granted 25,582 31.44 to 32.50 Exercised (588,938) 1.38 to 29.75 Canceled or expired (61,402) 16.13 to 29.75 --------- Under option at December 31, 1992 2,102,826 7.13 to 32.50 During 1993- Granted 688,008 36.38 to 37.00 Exercised (430,906) 7.13 to 29.75 Canceled or expired (25,402) 20.69 to 29.75 --------- Under option at December 31, 1993 2,334,526 8.19 to 37.00 During 1994- Granted 126,358 40.13 to 44.38 Exercised (222,332) 8.19 to 36.38 Canceled or expired (15,000) 29.75 to 36.38 --------- Under option at December 31, 1994 2,223,552 8.19 to 44.38 ========= Exercisable at December 31, 1994 1,406,591 8.19 to 37.00 Reserved for grant - December 31, 1993 3,011,946 - December 31, 1994 2,777,241 ------------------------------------------------------------------------------------------------------
Cash Dividends Declared were $.56 per share in 1994, $.50 per share in 1993 and $.46 per share in 1992. 35 Thirteen Year Financial Summary
------------------------------------------------------------------------------------------------------------ Dollars and shares in thousands except per share amounts 1994 1993 1992 1991 ------------------------------------------------------------------------------------------------------------ Income: Operating revenues $3,461,315 3,159,181 2,811,645 2,639,650 Operating costs $2,290,117 2,122,286 1,858,752 1,759,288 Selling, administrative, and research and development expenses $ 650,069 629,459 586,801 552,874 Amortization of goodwill and other intangible assets $ 22,344 21,874 22,169 23,979 Operating income $ 498,785 385,562 343,923 303,509 Interest expense $ (26,943) (35,025) (42,852) (44,342) Amortization of retiree health care $ (6,968) (6,968) -- -- Other income (expense) $ (14,591) (7,699) 8,709 28,592 Income before income taxes $ 450,283 335,870 309,780 287,759 Income taxes $ 172,500 129,300 117,700 107,200 Net income $ 277,783 206,570 192,080 180,559 Per share $ 2.45 1.83 1.72 1.62 Financial Position: Net working capital $ 634,500 547,506 492,118 442,041 Plant and equipment, net $ 641,235 583,765 524,116 525,695 Total assets $2,580,498 2,336,891 2,204,187 2,257,139 Long-term debt $ 272,987 375,641 251,979 307,082 Total debt $ 339,989 482,714 335,240 489,189 Stockholders' equity $1,541,521 1,258,669 1,339,673 1,212,051 Other Data: Operating income: Return on operating revenues % 14.4 12.2 12.2 11.5 Net income: Return on operating revenues % 8.0 6.5 6.8 6.8 Return on average stockholders' equity % 19.8 15.9 15.1 15.7 Cash dividends paid $ 61,162 55,175 50,290 44,108 Per share - paid $ .54 .49 .45 .40 - declared $ .56 .50 .46 .42 Book value per share $ 13.53 11.12 11.96 10.88 Common stock market price at year-end $ 43.75 39.00 32.62 31.88 Long-term debt to total capitalization % 15.0 23.0 15.8 20.2 Total debt to total capitalization % 18.1 27.7 20.0 28.8 Shares outstanding: At December 31 113,958 113,150 112,014 111,436 Average during year 113,387 112,979 111,746 111,178 Plant and equipment additions $ 131,055 119,931 115,313 106,036 Depreciation $ 109,805 109,852 100,462 91,414 Research and development expenses $ 47,500 47,200 42,500 40,300 Employees at December 31 19,500 19,000 17,800 18,700
36
------------------------------------------------------------------------------------------------------------ Dollars and shares in thousands except per share amounts 1990 1989 1988 1987 ------------------------------------------------------------------------------------------------------------ Income: Operating revenues $2,544,153 2,172,747 1,929,805 1,698,353 Operating costs $1,686,423 1,450,116 1,287,297 1,117,990 Selling, administrative, and research and development expenses $ 510,276 417,874 369,138 339,143 Amortization of goodwill and other intangible assets $ 19,181 15,829 13,106 16,812 Operating income $ 328,273 288,928 260,264 224,408 Interest expense $ (39,190) (30,995) ( 26,109) (33,439) Amortization of retiree health care $ -- -- -- -- Other income (expense) $ 10,800 11,089 (1,343) 8,815 Income before income taxes $ 299,883 269,022 232,812 199,784 Income taxes $ 117,500 105,200 92,800 93,600 Net income $ 182,383 163,822 140,012 106,184 Per share $ 1.68 1.53 1.33 1.03 Financial Position: Net working capital $ 615,055 440,406 392,283 332,290 Plant and equipment, net $ 483,549 413,578 342,794 318,690 Total assets $2,150,307 1,687,985 1,380,237 1,334,063 Long-term debt $ 430,632 334,407 225,907 309,515 Total debt $ 495,952 370,507 257,597 357,249 Stockholders' equity $1,091,842 871,124 744,727 608,541 Other Data: Operating income: Return on operating revenues % 12.9 13.3 13.5 13.2 Net income: Return on operating revenues % 7.2 7.5 7.3 6.3 Return on average stockholders' equity % 18.6 20.3 20.7 19.6 Cash dividends paid $ 35,861 28,747 23,027 20,144 Per share - paid $ .33 .27 .22 .20 - declared $ .35 .28 .23 .20 Book value per share $ 9.96 8.12 7.05 5.88 Common stock market price at year-end $ 24.13 22.44 17.25 16.50 Long-term debt to total capitalization % 28.3 27.7 23.3 33.7 Total debt to total capitalization % 31.2 29.8 25.7 37.0 Shares outstanding: At December 31 109,610 107,332 105,588 103,560 Average during year 108,872 107,028 105,350 103,272 Plant and equipment additions $ 101,183 84,263 84,107 61,052 Depreciation $ 82,913 68,890 62,064 57,839 Research and development expenses $ 40,300 32,500 26,588 24,739 Employees at December 31 18,400 15,700 14,200 13,600
37
------------------------------------------------------------------------------------------------------------------------------ Dollars and shares in thousands except per share amounts 1986 1985 1984 1983 1982 ------------------------------------------------------------------------------------------------------------------------------ Income: Operating revenues $ 961,077 596,127 592,253 497,821 446,983 Operating costs $ 622,310 390,501 382,299 325,022 287,528 Selling, administrative, and research and development expenses $ 223,765 123,292 115,845 104,594 97,195 Amortization of goodwill and other intangible assets $ 8,635 715 630 317 264 Operating income $ 106,367 81,619 93,479 67,888 61,996 Interest expense $ (14,468) (1,917) (1,914) (2,433) (2,004) Amortization of retiree health care $ -- -- -- -- -- Other income (expense) $ 51,384 (9,755) 7,139 17,433 9,698 Income before income taxes $ 143,283 69,947 98,704 82,888 69,690 Income taxes $ 63,700 38,400 38,700 33,300 29,600 Net income $ 79,583 31,547 60,004 49,588 40,090 Per share $ .78 .31 .60 .50 .41 Financial Position: Net working capital $ 293,575 172,201 182,698 168,717 130,015 Plant and equipment, net $ 317,829 137,001 118,889 108,695 109,978 Total assets $1,309,886 521,850 483,953 449,811 394,509 Long-term debt $ 468,269 9,995 11,101 11,578 10,292 Total debt $ 503,998 17,618 17,457 17,328 17,196 Stockholders' equity $ 476,550 403,439 377,557 339,952 301,540 Other Data: Operating income: Return on operating revenues % 11.1 13.7 15.8 13.6 13.9 Net income: Return on operating revenues % 8.3 5.3 10.1 10.0 9.0 Return on average stockholders' equity % 18.1 8.1 16.7 15.5 13.6 Cash dividends paid $ 18,295 17,095 15,648 14,375 13,511 Per share - paid $ .18 .17 .16 .15 .14 - declared $ .18 .18 .16 .15 .14 Book value per share $ 4.65 4.00 3.76 3.40 3.07 Common stock market price at year-end $ 12.97 8.75 7.06 6.83 4.94 Long-term debt to total capitalization % 49.6 2.4 2.9 3.3 3.3 Total debt to total capitalization % 51.4 4.2 4.4 4.8 5.4 Shares outstanding: At December 31 102,508 100,796 100,304 99,846 98,374 Average during year 102,206 100,558 100,138 99,650 98,248 Plant and equipment additions $ 44,722 39,062 39,248 24,491 24,073 Depreciation $ 37,213 27,312 25,742 24,039 22,749 Research and development expenses $ 13,161 7,795 8,029 6,022 6,426 Employees at December 31 13,700 7,300 7,800 7,300 6,500
37 Quarterly and Common Stock Data Quarterly Financial Data (Unaudited) was as summarized below:
Three Months Ended ----------------------------------------------------------------------------- March 31 June 30 September 30 December 31 ----------------- ------------------ ------------------ ------------------ In thousands except per share amounts 1994 1993 1994 1993 1994 1993 1994 1993 -------------------------------------------------------------------------------------------------- Operating revenues $771,439 $750,022 $881,042 $829,318 $870,911 $779,536 $937,923 $800,305 Operating costs 520,264 508,887 583,910 556,998 579,917 527,854 606,026 528,547 Operating income 91,316 77,585 131,113 101,935 126,337 93,529 150,019 112,513 Net income 50,915 42,027 70,727 54,799 71,399 50,946 84,742 58,798 Net income per share .45 .37 .62 .49 .63 .45 .75 .52 --------------------------------------------------------------------------------------------------------
Common Stock Price and Dividend Data - The common stock of Illinois Tool Works Inc. is listed on the New York Stock Exchange and the Chicago Stock Exchange. Quarterly market price and dividend data for 1994 and 1993 were as shown below:
Market Price Dividends Per Share Paid --------------------- High Low Per Share -------------------------------------------------------------------------------------------------- 1994 First quarter $45-1/8 $37 $.13 Second quarter 42-1/4 36-3/4 .13 Third quarter 44-7/8 37 .13 Fourth quarter 45-1/2 39-5/8 .15 1993 First quarter $39 $32-1/2 $.12 Second quarter 38-3/4 34-7/8 .12 Third quarter 40-1/2 35-1/4 .12 Fourth quarter 39-7/8 36 .13
The approximate number of holders of record of common stock as of February 22, 1995 was 3,700. This number does not include beneficial owners of the Company's securities held in the name of nominees. 38 EX-21 7 EXHIBIT 21 EXHIBIT 21 FEBRUARY 1995 ILLINOIS TOOL WORKS INC. SUBSIDIARIES AND AFFILIATES
PERCENT COMPANY RELATIONSHIP OWNERSHIP ------- ------------ --------- Accu-Lube Manufacturing GmbH - Germany Affiliate 50% Action Fasteners Pty. Ltd. - Australia (1) Subsidiary 100% Andrex Radiation Products A/S - Denmark Subsidiary 100% Andrex NDT Products (UK) Ltd. - England (2) Subsidiary 100% Automated Label Systems Company - Ohio (3) Partnership 100% Buell Industries, Inc. - Delaware Subsidiary 100% Cintas Inyectadas Citex S.A. - Spain (4) Subsidiary 100% Coding Products Inc. - Michigan (5) Subsidiary 100% Crones & Co. GmbH - Germany (6) Subsidiary 100% Cumberland Leasing Co. - Illinois (7) Subsidiary 100% Denepark Pty Ltd. - Australia Subsidiary 100% Devcon Limited - Ireland Subsidiary 100% Devcon de Mexico S.A. - Mexico Subsidiary 100% DeVilbiss Ransburg de Mexico S.A. de C.V.- Mexico (8) Subsidiary 100% DeVilbiss Holding S.A. - France (9) Subsidiary 100% DeVilbiss Equipmentos Para Pintura Industrial Ltda - Brazil Subsidiary 100% Envases Multipac, S.A. de C.V. - Mexico Affiliate 49% Etanco, S.A. - Spain (10) Subsidiary 10% Expandet S.A. - France (11) Subsidiary 100% Fixing System S.A. - Switzerland Subsidiary 100% Fixlock A.B. - Sweden Subsidiary 100% Gema Volstatic AG - Switzerland (8) Subsidiary 100% Gema Volstatic S.A. - France (8) Subsidiary 100% Gerrard-Signode Pte. Ltd. - Singapore Affiliate 49% Glen Lake Venture - Illinois Affiliate 50% Gunther S.A. - France (9) Subsidiary 100% ITW Asia (Pte.) Limited - Singapore Subsidiary 100% ITW Austria Vertriebs-Ges.m.b.H.- Austria (12) Subsidiary 100% ITW Ateco GmbH - Germany (6) Subsidiary 100% ITW Befestigungssyteme GmbH - Germany (13) Subsidiary 100% ITW Bevestigingssystemen B.V. - Netherlands ( (14) Subsidiary 100% ITW Belgium S.A. - Belgium Subsidiary 100% ITW Canada Inc. - Canada Subsidiary 100% ITW Cayman - Cayman Islands (15) Subsidiary 100% ITW de Argentina S.A. - Argentina (16) Subsidiary 100% ITW de France S.A. - France (9) Subsidiary 100% ITW (Deutschland) GmbH - Germany (8) Subsidiary 100% ITW Development Corporation - Illinois Subsidiary 100% ITW do Brasil Participacoes Ltda. - Brazil Subsidiary 100% ITW Dynatec (Hong Kong) Limited - Hong Kong Affiliate 50% ITW Dynatec Kabushiki Kaisha - Japan Affiliate 50% ITW Dynatec Klebetechnik Holding GmbH- Germany (6) Subsidiary 100% ITW Dynatec Singapore Pte. Ltd. - Singapore Affiliate 50% ITW Dynatec Thailand Ltd. - Thailand Affiliate 50% ITW Espana S.A. - Spain (17) Subsidiary 100% ITW FSC Inc. - Barbados Subsidiary 100% ITW Fastex Italia S.p.A. - Italy Subsidiary 100% ITW Finishing Systems & Products Pty. Ltd. - Australia (8) Subsidiary 100% ITW Fixations - France (18) Subsidiary 100% ITW Fixfast AB - Sweden (19) Subsidiary 100% ITW Hi-Cone Holdings - Ireland (20) Subsidiary 100% ITW Hi-Cone - Ireland (21) Subsidiary 100% I.T.W. Inc. - Illinois Subsidiary 100% ITW Industriesysteme GmbH - Germany (22) Subsidiary 100% ITW Industry Co., Ltd. - Japan (23) Subsidiary 100% ITW International Inc. - Delaware Subsidiary 100% ITW Italia S.p.A. - Italy Subsidiary 100% ITW Korea Inc. - Korea Subsidiary 100% ITW Leasing & Investments Inc. - Delaware Subsidiary 100% ITW Limited - England Subsidiary 100% ITW Mapri Industria e Commercio Ltda. - Brazil (24) Subsidiary 94.3% ITW Meritex Sdn Bhd - Malaysia (25) Subsidiary 100% ITW Mima Europe S.A. - France ( 9) Subsidiary 100% ITW Nederland B.V. - Netherlands Subsidiary 100% ITW New Zealand - New Zealand Subsidiary 100%
PAGE 2 FEBRUARY 1995 ILLINOIS TOOL WORKS INC. SUBSIDIARIES AND AFFILIATES
PERCENT COMPANY RELATIONSHIP OWNERSHIP ------- ------------ --------- ITW-Nifco Inc. - Delaware Affiliate 50% ITW Oberflachentechnik GmbH - Germany (6) Subsidiary 100% ITW Overseas Holdings Inc. - Delaware Subsidiary 100% ITW Overseas Investment Corp. - Delaware Subsidiary 100% ITW Packaging Corporation - Delaware Subsidiary 100% ITW Participations S.A. - France Subsidiary 100% ITW Polska Inc. - Delaware Subsidiary 100% ITW Polska Sp. z o.o. - Poland (26) Subsidiary 100% ITW Residuals Inc. - Delaware (7) Subsidiary 100% ITW Shelf Corporation - Delaware Subsidiary 100% ITW Shippers S.A. - Belgium (27) Subsidiary 100% ITW Signode India Limited - India Affiliate 29% ITW South America Inc. - Delaware Subsidiary 100% ITW Surfaces & Finition S.A. - France (28) Subsidiary 100% ITW Switches Asia Ltd. - Taiwan Subsidiary 100% I.T.W. (Thailand) Co., Ltd. - Thailand Subsidiary 100% ITW XP Inc. - Delaware Subsidiary 100% Illinois Tool Works FSC Inc - Barbados Subsidiary 100% Impex Walcar B.V. - Netherlands (14) Subsidiary 100% IMSA Signode, S.A. de C.V. - Mexico Affiliate 50% Inmobiliaria Cit, S.A. de C.V. - Mexico Affiliate 49% Indiana Pickling and Processing Company - Indiana (29) Affiliate 35% Jambro Ltd. - New Zealand Subsidiary 100% Jambro Pty. Ltd. - Australia (1) Subsidiary 100% Kormag Industries e Comercio Ltda. - Brazil Affiliate 40% LSH Holding Corp. - Delaware Subsidiary 100% Liljendals Bruk Ab - Finland Subsidiary 100% Loveshaw Corporation, The - Delaware (30) Subsidiary 100% Macon Klebetechnik GmbH - Germany (31) Subsidiary 100% Maple Control Company - Michigan Subsidiary 100% Maple Roll Leaf Company, Inc. - Michigan (32) Subsidiary 100% Meritex (Penang) Sdn. Bhd. - Malaysia (25) Subsidiary 100% Meritex Plastic Industries, Inc. - Texas Subsidiary 100% Meypack Verpackungs und Palettiertechnik GmbH - Germany (6) Subsidiary 100% Miller Automation, Inc. - Wisconsin (33) Subsidiary 100% Miller Electric Mfg. Co. - Wisconsin (33) Subsidiary 100% Miller Europe, S.p.A. - Italy (34) Subsidiary 100% Miller Group France S.A., The - France (9 ) Subsidiary 100% Miller Group, Ltd., The - Wisconsin Subsidiary 100% Miller Insurance, Ltd. - Bermuda (33) Subsidiary 100% Miller Services of Appleton, Ltd. - Wisconsin (33) Subsidiary 100% Miller Thermal, Inc. - Wisconsin (33) Subsidiary 100% Mima, Inc. - Florida Subsidiary 100% Minigrip Inc. - Delaware Subsidiary 100% N. A. Woodworth Company - Michigan Subsidiary 100% Nifco Hi-Cone Leasing Company Limited - Japan Affiliate 40% Odesign, Inc. - Illinois Subsidiary 100% Odesign II, Inc. - Illinois Subsidiary 100% Odesign III, Inc. - Illinois Subsidiary 100% Odesign IV, Inc. - Illinois Subsidiary 100% Oxo Welding Equipment Company Inc. - Illinois (33) Subsidiary 100% Pro/Mark Corporation - Connecticut Subsidiary 100% Packaging Leasing Systems Inc. - Delaware Subsidiary 80% Padlocker, Inc. - New York (30) Subsidiary 100% Paslode Corporation - Illinois Subsidiary 100% Paslode Corporation - Florida - Florida (35) Subsidiary 100% Paslode S.A.R.L. - France (9) Subsidiary 100% Plastiglide Manufacturing Leasing Limited Partnership - Illinois Partnership 60.4% Pow Con Incorporated - Delaware (33) Subsidiary 100% Ransburg Comercial Ltda. - Brazil (8) Subsidiary 100% Ransburg Corporation - Indiana Subsidiary 100% Ransburg Equipamentos Industrials Ltda. - Brasil (36) Affiliate 50% Ransburg-Gema KK - Japan (8) Subsidiary 100% Ransburg-Gema s.r.l. - Italy (8) Subsidiary 100%
PAGE 3 FEBRUARY 1995 ILLINOIS TOOL WORKS INC. SUBSIDIARIES AND AFFILIATES
PERCENT COMPANY RELATIONSHIP OWNERSHIP ------- ------------ --------- Ransburg Manufacturing Corporation - Indiana (8) Subsidiary 100% Scanilec B.V. - Netherlands (14) Subsidiary 100% Shippers Paper Products Company - Ohio Subsidiary 100% Signode B.V. - Netherlands (14) Subsidiary 100% Signode Bernpak GmbH - Germany Subsidiary 100% Signode Bernpak, Inc. - Delaware Subsidiary 100% Signode France - France (9) Subsidiary 100% Signode Hong Kong Limited - Hong Kong Subsidiary 100% Signode International Trading Corporation - Illinois Subsidiary 100% Signode Ireland Limited - Ireland (37) Affiliate 50% Signode Kabushiki Kaisha - Japan Subsidiary 100% Signode Overseas Inc. of Illinois - Illinois Subsidiary 100% Signode Packaging Systems Limited - East Africa Affiliate 20% Signode Pickling Corporation - Delaware Subsidiary 100% Signode Systems GmbH - Germany Subsidiary 100% Simco (Europe) B.V. - Netherlands (8) Subsidiary 100% Simco Japan Kabushiki Kaisha - Japan (38) Affiliate 50% Simco (Nederland) B.V. - Netherlands (39) Subsidiary 100% Societe de Prospection et D'Invention Techniques - France (9) Subsidiary 100% Societe Novvelle SARL Provence Plastic - France (18) Subsidiary 100% Soparca S.A. - France (9) Subsidiary 100% Steinmax GmbH - Germany (6) Subsidiary 100% Vortec Corporation - Ohio (8) Subsidiary 100% W. A. Deutsher Pty. Ltd. - Australia Subsidiary 100% Waterbury Buckle Company - Connecticut Subsidiary 100%
( 1) Wholly owned by W. A. Deutsher Pty. Ltd. ( 2) Ownership interest is by Andrex Radiation Products A/S ( 3) 50% owned by ITW Packaging Corporation; 50% owned by ITW XP Inc. ( 4) Wholly owned by ITW Espana S.A. ( 5) 80% owned by Maple Control Company; 20% owned by Illinois Tool Works Inc. ( 6) Wholly owned by ITW (Deutschland) GmbH ( 7) Wholly owned by ITW Leasing & Investments Inc. ( 8) Wholly owned by Ransburg Corporation ( 9) Wholly owned by ITW Participations S.A. (10) Ownership interest is by ITW Espana S.A. (11) Wholly owned by Soparca S.A. (12) Wholly owned by Automated Label Systems Company (13) 64% owned by ITW (Deutschland) GmbH; 36% owned by ITW Ateco GmbH (14) Wholly owned by ITW Nederland B.V. (15) Wholly owned by ITW Overseas Holdings Inc. (16) Wholly owned by ITW South America Inc. (17) Wholly owned by ITW International Inc. (18) Wholly owned by Societe de Prospection et D'Invention Techniques (19) Wholly owned by Fixlock A.B. (20) .1% owned by ITW Cayman; 99.9% by ITW Overseas Investment Corp. (21) .1% owned by ITW Cayman; 99.9% by ITW Hi-Cone Holdings (22) Wholly owned by Signode Bernpak GmbH (23) Wholly owned by Ransburg-Gema KK (24) 94% owned by Illinois Tool Works Inc.; .3% owned by ITW do Brasil Paricipacoes Ltda. (25) Wholly owned by Meritex Plastic Industries, Inc. (26) Wholly owned by ITW Polska Inc. (27) Wholly owned by ITW Belgium S.A. (28) Wholly owned by DeVilbiss Holding, S.A. - France (29) Ownership interest is by Signode Pickling Corporation (30) Wholly owned by LSH Holding Corp. (31) Wholly owned by ITW Dynatec Klebetechnik Holding GmbH (32) Wholly owned by Maple Control Company (33) Wholly owned by The Miller Group, Ltd. (34) 98.5% owned by Miller Electric Mfg. Co.; 1.5% owned by The Miller Group, Ltd. (35) Wholly owned by Paslode Corporation (36) Ownership interest is by Ransburg Comercial Ltda. (37) Ownership interst is by ITW Limited (38) Ownership interest is by Ransburg Corporation (39) Wholly owned by Simco (Europe) B.V. EX-22 8 EXHIBIT 22 EXHIBIT 22 ILLINOIS TOOL WORKS INC. 3600 WEST LAKE AVENUE GLENVIEW, ILLINOIS 60025 March 27, 1995 PROXY STATEMENT For the Annual Meeting of Stockholders of Illinois Tool Works Inc. To Be Held on May 5, 1995 ELECTION OF DIRECTORS Fourteen directors of the Company are to be elected to hold office until the next annual meeting or until their successors are duly elected and qualified or until their earlier resignation or removal. Unless otherwise directed, proxies will be voted at the meeting for the election of the persons listed below, or in the event of an unforeseen contingency, for different persons as substitutes. The Nominating Committee and the Board as a whole are recommending the addition of Messrs. Crowther and Farrell as directors in anticipation of the retirement of Messrs. Cathcart and Nichols at the 1996 annual meeting. Calvin A. H. Waller is also being recommended as a director in light of the mandatory retirement of four directors in 1997. The Company anticipates that three additional directors will stand for election at the 1996 annual meeting of stockholders. Set forth below are the name, age, principal occupation and other information concerning each nominee. Julius W. Becton, Jr. (68) Former President, Prairie View A&M University from 1989 through 1994. Mr. Becton served as Director of the Federal Emergency Management Agency from 1985 to 1989 after 40 years of commissioned service in the U.S. Army, during which he attained the rank of Lieutenant General. He is a director of The Wackenhut Corporation, and has been a director of the Company since 1992. 1 Silas S. Cathcart (68) Former Chairman, Kidder, Peabody Group, Inc. (investment banking) from January 1989 through January 1990, Chairman and Chief Executive Officer from February 1988 to January 1989, and President and Chief Executive Officer from May 1987 to February 1988. In May 1986, Mr. Cathcart retired as Chairman of Illinois Tool Works Inc., a position that he had held since 1972. Mr Cathcart is a director of Baxter International Inc., General Electric Company and The Quaker Oats Company and has been a director of the Company since 1964. Susan Crown (36) Vice President, Henry Crown and Company since 1984. Henry Crown and Company is a family owned and operated company with investments in securities, real estate, resort properties and manufacturing operations. Ms. Crown is a director of Baxter International Inc. She is also a trustee and executive committee member of Rush-Presbyterian-St. Luke's Medical Center in Chicago and a trustee of The Yale Corporation. She has been a director of the Company since 1994. H. Richard Crowther (62) Vice Chairman of Illinois Tool Works Inc. Mr. Crowther will retire as Vice Chairman of the Company on March 31, 1995, a position he has held since 1990. Prior to becoming Vice Chairman, Mr. Crowther was Executive Vice President, and has a total of 36 years with the Company. W. James Farrell (52) President of the Company since December 1994; Executive Vice President from 1983 to December 1994, with a total of 29 years with the Company. Mr. Farrell is a director of Hon Industries Inc. Richard M. Jones (68) Former Chairman and Chief Executive Officer, Guaranty Federal Savings Bank from 1989 through 1991. Mr. Jones was President of Sears, Roebuck and Co. (diversified merchandise, insurance, real estate and financial services) from 1986 to 1988 and Chief Financial Officer from 1980 to 1988. Mr. Jones is a director of Applied Power Inc., baker, Fentress & Co., Guaranty Federal Savings Bank and MCI Communications Corp., and has been a director of the Company since 1988. George D. Kennedy (68) Former Chairman, Mallinckrodt Group Inc. (animal and human health) from 1991 to 1994 and Chairman and Chief Executive Officer from 1986 to 1991. Mr. Kennedy is a director of American National Can Corporation, Brunswick Corporation, Kemper National Insurance Company, Kemper Corporation, Mallinckrodt Group Inc., Scotsman Industries, Inc. and Stone Container Corporation, and has been a director of the Company since 1988. Richard H. Leet (68) Former Vice Chairman, Amoco Corporation (oil and chemicals) from March 1991 to October 1991 and Executive Vice President from 1983 through February 1991. Mr. Leet is a director of Great Lakes Chemical Corporation, Landauer Inc. and Vulcan Materials Corp., was formerly President of the Boy Scouts of America, and has been a director of the Company since 1988. Robert C. McCormack (55) Partner, Trident Capital L.P. (venture capital) since January 1993; Assistant Secretary of the Navy from 1990 to 1993; Deputy Under Secretary of Defense from 1987 to 1990; and Managing Director, Morgan Stanley & Co. Incorporated (investment banking) from 1985 to 1987. Mr. McCormack has been a director of the Company since 1993 and was previously a director from 1978 through 1987. John D. Nichols (64) Chairman and Chief Executive Officer of the Company since May 1986; President and Chief Executive Officer from January 1982 to May 1986. Mr. Nichols is a director of Household International Inc., Philip Morris Cos. Inc., Rockwell International Corporation and Stone Container Corporation. He has been a director of the Company since 1981. 2 Phillip B. Rooney (50) President and Chief Operating Officer, WMX Technologies Inc. (environmental services) since 1985, Chairman and Chief Executive Officer, Waste Management Inc. (solid waste management) since November 1993; Chairman and Chief Executive Officer, Wheelabrator Technologies Inc. (waste-to-energy) since 1990; and Chairman of the Board, Rust International Inc. (engineering, design and construction services) since January 1983. Mr. Rooney is a director of Caremark International Inc., Chemical Waste Management, Inc., Rust International Inc., The ServiceMaster Company, Urban Shopping Centers Inc., Waste Management International plc, Wheelabrator Technologies Inc. and WMX Technologies, Inc., and has been a director of the Company since 1990. Harold B. Smith (61) Chairman of the Executive Committee of the Company since 1982. Mr. Smith is a director of W.W. Grainger Inc. and Northern Trust Corporation and a Trustee of The Northwestern Mutual Life Insurance Company. He has been a director of the Company since 1968. Ormand J. Wade (55) Former Vice Chairman, Ameritech Corp. (telecommunications products and services) from 1989 to 1993; President of the Ameritech Bell Group form 1987 to 1989; and President and Chief Executive Officer, Illinois Bell Telephone Company from 1982 through 1986. Mr. Wade is a director of Andrew Corporation, NBD Bancorp Inc. and Westell Inc. He has been a director of the Company since 1985. Calvin A. H. Waller (57) Senior Vice President, ICF Kaiser International Inc. (energy and environmental group) since August 1994. Former President and Chief Executive Officer of RKK Ltd. (environmental technology) from 1993 to 1994 and Chief Operating Officer and Executive Vice President from November 1991 to May 1993. After 32 years of military service, Mr. Waller retired form the Army in October 1991 with the rank of Lieutenant General, having served, among other positions, as Deputy Commander-in-Chief of Operations Desert Shield and Desert Storm. Mr. Waller is a director of Interpoint Corp. and RADICA Games, Ltd. of Hong Kong. 3 SECURITY OWNERSHIP The following table sets forth information regarding ownership of the Company's Common Stock as of December 31, 1994 by each director and nominee for director; by each of the named executive officer; by directors, nominees and executive officers as a group; and by other persons who, to the knowledge of the Company, own of record or beneficially more than 5% of the outstanding Common Stock of the Company.
Amount and Nature of Name of Beneficial Owner or Group Beneficial Ownership ( ) Percent of Class --------------------------------- ------------------------- ---------------- Directors and Nominees (Other Than Executive Officers) Julius W. Becton, Jr. . . . . . . . . . . . . . . . . . 1,300(2) * Silas S Cathcart. . . . . . . . . . . . . . . . . . . . 185,974(3) * Susan Crown . . . . . . . . . . . . . . . . . . . . . . 3,900(2)(4) * Richard M. Jones. . . . . . . . . . . . . . . . . . . . 5,500(2) * George D. Kennedy . . . . . . . . . . . . . . . . . . . 1,760(2) * Richard H. Leet . . . . . . . . . . . . . . . . . . . . 4,500( ) * Robert C. McCormack . . . . . . . . . . . . . . . . . . 7,274,250(5)(6) 6.3 Phillip B. Rooney . . . . . . . . . . . . . . . . . . . 5,500( ) * Harold B. Smith . . . . . . . . . . . . . . . . . . . . 19,785,454(6)(7) 17.2 Ormand J. Wade. . . . . . . . . . . . . . . . . . . . . 1,900(2) * Calvin A. H. Waller . . . . . . . . . . . . . . . . . . -- -- Executive Officers H. Richard Crowther . . . . . . . . . . . . . . . . . . 186,532(8)(9) * W. James Farrell. . . . . . . . . . . . . . . . . . . . 95,686(8)(10) * Robert H. Jenkins . . . . . . . . . . . . . . . . . . . 58,036(8)(11) * John D. Nichols . . . . . . . . . . . . . . . . . . . . 426,428(8)(12) * Frank S. Ptak . . . . . . . . . . . . . . . . . . . . . 69,702(8) * Directors, Nominees and Executive Officers as a Group (24 Persons) . . . . . . . . . . . . . . . . 21,099,787(8) 18.3 Other Principal Beneficial Owners Edward Byron Smith, Jr. . . . . . . . . . . . . . . . . 7,592,906(6)(13) 6.6 The Northern Trust Company. . . . . . . . . . . . . . . 21,479,850(14) 18.6 -------------- * Less than 1% of Class (1) Unless otherwise noted, ownership is direct. (2) Includes 900 shares of restricted stock granted on January 3, 1995 under the Directors' Restricted Stock Plan. (3) Includes 12,920 shares owned by Mr. Cathcart's wife, as to which he disclaims beneficial ownership; 11,684 shares owned by a trust as to which Mr. Cathcart has sole voting and investment power; 560 shares owned by a trust as to which he shares voting and investment power; and 6,000 shares owned by a charitable organization of which he is president and a director. (4) Includes 1,000 shares owned in a trust as to which Ms. Crown shares voting and investment power. (5) Includes 3,760 shares held in a revocable living trust as to which Mr. McCormack has sole voting and investment power, 200 shares owned in a trust as to which he shares voting and investment power with The Northern Trust Company, and 7,270,090 shares as described in footnote 6. (6) Robert C. McCormack, Harold B. Smith, Edward Byron Smith, Jr. and The Northern Trust Company are trustees of twelve trusts owning 7,270,090 shares as to which they share voting and investment power. 6 (7) Includes 151,088 shares held in a revocable living trust as to which Harold B. Smith has sole voting and investment power; 11,018,732 shares owned in twelve trusts as to which he shares voting and investment power with The Northern Trust Company and others; 1,099,240 shares owned in ten trusts as to which he shares voting and investment power; 7,270,090 shares as described in Footnote 6; and 44,056 shares owned by a charitable foundation of which he is a director. (8) Includes shares covered by stock options exercisable within 60 days of December 31, 1994 as follows: Mr. Crowther, 35,068; Mr. Farrell, 47,496; Mr. Jenkins, 25,500; Mr. Nichols, 12,500; Mr. Ptak, 34,750; and directors, nominees and executive officers as a group, 320,564. (9) Includes 146,464 shares held in a revocable living trust as to which Mr. Crowther shares voting and investment power. (10) Includes 1,962 shares held by Mr. Farrell as custodian for his minor children, as to which he disclaims beneficial ownership. (11) Includes 100 shares allocated to Mr. Jenkins' account in the Company's Savings and Investment Plan. (12) Includes 322,038 shares held in a family partnership of which Mr. Nichols is general partner and shares voting and investment powers; 5,600 shares owned in a revocable living trust as to which Mr. Nichols has sole voting and investment power; 7,200 shares owned by Mr. Nichols' wife, as to which Mr. Nichols disclaims beneficial ownership; 6,148 shares held by Mrs. Nichols as custodian for their minor children, as to which Mr. Nichols disclaims beneficial ownership; 3,522 shares allocated to his account in the Company's Savings and Investment Plan; and 69,430 shares owned by a charitable foundation of which he is a co-trustee. (13) Includes 10,874 shares owned in a trust as to which Edward Byron Smith, Jr. has sole voting and investment power; 96,200 shares owned in a trust as to which The Northern Trust Company has sole voting and investment power; 122,392 shares owned in three trusts as to which Mr. Smith shares voting and investment power, and 7,270,090 shares as described in Footnote 6. Also includes the following shares held for the benefit of Mr. Smith's minor children: 65,190 shares owned in two trusts as to which The Northern Trust Company has sole voting and investment power; 6,720 shares held in a trust as to which Mr. Smith and his wife share voting and investment power; 9,320 shares held in a trust as to which Mr. Smith's wife and sisters share voting and investment power; and 4,400 shares owned in two trusts as to which Mr. Smith sisters share voting and investment power. (14) Including its holdings as trustee described in Footnotes 5, 6, 7, and 13, The Northern Trust Company and its affiliates act as sole fiduciary or co- fiduciary of trusts and other fiduciary accounts which own an aggregate of 21,479,850 shares. They have sole voting power with respect to 2,064,801 shares and share voting power with respect to 18,770,111 shares. They have sole investment power with respect to 1,795,806 shares and share investment power with respect to 19,448,598 shares. In addition, The Northern Trust Company holds in other accounts, but does not beneficially own, 9,923,449 shares, resulting in aggregate holdings by The Northern Trust Company of 31,403,299 shares (27.2%).
Because of their holdings individually and as trustees, the holdings of their immediate families and/or their positions with the Company, Robert C. McCormack, Edward Byron Smith Jr. and Harold B. Smith may be deemed to be "controlling persons" of the Company within the meaning of the Securities Act of 1933, as amended. The Company maintains normal commercial banking relationships with The Northern Trust Company, which also acts as the trustee under the Company's pension plan. The Northern Trust Company is wholly owned subsidiary of Northern Trust Corporation. Harold B. Smith, a director of the Company, is also a director of Northern Trust Corporation. The Northern Trust Company's address is 50 South LaSalle Street, Chicago, IL 60675 and the address of each of the other beneficial owners of more than 5% of the Company's Common Stock is c/o The Secretary, Illinois Tool Works Inc., 3600 West Lake Avenue, Glenview, IL 60025. 7 EXECUTIVE COMPENSATION The table below summarizes the compensation of the Chief Executive Officer and the other four most highly compensated Executive Officers. Summary Compensation Table
Long-Term Compensation --------------------------------------- Annual Compensation Awards Payouts --------------------------------------------- ------------------------- ------------ Securities Restricted Underlying All Other Name and Other Annual Stock Options LTIP Compensation Principal Position Year Salary($)(1) Bonus($)(2) Compensation($)( ) Awards($)(4) ($)( ) Payouts($) ($) ------------------ ---- ------------ ----------- ------------------ ------------- ---------- ------------ ------------ John D. Nichols. . . . 1994 652,067 750,000 --- --- --- 1,042,776( ) 27,014( )( ) Chairman and Chief 1993 600,000 567,600 --- --- 50,000 950,111( ) 12,269 Executive Officer 1992 580,684 530,900 --- --- --- 782,097( ) 6,365 H. Richard Crowther. . 1994 282,298 287,100 --- 218,750 17,918 --- 12,136( )( ) Vice Chairman 1993 273,000 258,000 --- --- 42,708 --- 8,322 1992 283,651 250,000 --- --- 6,082 --- 6,806 W. James Farrell . . . 1994 250,650 291,300 --- 1,400,000 --- --- 9,836( )( ) President 1993 242,000 228,000 --- --- 36,986 --- 7,332 1992 233,448 146,000 --- --- --- --- 6,860 Robert H. Jenkins. . . 1994 214,641 218,000 --- 1,400,000 --- --- 7,813( )( ) Executive 1993 200,000 177,000 --- --- 30,000 --- 6,050 Vice President 1992 186,905 150,000 --- --- --- --- 5,452 Frank S. Ptak. . . . . 1994 192,165 195,000 --- 1,400,000 --- --- 7,380( )( ) Executive 1993 180,000 177,000 --- --- 30,000 139,758(7) 5,507 Vice President 1992 172,500 173,000 --- --- --- --- 5,003 _____________ (1) The dollars displayed in the salary column reflect the actual salary earned during 1994, including any amounts deferred under the Company's 1993 Executive Contributory Retirement Income Plan or the Savings and Investment Plan or both. (2) Amounts awarded under the Executive Incentive Plan are calculated on the base salary of record as of December 31 for the respective years. (3) Perquisites and other personal benefits, securities or property in the aggregate do not exceed the threshold reporting level of the lesser of $50,000 or 10% of total salary and bonus reported for the named Executive Officer. (4) Represents the value of restricted stock grants authorized under the 1979 Stock Incentive Plan and approved by the Compensation Committee at their December 1994 meeting. The number of shares granted and their value as of December 31, 1994 for each of the officers is as follows: Mr. Crowther, 5,000 shares ($218,750); Mr. Farrell, 32,000 shares ($1,400,000); Mr. Jenkins, 32,000 shares ($1,400,000); and Mr. Ptak, 32,000 shares ($1,400,000). These individuals may exercise full voting rights as to the restricted stock and are entitled to receive all dividends and other distributions paid on the restricted stock from the date of grant until forfeited or sold. Mr. Crowther's shares will vest in five equal annual installments commencing December 31, 1995. Messrs. Farrell, Jenkins and Ptak's shares each vest in the following manner: 3,200 on December 31,1995; 4,800 on December 31, 1996; 6,400 on December 31, 1997; 6,400 on December 31, 1998; 6,400 on December 31,1999; 3,200 on December 31, 2000; and 1,600 on December 31, 2001. Unvested shares will be forfeited if the executive leaves the Company before retirement. (5) Stock option grants have been adjusted where appropriate to reflect the 2 for 1 stock split effective June 1993. (6) For 1994, the market value of 20,000 phantom stock units, the vesting of which was approved by the Compensation Committee on February 15, 1995 to be effective March 31, 1995, was $875,000 as of 8 December 31, 1994; and interest and dividends credited on 264,000 shares in Mr. Nichols' Phantom Stock Account totaled $167,776. For 1993, the market value as of the date of vesting (March 31, 1994) for 20,000 phantom shares was $810,000, and interest and dividends credited on 244,000 shares in his Account totaled $140,111. For 1992, the market value at the date of vesting (December 11, 1992) for 20,000 phantom stock units was $628,750, and interest and dividends credited on 264,000 shares to his Account totaled $153,347. The Compensation Committee previously authorized the distribution to Mr. Nichols on December 31, 1992 of (i) the market share of and accrued dividends and interest on the 20,000 phantom stock units vested for 1992 totaling $659,683, and (ii) the market value of and accrued dividends and interest on 20,000 phantom stock units earned in 1991 totaling $666,567. Other than the December 31, 1992 distribution referred to in the previous sentence, all vested units and accrued interest and dividends are being held for Mr. Nichols in his Account and have not been distributed. Units have been adjusted where appropriate to reflect the 2 for 1 stock split effective June 1993. (7) Cash and market value of Common Stock paid in 1993 for performance share appreciation units granted under the Company's 1979 Stock Incentive Plan for a three-year performance period ended December 31, 1992. (8) Includes Company matching contributions to the Executive Officers' accounts in the 1993 Executive Contributory Retirement Income Plan. For 1994 the amounts are: Mr. Nichols, $19,562; Mr. Crowther, $8,469; Mr. Farrell, $7,525; Mr. Jenkins, $6,439; and Mr. Ptak, $5,765. (9) Includes interest credited on deferrred compensation in excess of 120% of the Applicable Federal Long-term Rate. For 1994 the amounts are: Mr. Nichols, $7,452; Mr. Crowther, $3,667; Mr. Farrell, $1,711; Mr. Jenkins, $1,374; and Mr. Ptak, $1,555.
______________________ The table below sets forth information as to options granted during 1994 to the Executive Officers listed in the Summary Compensation Table. Option Grants in 1994
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation Individual Grants for Option Term ( ) -------------------------------------------------------------- ------------------------------- Number of Securities Underlying % of Total Options Options Granted Granted to Employees Exercise or Base Expiration Name ($) in 1994 Price ($/Sh) Date 0% ($) 5% ($) 10% ($) ---- ---------- --------------- ---------------- ---------- ------ -------- --------- John D. Nichols. . . . . . . . --- --- --- --- --- --- --- H. Richard Crowther. . . . . . 4,360(2) 3.5% 44.375 12/11/97 0 33,245 70,250 3,496(2) 2.8% 44.375 12/06/99 0 45,291 100,736 10,056(2) 8.2% 44.375 12/13/01 0 189,368 444,320 W. James Farrell . . . . . . . --- --- --- --- --- --- --- Robert H. Jenkins. . . . . . . --- --- --- --- --- --- --- Frank S. Ptak. . . . . . . . . --- --- --- --- --- --- --- ___________ (1) The dollar amounts under these columns are the result of calculations at 0% and at the 5% and 10% rates set by the Securities and Exchange Commission. They are therefore not intended to forecast possible future appreciation, if any, of the Company's Stock price and do not reflect any income tax liability of the individual recipients nor the time value of money. The Company did not use an alternative formula for a grant date valuation, as the Company is not aware of any formula which will determine with reasonable accuracy a present value based on future unknown or volatile factors. 9 (2) These grants were made on August 26, 1994 in connection with the exercise of previously granted options containing a reload feature. These grants also contain a reload feature providing that if the exercise price is paid by surrender of previously owned shares of Common Stock, a new option in the amount of the shares surrendered will be granted. The exercise price of the new option will equal the markeet value of a share of Common Stock on the date of grant. The option will vest in one year, provided the shares acquired on exercise of the underlying option are held for one year, and will expire on the same date as the underlying option.
______________________ The table below sets forth information as to option exercises during 1994 as well as the number and value of unexercised options as of December 31, 1994 for the Executive Officers listed in the Summary Compensation Table. Aggregated Option Exercises in 1994 and 1994 Year-End Option Values
Number of Securities Underlying Value of Unexercised In- Unexercised Options the-Money Options at at Year-End ( ) Year-End ($)(1) Shares -------------------- ------------------------ Acquired on Value Exer- Unexer- Exer- Unexer- Name Exercise( ) Realized( ) cisable cisable cisable cisable ---- ----------- ----------- -------- -------- ---------- ----------- John D. Nichols. . . . . . . . --- --- 12,500 37,500 92,188 276,583 H. Richard Crowther. . . . . . 38,382 825,699 35,068 47,912 506,228 264,113 W. James Farrell . . . . . . . 6,000 117,375 47,496 27,500 728,538 235,938 Robert H. Jenkins. . . . . . . 2,000 42,375 25,500 27,500 334,501 235,938 Frank S. Ptak. . . . . . . . . --- --- 34,750 26,250 659,188 218,438 ___________ (1) Based on the year-end closing market price of the Company's Common Stock ($43.75).
Retirement Plans The Company's principal non-contributory defined benefit Pension Plan covers substantially all employees of the parent company and certain domestic subsidiaries. Executive Officers participate in this plan on the same basis as do more than 10,000 other eligible employees. Benefit amounts are based on years of service and average monthly compensation for the five highest consecutive years out of the last ten years of employment. The Company did not make any contributions to the Pension Plan during the year ended December 31, 1994. The following table illustrates the maximum estimated annual benefits to be paid upon normal retirement at age 65 to individuals in specified compensation and years of service classifications. The table does not reflect the limitations contained in the Internal Revenue Code of 1986 on benefit accruals under the Pension Plan. Under a plan adopted by the Board of Directors, supplemental payments in excess of those limitations will be made to participants designated by the Compensation Committee in order to maintain benefits upon retirement at the levels provided under the Pension Plan's formula.
Estimated Annual Normal Retirement Benefits(1) -------------------------------------------------------------------------- Years of service at normal retirement(2) Compensation(3) 10 15 20 25 30 35 40 --------------- -------- -------- -------- -------- -------- -------- -------- $ 500,000. . . . . . . $ 32,500 $123,750 $165,000 $206,250 $247,500 $266,250 $285,000 750,000. . . . . . . 123,750 185,625 247,500 309,375 371,250 399,375 427,500 1,000,000. . . . . . . 165,000 247,500 330,000 412,500 495,000 532,500 570,000 1,250,000. . . . . . . 206,250 309,375 412,500 515,625 618,750 665,625 712,500 1,500,000. . . . . . . 247,500 371,250 495,000 618,750 742,500 798,750 855,000 1,750,000. . . . . . . 288,750 433,125 577,500 721,875 866,250 931,875 997,500 ___________ (1) Amounts shown exceed actual amounts by .65% of Social Security covered compensation for each year of service up to 30 years. 10 (2) Years of service as of December 31, 1994 for the five most highly compensated Executive Officers were as follows: Mr. Nichols, 25.2 years; Mr. Crowther, 36.0 years; Mr. Farrell, 29.5 years; Mr. Jenkins, 15.6 years; Mr. Ptak, 19.1 years. The years of service for Mr. Nichols reflect the Company's agreement to provide him pension benefits to which he otherwise would be entitled if his service with certain previous employers had been with the Company. (3) Compensation includes all amounts shown under the columns "Salary" and "Bonus" in the Summary Compensation Table.
The Company's 1982 Executive Contributory Retirement Income Plan provided certain executives designated by the Compensation Committee the opportunity to supplement their retirement benefits in exchange for salary reductions during the four-year period 1983 through 1986. Under the plan the Company agreed to pay benefits upon retirement, death or disability, with the actual benefit amounts dependent upon the amount of the deferral, the amount of the Company's contribution, and the age of the participant at entry into the plan. Four of the five named Executive Officers included in the Summary Compensation Table were eligible and elected to have their salaries reduced by 10%. During the period of salary reduction the executives could not contribute to and did not receive the Company's matching contribution in the Savings and Investment Plan. The Company purchased insurance on the lives of the participants to fund the benefits, with the 10% of salary retained by the Company and the 3% of base compensation that the Company would have contributed to match participant contributions to the Savings and Investment Plan applied to the premium for insurance. Under the 1982 Plan, annual benefits payable beginning at the normal retirement age of 65 for 15 years were fixed following the deferral period and are as follows: Mr. Nichols, $107,658; Mr. Crowther, $69,477; Mr. Farrell, $113,529; and Mr. Jenkins, $70,240. 11 EX-23 9 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports dated January 31, 1995 included or incorporated by reference in this Form 10-K into the Company's previously filed registration statements on Form S-8 (File No.'s 33-8510 and 33-53517), Form S-4 (File No. 33-22403) and Form S-3 (File No. 33-5780). ARTHUR ANDERSEN LLP Chicago, Illinois, March 24, 1995 EX-24 10 EXHIBIT 24 EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) Julius W. Becton, Jr. ------------------------------------ (signature) Julius W. Becton, Jr. ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) Silas S. Cathcart ------------------------------------ (signature) Silas S. Cathcart ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) Susan Crown ------------------------------------ (signature) Susan Crown ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) Richard M. Jones ------------------------------------ (signature) Richard M. Jones ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) George D. Kennedy ------------------------------------ (signature) George D. Kennedy ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) Richard H. Leet ------------------------------------ (signature) Richard H. Leet ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) Robert C. McCormack ------------------------------------ (signature) Robert C. McCormack ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) John D. Nichols ------------------------------------ (signature) John D. Nichols ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) Harold B. Smith ------------------------------------ (signature) Harold B. Smith ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) Phillip B. Rooney ------------------------------------ (signature) Phillip B. Rooney ------------------------------------ (printed name) EXHIBIT 24 ILLINOIS TOOL WORKS INC. FORM 10-K ANNUAL REPORT ----------------------- POWER OF ATTORNEY ----------------------- KNOW ALL MEN BY THESE PRESENTS, that the undersigned whose signature appears below constitutes and appoints John D. Nichols, Harold B. Smith, H. Richard Crowther and Stewart S. Hudnut, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign the Companys's Form 10-K Annual Report and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue thereof. IN WITNESS WHEREOF, the undersigned has executed this power of attorney this 17th day of February 1995. (s) Ormand J. Wade ------------------------------------ (signature) Ormand J. Wade ------------------------------------ (printed name) EX-27 11 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the Statement of Income and the Statement of Financial Position and is qualified in its entirety by reference to such financial statements. 1,000 12-MOS DEC-31-1994 JAN-01-1994 DEC-31-1994 76,867 0 632,238 19,600 439,486 1,262,933 1,400,794 759,559 2,580,498 628,433 272,987 201,166 0 0 1,340,355 2,580,498 3,461,315 3,461,315 2,290,117 2,290,117 22,344 7,191 26,943 450,283 172,500 277,783 0 0 0 277,783 2.45 2.45