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