<PAGE> 1
The information in this prospectus supplement is not complete and may be
changed. A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. A final prospectus
supplement and prospectus will be delivered to purchasers of these
securities. This prospectus supplement and the prospectus are not an offer
to sell and are not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED FEBRUARY 16, 1999
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 26, 1999)
$500,000,000
#ITW LOGO
ILLINOIS TOOL WORKS INC.
% NOTES DUE 2009
---------------------------
The Notes are unsecured obligations of Illinois Tool Works Inc. The Notes
will mature on , 2009. We will pay interest on the securities
semiannually on and of each year to registered holders
of the Notes on the preceding and . The first payment
will be made on , 1999.
---------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE RELATED PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- --------
<S> <C> <C>
Public Offering Price..................................... % $
Underwriting Discount..................................... % $
Proceeds to ITW (before expenses)......................... % $
</TABLE>
Interest on the Notes will accrue from , 1999.
The underwriters are offering the Notes subject to various conditions. The
underwriters expect to deliver the Notes in book-entry form only through the
facilities of The Depository Trust Company against payment for the Notes in New
York, New York on or about , 1999.
---------------------------
SALOMON SMITH BARNEY
MERRILL LYNCH & CO.
FIRST CHICAGO CAPITAL MARKETS, INC.
A BANK ONE COMPANY
, 1999
<PAGE> 2
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE AS OF ANY DATE
OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS SUPPLEMENT.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Illinois Tool Works Inc. ................................... S-3
Recent Developments......................................... S-3
Use of Proceeds............................................. S-3
Description of the Notes.................................... S-4
Underwriting................................................ S-6
PROSPECTUS
About this Prospectus....................................... 2
Illinois Tool Works Inc. ................................... 2
Use of Proceeds............................................. 3
Ratios of Earnings to Fixed Charges......................... 4
Description of Debt Securities.............................. 4
Plan of Distribution........................................ 9
Legal Opinions.............................................. 10
Experts..................................................... 11
</TABLE>
S-2
<PAGE> 3
ILLINOIS TOOL WORKS INC.
Through 400 decentralized business units, we develop and manufacture
fasteners, components, assemblies and systems for customers throughout the
world. Our products include:
- plastic and metal components, fasteners and assemblies
- industrial fluids and adhesives
- fastening tools, welding equipment and consumables
- systems and consumables for consumer and industrial packaging
- marking, labeling and identification systems
- industrial spray coating equipment and systems
- quality measurement application equipment and systems
We strive to improve our customers' competitive positions by increasing
their productivity and quality while reducing their manufacturing and assembly
costs. We serve the construction, general industrial, automotive, food and
beverage, industrial capital goods, paper products, consumer durables and
electronics markets. We also invest a portion of our cash flow in commercial
real estate, equipment leasing, affordable housing, property development and
mortgage securities.
Our international operations, which are conducted in 34 countries,
accounted for approximately 36% of our operating revenues for the quarter ended
December 31, 1998.
Our principal executive offices are located at 3600 West Lake Avenue,
Glenview, Illinois 60025; our telephone number is (847) 724-7500; and our World
Wide Web home site is http://www.itwinc.com.
RECENT DEVELOPMENTS
For the quarter ended December 31, 1998 our revenues increased by 12% to
$1.51 billion from $1.35 billion for the same period in 1997. Our operating
income increased by 19% to $296.7 million from $249.2 million, and our net
income increased by 15% to $184.3 million from $160.2 million.
For the year ended December 31, 1998 our revenues increased by 8% to $5.7
billion from $5.2 billion for the year ended December 31, 1997. Our operating
income increased by 16% to $1.1 billion from $927.2 million, and our net income
increased by 15% to $672.8 million from $587.0 million.
USE OF PROCEEDS
The proceeds (after deducting the underwriting discount and estimated
expenses) to be received by us from the sale of the Notes are estimated to be
approximately $ . Of this amount, we will use approximately
$450,000,000 to reduce from time to time commercial paper outstanding as it
becomes due. The approximately
S-3
<PAGE> 4
$450,000,000 of commercial paper outstanding on February 16, 1999 was used
primarily to finance our working capital requirements and to refinance maturing
long-term debt. That commercial paper had a weighted average effective cost of
approximately 5.00% per annum and an average maturity of approximately 52 days.
The remaining proceeds will be used for general corporate purposes, including
capital expenditures, working capital, acquisitions and the repayment of
indebtedness. Until we apply the net proceeds for specific purposes, we may
invest them in marketable securities.
DESCRIPTION OF THE NOTES
Set forth below is a description of the particular terms of the Notes that
supplements and, if inconsistent, replaces the description of the general terms
and provisions of the Notes set forth in the accompanying prospectus.
GENERAL
The Notes will be issued under the Indenture between Illinois Tool Works
Inc. and Harris Trust and Savings Bank, the Trustee, and will be limited to
$500,000,000 aggregate principal amount. The Notes will mature on ,
2009. They will be issued in book-entry form only. We may not redeem the Notes
prior to maturity, and the Notes will not be entitled to the benefit of any
sinking fund. The Notes will bear interest from , 1999, payable
semi-annually on each and to the persons in whose name
they are registered at the close of business on or preceding the
interest payment date. The first interest payment will be made on ,
1999.
BOOK-ENTRY SYSTEM
The Notes initially will be represented by one or more global securities
deposited with The Depository Trust Company (DTC) and registered in the name of
DTC's nominee. Except under the circumstances described below, we will not issue
the Notes in definitive form.
Upon the issuance of a global security, DTC will credit on its book-entry
registration and transfer system the accounts of persons designated by the
underwriters with the respective principal amounts of the Notes represented by
the global security. Ownership of beneficial interests in a global security is
limited to persons that have accounts with DTC or its nominee ("participants")
or persons that may hold interests through participants. Ownership of beneficial
interests in a global security will be shown on, and the transfer of that
ownership may be effected only through, records maintained by DTC or its nominee
(for interests of persons other than participants). The laws of some states
require that certain purchasers of securities take physical delivery of the
securities in definitive form. Such limits and laws may impair a purchaser's
ability to transfer beneficial interests in a global security.
DTC or its nominee will be considered the sole owner or holder of the Notes
represented by that global security for all purposes under the Indenture. Except
as
S-4
<PAGE> 5
provided below, owners of beneficial interests in a global security will not be
entitled to have Notes represented by the global security registered in their
names, will not receive or be entitled to receive physical delivery of Notes in
definitive form, and will not be considered the owners of record or holders of
Notes under the Indenture.
We will make principal and interest payments on Notes registered in the
name of DTC or its nominee to DTC or its nominee as the registered holder of the
relevant global security. Neither we nor the Trustee nor any paying agent nor
the registrar for the Notes will have any responsibility or liability for any
aspect of the records relating to or payment made on account of beneficial
interests in a global security or for maintaining, supervising or reviewing any
records relating to such beneficial interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the relevant global security as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners of beneficial
interests in a global security held through such participants will be governed
by standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such participants.
If DTC at any time is unwilling or unable to continue as a depositary and
we do not appoint a successor depositary within 90 days, we will issue Notes in
definitive form in exchange for the entire global security. In addition, we may
at any time and in our sole discretion determine not to have Notes represented
by a global security and, in such event, we will issue Notes in definite form in
exchange for the entire global security. In any such instance, an owner of a
beneficial interest in a global security will be entitled to physical delivery
in definitive form of Notes represented by such global security equal in
principal amount to such beneficial interest and to have such Notes registered
in the owner's name. Notes so issued in definitive form will be issued as
registered Notes in denominations of $1,000 and integral multiples thereof,
unless we otherwise specify.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that we believe to be reliable, but we do not
take responsibility for its accuracy.
S-5
<PAGE> 6
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, the underwriters named below have agreed to
purchase, and we have agreed to sell to them, severally, the respective
principal amounts of Notes set forth opposite their respective names:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITERS AMOUNT OF NOTES
- ------------ ---------------
<S> <C>
Salomon Smith Barney Inc.................................... $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................
First Chicago Capital Markets, Inc. ........................
------------
Total.............................................. $500,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The underwriters are committed to take and pay for all of the Notes,
if any are taken.
The underwriters propose to offer part of the Notes directly to the public
at the public offering price set forth on the cover page of this prospectus
supplement and part to certain dealers at a price that represents a concession
not in excess of % of the principal amount under the public offering
price. Any underwriter may allow, and such dealers may reallow, a discount not
in excess of % of the principal amount to certain other dealers.
The underwriters have advised us that they intend to make a market in the
Notes, but that they are not obligated to do so and may discontinue making a
market at any time without notice. We currently have no intention to list the
Notes on any securities exchange, and we can give you no assurance as to the
liquidity of, or trading market for, the Notes.
In connection with the offering and sale of the Notes, Salomon Smith Barney
Inc., on behalf of the underwriters, may engage in overallotment, stabilizing
transactions and syndicate covering transactions in accordance with Regulation M
under the Securities Exchange Act of 1934. Overallotment involves sales in
excess of the offering size, which creates a short position for the
underwriters. Stabilizing transactions permit bids to purchase the Notes in the
open market for the purpose of pegging, fixing or maintaining the price of the
Notes. Syndicate covering transactions involve purchases of the Notes in the
open market after the distribution has been completed in order to cover short
positions. Such stabilizing transactions and syndicate covering transactions may
cause the price of the Notes to be higher than it would otherwise be in the
absence of such transactions. Such activities, if commenced, may be discontinued
at any time.
Certain of the underwriters or their affiliates provide or may provide
commercial banking or investment banking services to us and our affiliates in
the ordinary course of
S-6
<PAGE> 7
business. Winston & Strawn, counsel for the underwriters, from time to time acts
as counsel for us.
We estimate that our share of the total expenses of the offering, excluding
underwriting discounts and commissions, will not exceed $425,000.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
S-7
<PAGE> 8
PROSPECTUS
#ITW LOGO
ILLINOIS TOOL WORKS INC.
$500,000,000
DEBT SECURITIES
---------------------
Illinois Tool Works Inc. may use this prospectus from time to time to offer
and sell its debt securities in one or more offerings with a total initial
public offering price or purchase price of up to $500,000,000 or the equivalent
in one or more foreign currencies. The debt securities may be offered in one or
more separate series on terms to be determined at the time of sale. We may sell
the debt securities for U.S. dollars or a foreign or composite currency and
payments on debt securities may be made in U.S. dollars or a foreign or
composite currency. Debt securities may be issued as individual securities in
registered form without coupons or as one or more global securities in
registered form. We may offer the debt securities directly to purchasers or
through agents, dealers or underwriters or a syndicate of underwriters.
We will provide specific terms for these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JANUARY 26, 1999.
<PAGE> 9
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may sell the debt securities described in this
prospectus in one or more offerings up to a total principal amount or initial
purchase price of $500,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the heading "Where To Find More Information."
ILLINOIS TOOL WORKS INC.
GENERAL
Through 400 decentralized business units, we develop and manufacture
fasteners, components, assemblies and systems for customers throughout the
world. Our products include:
- plastic and metal components, fasteners and assemblies
- industrial fluids and adhesives
- fastening tools, welding equipment and consumables
- systems and consumables for consumer and industrial packaging
- marking, labeling and identification systems
- industrial spray coating equipment and systems
- quality measurement application equipment and systems
We strive to improve our customers' competitive positions by increasing
their productivity and quality while reducing their manufacturing and assembly
costs. We serve the construction, general industrial, automotive, food and
beverage, industrial capital goods, paper products, consumer durables and
electronics markets. We also invest a portion of our cash flow in commercial
real estate, equipment leasing, affordable housing, property development and
mortgage securities.
Our international operations, which are conducted in 34 countries,
accounted for approximately 35% of our operating revenues for the quarter ended
September 30, 1998.
Our principal executive offices are located at 3600 West Lake Avenue,
Glenview, Illinois 60025; our telephone number is (847) 724-7500; and our World
Wide Web home site is http://www.itwinc.com.
2
<PAGE> 10
WHERE TO FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our SEC filings are
available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the SEC's regional offices located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, New York, New
York 10048. You can call the SEC at 1-800-SEC-0330 for further information on
the public reference rooms.
Our reports, proxy statements and other information may also be inspected
at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005 and the Chicago Stock Exchange, Incorporated, 440 South LaSalle
Street, Chicago, Illinois 60605.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file later with the
SEC will automatically update and supersede the information included or
incorporated by reference in this prospectus. We incorporate by reference the
documents listed below and any future filings with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we sell all of
the debt securities:
- Annual Report on Form 10-K for the year ended December 31, 1997; and
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998.
You may request a free copy of these filings by writing or telephoning
Stewart S. Hudnut, Corporate Secretary, Illinois Tool Works Inc., 3600 West Lake
Avenue, Glenview, Illinois 60025-5811, telephone (847) 724-7500.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
USE OF PROCEEDS
Unless we specify otherwise in the applicable prospectus supplement, the
net proceeds from the sale of the debt securities will be used for general
corporate purposes, including capital expenditures, working capital,
acquisitions and the repayment of indebtedness. We have not allocated a specific
portion of the net proceeds for any particular use at this time. Until we apply
the net proceeds for specific purposes, we may invest such net proceeds in
marketable securities.
3
<PAGE> 11
RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratio of earnings to fixed charges for each of the years
in the five-year period ended December 31, 1997 and the nine-month periods ended
September 30, 1997 and 1998 is set forth below.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ -------------
1993 1994 1995 1996 1997 1997 1998
---- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges..................... 8.35 13.15 14.67 11.91 11.27 10.61 11.69
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes plus fixed charges. Fixed charges
consist of interest expense plus that portion of rental expense that is deemed
to represent interest.
DESCRIPTION OF DEBT SECURITIES
GENERAL
We provide information to you about the debt securities in up to three
separate documents that progressively provide more detail:
1. This prospectus provides general information that may not apply to
each series of debt securities.
2. The prospectus supplement is more specific than this prospectus. To
the extent the information provided in the prospectus supplement differs
from this prospectus, you should rely on the prospectus supplement.
3. The pricing supplement, if used, provides final details about a
specific series of debt securities. To the extent the pricing supplement
differs from this prospectus or the prospectus supplement, you should rely
on the pricing supplement.
The debt securities will be issued under an indenture (we refer to the
indenture, as supplemented from time to time, as the "Indenture") between ITW
and Harris Trust and Savings Bank, as Trustee. The following summary of certain
provisions of the debt securities and the Indenture is not complete and is
subject to the detailed provisions of the Indenture. We have filed a copy of the
Indenture as an exhibit to the Registration Statement. Whenever particular
provisions or defined terms in the Indenture are referred to in this prospectus,
such provisions or defined terms are incorporated by reference in this
prospectus. Article or Section references used in this prospectus are references
to the Indenture.
The debt securities will be our direct, unsecured obligations. They will
rank on a parity with all of our other unsecured and unsubordinated
indebtedness.
The Indenture provides that we may issue the debt securities from time to
time in one or more series without limitation on the amount. (Section 2.01)
Currently, $125,000,000 of 5 7/8% Notes due March 1, 2000 are outstanding under
the Indenture.
4
<PAGE> 12
Unless we indicate otherwise in the applicable prospectus supplement,
principal of and any premium or interest on the debt securities will be payable,
and the debt securities may be transferred or exchanged without payment of any
charge (other than any tax or other governmental charge payable in connection
therewith), at the office or agency of the Trustee in Chicago, Illinois.
However, we may elect that payment of interest on registered debt securities be
made by check mailed to the address of the appropriate person as it appears on
the security register or by wire transfer as instructed by the appropriate
person. (Sections 2.06, 4.01 and 4.02)
The applicable prospectus supplement will include specific terms relating
to the offering of specific debt securities. These may include some or all of
the following:
- the title, denominations, amount and price of the debt securities;
- the maturity of the debt securities;
- the interest rates of the debt securities;
- the currency or currency unit of the debt securities;
- any redemption or sinking fund terms;
- any provisions for discharge;
- whether the debt securities will be registered or unregistered; and
- other specific terms associated with the debt securities. (Section 2.01)
Debt securities may be issued as Original Issue Discount Securities to be
offered and sold at a substantial discount below their stated principal amount.
In such event, the Federal income tax consequences and other special
considerations will be described in the applicable prospectus supplement. An
"Original Issue Discount Security" is any debt security that provides for the
declaration of acceleration of the maturity of an amount less than the principal
amount of the security upon the occurrence of an event of default and the
continuation of an event of default. (Section 1.01)
FORM OF SECURITIES
We may issue the debt securities in fully registered form without coupons
or in unregistered form with or without coupons. We also may issue the debt
securities in the form of one or more temporary or permanent global securities.
Global securities are issued to a depository that holds the securities for the
benefit of investors. Book-entry debt securities will be issued as registered
global securities.(Section 2.03)
If any debt securities are issuable in temporary or permanent global form,
the applicable prospectus supplement will describe the circumstances, if any,
under which beneficial owners of interests in the global security may obtain
definitive debt securities. Payments on a permanent global debt security will be
made in the manner described in the prospectus supplement.
5
<PAGE> 13
COVENANTS
The following covenants apply with respect to all series of debt
securities, unless we specify otherwise in the applicable prospectus supplement.
Both covenants are subject to the provision for exempted indebtedness described
below. We will describe any additional covenants for a particular series of debt
securities in the prospectus supplement.
For your reference, we have provided below definitions of the capitalized
terms used in the description of the covenants.
Limitation on Liens
We will not, nor will we permit any Restricted Subsidiary to, issue, assume
or guarantee any debt for money borrowed if such debt is secured by a mortgage,
security interest, lien, pledge or other encumbrance (referred to in this
prospectus as a "lien") on any Principal Property, or on any shares of stock or
indebtedness of any Restricted Subsidiary, without in any such case effectively
providing that the debt securities are secured equally and ratably. These
restrictions do not apply to debt secured by:
- liens on property of a corporation existing at the time it becomes a
subsidiary or at the time it is merged into or consolidated with ITW or a
subsidiary;
- liens on property existing at the time of its acquisition and certain
purchase money liens;
- liens securing the cost of construction of new plants, incurred within
180 days of completion of construction;
- liens securing the debt of a Restricted Subsidiary owing to ITW or
another Restricted Subsidiary;
- liens in connection with the issuance of certain industrial revenue bonds
or similar financings; and
- any extensions, renewals or replacements, in whole or in part, of any
lien referred to above. (Section 4.05)
Limitation on Sale and Lease-Back
We will not, nor will we permit any Restricted Subsidiary to, engage in a
sale and lease-back transaction of any Principal Property (except for certain
temporary leases) unless:
- we or the Restricted Subsidiary could (subject to the limitation on
liens) incur debt secured by a lien on the Principal Property to be
leased without equally and ratably securing the debt securities; or
- within 180 days following the transaction, we retire long-term debt equal
to the value of the transaction. (Section 4.06)
6
<PAGE> 14
Exempted Indebtedness
We and our Restricted Subsidiaries may incur debt and enter into sale and
lease-back transactions without regard to the two covenants described above if
the sum of such debt and the value of such sale and lease-back transactions on a
cumulative basis does not exceed 10% of the Consolidated Net Tangible Assets
(which is total assets less current liabilities, goodwill and other intangibles)
as shown on our audited consolidated balance sheet. (Section 4.07)
CONSOLIDATION OR MERGER
We may consolidate or merge with, or sell all or substantially all of our
assets to, another corporation. The remaining or acquiring corporation must
assume all of our responsibilities and liabilities under the Indenture,
including the payment of all amounts due on the debt securities and performance
of the covenants. (Section 11.01) Under these circumstances, if any Principal
Property, shares of stock or indebtedness of a Restricted Subsidiary would be
subject to a lien, we will equally and ratably secure the debt securities.
(Section 11.02)
DEFINITIONS
"Principal Property" means any manufacturing plant or other facility within
the United States that we or a subsidiary own or lease, unless our Board of
Directors determines that the plant or facility, together with any others so
determined, is not of material importance to the total business of ITW and its
Restricted Subsidiaries. (Article One)
"Restricted Subsidiary" means any subsidiary (other than a leasing or
finance subsidiary) that owns or leases a Principal Property if: (1) its
property is located in the United States, (2) substantially all of its business
is carried on in the United States, or (3) it is incorporated in the United
States. (Article One)
EVENTS OF DEFAULT
An event of default for any series of debt securities includes the
following:
- failure to pay interest on any debt securities for 30 days;
- failure to pay principal of or premium or sinking fund payment on any
debt securities when due;
- failure to perform any of the other covenants or agreements in the
Indenture relating to debt securities of that series that continues for
60 days after notice to ITW by the Trustee or holders of at least 25% in
aggregate principal amount of the outstanding debt securities of that
series; or
- certain events of bankruptcy, insolvency or reorganization of ITW.
(Section 6.01)
An event of default with respect to a particular series of debt securities
does not necessarily constitute an event of default with respect to any other
series. Additional events of default may be prescribed for the benefit of
holders of certain series of debt
7
<PAGE> 15
securities and described in the applicable prospectus supplement. (Section
10.01) The Indenture provides that the Trustee will, with certain exceptions,
notify the holders of debt securities of each series of any event of default
known to it and affecting that series within 90 days after the occurrence
thereof. (Section 6.07)
If an event of default is continuing for any series of debt securities, the
Trustee or the holders of not less than 25% in aggregate principal amount of the
affected series of debt securities may declare the principal amount (or, if the
debt securities of that series are Original Issue Discount Securities, the
specified portion of the principal amount) of that series to be due and payable.
In such a case, subject to certain conditions, the holders of a majority in
principal amount of such series then outstanding can annul the declaration and
waive past defaults. (Sections 6.01 and 6.06)
We are required to file an annual officers' certificate with the Trustee
concerning our compliance with the Indenture. (Section 4.08) Subject to the
provisions of the Indenture relating to the duties of the Trustee, the Trustee
is not obligated to exercise any of its rights or powers at the request or
direction of any of the holders unless they have offered the Trustee reasonable
security or indemnity. (Sections 7.01 and 7.02) If they provide reasonable
security or indemnity, the holders of a majority in principal amount of the
outstanding debt securities of each series affected by an event of default may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee under the Indenture or exercising any of the Trustee's
trusts or powers with respect to that series. (Section 6.06)
MODIFICATION AND AMENDMENT OF THE INDENTURE
We may enter into supplemental indentures with the Trustee without the
consent of the holders of the debt securities to, among other things:
- evidence the assumption by a successor corporation of our obligations;
- appoint additional, separate or successor trustees to act under the
Indenture;
- add covenants for the protection of the holders of the debt securities;
- cure any ambiguity or correct any inconsistency in the Indenture; and
- establish the form or terms of debt securities of any series.
With the consent of the holders of a majority in principal amount of the
debt securities of each series at the time outstanding, we may execute
supplemental indentures with the Trustee to add provisions or change or
eliminate any provision of the Indenture or any supplemental indenture or to
modify the rights of the holders of those debt securities. However, no such
supplemental indenture will (1) extend the fixed maturity of any debt security,
or reduce the principal amount (including in the case of a discounted debt
security the amount payable upon acceleration of the maturity thereof), reduce
the rate or extend the time of payment of any interest, reduce any premium
payable upon redemption, or change the currency in which any debt security is
payable, without the consent of the holder of each affected debt security, or
(2) reduce the aforesaid majority in principal amount of the debt securities of
any series, the consent of
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the holders of which is required for any such supplemental indenture, without
the consent of the holders of all debt securities of such series. (Sections
10.01 and 10.02)
DISCHARGE OF INDENTURE
At our option, we (1) will be discharged from all obligations under the
Indenture in respect of the debt securities of a series (except for certain
obligations to register the transfer or exchange of those debt securities,
replace stolen, lost or mutilated debt securities, maintain paying agencies and
hold monies for payment in trust) or (2) need not comply with certain covenants
of the Indenture (including the limitation on liens and the limitation on sale
and lease-back) and will not be limited by any restrictions with respect to
merger, consolidation or sales of assets with respect to those debt securities,
in each case if we deposit with the Trustee, in trust, money or U.S. government
obligations (or a combination thereof) sufficient to pay the principal
(including any mandatory sinking fund payments) of and any premium or interest
on those debt securities when due. In order to select either option, we must
provide the Trustee with an opinion of counsel or a ruling from, or published
by, the Internal Revenue Service, to the effect that holders will not recognize
income, gain or loss for Federal income tax as if we had not exercised either
option. (Sections 12.01(a) and 12.02(b))
In the event we exercise our option under (2) above with respect to the
debt securities of any series and the debt securities of that series are
declared due and payable because of the occurrence of any event of default other
than default with respect to such obligations, the amount of money and U.S.
government obligations on deposit with the Trustee will be sufficient to pay
amounts due on the debt securities of such series at the time of their stated
maturity but may not be sufficient to pay amounts due on the debt securities of
such series at the time of the acceleration resulting from such event of
default. We would remain liable, however, for such payments.
CONCERNING THE TRUSTEE
We maintain lines of credit and have customary banking relationships with
Harris Trust and Savings Bank, the Trustee under the Indenture.
PLAN OF DISTRIBUTION
We may offer debt securities directly, through agents or dealers or through
one or more underwriters or a syndicate of underwriters in an underwritten
offering. In the prospectus supplement for a particular offering, we will
describe how the offering of debt securities will be made, including the names
of any underwriters, the purchase price of the securities, the proceeds of the
offering any underwriters' discounts, concessions or commissions.
If we use underwriters or dealers in the sale, they will acquire the debt
securities for their own account and may resell them in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. We may offer debt
securities to the public either through underwriting syndicates represented by
managing underwriters or by underwriters without a syndicate. Unless we
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state otherwise in the applicable prospectus supplement, the obligations of the
underwriters to purchase debt securities will be subject to certain conditions
precedent, and the underwriters must purchase all of such debt securities if
they buy any of them. The underwriters may change any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
from time to time.
We also may sell debt securities directly or through designated agents. We
will name any agent involved in the offer or sale of debt securities and
describe any commissions payable by us to such agent in the applicable
prospectus supplement. Unless we indicate otherwise, an agent will act on a best
efforts basis for the period of its appointment.
Any underwriters, dealers or agents participating in the distribution of
debt securities may be deemed to be underwriters under the Securities Act of
1933, as amended. Furthermore, any discounts, concessions or commissions
received by them on the sale or resale of debt securities may be deemed to be
underwriting discounts and commissions under the Securities Act. We will
indemnify underwriters and agents against certain civil liabilities, including
liabilities under the Securities Act. These underwriters and agents may be
entitled to contribution with respect to payments that the underwriters or
agents may be required to make in respect of such liabilities. These
underwriters and agents may be customers of, engage in transactions with, or
perform services for us in the ordinary course of business.
We may indicate in the applicable prospectus supplement that we have
authorized underwriters or agents to solicit offers by certain specified
institutions to purchase debt securities from us at the offering price pursuant
to delayed delivery contracts providing for payment and delivery on a specified
date or dates in the future. These delayed delivery contracts will be subject
only to those conditions described in the prospectus supplement and to the
condition that at the time of delivery the purchase of debt securities shall not
be prohibited under the laws of the jurisdiction to which the purchaser is
subject. The prospectus supplement will describe any commission payable for the
solicitation of such contracts.
LEGAL OPINIONS
Stewart S. Hudnut, who is our Senior Vice President, General Counsel and
Secretary, will issue an opinion about the legality of the offered securities
for us. Gardner, Carton & Douglas, Chicago, Illinois, will issue an opinion for
us with respect to certain other matters. Winston & Strawn, Chicago, Illinois,
will pass on the validity of the offered securities for any underwriters or
agents.
As of December 15, 1998, Mr. Hudnut owned 6,000 shares of ITW common stock
directly and 778 shares of ITW common stock indirectly through the ITW Savings &
Investment Plan. As of the same date, Mr. Hudnut held options to acquire an
additional 104,450 shares. As of December 15, 1998, a partner of Gardner, Carton
& Douglas working on these matters owned 4,000 shares of ITW common stock.
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EXPERTS
The consolidated financial statements and schedule appearing in our Annual
Report on Form 10-K for the year ended December 31, 1997 incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
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$500,000,000
#ITW LOGO
ILLINOIS TOOL WORKS INC.
% NOTES DUE 2009
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PROSPECTUS SUPPLEMENT
, 1999
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SALOMON SMITH BARNEY
MERRILL LYNCH & CO.
FIRST CHICAGO CAPITAL MARKETS, INC.
A BANK ONE COMPANY
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