Illinois Tool Works Inc. (ITW) filed Quarterly Report for the period ended 2009-09-30.
Illinois Tool Works Inc. manufactures and markets a variety of productsand systems that provide specific problem-solving solutions for a diversecustomer base worldwide. The company's business units are divided into six segments: Engineered Products-North America; Engineered Products-International; Specialty Systems-North America; Specialty Systems-International; Consumer Products; and Leasing and Investments. Illinois Tool Works Inc. has a market cap of $23.48 billion; its shares were traded at around $46.94 with a P/E ratio of 27.1 and P/S ratio of 1.5. The dividend yield of Illinois Tool Works Inc. stocks is 2.7%. Illinois Tool Works Inc. had an annual average earning growth of 9.2% over the past 10 years. GuruFocus rated Illinois Tool Works Inc. the business predictability rank of 3-star.
Highlight of Business Operations:
Revenues decreased 19.8% and 23.0% in the third quarter and year-to-date periods of 2009, respectively, primarily due to lower base revenues and the unfavorable effect of currency translation, mainly due to the strengthening of the Dollar, partially offset by revenues from acquisitions. Total base revenues declined 17.9% and 20.9% in the third quarter and year-to-date periods, respectively, but showed improvement as compared to the second quarter 2009. North American base revenue declined 21.6% and 24.8%, in the third quarter and year-to-date periods, respectively, while international base revenues declined 13.8% and 16.7% in the same periods. Both North American and international base revenues were adversely affected by weak, but improving macroeconomic and industrial production trends as compared to the second quarter 2009. The Company anticipates that the current weak global economic environment will continue through 2009 and as such, expects that key end markets will continue to be negatively impacted.
Operating income declined 27.9% and 55.6% in the third quarter and year-to-date periods of 2009, respectively, primarily due to the decline in base revenues, the negative effect of currency translation, increased restructuring charges and increased goodwill and intangible impairment charges. In the first quarter of 2009, the Company recorded impairment charges of $78 million and $12 million against goodwill and intangibles, respectively, and in the third quarter recorded a $12 million goodwill impairment charge. The goodwill and intangible impairments were primarily related to new reporting units which were acquired over the last few years. These charges were driven by lower current forecasts compared to the expected forecasts at the time the reporting units were acquired. The higher restructuring charges reflect the Company s efforts to reduce costs in response to current economic conditions. Improvements in base variable margins and lower overhead costs increased base margins 5.8% and 3.5% in the third quarter and year-to-date periods, respectively, as the cumulative benefits of past restructuring projects began to be more fully realized and price versus raw material cost comparisons were favorable. Total margins declined by 1.5% and 6.6% in the third quarter and year-to-date periods of 2009, respectively, primarily due to the declines in base revenues, restructuring charges and the goodwill and intangible impairment charges.
ITW is in the portfolios of Bill Nygren of Oak Mark Fund, Brian Rogers of T Rowe Price Equity Income Fund, Brian Rogers of T Rowe Price Equity Income Fund, Tom Gayner of Markel Gayner Asset Management Corp, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
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