[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
For the quarterly period ended March 31, 2013
|
|
|
|
OR
|
|
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
For the transition period from _______________ to _______________
|
Delaware
|
|
36-1258310
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
|
|
|
3600 West Lake Avenue, Glenview, IL
|
|
60026-1215
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Three Months Ended
|
||||||
(In millions except per share amounts)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating Revenues
|
$
|
4,009
|
|
|
$
|
4,358
|
|
Cost of revenues
|
2,502
|
|
|
2,763
|
|
||
Selling, administrative, and research and development expenses
|
779
|
|
|
832
|
|
||
Amortization of intangible assets
|
68
|
|
|
69
|
|
||
Operating Income
|
660
|
|
|
694
|
|
||
Interest expense
|
(60
|
)
|
|
(50
|
)
|
||
Other income (expense)
|
46
|
|
|
8
|
|
||
Income from Continuing Operations Before Income Taxes
|
646
|
|
|
652
|
|
||
Income Taxes
|
187
|
|
|
188
|
|
||
Income from Continuing Operations
|
459
|
|
|
464
|
|
||
Income (Loss) from Discontinued Operations
|
(105
|
)
|
|
22
|
|
||
Net Income
|
$
|
354
|
|
|
$
|
486
|
|
|
|
|
|
||||
Income Per Share from Continuing Operations:
|
|
|
|
||||
Basic
|
$
|
1.02
|
|
|
$
|
0.96
|
|
Diluted
|
$
|
1.01
|
|
|
$
|
0.95
|
|
Income (Loss) Per Share from Discontinued Operations:
|
|
|
|
||||
Basic
|
$
|
(0.23
|
)
|
|
$
|
0.05
|
|
Diluted
|
$
|
(0.23
|
)
|
|
$
|
0.05
|
|
Net Income Per Share:
|
|
|
|
||||
Basic
|
$
|
0.78
|
|
|
$
|
1.01
|
|
Diluted
|
$
|
0.78
|
|
|
$
|
1.00
|
|
Cash Dividends Per Share:
|
|
|
|
||||
Paid
|
$
|
—
|
|
|
$
|
0.36
|
|
Declared
|
$
|
0.38
|
|
|
$
|
0.36
|
|
|
|
|
|
||||
Shares of Common Stock Outstanding During the Period:
|
|
|
|
||||
Average
|
451.7
|
|
|
482.0
|
|
||
Average assuming dilution
|
454.8
|
|
|
485.6
|
|
|
Three Months Ended
|
||||||
(In millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Net income
|
$
|
354
|
|
|
$
|
486
|
|
Other comprehensive income:
|
|
|
|
||||
Foreign currency translation adjustments
|
(150
|
)
|
|
176
|
|
||
Pension and other postretirement benefit adjustments, net of tax
|
12
|
|
|
10
|
|
||
Comprehensive income
|
$
|
216
|
|
|
$
|
672
|
|
(In millions)
|
March 31,
2013 |
|
December 31,
2012 |
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and equivalents
|
$
|
2,662
|
|
|
$
|
2,779
|
|
Trade receivables
|
2,789
|
|
|
2,742
|
|
||
Inventories
|
1,514
|
|
|
1,585
|
|
||
Deferred income taxes
|
343
|
|
|
332
|
|
||
Prepaid expenses and other current assets
|
486
|
|
|
522
|
|
||
Assets held for sale
|
316
|
|
|
—
|
|
||
Total current assets
|
8,110
|
|
|
7,960
|
|
||
Net Plant and Equipment
|
1,960
|
|
|
1,994
|
|
||
Goodwill
|
5,392
|
|
|
5,530
|
|
||
Intangible Assets
|
2,182
|
|
|
2,258
|
|
||
Deferred Income Taxes
|
390
|
|
|
391
|
|
||
Other Assets
|
1,172
|
|
|
1,176
|
|
||
|
$
|
19,206
|
|
|
$
|
19,309
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current Liabilities:
|
|
|
|
|
|
||
Short-term debt
|
$
|
456
|
|
|
$
|
459
|
|
Accounts payable
|
749
|
|
|
676
|
|
||
Accrued expenses
|
1,235
|
|
|
1,392
|
|
||
Cash dividends payable
|
171
|
|
|
—
|
|
||
Income taxes payable
|
99
|
|
|
116
|
|
||
Deferred income taxes
|
8
|
|
|
8
|
|
||
Liabilities held for sale
|
84
|
|
|
—
|
|
||
Total current liabilities
|
2,802
|
|
|
2,651
|
|
||
Noncurrent Liabilities:
|
|
|
|
|
|
||
Long-term debt
|
4,556
|
|
|
4,589
|
|
||
Deferred income taxes
|
309
|
|
|
244
|
|
||
Other liabilities
|
1,260
|
|
|
1,255
|
|
||
Total noncurrent liabilities
|
6,125
|
|
|
6,088
|
|
||
Stockholders’ Equity:
|
|
|
|
|
|
||
Common stock
|
6
|
|
|
5
|
|
||
Additional paid-in-capital
|
1,012
|
|
|
1,012
|
|
||
Income reinvested in the business
|
14,156
|
|
|
13,973
|
|
||
Common stock held in treasury
|
(5,055
|
)
|
|
(4,722
|
)
|
||
Accumulated other comprehensive income
|
155
|
|
|
293
|
|
||
Noncontrolling interest
|
5
|
|
|
9
|
|
||
Total stockholders’ equity
|
10,279
|
|
|
10,570
|
|
||
|
$
|
19,206
|
|
|
$
|
19,309
|
|
|
Three Months Ended
|
||||||
(In millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Cash Provided by (Used for) Operating Activities:
|
|
|
|
||||
Net income
|
$
|
354
|
|
|
$
|
486
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation
|
76
|
|
|
81
|
|
||
Amortization and impairment of goodwill and other intangible assets
|
112
|
|
|
72
|
|
||
Change in deferred income taxes
|
4
|
|
|
20
|
|
||
Provision for uncollectible accounts
|
4
|
|
|
3
|
|
||
Income (loss) from investments
|
(5
|
)
|
|
(3
|
)
|
||
(Gain) loss on sale of plant and equipment
|
(2
|
)
|
|
—
|
|
||
(Gain) loss from discontinued operations
|
65
|
|
|
—
|
|
||
(Gain) loss on sale of operations and affiliates
|
4
|
|
|
(1
|
)
|
||
Stock compensation expense
|
9
|
|
|
12
|
|
||
Gain on acquisition of controlling interest in an equity investment
|
(30
|
)
|
|
—
|
|
||
Other non-cash items, net
|
3
|
|
|
14
|
|
||
Change in assets and liabilities:
|
|
|
|
|
|
||
(Increase) decrease in--
|
|
|
|
|
|
||
Trade receivables
|
(175
|
)
|
|
(243
|
)
|
||
Inventories
|
(38
|
)
|
|
(43
|
)
|
||
Prepaid expenses and other assets
|
(31
|
)
|
|
(44
|
)
|
||
Increase (decrease) in--
|
|
|
|
|
|
||
Accounts payable
|
94
|
|
|
75
|
|
||
Accrued expenses and other liabilities
|
(132
|
)
|
|
(95
|
)
|
||
Income taxes
|
50
|
|
|
8
|
|
||
Other, net
|
4
|
|
|
(19
|
)
|
||
Net cash provided by operating activities
|
366
|
|
|
323
|
|
||
Cash Provided by (Used for) Investing Activities:
|
|
|
|
|
|
||
Acquisition of businesses (excluding cash and equivalents) and additional interest in affiliates
|
(56
|
)
|
|
(481
|
)
|
||
Additions to plant and equipment
|
(89
|
)
|
|
(84
|
)
|
||
Proceeds from investments
|
13
|
|
|
123
|
|
||
Proceeds from sale of plant and equipment
|
4
|
|
|
5
|
|
||
Net proceeds from sale of discontinued operations
|
(3
|
)
|
|
—
|
|
||
Proceeds from sales of operations and affiliates
|
—
|
|
|
3
|
|
||
Other, net
|
(3
|
)
|
|
(3
|
)
|
||
Net cash provided by (used for) investing activities
|
(134
|
)
|
|
(437
|
)
|
||
Cash Provided by (Used for) Financing Activities:
|
|
|
|
|
|
||
Cash dividends paid
|
—
|
|
|
(174
|
)
|
||
Issuance of common stock
|
36
|
|
|
71
|
|
||
Repurchases of common stock
|
(344
|
)
|
|
(443
|
)
|
||
Net proceeds (repayments) of debt with original maturities of three months or less
|
(4
|
)
|
|
994
|
|
||
Repayments of debt with original maturities of more than three months
|
—
|
|
|
(259
|
)
|
||
Excess tax benefits from share-based compensation
|
7
|
|
|
1
|
|
||
Net cash provided by (used for) financing activities
|
(305
|
)
|
|
190
|
|
||
Effect of Exchange Rate Changes on Cash and Equivalents
|
(44
|
)
|
|
50
|
|
||
Cash and Equivalents:
|
|
|
|
|
|
||
Increase (decrease) during the period
|
(117
|
)
|
|
126
|
|
||
Beginning of period
|
2,779
|
|
|
1,178
|
|
||
End of period
|
$
|
2,662
|
|
|
$
|
1,304
|
|
Supplementary Cash and Non-Cash Information:
|
|
|
|
||||
Cash Paid During the Period for Interest
|
$
|
49
|
|
|
$
|
37
|
|
Cash Paid During the Period for Income Taxes, Net of Refunds
|
$
|
107
|
|
|
$
|
152
|
|
Liabilities Assumed from Acquisitions
|
$
|
51
|
|
|
$
|
126
|
|
(In millions)
|
Three Months Ended
|
||
|
March 31, 2012
|
||
Operating revenues
|
$
|
275
|
|
Operating income
|
42
|
|
|
Three Months Ended
|
||||||
(In millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
149
|
|
|
$
|
303
|
|
|
|
|
|
||||
Income (loss) from discontinued operations before income taxes
|
$
|
(101
|
)
|
|
$
|
33
|
|
Income taxes
|
(4
|
)
|
|
(11
|
)
|
||
Income (loss) from discontinued operations
|
$
|
(105
|
)
|
|
$
|
22
|
|
(In millions)
|
|
March 31,
2013 |
||
Trade receivables
|
|
$
|
92
|
|
Inventories
|
|
94
|
|
|
Net plant and equipment
|
|
21
|
|
|
Goodwill and intangible assets
|
|
150
|
|
|
Other
|
|
19
|
|
|
Loss reserves on assets held for sale
|
|
(60
|
)
|
|
Total assets held for sale
|
|
$
|
316
|
|
|
|
|
||
Accounts payable
|
|
$
|
35
|
|
Accrued expenses
|
|
26
|
|
|
Other
|
|
23
|
|
|
Total liabilities held for sale
|
|
$
|
84
|
|
(In millions)
|
March 31,
2013 |
|
December 31,
2012 |
||||
Raw material
|
$
|
521
|
|
|
$
|
539
|
|
Work-in-process
|
156
|
|
|
152
|
|
||
Finished goods
|
837
|
|
|
894
|
|
||
Total inventories
|
$
|
1,514
|
|
|
$
|
1,585
|
|
|
Three Months Ended
|
||||||||||||||
(In millions)
|
March 31,
|
||||||||||||||
|
Pension
|
|
Other Postretirement Benefits
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
23
|
|
|
$
|
25
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Interest cost
|
24
|
|
|
28
|
|
|
6
|
|
|
7
|
|
||||
Expected return on plan assets
|
(39
|
)
|
|
(40
|
)
|
|
(5
|
)
|
|
(5
|
)
|
||||
Amortization of actuarial loss
|
19
|
|
|
13
|
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Net periodic benefit cost
|
$
|
27
|
|
|
$
|
26
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts were included in the statement of income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations
|
$
|
27
|
|
|
$
|
25
|
|
|
$
|
4
|
|
|
$
|
6
|
|
Income (loss) from discontinued operations
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Net periodic benefit cost
|
$
|
27
|
|
|
$
|
26
|
|
|
$
|
4
|
|
|
$
|
6
|
|
(In millions)
|
March 31,
2013 |
|
December 31,
2012 |
||||
Fair value
|
$
|
4,958
|
|
|
$
|
5,105
|
|
Carrying value
|
4,561
|
|
|
4,595
|
|
|
Three Months Ended
|
||||||
(In millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Beginning balance
|
$
|
293
|
|
|
$
|
224
|
|
|
|
|
|
||||
Foreign currency translation adjustments during the period
|
(154
|
)
|
|
180
|
|
||
Foreign currency translation adjustments reclassified to income
|
4
|
|
|
(4
|
)
|
||
Income taxes
|
—
|
|
|
—
|
|
||
Total foreign currency translation adjustments
|
(150
|
)
|
|
176
|
|
||
|
|
|
|
||||
Pension and other postretirement benefit adjustments reclassified to income
|
19
|
|
|
14
|
|
||
Income taxes
|
(7
|
)
|
|
(4
|
)
|
||
Total pension and other postretirement benefit adjustments
|
12
|
|
|
10
|
|
||
|
|
|
|
||||
Ending balance
|
$
|
155
|
|
|
$
|
410
|
|
(Shares in millions)
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value
|
|
Weighted-Average Exercise Price
|
||||
Stock options
|
1.2
|
|
$
|
9.83
|
|
|
$
|
63.25
|
|
Restricted stock units (RSUs/PRSUs)
|
0.5
|
|
58.69
|
|
|
—
|
|
Risk-free interest rate
|
0.2-2.1%
|
|
Weighted-average volatility
|
21.0
|
%
|
Dividend yield
|
2.72
|
%
|
Expected years until exercise
|
6.6-7.6
|
|
•
|
Certain businesses within the former Transportation segment, primarily related to the automotive aftermarket business, are reported in the Polymers & Fluids segment and the Transportation segment has been renamed Automotive OEM.
|
•
|
The Welding business, which was formerly reported in the Power Systems & Electronics segment, is reported separately as the Welding segment.
|
•
|
The Electronics business, which was formerly reported in the Power Systems & Electronics segment, has been combined with the Test & Measurement business, which was formerly reported in the All Other segment, to form a new Test & Measurement and Electronics segment.
|
•
|
The All Other segment has been renamed Specialty Products.
|
•
|
Certain businesses within the former Transportation segment, primarily related to the automotive aftermarket business, are reported in the Polymers & Fluids segment and the Transportation segment has been renamed Automotive OEM.
|
•
|
The Welding business, which was formerly reported in the Power Systems & Electronics segment, is reported separately as the Welding segment.
|
•
|
The Electronics business, which was formerly reported in the Power Systems & Electronics segment, has been combined with the Test & Measurement business, which was formerly reported in the All Other segment, to form a new Test & Measurement and Electronics segment.
|
•
|
The All Other segment has been renamed Specialty Products.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
4,009
|
|
|
$
|
4,358
|
|
Operating income
|
660
|
|
|
694
|
|
||
Operating margin %
|
16.5
|
%
|
|
15.9
|
%
|
|
Three Months Ended
|
|||||||
|
March 31
|
|||||||
|
% Increase (Decrease)
|
|
% Increase (Decrease)
|
|
% Point Increase (Decrease)
|
|||
|
Operating Revenues
|
|
Operating Income
|
|
Operating Margins
|
|||
Base business:
|
|
|
|
|
|
|||
Revenue change/Operating leverage
|
(2.7
|
)%
|
|
(6.6
|
)%
|
|
(0.7
|
)%
|
Changes in variable margins & overhead costs
|
—
|
%
|
|
6.1
|
%
|
|
1.0
|
%
|
|
(2.7
|
)%
|
|
(0.5
|
)%
|
|
0.3
|
%
|
Acquisitions
|
1.3
|
%
|
|
(0.1
|
)%
|
|
(0.2
|
)%
|
Divestitures
|
(6.4
|
)%
|
|
(5.2
|
)%
|
|
0.2
|
%
|
Restructuring costs
|
—
|
%
|
|
1.1
|
%
|
|
0.2
|
%
|
Impairment of goodwill & intangibles
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Translation
|
(0.2
|
)%
|
|
(0.2
|
)%
|
|
0.1
|
%
|
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
(8.0
|
)%
|
|
(4.9
|
)%
|
|
0.6
|
%
|
|
Three Months Ended
|
||||||
(In millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Test & Measurement and Electronics
|
$
|
520
|
|
|
$
|
530
|
|
Automotive OEM
|
589
|
|
|
566
|
|
||
Polymers & Fluids
|
495
|
|
|
526
|
|
||
Food Equipment
|
467
|
|
|
473
|
|
||
Welding
|
472
|
|
|
495
|
|
||
Construction Products
|
418
|
|
|
433
|
|
||
Specialty Products
|
481
|
|
|
465
|
|
||
Industrial Packaging
|
579
|
|
|
608
|
|
||
Intersegment revenues
|
(12
|
)
|
|
(13
|
)
|
||
Total Segments
|
4,009
|
|
|
4,083
|
|
||
Decorative Surfaces
|
—
|
|
|
275
|
|
||
Total Operating Revenues
|
$
|
4,009
|
|
|
$
|
4,358
|
|
|
Three Months Ended
|
||||||
(In millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Test & Measurement and Electronics
|
$
|
68
|
|
|
$
|
62
|
|
Automotive OEM
|
117
|
|
|
112
|
|
||
Polymers & Fluids
|
72
|
|
|
78
|
|
||
Food Equipment
|
78
|
|
|
76
|
|
||
Welding
|
122
|
|
|
139
|
|
||
Construction Products
|
49
|
|
|
37
|
|
||
Specialty Products
|
96
|
|
|
88
|
|
||
Industrial Packaging
|
72
|
|
|
68
|
|
||
Total Segments
|
674
|
|
|
660
|
|
||
Decorative Surfaces
|
—
|
|
|
42
|
|
||
Unallocated
|
(14
|
)
|
|
(8
|
)
|
||
Total Operating Income
|
$
|
660
|
|
|
$
|
694
|
|
•
|
equipment, consumables, and related software for testing and measuring of materials, structures, gases and fluids;
|
•
|
electronic assembly equipment and related consumable solder materials;
|
•
|
electronic components and component packaging;
|
•
|
static control equipment and consumables used for contamination control in clean room environments; and
|
•
|
pressure sensitive adhesives and components for telecommunications, electronics, medical and transportation applications.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
520
|
|
|
$
|
530
|
|
Operating income
|
68
|
|
|
62
|
|
||
Operating margin %
|
13.0
|
%
|
|
11.8
|
%
|
|
Three Months Ended
|
|||||||
|
March 31
|
|||||||
|
% Increase (Decrease)
|
|
% Increase (Decrease)
|
|
% Point Increase (Decrease)
|
|||
|
Operating Revenues
|
|
Operating Income
|
|
Operating Margins
|
|||
Base business:
|
|
|
|
|
|
|||
Revenue change/Operating leverage
|
(3.4
|
)%
|
|
(13.2
|
)%
|
|
(1.2
|
)%
|
Changes in variable margins & overhead costs
|
—
|
%
|
|
16.3
|
%
|
|
2.0
|
%
|
|
(3.4
|
)%
|
|
3.1
|
%
|
|
0.8
|
%
|
Acquisitions
|
1.8
|
%
|
|
0.4
|
%
|
|
(0.2
|
)%
|
Divestitures
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Restructuring costs
|
—
|
%
|
|
5.5
|
%
|
|
0.7
|
%
|
Impairment of goodwill & intangibles
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Translation
|
(0.5
|
)%
|
|
(0.5
|
)%
|
|
(0.1
|
)%
|
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
(2.1
|
)%
|
|
8.5
|
%
|
|
1.2
|
%
|
•
|
plastic and metal components, fasteners and assemblies for automobiles, light trucks, and other industrial uses.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
589
|
|
|
$
|
566
|
|
Operating income
|
117
|
|
|
112
|
|
||
Operating margin %
|
19.8
|
%
|
|
19.7
|
%
|
|
Three Months Ended
|
|||||||
|
March 31
|
|||||||
|
% Increase (Decrease)
|
|
% Increase (Decrease)
|
|
% Point Increase (Decrease)
|
|||
|
Operating Revenues
|
|
Operating Income
|
|
Operating Margins
|
|||
Base business:
|
|
|
|
|
|
|||
Revenue change/Operating leverage
|
4.0
|
%
|
|
7.3
|
%
|
|
0.6
|
%
|
Changes in variable margins & overhead costs
|
—
|
%
|
|
(1.8
|
)%
|
|
(0.3
|
)%
|
|
4.0
|
%
|
|
5.5
|
%
|
|
0.3
|
%
|
Acquisitions
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Divestitures
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Restructuring costs
|
—
|
%
|
|
(1.8
|
)%
|
|
(0.3
|
)%
|
Impairment of goodwill & intangibles
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Translation
|
—
|
%
|
|
0.6
|
%
|
|
0.1
|
%
|
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
4.0
|
%
|
|
4.3
|
%
|
|
0.1
|
%
|
•
|
adhesives for industrial, construction and consumer purposes;
|
•
|
chemical fluids which clean or add lubrication to machines;
|
•
|
epoxy and resin-based coating products for industrial applications;
|
•
|
hand wipes and cleaners for industrial applications;
|
•
|
fluids, polymers and other supplies for auto aftermarket maintenance and appearance;
|
•
|
fillers and putties for auto body repair; and
|
•
|
polyester coatings and patch and repair products for the marine industry.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
495
|
|
|
$
|
526
|
|
Operating income
|
72
|
|
|
78
|
|
||
Operating margin %
|
14.6
|
%
|
|
14.9
|
%
|
|
Three Months Ended
|
|||||||
|
March 31
|
|||||||
|
% Increase (Decrease)
|
|
% Increase (Decrease)
|
|
% Point Increase (Decrease)
|
|||
|
Operating Revenues
|
|
Operating Income
|
|
Operating Margins
|
|||
Base business:
|
|
|
|
|
|
|||
Revenue change/Operating leverage
|
(6.7
|
)%
|
|
(19.3
|
)%
|
|
(2.0
|
)%
|
Changes in variable margins & overhead costs
|
—
|
%
|
|
18.8
|
%
|
|
3.0
|
%
|
|
(6.7
|
)%
|
|
(0.5
|
)%
|
|
1.0
|
%
|
Acquisitions
|
2.0
|
%
|
|
0.3
|
%
|
|
(0.3
|
)%
|
Divestiture
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Restructuring costs
|
—
|
%
|
|
(6.9
|
)%
|
|
(1.1
|
)%
|
Impairment of goodwill & intangibles
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Translation
|
(1.2
|
)%
|
|
(1.1
|
)%
|
|
0.1
|
%
|
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
(5.9
|
)%
|
|
(8.2
|
)%
|
|
(0.3
|
)%
|
•
|
warewashing equipment;
|
•
|
cooking equipment, including ovens, ranges and broilers;
|
•
|
refrigeration equipment, including refrigerators, freezers and prep tables;
|
•
|
food processing equipment, including slicers, mixers and scales;
|
•
|
kitchen exhaust, ventilation and pollution control systems; and
|
•
|
food equipment service, maintenance and repair.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
467
|
|
|
$
|
473
|
|
Operating income
|
78
|
|
|
76
|
|
||
Operating margin %
|
16.7
|
%
|
|
16.0
|
%
|
|
Three Months Ended
|
|||||||
|
March 31
|
|||||||
|
% Increase (Decrease)
|
|
% Increase (Decrease)
|
|
% Point Increase (Decrease)
|
|||
|
Operating Revenues
|
|
Operating Income
|
|
Operating Margins
|
|||
Base business:
|
|
|
|
|
|
|||
Revenue change/Operating leverage
|
(2.5
|
)%
|
|
(6.9
|
)%
|
|
(0.7
|
)%
|
Changes in variable margins & overhead costs
|
—
|
%
|
|
10.9
|
%
|
|
1.8
|
%
|
|
(2.5
|
)%
|
|
4.0
|
%
|
|
1.1
|
%
|
Acquisitions
|
1.5
|
%
|
|
(0.1
|
)%
|
|
(0.3
|
)%
|
Divestitures
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Restructuring costs
|
—
|
%
|
|
(0.6
|
)%
|
|
(0.1
|
)%
|
Impairment of goodwill & intangibles
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Translation
|
(0.2
|
)%
|
|
(0.2
|
)%
|
|
—
|
%
|
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
(1.2
|
)%
|
|
3.1
|
%
|
|
0.7
|
%
|
•
|
arc welding equipment;
|
•
|
metal arc welding consumables and related accessories; and
|
•
|
metal jacketing and other insulation products.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
472
|
|
|
$
|
495
|
|
Operating income
|
122
|
|
|
139
|
|
||
Operating margin %
|
26.0
|
%
|
|
28.0
|
%
|
|
Three Months Ended
|
|||||||
|
March 31
|
|||||||
|
% Increase (Decrease)
|
|
% Increase (Decrease)
|
|
% Point Increase (Decrease)
|
|||
|
Operating Revenues
|
|
Operating Income
|
|
Operating Margins
|
|||
Base business:
|
|
|
|
|
|
|||
Revenue change/Operating leverage
|
(5.5
|
)%
|
|
(8.3
|
)%
|
|
(0.8
|
)%
|
Changes in variable margins & overhead costs
|
—
|
%
|
|
(2.6
|
)%
|
|
(0.8
|
)%
|
|
(5.5
|
)%
|
|
(10.9
|
)%
|
|
(1.6
|
)%
|
Acquisitions
|
0.8
|
%
|
|
(0.5
|
)%
|
|
(0.4
|
)%
|
Divestitures
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Restructuring costs
|
—
|
%
|
|
(0.5
|
)%
|
|
(0.2
|
)%
|
Impairment of goodwill & intangibles
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Translation
|
(0.1
|
)%
|
|
0.1
|
%
|
|
0.2
|
%
|
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
(4.8
|
)%
|
|
(11.8
|
)%
|
|
(2.0
|
)%
|
•
|
fasteners and related fastening tools for wood and metal applications;
|
•
|
anchors, fasteners and related tools for concrete applications;
|
•
|
metal plate truss components and related equipment and software; and
|
•
|
packaged hardware, fasteners, anchors and other products for retail.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
418
|
|
|
$
|
433
|
|
Operating income
|
49
|
|
|
37
|
|
||
Operating margin %
|
11.7
|
%
|
|
8.5
|
%
|
|
Three Months Ended
|
|||||||
|
March 31
|
|||||||
|
% Increase (Decrease)
|
|
% Increase (Decrease)
|
|
% Point Increase (Decrease)
|
|||
|
Operating Revenues
|
|
Operating Income
|
|
Operating Margins
|
|||
Base business:
|
|
|
|
|
|
|||
Revenue change/Operating leverage
|
(3.4
|
)%
|
|
(17.4
|
)%
|
|
(1.2
|
)%
|
Changes in variable margins & overhead costs
|
—
|
%
|
|
27.9
|
%
|
|
2.5
|
%
|
|
(3.4
|
)%
|
|
10.5
|
%
|
|
1.3
|
%
|
Acquisitions
|
1.0
|
%
|
|
(0.8
|
)%
|
|
(0.2
|
)%
|
Divestitures
|
(0.6
|
)%
|
|
(0.2
|
)%
|
|
0.1
|
%
|
Restructuring costs
|
—
|
%
|
|
24.3
|
%
|
|
2.1
|
%
|
Impairment of goodwill & intangibles
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Translation
|
(0.3
|
)%
|
|
(0.5
|
)%
|
|
(0.1
|
)%
|
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
(3.3
|
)%
|
|
33.3
|
%
|
|
3.2
|
%
|
•
|
plastic consumables that multi-pack cans and bottles and related equipment;
|
•
|
foil, film and related equipment used to decorate consumer products;
|
•
|
product coding and marking equipment and related consumables;
|
•
|
line integration, conveyor systems and line automation for the food and beverage industries;
|
•
|
plastic and metal fasteners and components for appliances;
|
•
|
airport ground support equipment; and
|
•
|
components for medical devices.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
481
|
|
|
$
|
465
|
|
Operating income
|
96
|
|
|
88
|
|
||
Operating margin %
|
19.9
|
%
|
|
19.1
|
%
|
|
Three Months Ended
|
|||||||
|
March 31
|
|||||||
|
% Increase (Decrease)
|
|
% Increase (Decrease)
|
|
% Point Increase (Decrease)
|
|||
|
Operating Revenues
|
|
Operating Income
|
|
Operating Margins
|
|||
Base business:
|
|
|
|
|
|
|||
Revenue change/Operating leverage
|
0.3
|
%
|
|
0.8
|
%
|
|
0.1
|
%
|
Changes in variable margins & overhead costs
|
—
|
%
|
|
7.1
|
%
|
|
1.3
|
%
|
|
0.3
|
%
|
|
7.9
|
%
|
|
1.4
|
%
|
Acquisitions
|
3.4
|
%
|
|
—
|
%
|
|
(0.7
|
)%
|
Divestitures
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Restructuring costs
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
Impairment of goodwill & intangibles
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Translation
|
(0.1
|
)%
|
|
0.1
|
%
|
|
0.1
|
%
|
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
3.6
|
%
|
|
8.1
|
%
|
|
0.8
|
%
|
•
|
steel and plastic strapping and related tools and equipment;
|
•
|
plastic stretch film and related equipment; and
|
•
|
paper and plastic products that protect goods in transit.
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating revenues
|
$
|
579
|
|
|
$
|
608
|
|
Operating income
|
72
|
|
|
68
|
|
||
Operating margin %
|
12.4
|
%
|
|
11.1
|
%
|
|
Three Months Ended
|
|||||||
|
March 31
|
|||||||
|
% Increase (Decrease)
|
|
% Increase (Decrease)
|
|
% Point Increase (Decrease)
|
|||
|
Operating Revenues
|
|
Operating Income
|
|
Operating Margins
|
|||
Base business:
|
|
|
|
|
|
|||
Revenue change/Operating leverage
|
(4.4
|
)%
|
|
(15.4
|
)%
|
|
(1.3
|
)%
|
Changes in variable margins & overhead costs
|
—
|
%
|
|
16.1
|
%
|
|
1.9
|
%
|
|
(4.4
|
)%
|
|
0.7
|
%
|
|
0.6
|
%
|
Acquisitions
|
0.3
|
%
|
|
0.1
|
%
|
|
—
|
%
|
Divestitures
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Restructuring costs
|
—
|
%
|
|
6.9
|
%
|
|
0.8
|
%
|
Impairment of goodwill & intangibles
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Translation
|
(0.6
|
)%
|
|
(0.8
|
)%
|
|
(0.1
|
)%
|
Other
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
(4.7
|
)%
|
|
6.9
|
%
|
|
1.3
|
%
|
(Dollars in millions)
|
Three Months Ended
|
||
|
March 31, 2012
|
||
Operating revenues
|
$
|
275
|
|
Operating income
|
42
|
|
|
Operating margin %
|
15.3
|
%
|
•
|
dividend payments - the Company's dividend payout guidelines are 30% to 45% of the average of the last two years' free operating cash flow;
|
•
|
share repurchases; and
|
•
|
acquisitions.
|
|
Three Months Ended
|
||||||
(In millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Net cash provided by operating activities
|
$
|
366
|
|
|
$
|
323
|
|
Additions to plant and equipment
|
(89
|
)
|
|
(84
|
)
|
||
Free operating cash flow
|
$
|
277
|
|
|
$
|
239
|
|
|
|
|
|
||||
Cash dividends paid
|
$
|
—
|
|
|
$
|
(174
|
)
|
Acquisition of businesses (excluding cash and equivalents) and additional interest in affiliates
|
(56
|
)
|
|
(481
|
)
|
||
Repurchases of common stock
|
(344
|
)
|
|
(443
|
)
|
||
Net proceeds from (repayments of) debt
|
(4
|
)
|
|
735
|
|
||
Other
|
54
|
|
|
200
|
|
||
Effect of exchange rate changes on cash and equivalents
|
(44
|
)
|
|
50
|
|
||
Net increase (decrease) in cash and equivalents
|
$
|
(117
|
)
|
|
$
|
126
|
|
|
Three Months Ended
|
||||||
(Dollars in millions)
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Operating income
|
$
|
660
|
|
|
$
|
694
|
|
Taxes (29.0% for 2013 and 28.9% in 2012)
|
(191
|
)
|
|
(201
|
)
|
||
Operating income after taxes
|
$
|
469
|
|
|
$
|
493
|
|
Invested capital:
|
|
|
|
|
|||
Trade receivables
|
$
|
2,789
|
|
|
$
|
3,134
|
|
Inventories
|
1,514
|
|
|
1,824
|
|
||
Net plant and equipment
|
1,960
|
|
|
2,100
|
|
||
Goodwill and intangible assets
|
7,574
|
|
|
7,889
|
|
||
Accounts payable and accrued expenses
|
(1,984
|
)
|
|
(2,219
|
)
|
||
Net assets held for sale
|
232
|
|
|
299
|
|
||
Other, net
|
544
|
|
|
569
|
|
||
Total invested capital
|
$
|
12,629
|
|
|
$
|
13,596
|
|
Average invested capital
|
$
|
12,735
|
|
|
$
|
13,221
|
|
Annualized return on average invested capital
|
14.7
|
%
|
|
14.9
|
%
|
(Dollars in millions)
|
March 31, 2013
|
|
December 31, 2012
|
|
Increase/
(Decrease)
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and equivalents
|
$
|
2,662
|
|
|
$
|
2,779
|
|
|
$
|
(117
|
)
|
Trade receivables
|
2,789
|
|
|
2,742
|
|
|
47
|
|
|||
Inventories
|
1,514
|
|
|
1,585
|
|
|
(71
|
)
|
|||
Other
|
829
|
|
|
854
|
|
|
(25
|
)
|
|||
Assets held for sale
|
316
|
|
|
—
|
|
|
316
|
|
|||
|
8,110
|
|
|
7,960
|
|
|
150
|
|
|||
Current liabilities:
|
|
|
|
|
|
||||||
Short-term debt
|
456
|
|
|
459
|
|
|
(3
|
)
|
|||
Accounts payable and accrued expenses
|
1,984
|
|
|
2,068
|
|
|
(84
|
)
|
|||
Other
|
278
|
|
|
124
|
|
|
154
|
|
|||
Liabilities held for sale
|
84
|
|
|
—
|
|
|
84
|
|
|||
|
2,802
|
|
|
2,651
|
|
|
151
|
|
|||
Net working capital
|
$
|
5,308
|
|
|
$
|
5,309
|
|
|
$
|
(1
|
)
|
Current ratio
|
2.89
|
|
|
3.00
|
|
|
|
(Dollars in millions)
|
March 31, 2013
|
|
December 31, 2012
|
||||
Short-term debt
|
$
|
456
|
|
|
$
|
459
|
|
Long-term debt
|
4,556
|
|
|
4,589
|
|
||
Total debt
|
$
|
5,012
|
|
|
$
|
5,048
|
|
Total debt to capitalization
|
32.8
|
%
|
|
32.3
|
%
|
(Dollars in millions)
|
Twelve Months Ended
|
||||||
|
March 31, 2013
|
|
December 31, 2012
|
||||
Total debt
|
$
|
5,012
|
|
|
$
|
5,048
|
|
|
|
|
|
||||
Income from continuing operations
|
$
|
2,459
|
|
|
$
|
2,464
|
|
Add:
|
|
|
|
||||
Interest expense
|
223
|
|
|
213
|
|
||
Gain on sale of interest in Decorative Surfaces
|
(933
|
)
|
|
(933
|
)
|
||
Other income (expense)
|
(52
|
)
|
|
(14
|
)
|
||
Income taxes
|
1,075
|
|
|
1,076
|
|
||
Depreciation
|
318
|
|
|
323
|
|
||
Amortization and impairment of goodwill and other intangible assets
|
277
|
|
|
278
|
|
||
Adjusted EBITDA
|
$
|
3,367
|
|
|
$
|
3,407
|
|
Total debt to adjusted EBITDA ratio
|
1.5
|
|
|
1.5
|
|
(In millions)
|
|
||
Total stockholders’ equity, December 31, 2012
|
$
|
10,570
|
|
Net income
|
354
|
|
|
Stock option and restricted stock activity
|
42
|
|
|
Repurchases of common stock
|
(366
|
)
|
|
Cash dividends declared
|
(171
|
)
|
|
Noncontrolling interest activity
|
(12
|
)
|
|
Pension and other postretirement benefit adjustments
|
12
|
|
|
Foreign currency translation adjustments
|
(150
|
)
|
|
Total stockholders’ equity, March 31, 2013
|
$
|
10,279
|
|
|
|
|
|
|
ILLINOIS TOOL WORKS INC.
|
|
|
|
|
|
|
Dated:
|
May 2, 2013
|
By:
/s/ Randall J. Scheuneman
|
|
|
Randall J. Scheuneman
|
|
|
Vice President & Chief Accounting Officer
|
|
|
(Principal Accounting Officer and Duly Authorized Officer)
|
1.
|
Eligibility for payment
. You are eligible to receive a Retention and Incentive Award and P&O Bonus as set forth and subject to additional conditions in Sections 2 and 3, if after the closing of the Transaction your employment transfers to the successor interest of the business, and you remain employed by and fully engaged in the Business until payment date(s). If, however, prior to payment date, your employment is involuntarily terminated by ITW, the Business or any successor in interest to the Business for any reason other than for Cause or you leave employment for Good Reason you will receive the payment.
|
2.
|
Retention and Incentive Award.
The Award will consist of two components, as described below:
|
a)
|
ITW Long Term Incentive Plan ("LTIP")
. Effective upon the Closing of the Transaction, the following modifications shall be made to any stock options, company growth plan ("CGP") awards, and performance restricted stock units ("PRSUs") you possess under the ITW Long Term Incentive Plan ("LTIP") granted prior to 2014:
|
i.
|
100% Vesting acceleration
|
ii.
|
Stock Option Exercise Period: You will then have one (1) year following the Closing of the Transaction to exercise any outstanding stock option grant including options subject to the vesting acceleration provision set forth in Section 1(a)(i) herein (unless a provision under the original grant agreement (e.g. in case of Death or Disability) would have provided for longer than one (1) year, in which case the original grant agreement shall govern the exercise period); however, in no case will such extension to the exercise period extend beyond the original grant life.
|
iii.
|
PRSU: Shares will be delivered after the performance period based on the payout level certified by the Compensation Committee.
|
iv.
|
CGP Payment: Any unvested CGP grant subject to the vesting acceleration provision will be paid at the target level within 90 days following the Closing.
|
b)
|
Cash Bonus Award. The Award will also include a cash bonus payment in the amount of $600,000 (“Cash Bonus Award”).
|
a)
|
You will not be entitled to any Award or P&O Bonus if, prior to payment, (1) you voluntarily terminate your employment without “Good Reason,” (2) you die, or (3) your employment is terminated for "Cause".
|
b)
|
For purposes of this agreement, “Good Reason” means (i) a 10% reduction in your salary and/or bonus opportunity, (ii) a material adverse change in your role, duties or responsibilities, (iii) reassignment to a work location more than 30 miles from your current principal place of employment, (iv) not being offered continued employment with any successor in interest to the Business, (v) declining continued employment with any successor in interest to the Business because the proposed terms of employment would trigger “Good Reason,” or (vi) any other material breach of this Severance Agreement or the Retention and Severance Award.
|
c)
|
For purposes of this Severance Agreement, "Cause" means (i) your commission of an act of dishonesty, fraud, misrepresentation, embezzlement or actua1/attempted intentional physical violence or other offensive contact against ITW, the Business, any successor in interest to the Business, or any of their respective employees, clients, or suppliers; (ii) your material breach of any of your obligations under this Severance Agreement, or any other agreement between you and ITW, the Business or any successor in interest to the Business; (iii) a material violation of the written policies of ITW, the Business or any successor in interest to the Business which is likely to cause ITW, the Business or a successor to suffer economic or reputational injury; (iv) your willful refusal to perform your essential duties for ITW or the Business or any successor in interest to the Business, or to follow the lawful written directions of ITW, the Business or any successor in interest to the Business; (v) your conviction of, or plea of no contest to, any felony or any crime involving moral turpitude; (vi) any willful act or reckless omission by you which is, or is reasonably likely to be, injurious to the financial condition or business reputation of ITW, the Business, any successor in interest to the Business, or any of their respective employees, clients, or suppliers; (viii) your inability, as a result of alcohol or drug use, to perform the essential duties and/or responsibilities of your position. Notwithstanding the foregoing, no act omission which is curable shall constitute grounds for “Cause,” unless you
|
a)
|
Plan Interpretations
. You agree that ITW has full and complete authority, in good faith, (i) to construe, interpret and implement this letter agreement and any related document, including, for example, eligibility for and entitlement to benefits; and (ii) to make all determinations
|
b)
|
Non Assignability
. Except as otherwise determined by ITW, you may not assign or transfer this letter agreement or any payments or benefits under this letter agreement to anyone.
|
c)
|
No Right to Continued Employment
. Nothing in this letter agreement constitutes an offer to you of any fixed period of employment up to the Closing, the Closing date or thereafter. Except as specifically provided herein, this letter agreement does not affect the terms of your employment with ITW or the Business or ITW's or the Business's rights in any way.
|
e)
|
Governing Law.
This letter agreement and all actions taken under this letter agreement will be governed by, and construed in accordance with, the laws of the country in which you currently maintain your primary residence without regard to the conflict of law principles thereof. This letter agreement may be modified by ITW in its discretion, if needed, in order to be compliant by applicable law and regulations.
|
f)
|
Section 409A
. All amounts payable under this Agreement are intended to comply with the "short term deferral" exception from Section 409A of the Internal Revenue Code ('"Section 409A") specified in Treas. Reg.§409A-l(b)(4) (or any successor provision) or the separation pay Agreement exception specified in Treas. Reg.§409A-l(bX9) (or any successor provision), and shall be interpreted in a manner consistent with those exceptions. Notwithstanding the foregoing, to the extent that any amounts payable in accordance with this Agreement are subject to Section 409A, the Agreement shall be interpreted and administered in such a way as to comply with the applicable provisions of Section 409A to the maximum extent possible. To the extent that the Agreement is subject to Section 409A and fails to comply with the requirements of Section 409A, ITW or Affiliates reserve the right (without any obligation to do so) to amend or terminate the Agreement to comply with the applicable provisions of Section 409A or not be subject to Section 409A. If payment of any amount of "deferred compensation" (as defined under Section 409A ) is triggered by a separation from service that occurs while the employee is a "specified employee" (as defined under Section 409A) with respect to ITW or Affiliates, and if such amount is scheduled to be paid within six (6) months after such separation from service, the amount shall accrue without interest and shall be paid the first business day after the end of such six-month period, or, if earlier, within 15 days after the appointment of the personal representative or executor of the Employee's estate following the Employee's death. Each payment of compensation under the Agreement shall be treated as a separate payment of compensation for purposes of applying Section 409A. "Termination of employment,'' "resignation", "separation" or words of similar import, as used in this Agreement shall mean, with respect to any payments of deferred compensation subject to Section 409A of the Code, the employee's ''separation from service" as defined in Section 409A.
|
1)
|
You are terminated without cause or resign for Good Reason prior to a Transaction but after an executed letter of intent; or
|
2)
|
There is a Transaction, and within 24 months of such Transaction, you are subsequently terminated without Cause or you resign for Good Reason.
|
1.
|
I have reviewed this report on Form 10-Q of Illinois Tool Works Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: May 2, 2013
|
|
/s/ E. Scott Santi
|
|
|
E. Scott Santi
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q of Illinois Tool Works Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: May 2, 2013
|
|
/s/ Ronald D. Kropp
|
|
|
Ronald D. Kropp
|
|
|
Senior Vice President & Chief Financial Officer
|
Dated: May 2, 2013
|
|
/s/ E. Scott Santi
|
|
|
E. Scott Santi
|
|
|
President and Chief Executive Officer
|
Dated: May 2, 2013
|
|
/s/ Ronald D. Kropp
|
|
|
Ronald D. Kropp
|
|
|
Senior Vice President & Chief Financial Officer
|