Exhibit 10(o)
ILLINOIS TOOL WORKS INC.
EXECUTIVE CONTRIBUTORY RETIREMENT INCOME PLAN
As Amended and Restated Effective January 1, 2008
Illinois Tool Works Inc. hereby amends and restates, effective as of January 1, 2008, the
Illinois Tool Works Inc. Executive Contributory Retirement Income Plan, originally established
April 1, 1993. The Company intends for the Plan to comply with Section 409A of the Internal
Revenue Code of 1986, as amended, and the applicable regulations (“Section 409A”); to operate the
Plan in good faith compliance with Section 409A during the Section 409A transition period; and to
satisfy the applicable grandfather rules so that each Participant’s Pre-1/1/2005 Sub-Account will
not be subject to Section 409A.
ARTICLE I.
DEFINITIONS
1.1 “
Account
” means the account(s) maintained on the books of the Company for each
Participant or Beneficiary pursuant to Article II. Except as otherwise indicated, any reference in
the Plan to a Participant’s or Beneficiary’s Account shall be deemed to refer to the aggregate of
his/her Pre-1/1/2005 and Post-1/1/2005 Sub-Accounts, as such terms are defined in Article II.
1.2 “
Basic Compensation
” means any pay that could be deferred as “Compensation” under
the ITW Savings and Investment Plan (without regard to the Code Section 415 and Code Section
401(a)(17) limits), except for pay otherwise defined as Incentive under this Plan.
1.3 “
Beneficiary
” means the person or persons so designated by a Participant pursuant to Section 3.6.
1.4 “
Board
” means the Board of Directors of the Company.
1.5 “
CEO
” means the Chief Executive Officer of the Company.
1.6 “
Code
” means the Internal Revenue Code of 1986, as amended.
1.7 “
Committee
” means the Employee Benefits Steering Committee of the Company.
1.8 “
Company
” means Illinois Tool Works Inc., a Delaware corporation, and any
successor thereto, and any corporation or other entity that together with Illinois Tool Works Inc.
is a member of a controlled group of corporations under Code Section 414(b) or a group of trades or
businesses under common control pursuant to Code Section 414(c).
1.9 “
Company Basic Contribution
” means the contribution made by the Company to a
Participant’s Post-1/1/2005 Sub-Account pursuant to Section 2.5.
1.10 “
Company Matching Contribution
” means the contribution made by the Company to a
Participant’s Post-1/1/2005 Sub-Account pursuant to Section 2.4.
1.11 “
Corporate Change
” shall mean either a “Change in Ownership,” “Change in
Effective Control” or a “Change of Ownership of a Substantial Portion of Assets” as defined in
Section 409A and summarized herein. A “Change in Ownership” occurs on the date that any one
person, or more than one person acting as a group (as defined in Section 409A), acquires ownership
of stock of the Company that, together with stock held by such person or group, constitutes more
than 50% of the total fair market value or total voting power of the stock of the Company. A
“Change in Effective Control” occurs on the date that either (i) any one person, or more than one
person acting as a group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of the Company
possessing 35% or more of the total voting power of the stock of the Company; or (ii) a majority of
members of the Board is replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board prior to the date of the
appointment or election. A “Change of Ownership of a Substantial Portion of Assets” occurs on the
date that any one person, or more than one person acting as a group, acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair market value equal to or more than
40% of the total gross fair market value of all of the assets of the Company immediately prior to
such acquisition or acquisitions.
1.12 “
Deferral Year
” means any calendar year.
1.13 “
Determination Date
” means the date on which the amount of a Participant’s or
Beneficiary’s Account is determined as provided in Article II which, effective July 1, 2005, shall
be each business day.
1.14 “
Disability
” means the Participant’s Separation from Service because he/she (i)
is unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under a Company-sponsored accident and health
plan. Notwithstanding the foregoing, with respect to a Participant’s Pre-1/1/2005 Sub-Account,
“Disability” shall have the same meaning as “Disabled” under the ITW Retirement Accumulation Plan
as in effect on October 3, 2004.
1.15 “
Early Retirement Date
” means the date of a Participant’s Separation from Service
on or after attaining age 55 and 10 or more years of service before attaining age 65.
1.16 “
Eligible Executive
” means any Company executive designated as eligible for Plan
participation by the CEO. The CEO or the Board can subsequently determine that an executive is not
an Eligible Executive. Such determination shall only apply on a prospective basis (i.e., with
respect to future deferrals) and any Basic Compensation or Incentive previously deferred by such
executive shall be paid in accordance with the terms of the Plan. Notwithstanding the foregoing,
an Eligible Executive shall only be considered such if he/she is part of a “select group of
management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
1.17 “
Incentive
” means any performance-based bonus or other amount(s) earned during a
calendar year by the Participant under any incentive plan sponsored by the Company.
1.18 “
Interest Yield
” means either the Retirement Interest Yield or the Termination
Interest Yield as defined below:
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(a)
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“
Retirement Interest Yield
” means 130 percent of
Moody’s. The maximum Retirement Interest Yield pursuant to this Plan shall be
15.6%.
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(b)
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“
Termination Interest Yield
” means 100 percent of
Moody’s. The maximum Termination Interest Yield pursuant to this Plan shall
be 12%.
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“Moody’s” means the average of the monthly Moody’s Long-Term Corporate Bond Yields for the
preceding calendar quarter as determined from the Moody’s Bond Record published by Moody’s
Investor’s Service, Inc. (or any successor thereto).
1.19 “
Normal Retirement Date
” means the date of a Participant’s Separation from
Service on or after attaining age 65 and 5 or more years of service.
1.20 “
Participant
” means an Eligible Executive who has commenced Basic Compensation
and/or Incentive deferrals pursuant to Article II and any other individual (other than a
Beneficiary) who has an Account.
1.21 “
Plan
” means the Illinois Tool Works Inc. Executive Contributory Retirement
Income Plan as amended from time to time.
1.22 “
Retirement Benefit
” means the payment of the Participant’s or Beneficiary’s
Account pursuant to Sections 3.1 and 3.2.
1.23 “
Separation from Service
” means the Participant’s cessation of services with the
Company for any reason.
1.24 “
Unforeseeable Emergency
” means a severe financial hardship to a Participant
resulting from an illness or accident of the Participant, or the Participant’s spouse, Beneficiary,
or dependent (as defined in Code Section 152 without regard to Code Sections 152(b)(1), (b)(2), and
(d)(1)(B)); loss of the Participant’s property due to casualty (including the need to rebuild a
home following damage to a home not otherwise covered by insurance, for example, not as a result of
a natural disaster) or other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant.
1.25 “
Vesting Service
” has the meaning set forth in the ITW Savings and Investment
Plan.
ARTICLE II.
DEFERRAL ELECTIONS AND COMPANY MATCH
2.1
Deferral Elections
.
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(a)
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General
. In order to participate in the Plan, an
Eligible Executive must submit (according to the method prescribed by the
Company) a deferral election as to Basic Compensation and/or Incentive prior
to the first day of the Deferral Year in which he/she will perform services
related to the amount to be deferred. Such election shall be effective with
respect to Basic Compensation and/or Incentive related to services to be
performed during the Deferral Year to which the deferral election relates.
Deferral elections may be amended or revoked at any time prior to the first
day of the Deferral Year to which the election relates. Notwithstanding the
foregoing, any deferral election with respect to an Incentive that qualifies
as “performance-based” compensation under Section 409A may be made with
respect to such Incentive on or before the date that is six months before the
end of the performance period, provided that (i) the Participant provides
services continuously from the later of the beginning of the performance
period or the date the Incentive criteria are established through the date of
the deferral election, and (ii) that in no event may an election to defer
Incentive be made after such Incentive has become readily ascertainable.
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(b)
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New Participants
. A Company executive designated
as an Eligible Executive by the CEO during a Deferral Year and who desires to
become a Participant prior to the commencement of the next Deferral Year must
submit a deferral election no later than 30 days after the date he/she
receives notice of designation as an Eligible Executive. Such election shall
be effective with respect to Basic Compensation and/or Incentive related to
services to be performed subsequent to the date of the election.
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(c)
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Unforeseeable Emergency/Hardship
. A Participant’s
deferral election with respect to the then-current Deferral Year shall be
cancelled in the event that the Participant receives a payment pursuant to
Section 3.5 due to an Unforeseeable Emergency or due to a hardship withdrawal
under the ITW Savings and Investment Plan.
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2.2
Minimum and Maximum Deferral
. A Participant may elect to defer between 6% and 50%
of his/her Basic Compensation in 1% increments during a Deferral Year. In addition, a Participant
may elect to defer between 6% and 85% of his/her Incentive in 1% increments. The Company may reduce
a Participant’s Incentive deferral if, and to the extent, the Participant elects to defer an amount
that would not allow for payment by the Company of all FICA, federal, state and/or local income tax
withholdings.
2.3
Timing of Deferral Credits
. The amount of Basic Compensation and Incentive that a
Participant elects to defer shall cause an equivalent reduction in the Participant’s Basic
Compensation and Incentive. Basic Compensation and Incentive deferrals shall be credited to a
Participant’s Post-1/1/2005 Sub-Account at the end of each calendar quarter with respect to
deferrals for periods prior to July 1, 2005, and thereafter as of the date the deferred Basic
Compensation or Incentive would have otherwise been paid to the Participant or as soon as
reasonably practicable thereafter.
2.4
Company Matching Contributions
. All Participants shall be immediately eligible
for Company Matching Contributions. Each Participant shall be fully and immediately vested in
his/her Company Matching Contributions. If a Participant defers compensation under this Plan, the
Participant will be ineligible for Company Matching Contributions with respect to the same type of
compensation, i.e. Basic Compensation or Incentive, that is deferred during the applicable Deferral
Year under the ITW Savings and Investment Plan or any other plan that would be considered a defined
contribution plan under Code Section 414(i) regardless of whether such plan or agreement
constitutes a qualified plan under Code Section 401(a). Each Participant shall be designated as a
“Group I” or “Group II” Participant according to the provisions of the ITW Savings and Investment
Plan. Any such change in designation shall only be made on a prospective basis (i.e., with respect
to future deferrals).
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(a)
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Group I Participants
. A Group I Participant shall
be credited with a Company Matching Contribution equal to 3.5% of his/her
Basic Compensation for each payroll period during which he/she is deferring
at least 6% of Basic Compensation. A Group I Participant also shall be
credited with a Company Matching Contribution equal to 3.5% of his/her
Incentive, provided the Group I Participant elects to defer at least 6% of
such Incentive. For purposes of this Section 2.4(a), the term “Incentive”
shall not include any payment made under a long-term incentive plan.
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(b)
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Group II Participants
. A Group II Participant
shall be credited with a Company Matching Contribution equal to 4.5% of
his/her Basic Compensation for each payroll period during which he/she is
deferring at least 6% of Basic Compensation. A Group II Participant shall
also be credited with a Company Matching Contribution equal to 4.5% of
his/her Incentive, provided the Group II Participant elects to defer at least
6% of such Incentive. For purposes of this Section 2.4(b), the term
“Incentive” shall not include any payment made under a long-term incentive
plan.
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Company Matching Contributions shall be allocated to a Participant’s Post-1/1/2005 Sub-Account.
2.5
Company Basic Contributions
. Each Group II Participant with one year of service,
including any Group II Participants who do not elect to defer Basic Compensation or Incentive under
Section 2.2, shall be eligible to receive a Company Basic Contribution for each payroll period
equal to the difference between (i) the Company Basic Contribution paid to the Group II Participant
under the ITW Savings and Investment Plan for such payroll period and (ii) the Company Basic
Contribution that would be payable under the ITW Savings and Investment Plan for such payroll
period if the ITW Savings and Investment Plan included deferrals under Section 2.2 in the
calculation of the Company Basic Contribution and the limits under Code Section 401(a)(17) and Code
Section 415 did not apply. Company Basic Contributions shall be allocated to a Group II
Participant’s Post-1/1/2005 Sub-Account. A Group II Participant shall be fully vested in his/her
Company Basic Contributions upon completion of three years of Vesting Service.
2.6
Determination of Account Balance
.
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(a)
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Sub-Accounts Generally
. A Participant’s or
Beneficiary’s Account shall be comprised of multiple “Sub-Accounts.” Unless
the Company determines otherwise, each Participant’s Account shall include a
“Pre-1/1/2005 Sub-Account” and a “Post-1/1/2005 Sub-Account.” Each
Sub-Account may provide for a different form of payment and payment
commencement date pursuant to Sections 3.1 and 3.2. The Company reserves the
right to add additional Post-1/1/2005 Sub-Accounts and new rules applicable
thereto.
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(b)
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Pre-1/1/2005 Sub-Account
. A Participant’s or
Beneficiary’s Pre-1/1/2005 Sub-Account shall consist of his/her Account
balance as of December 31, 2004, if any, adjusted as of each Determination
Date to include interest based on the Termination Interest Yield in effect
from time to time, or based on the Retirement Interest Yield if the
Participant or Beneficiary had satisfied the eligibility requirements for a
Retirement Benefit on or before December 31, 2004.
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(c)
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Post-1/1/2005 Sub-Account
. A Participant’s or
Beneficiary’s Post-1/1/2005 Sub-Account shall be credited with his/her
deferrals from Basic Compensation and/or Incentive made pursuant to an
applicable deferral election with respect to services rendered after December
31, 2004, and any related Company Matching Contributions and Basic Company
Contributions. The Post-1/1/2005 Sub-Account shall be adjusted as of each
Determination Date to include interest based on the Termination Interest
Yield in effect from time to time, or based on the Retirement Interest Yield
if the Participant or Beneficiary has satisfied the eligibility requirements
for a Retirement Benefit. In addition, when any Participant or Beneficiary
who was not eligible for a Retirement Benefit on December 31, 2004 becomes so
eligible, his/her Post-1/1/2005 Sub-Account shall be credited with the
additional amount of interest that would previously have been allocated to
both the Participant’s Pre-1/1/2005 and Post-1/1/2005 Sub-Accounts using the
Retirement Interest Yields applicable through such date. Any such additional
interest earned on the Pre-1/1/2005 Sub-Account and credited to the
Post-1/1/2005 Sub-Account in accordance with this Section 2.6(c) shall be
distributed in the form elected for distribution of the Post-1/1/2005
Sub-Account. However, in the event that any such additional interest is
credited to this Plan after the Post-1/1/2005 Sub-Account has been fully
distributed, the resulting Post-1/1/2005 Sub-Account balance shall be payable
in a single lump sum in March of the calendar year following the calendar
year in which the earnings are credited to the Post-1/1/2005 Sub-Account.
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(d)
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Interest While Receiving Installments
. A
Participant’s or Beneficiary’s Account that is being paid in the form of
installments shall continue to be credited with interest using the Retirement
Interest Yield during the period that payments are being made.
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ARTICLE III.
PAYMENT OF BENEFITS
3.1
Retirement Benefit Payment Election for Pre-1/1/2005 Sub-Account
. In the event of
a Participant’s Early or Normal Retirement Date, or death or Separation from Service on account of
Disability prior to either date, a Participant’s Pre-1/1/2005 Sub-Account shall be paid out in
accordance with the payment form and commencement of payment date elected for his/her Pre-1/1/2005
Sub-Account. In the absence of an applicable payment form and commencement of payment election, a
Participant’s Pre-1/1/2005 Sub-Account shall be paid in a lump sum on the first day of the month
following Separation from Service. A Participant may elect, at least 13 months prior to the
payment commencement date of his/her Pre-1/1/2005 Sub-Account, to change the method of distribution
previously elected for the Pre-1/1/2005 Sub-Account to either a lump sum or monthly installments
over two to 20 years. A Participant may elect to defer payment commencement of his/her Pre-1/1/2005
Sub-Account to a date later than Separation from Service up to his/her 70th birthday provided (i)
that the duration of any installment payments to the Participant shall provide for full payment of
the Pre-1/1/2005 Sub-Account prior to the Participant’s 85th birthday, and (ii) that Separation
from Service occurs prior to his/her Normal Retirement Date. Any election made within 13 months of
the Participant’s payment commencement date shall be void and his/her most recent prior election
shall be reinstated. The Participant’s election may be subject to Committee approval.
3.2
Retirement Benefit Payment Election for Post-1/1/2005 Sub-Account
. In the event
of a Participant’s Early or Normal Retirement Date, or death or Separation from Service on account
of Disability prior to either date, a Participant’s Post-1/1/2005 Sub-Account shall be paid out in
accordance with the payment form and commencement of payment election for his/her Post-1/1/2005
Sub-Account. At the time an Eligible Executive submits his/her initial deferral election, he/she
shall elect (i) the form of payment in which the Post-1/1/2005 Sub-Account shall be paid, which may
be either a lump sum or monthly installments over two to 20 years, and (ii) a payment commencement
date, which may be later than Separation from Service and up to his/her 70th birthday. Following
are additional rules applicable to the payment of a Participant’s Post-1/1/2005 Sub-Account:
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(a)
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Change to Prior Election
. Effective January 1,
2009, a Participant may elect to change a form of payment previously elected
with respect to his/her Post-1/1/2005 Sub-Account, or to elect another
payment commencement date that is subsequent to Separation from Service but
no later than his/her 70th birthday, provided (i) such new election does not
take effect until at least 12 months after the date the election is made,
(ii) if commencement of payment is not related to the Participant’s
Separation from Service on account of Disability or death, the first payment
with respect to which such new election is effective is deferred for a period
of five years from the date such payment would otherwise have commenced, and
(iii) if a Participant previously elected a payment commencement date that is
subsequent to Separation from Service, a change to that date may not be made
within the 12-month period prior thereto.
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(b)
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Company Basic Contribution Participants
. In the
event that an Eligible Executive elects not to defer Basic Compensation
and/or Incentive under Section 2.1(a) but is a Group II Participant eligible
to receive Company Basic Contributions pursuant to Section 2.5, such Eligible
Executive shall be considered a Participant for purposes of this Plan and
shall have the opportunity to make a form and commencement of payment
election with respect to his Post-1/1/2005 Sub-Account in accordance with the
timing rules for deferral elections set forth in Section 2.1.
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(c)
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Default Election
. In the absence of a valid
payment form and commencement of payment election upon the Participant’s
Early or Normal Retirement Date, or death Separation from Service on account
of Disability prior to either date, a Participant’s applicable Post-1/1/2005
Sub-Account shall be paid out in a lump sum on the first day of the month
following Separation from Service.
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(d)
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Key Employees
. Payments to a Participant who is a
key employee (as defined in Section 409A) with respect to his/her
Post-1/1/2005 Sub-Account shall commence on the first day of the seventh
month following the date of the Participant’s Separation from Service (other
than due to death) or such later date as elected by the Participant under
this Section 3.2. If commencement is delayed pursuant to this Section 3.2(d)
and not because of the Participant’s election under Section 3.2(a), his/her
initial payment shall include all amounts that would have been paid had there
been no six-month delay and the retroactive payments shall be credited with
interest at the Retirement Interest Yield through the delayed payment
commencement date.
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3.3
Termination Benefit
. Upon a Participant’s Separation from Service prior to
becoming eligible for a Retirement Benefit, the Company shall pay a lump sum to the Participant on
the first day of the month following Separation from Service of his/her Account determined under
Section 2.6 using the Termination Interest Yield. A Participant who is a key employee (as defined
in Section 409A) shall not receive the portion of his/her lump sum consisting of his/her
Post-1/1/2005 Sub-Account until the first day of the seventh month commencing after the date of the
Participant’s Separation from Service (other than due to death). The delayed portion of the lump
sum payment shall be credited with interest at the Termination Interest Yield through the delayed
payment commencement date.
3.4
Return of Deferrals
. At the time that a Participant submits a deferral election
for any Deferral Year, he/she may elect irrevocably to receive a return of his/her deferrals for
such Deferral Year. The return of deferral election does not apply to Company Matching
Contributions, Company Basic Contributions, or the interest credited to the Participant’s Account
for such Deferral Year. The return of deferral election shall specify the calendar year in which
payment shall be made, which may be no earlier than the calendar year that commences five or more
calendar years after the Deferral Year in which the Basic Compensation and/or Incentive deferral
was initially credited to the Participant’s Account. Return of Deferral payments shall be made in
July of the specified calendar year. Notwithstanding the foregoing, a Participant’s return of
deferral election shall be void if his/her Separation from Service occurs prior to the return of
deferral payment date and the participant’s deferrals shall instead be paid in accordance with the
payment form and commencement of payment election made by the Participant for his/her applicable
sub-account. Company Matching Contributions, Basic Company Contributions, and interest credits for
such Deferral Year.
3.5
Emergency Benefit
. In the event that the Company, upon a request by a Participant
according to the method prescribed by the Company, determines in its sole discretion, that the
Participant has suffered an Unforeseeable Emergency, the Company may pay to the Participant, as
soon as practicable following such determination, an amount, not in excess of the Participant’s
Account, necessary to satisfy the emergency, plus amounts necessary to pay taxes reasonably
anticipated as a result of the payment, after taking into account the extent to which such hardship
is or may be relieved through reimbursement or compensation by insurance or otherwise, by
liquidation of the Participant’s assets (to the extent the liquidation of such assets would not
itself cause severe financial hardship), or by cessation of deferrals under the Plan.
3.6
Payment to Beneficiary
. If a Participant dies prior to the commencement or
completion of payments (and was not awaiting payment of a termination benefit under Section 3.3),
then the Participant’s Account determined using the Retirement Interest Yield shall be paid (or
continue to be paid if payments had previously commenced) to his/her Beneficiary on the first day
of the month following the date of the Participant’s death (i) pursuant to the applicable payment
election made by the Participant or (ii) in a lump sum if the Participant had not elected a form of
payment. The Participant may designate (or change) a Beneficiary according to the method prescribed
by the Company. If no designation is in effect or if an existing designation is determined to be
invalid or ineffective at the time any payments under this Plan become due, the Beneficiary shall
be the spouse of the Participant, or if no spouse is then living, the Participant’s estate.
3.7
Small Benefits
. Notwithstanding anything in this Article III to the contrary, if
the aggregate balance of a Participant’s Account is $25,000 or less on the Participant’s Separation
from Service or death, such amount shall be paid in a lump sum to the Participant or his/her
Beneficiary on the first day of the month following the Participant’s Retirement Date or death in
full settlement of his/her benefits under this Plan.
3.8
Forfeiture of Benefits
. If, prior to a Corporate Change, a Participant shall be
discharged for gross misconduct or a Participant or Beneficiary shall at any time, regardless of
whether before or after the Participant’s Early or Normal Retirement Date, divulge confidential
Company information to other persons or otherwise act against the business interests of the
Company, the portion of the Participant’s or Beneficiary’s Account attributable to Company Basic
Contributions and Company Matching Contributions may be forfeited by the Committee or the CEO.
3.9
Payment on Specified Date
. For purposes of this Article III, a payment shall be
treated as made (or commencing) on the payment commencement date specified in Section 3.2, 3.3, 3.4
or 3.6, as applicable, if the payment is made (or commences) on (i) such date, (ii) a later date
within the same taxable year of the Participant, or (iii) if later, by the fifteenth day of the
third calendar month following such date, provided that the Participant is not permitted, directly
or indirectly, to designate the taxable year of the payment.
ARTICLE IV.
CLAIMS PROCEDURE
4.1
Claim for Benefits
. All claims for benefits shall be submitted in writing to the
Committee which shall process them and approve or disapprove them within 90 days following the date
that the claim is received by the Committee. If special circumstances arise and the Committee
cannot process the claim within 90 days, the Committee shall notify the claimant on or before the
close of the initial 90-day period that the time for making the decision is extended for up to 90
additional days. If the Committee fails to notify the claimant within the applicable period, the
claim is considered denied. If the Committee makes a determination to deny benefits to a claimant,
the denial shall be stated in writing by the Committee and delivered or mailed to the claimant.
Such notice shall set forth the specific reasons for the denial; be written in a manner that may be
understood by the claimant; refer to the specific Plan provisions upon which denial is based; and
describe the steps necessary for appeal.
4.2
Request for Review of a Claim Denial
. The claimant whose claim for benefits has
been denied shall have a period of 60 days from the date of the Committee’s denial in which to
appeal in writing to the Committee. The claimant or his/her duly authorized representative shall
have an opportunity to review pertinent documents and submit additional information, issues and
comments to the Committee.
4.3
Decision Upon Review of a Claim Denial
. The Committee (or its delegate) shall
review all evidence submitted by the claimant and shall communicate its decision to the claimant in
writing within 60 days of the date on which the request for review was received, unless special
circumstances require an extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after receipt of a request for review.
The Committee’s decision regarding the claim shall be final and binding.
4.4
Timing of Judicial Action
. No action at law or in equity may be brought to
recover benefits under the Plan until the Participant has exercised all appeal rights and the Plan
benefits requested in such appeal have been denied in whole or in part. Benefits under the Plan
shall be paid only if the Committee, in its discretion, determines that a claimant is entitled to
them. If a judicial proceeding is undertaken to appeal the denial of a claim or bring any other
action under ERISA other than a breach of fiduciary duty claim, the evidence presented will be
strictly limited to the evidence timely presented to the Committee. In addition, any such judicial
proceeding must be filed within 180 days after the Committee’s final decision.
ARTICLE V.
ADMINISTRATION
The Committee, which shall administer the Plan, shall have the power and duty to adopt such
rules and regulations consistent with Plan terms; to maintain records concerning the Plan; to
construe and interpret the Plan and resolve all questions arising under the Plan; to direct the
payment of Plan benefits; and to comply with the requirements of any applicable federal or state
law. Neither the Company, nor any employee or Board or Committee member shall be liable to any
Eligible Executive, active or former Participant, Beneficiary or any other person for any claim,
loss, liability or expense incurred in connection with the Plan.
ARTICLE VI.
AMENDMENT AND TERMINATION
6.1
Amendment
. The Board may amend the Plan in whole or in part at any time, including
without limitation an amendment to discontinue future deferrals. Any amendment shall comply with
Section 409A. Specifically, no amendment may decrease the balance of a Participant’s or
Beneficiary’s Account (except as required by Section 409A), and no amendment shall be made if it
would constitute a material modification, as defined under Section 409A, of the Plan terms in
effect on October 3, 2004 which govern payment of the Pre-1/1/2005 Sub-Account as set forth in
Article III.
6.2
Termination
. The Board may terminate the Plan at any time, subject to the
termination restrictions of Code Section 409A. Upon termination, a Participant’s or Beneficiary’s
Pre-1/1/2005 Sub-Account, if any, shall be paid to him/her in monthly installments over a period of
not more than 15 years, except that the Company in its sole discretion may pay out such benefit in
a lump sum or in installments over a period shorter than 15 years. A Participant’s or Beneficiary’s
Post-1/1/2005 Sub-Account shall be paid to the Participant or Beneficiary in a lump sum upon Plan
termination, provided that (i) the termination and liquidation of the Plan does not occur proximate
to a downturn in the financial health of the Company; (ii) the Company terminates all non-qualified
deferred compensation arrangements of the same type at the same time that this Plan is terminated;
(iii) the Company makes no payments to Participants and Beneficiaries for 12 months but makes all
payments within 24 months; and (iv) the Company adopts no new non-qualified deferred compensation
arrangement of the same type for three years. Upon termination of the Plan, any Participant who
has not incurred a Separation from Service and was not previously eligible for a Retirement Benefit
shall have the Retirement Interest Yield credited to his/her post-1/1/2005 Sub-Account pursuant to
Section 2.6(c) as if the Participant then became eligible for a Retirement Benefit.
6.3
Corporate Change
. The Board may terminate the Plan in conjunction with a Corporate
Change, provided that (i) the Company terminates the Plan within the 30 days preceding or the 12
months following a Corporate Change; and (ii) the Company terminates all non-qualified deferred
compensation arrangements of the same type at the same time that this Plan is terminated with
respect to each Participant that experienced Corporate Change. Following such termination, each
current Participant, former Participant and Beneficiary shall receive a lump-sum payment of his/her
Account within the 12 months following the termination of the Plan. Account balances shall be
determined under Section 2.6 as of the applicable payment date as if each such Participant and
Beneficiary was then eligible for a Retirement Benefit hereunder.
ARTICLE VII.
MISCELLANEOUS
7.1
Corporate Successor
. The Plan shall not terminate, but shall continue, upon a
transfer or sale of assets of the Company or upon the reorganization, merger or consolidation of
the Company into or with any other corporation or other entity; provided that it is not terminated
pursuant to Section 6.3 and the transferee, purchaser or successor agrees to continue the Plan. In
the event that the transferee, purchaser or successor does not continue the Plan, then the Plan
shall terminate to the extent permitted under Section 6.2 and the applicable restrictions under
Section 409A.
7.2
No Implied Rights
. Neither the establishment of the Plan nor any amendment thereof
shall be construed as giving any Participant, Beneficiary or any other person any legal or
equitable right unless such right shall be specifically provided for in the Plan or conferred by
specific action of the Committee in accordance with the terms and provisions of the Plan. Except as
expressly provided in this Plan, the Company shall not be required or be liable to make any payment
under this Plan. The provisions of this Plan document supersede and preempt any prior
understandings, agreements or representations by or between the Company and any Participant or
Beneficiary, written or oral, which may have related in any manner to the subject matter hereof.
7.3
No Right to Company Assets
. Neither the Participant nor any other person shall
acquire by reason of the Plan any right in or title to any assets, funds or property of the Company
including, without limitation, any specific funds, assets or other property that the Company, in
its sole discretion, may set aside in anticipation of a liability hereunder. Any benefits which
become payable hereunder shall be paid from the general assets of the Company. The Participant
shall have only a contractual right to the amounts, if any, payable hereunder unsecured by any
asset of the Company. In order to provide for the payments hereunder, the Company has established
an irrevocable trust, the assets of which are part of the Company’s general assets and therefore
subject to the claims of the Company’s general creditors in the event of insolvency. To the extent
any Plan-required payments are made from the trust, the Company shall have no further obligations
to pay such amounts directly to the Participant or Beneficiary.
7.4
No Employment Rights
. Nothing herein shall constitute a contract of employment or
of continuing service or in any manner obligate the Company to continue the services of the
Participant or obligate the Participant to continue in the service of the Company, or as a
limitation of the right of the Company to discharge any of its employees, with or without cause.
7.5
Offset
. If, at the time payments are to be made hereunder, a Participant or
Beneficiary or both are indebted or obligated to the Company, then such payments may at the
discretion of the Committee be reduced by the amount of such indebtedness or obligation; provided,
however, that an election by the Committee not to reduce any such payments shall not constitute a
waiver of its claim for such indebtedness or obligation. In the event of an overpayment of benefits
under the ITW Retirement Accumulation Plan or any other Company-sponsored plan, the Committee may
determine that all or part of the amount of the overpayment may be recovered by an offset to any
payment to be made pursuant to this Plan.
7.6
Non-Assignability
. Neither the Participant nor any other person shall have any
voluntary or involuntary right to commute, sell, assign, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are expressly declared to be unassignable and
non-transferable. No part of the amounts payable shall be, prior to actual payment, subject to the
payment of any debts, judgments, alimony or separate maintenance owed by the Participant or any
other person, or be transferable by operation of law in the event of the Participant’s or any other
person’s bankruptcy or insolvency. This Section shall not apply to the creation, assignment, or
recognition of a right of any benefit payable pursuant to a domestic relations order, if such order
(i) meets the requirements of Section 414(p)(1)(B) of the Code, and (ii) does not require the
payment of a benefit to an alternate payee prior to the time benefits are payable pursuant to
Article III, as determined by the Committee.
7.7
Incapacity of Recipient
. If a current or former Participant or a Beneficiary is
deemed by the Committee to be incapable of personally receiving any payment under the Plan, then,
unless and until claim therefor shall have been made by a duly appointed guardian or other legal
representative of such person, the Committee may provide for such payment or any part thereof to be
made to any other person or institution providing for the care and maintenance of such person. Any
such payment shall be for the account of such person and shall be a complete discharge of any
liability of the Company and the Plan therefor.
7.8
Withholding of Taxes
. The Company shall withhold any federal, state or local taxes
applicable to any payments pursuant to the Plan. Notwithstanding any other Plan provision to the
contrary, the payment of any Participant’s benefit may be accelerated by the Company to the extent
of any required FICA withholdings applicable to such benefit (plus any other withholdings
applicable to the withheld FICA amount).
7.9
Governing Laws
. Except to the extent not pre-empted by ERISA or other federal law,
the Plan shall be construed and administered according to the laws of the State of Illinois.
7.10
Severability
. Whenever possible, each provision of this Plan shall be interpreted
in such manner as to be effective and valid under applicable law, but if any provision of this Plan
is held to be invalid, illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Plan or the validity, legality or
enforceability of such provision in any other jurisdiction, but this Plan shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
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ILLINOIS TOOL WORKS INC
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By:
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/s/ Sharon M. Brady
Senior Vice President, Human Resources
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Exhibit 10(p)
ILLINOIS TOOL WORKS INC. NONQUALIFIED PENSION PLAN
As Amended and Restated Effective January 1, 2008
Illinois Tool Works Inc. hereby amends and restates, effective as of January 1, 2008, the ITW
Nonqualified Pension Benefits Plan, originally established effective January 1, 1976, which is
hereby renamed the “Illinois Tool Works Inc. Nonqualified Pension Plan.” The Company intends for
the Plan to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and
applicable regulations (“Section 409A”), and to operate the Plan in good faith compliance with
Section 409A during the Section 409A transition period and any extension thereof.
ARTICLE I.
DEFINITIONS
Certain definitions utilized in this Plan are set forth below. Capitalized terms utilized in
the Plan that are not defined below shall have the meanings set forth in the Qualified Plan.
1.1 “
Actuarial Equivalent
” or “
Actuarial Equivalence
” means an equivalent form
of payment of a Participant’s Supplemental Benefit. For purposes of converting a Supplemental
Benefit to a form of payment offered under the Qualified Plan, Actuarial Equivalence will be
determined using the Qualified Plan’s definition of Actuarial Equivalent.
1.2 “
Beneficiary
” means the person so designated by a Participant according to the
method prescribed by the Company. If no designation is in effect or if an existing designation is
determined to be invalid or ineffective at the time any payments under this Plan become due, the
Beneficiary shall be the spouse of the Participant, or if no spouse is then living, the
Participant’s estate. The Participant may also change his Beneficiary according to the methods
prescribed by the Company, provided that no such change shall be allowed following commencement of
payment.
1.3 “
Board
” means the Board of Directors of the Company.
1.4 “
CEO
” means the Chief Executive Officer of the Company.
1.5 “
Code
” means the Internal Revenue Code of 1986, as amended.
1.6 “
Committee
” means the Employee Benefits Steering Committee of the Company.
1.7 “
Company
” means Illinois Tool Works Inc., a Delaware corporation, and any
successor thereto, and any corporation or other entity that together with Illinois Tool Works Inc.
is a member of a controlled group of corporations under Code Section 414(b) or a group of trades or
businesses under common control pursuant to Code Section 414(c).
1.8 “
Corporate Change
” shall mean either a “Change in Ownership,” “Change in Effective
Control” or a “Change of Ownership of a Substantial Portion of Assets” as defined in Section 409A
and summarized herein. A “Change in Ownership” occurs on the date that any one person, or more
than one person acting as a group (as defined in Section 409A), acquires ownership of stock of the
Company that, together with stock held by such person or group, constitutes more than 50% of the
total fair market value or total voting power of the stock of the Company. A “Change in Effective
Control” occurs on the date that either (i) any one person, or more than one person acting as a
group, acquires (or has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Company possessing 35% or more of
the total voting power of the stock of the Company; or (ii) a majority of members of the Board is
replaced during any 12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Board prior to the date of the appointment or election. A “Change
of Ownership of a Substantial Portion of Assets” occurs on the date that any one person, or more
than one person acting as a group, acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 40% of the total gross fair market value
of all of the assets of the Company immediately prior to such acquisition or acquisitions.
1.9 “
ECRIP
” means the Illinois Tool Works Inc. Executive Contributory Retirement
Income Plan, as established effective April 1, 1993 and amended and restated effective January 1,
2008, and as amended from time to time thereafter.
1.10 “
Eligible Executive
” means (i) any participant in ECRIP; (ii) any Company
executive entitled to certain benefits under the Premark Supplemental Plan, to the extent of any
Supplemental Benefit which is based on service through December 31, 2000, unless such person is an
Eligible Executive under either (i) or (iii); and (iii) any other Company executive who is eligible
to receive a Retirement Benefit, the amount of which is reduced by reason of the limitations on
compensation or benefits under Code Sections 401(a)(17) or 415(b) and who is designated as a
Participant by the CEO. Notwithstanding the foregoing, an Eligible Executive shall only be
considered such if he/she is part of a “select group of management or highly compensated employees”
within the meaning of Sections 201, 301 and 401 of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”).
1.11 “
Participant
” means any Eligible Executive and any former Eligible Executive, to
whom or with respect to whom a Supplemental Benefit is payable.
1.12 “
Plan
” means the Illinois Tool Works Inc. Nonqualified Pension Plan as amended
from time to time.
1.13 “
Qualified Plan
” means the ITW Retirement Accumulation Plan as amended from time
to time.
1.14 “
Retirement Benefit
” means the benefits payable to a Participant in the form of a
single life annuity under the Qualified Plan as of his/her Separation from Service. A Participant’s
Retirement Benefit shall include the value of any benefits paid or payable to an alternate payee
pursuant to a qualified domestic relations order with respect to the Qualified Plan.
1.15 “
Separation from Service
” means the date of the Participant’s cessation of
services with the Company for any reason.
1.16 “
Supplemental Benefit
” means the benefit payable to a Participant or Beneficiary
pursuant to Article III of the Plan.
ARTICLE II.
PARTICIPATION
An executive of the Company shall become a Participant effective either (i) as of the date on
which he/she is notified by the Committee that he/she has become an Eligible Executive by
designation by the CEO, (ii) as of the first date he/she is eligible to make deferrals under ECRIP
following designation of eligibility for participation in ECRIP, or (iii) as of January 1, 2001, if
the executive was entitled to Premark Supplemental Plan benefits. Prior to a Corporate Change, the
CEO may determine that an individual who has been designated as a Participant shall cease to
participate herein.
ARTICLE III.
SUPPLEMENTAL BENEFIT
A Participant’s Supplemental Benefit shall be determined as of his/her Separation from Service
by offsetting his/her actual Retirement Benefit against a hypothetical Retirement Benefit
calculated under the then-applicable provisions of the Qualified Plan, including all benefit
formulas, service credit, early retirement adjustments, vesting and eligibility requirements,
actuarial factors and other calculation methods under any such plan but not any limits on benefits
and compensation under Code Sections 415(b) and 401(a)(17), and as if there had been no deferrals
under ECRIP. Notwithstanding the foregoing, a Participant’s Supplemental Benefit as determined
above shall be adjusted as follows:
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(a)
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The CEO in his sole discretion may determine that a Participant’s
Supplemental Benefit shall not reflect the Participant’s compensation and ECRIP
deferrals in excess of the then-current Code Section 401(a)(17) limit and
benefits in excess of the applicable limit under Code Section 415(b) and reduce
the Participant’s Supplemental Benefit accordingly; and
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(b)
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The CEO may determine that a Participant’s Supplemental Benefit
shall reflect additional service and compensation credits, as he shall deem
appropriate, and shall increase the Participant’s Supplemental Benefit
accordingly.
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ARTICLE IV.
PAYMENT OF BENEFITS
4.1
Commencement of Benefits
. Except as provided in Section 4.2(c), payment of a
Participant’s Supplemental Benefit shall commence on the first day of the month following his/her
Separation from Service. A Participant’s or Beneficiary’s Supplemental Benefit that is being paid
in the form of installments shall continue to be credited with interest using a reasonable rate of
interest determined by the Committee.
4.2
Payment Elections
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(a)
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Initial Election
. A Participant shall submit an election
(according to the method prescribed by the Company) as to the form of payment of
his/her Supplemental Benefit, which form may be any of the forms of payment
permitted under the Qualified Plan (other than the level income option) or in a
lump sum or monthly installment payments over two to 20 years. Any such election
must be submitted within 30 days after the Participant’s commencement of Plan
participation as defined in Article II. If a Participant chooses a form of
payment available under the Qualified Plan or a lump sum, such form of payment
shall be the Actuarial Equivalent of the Participant’s Supplemental Benefit. If
a Participant (i) does not elect a form of payment, or (ii) as of his/her
Separation from Service, has not either attained age 55 with 10 years of service
or age 65 with 5 years of service, then the Participant shall receive his/her
Supplemental Benefit in the form of a lump sum payment on the first day of the
month following his/her Separation from Service.
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(b)
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Change to Prior Election
. Effective January 1, 2009, a
Participant may elect to change a form of payment previously elected (or if the
Participant failed to elect a form of payment in accordance with Section 4.2,
then to elect a form other than the lump sum), provided (i) such new election
does not take effect until at least 12 months after the date the election is
made, and (ii) if commencement of payment is not related to the Participant’s
death, the first payment with respect to such new election is deferred for a
period of five years from the date such payment would otherwise have commenced.
However, a change from one type of life annuity permitted under the Qualified
Plan to another type of life annuity permitted under the Qualified Plan is not
considered a change in the form of payment, provided that (i) such change is made
before commencement of payment and (ii) such annuities are actuarially equivalent
applying reasonable actuarial methods and assumptions.
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(c)
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Key Employees
. Payments to a Participant who is a key
employee (as defined in Section 409A) shall commence on the first day of the
seventh month commencing after his/her Separation from Service, unless retirement
is due to death. Upon commencement of payment, the Participant’s initial payment
shall include all amounts that would have been paid had there been no six-month
delay and the retroactive payments shall be credited with interest.
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4.3
Payment to Beneficiary
. If the Participant elected to receive his/her
Supplemental Benefit as a lump sum or in monthly installment payments and dies prior to the
commencement or completion of payments, then the Participant’s Supplemental Benefit shall be paid
(or continue to be paid if payments had previously commenced) on the first day of the month
following the Participant’s date of death to his/her Beneficiary in accordance with his/her
previously-elected form of payment. If the Participant dies prior to commencement of payment and
(i) failed to make a form of payment election or (ii) elected to receive his/her Supplemental
Benefit in a form of payment available under the Qualified Plan, then the Participant’s
Supplemental Benefit shall be paid on the first day of the month following the Participant’s date
of death to his/her Beneficiary in a lump sum.
4.4
Small Benefits
. Notwithstanding anything in this Article IV to the contrary, if
the lump-sum Actuarial Equivalent of the Participant’s or Beneficiary’s Supplemental Benefit is
$25,000 or less on the Participant’s Separation from Service or death, such amount shall be paid in
a lump sum to the Participant or his/her Beneficiary on the first date of the month following the
Participant’s Separation from Service or death in full settlement of his/her benefits under this
Plan.
4.5
Forfeiture of Supplemental Benefit
. If, prior to a Corporate Change, a
Participant shall be discharged for gross misconduct or a Participant or Beneficiary shall at any
time, regardless of whether before or after the Participant’s Separation from Service, divulge
confidential Company information to other persons or otherwise act against the business interests
of the Company, then the Participant’s or Beneficiary’s Supplemental Benefit attributable to
compensation in excess of the Code Section 401(a)(17) limit may be forfeited by the Committee or
the CEO.
4.6
Payment on Specified Date
. For purposes of this Article IV, a payment shall be
treated as made (or commencing) on the payment commencement date specified in Section 4.1, 4.2,
4.3, or 4.4 as applicable, if the payment is made (or commences) on (i) such date, (ii) a later
date within the same taxable year of the Participant, or (iii) if later, by the fifteenth day of
the third calendar month following such date, provided that the Participant is not permitted,
directly or indirectly, to designate the taxable year of the payment.
ARTICLE V.
CLAIMS PROCEDURE
5.1
Claim for Benefits
. All claims for benefits shall be submitted in writing to the
Committee which shall process them and approve or disapprove them within 90 days following the date
that the claim is received by the Committee. If special circumstances arise and the Committee
cannot process the claim within 90 days, the Committee shall notify the claimant on or before the
close of the initial 90-day period that the time for making the decision is extended for up to 90
additional days. If the Committee fails to notify the claimant within the applicable period, the
claim is considered denied. If the Committee makes a determination to deny benefits to a claimant,
the denial shall be stated in writing by the Committee and delivered or mailed to the claimant.
Such notice shall set forth the specific reasons for the denial; be written in a manner that may be
understood by the claimant; refer to the specific Plan provisions upon which denial is based; and
describe the steps necessary for appeal.
5.2
Request for Review of a Claim Denial
. The claimant whose claim for benefits has
been denied shall have a period of 60 days from the date of the Committee’s denial in which to
appeal in writing to the Committee. The claimant or his/her duly authorized representative shall
have an opportunity to review pertinent documents and submit additional information, issues and
comments to the Committee.
5.3
Decision Upon Review of a Claim Denial
. The Committee (or its delegate) shall
review all evidence submitted by the claimant and shall communicate its decision to the claimant in
writing within 60 days of the date on which the request for review was received, unless special
circumstances require an extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after receipt of a request for review.
The Committee’s decision regarding the claim shall be final and binding.
5.4
Timing of Judicial Action
. No action at law or in equity may be brought to
recover benefits under the Plan until the Participant has exercised all appeal rights and the Plan
benefits requested in such appeal have been denied in whole or in part. Benefits under the Plan
shall be paid only if the Committee, in its discretion, determines that a claimant is entitled to
them. If a judicial proceeding is undertaken to appeal the denial of a claim or bring any other
action under ERISA other than a breach of fiduciary duty claim, the evidence presented will be
strictly limited to the evidence timely presented to the Committee. In addition, any such judicial
proceeding must be filed within 180 days after the Committee’s final decision.
ARTICLE VI.
ADMINISTRATION
The Committee, which shall administer the Plan, shall have the power and duty to adopt such
rules and regulations consistent with Plan terms; to maintain records concerning the Plan; to
construe and interpret the Plan and resolve all questions arising under the Plan; to direct the
payment of Plan benefits; and to comply with the requirements of any applicable federal or state
law. Neither the Company, nor any employee or Board or Committee member, shall be liable to any
Eligible Executive, active or former Participant, Beneficiary or any other person for any claim,
loss, liability or expense incurred in connection with the Plan.
ARTICLE VII.
AMENDMENT AND TERMINATION
7.1
Amendment and Termination
. The Board may amend the Plan in whole or in part at any
time, including without limitation an amendment to discontinue benefit accruals. Any amendment
shall comply with Section 409A. The Board also may terminate the Plan at any time, subject to the
restrictions of Section 409A. In such event, each Participant and Beneficiary shall receive a
lump-sum payment of his/her Supplemental Benefit determined as if the effective date of Plan
termination was each Participant’s Separation from Service provided (i) the termination and
liquidation of the Plan does not occur proximate to a downturn in the financial health of the
Company; (ii) the Company terminates all non-qualified deferred compensation arrangements of the
same type at the same time that this Plan is terminated; (iii) the Company makes no payments to
Participants and Beneficiaries for 12 months but makes all payments within 24 months; and (iv) the
Company adopts no new non-qualified deferred compensation arrangement of the same type for three
years. No amendment or termination of the Plan shall, without the express written consent of the
affected Participant or Beneficiary, reduce such Participant’s or Beneficiary’s Supplemental
Benefit as of the effective date of such Plan amendment or termination.
7.2
Corporate Change
. The Board may terminate the Plan in conjunction with a Corporate
Change, provided that (i) the Company terminates the Plan within the 30 days preceding or the 12
months following a Corporate Change; and (ii) the Company terminates all non-qualified deferred
compensation arrangements of the same type at the same time that this Plan is terminated with
respect to each Participant that experienced Corporate Change. Following such termination, each
current Participant, former Participant and Beneficiary shall receive a lump-sum payment of his/her
Supplemental Benefit within the 12 months following the termination of the Plan.
ARTICLE VIII.
MISCELLANEOUS
8.1
Corporate Successor
. The Plan shall not terminate, but shall continue, upon a
transfer or sale of assets of the Company or upon the reorganization, merger or consolidation of
the Company into or with any other corporation or other entity; provided that it is not terminated
pursuant to Section 7.2 and the transferee, purchaser or successor agrees to continue the Plan. In
the event that the transferee, purchaser or successor does not continue the Plan, then the Plan
shall terminate to the extent permitted under Section 7.1 and the applicable restrictions under
Section 409A.
8.2
No Implied Rights
. Neither the establishment of the Plan nor any amendment thereof
shall be construed as giving any Participant, Beneficiary or any other person any legal or
equitable right unless such right shall be specifically provided for in the Plan or conferred by
specific action of the Committee in accordance with the terms and provisions of the Plan. Except as
expressly provided in this Plan, the Company shall not be required or be liable to make any payment
under this Plan. The provisions of this Plan document supersede and preempt any prior
understandings, agreements or representations by or between the Company and any Participant or
Beneficiary, written or oral, which may have related in any manner to the subject matter hereof.
8.3
No Right to Company Assets
. Neither the Participant nor any other person shall
acquire by reason of the Plan any right in or title to any assets, funds or property of the Company
including, without limitation, any specific funds, assets or other property that the Company, in
its sole discretion, may set aside in anticipation of a liability hereunder. Any benefits that
become payable hereunder shall be paid from the general assets of the Company. The Participant
shall have only a contractual right to the amounts, if any, payable hereunder unsecured by any
asset of the Company. In order to provide for the payment of Supplemental Benefits, the Company has
established an irrevocable trust, the assets of which are part of the Company’s general assets and
therefore subject to the claims of the Company’s general creditors in the event of insolvency. To
the extent any Supplemental Benefit is paid from the trust, the Company shall have no further
obligations to pay such Supplemental Benefit directly to the Participant or Beneficiary.
8.4
No Employment Rights
. Nothing herein shall constitute a contract of employment or
of continuing service or in any manner obligate the Company to continue the services of the
Participant or obligate the Participant to continue in the service of the Company, or as a
limitation of the right of the Company to discharge any of its employees, with or without cause.
8.5
Offset
. If, at the time payments are to commence hereunder, a Participant or
Beneficiary or both are indebted or obligated to the Company, then such payments may at the
discretion of the Committee be reduced by the amount of such indebtedness or obligation; provided,
however, that an election by the Committee not to reduce any such payments shall not constitute a
waiver of its claim for such indebtedness or obligation. In the event of an overpayment of benefits
under the Qualified Plan, the Committee may determine that all or part of the amount of the
overpayment may be recovered by an offset to the Participant’s or Beneficiary’s Supplemental
Benefit.
8.6
Non-Assignability
. Neither the Participant nor any other person shall have any
voluntary or involuntary right to commute, sell, assign, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are expressly declared to be unassignable and
non-transferable. No part of the amounts payable shall be, prior to actual payment, subject to the
payment of any debts, judgments, alimony or separate maintenance owed by the Participant or any
other person, or be transferable by operation of law in the event of the Participant’s or any other
person’s bankruptcy or insolvency. This Section shall not apply to the creation, assignment, or
recognition of a right of any benefit payable pursuant to a domestic relations order, if such order
(i) meets the requirements of Section 414(p)(1)(B) of the Code, and (ii) does not require the
payment of a benefit to an alternate payee prior to the time benefits are payable pursuant to
Article IV, as determined by the Committee.
8.7
Incapacity of Recipient
. If a current or former Participant or a Beneficiary is
deemed by the Committee to be incapable of personally receiving any Supplemental Benefit payment,
then, unless and until claim therefor shall have been made by a duly appointed guardian or other
legal representative of such person, the Committee may provide for such payment or any part thereof
to be made to any other person or institution providing for the care and maintenance of such
person. Any such payment shall be for the account of such person and shall be a complete discharge
of any liability of the Company and the Plan therefor.
8.8
Withholding of Taxes
. The Company shall withhold any federal, state or local taxes
applicable to any Participant’s or Beneficiary’s Supplemental Benefit. Notwithstanding any other
Plan provision to the contrary, the payment of any Participant’s Supplemental Benefit may be
accelerated by the Company to the extent of any required FICA withholdings applicable to such
Supplemental Benefit (plus any other withholdings applicable to the withheld FICA amount).
8.9
Governing Laws
. Except to the extent not pre-empted by ERISA or other federal law,
the Plan shall be construed and administered according to the laws of the State of Illinois.
8.10
Severability
. Whenever possible, each provision of this Plan shall be interpreted
in such manner as to be effective and valid under applicable law, but if any provision of this Plan
is held to be invalid, illegal or unenforceable in any respect under applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Plan or the validity, legality or
enforceability of such provision in any other jurisdiction, but this Plan shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.
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ILLINOIS TOOL WORKS INC.
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By:
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/s/ Sharon M. Brady
Senior Vice President, Human Resources
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Exhibit 13
Management’s
Discussion and Analysis
INTRODUCTION
Illinois Tool Works Inc. (the “Company” or “ITW”) is a multinational manufacturer of a diversified
range of industrial products and equipment with approximately 875 operations in 54 countries. These
875 businesses are internally reported as 60 operating segments to senior management. The Company’s
60 operating segments have been aggregated into the following seven external reportable segments:
Industrial Packaging; Power Systems & Electronics; Transportation; Food Equipment; Construction
Products; Polymers & Fluids; and All Other.
In 2007, the Company classified two consumer packaging businesses, an automotive machinery business
and an automotive components business as discontinued operations. Additionally, in August 2008, the
Company’s Board of Directors authorized the divestiture of the Decorative Surfaces segment and
Click Commerce industrial software business which was previously reported in the All Other segment.
The Company is actively marketing the Decorative Surfaces, Click Commerce and automotive components
businesses and expects to dispose of these businesses in 2009. The consolidated statements of
income, the notes to financial statements and management’s discussion and analysis for all periods
have been restated to present the results related to all of these businesses as discontinued
operations. See the Discontinued Operations note for further information on the Company’s
discontinued operations.
Due to the large number of diverse businesses and the Company’s highly decentralized operating
style, the Company does not require its businesses to provide detailed information on operating
results. Instead, the Company’s corporate management collects data on a few key measurements:
operating revenues, operating income, operating margins, overhead costs, number of months on hand
in inventory, days sales outstanding in accounts receivable, past due receivables and return on
invested capital. These key measures are monitored by management and significant changes in
operating results versus current trends in end markets and variances from forecasts are discussed
with operating unit management.
The results of each segment are analyzed by identifying the effects of changes in the results of
the base businesses, newly acquired companies, restructuring costs, goodwill and intangible
impairment charges, and currency translation on the operating revenues and operating income of each
segment. Base businesses are those businesses that have been included in the Company’s results of
operations for more than 12 months. The changes to base business operating income include the
estimated effects of both operating leverage and changes in variable margins and overhead costs.
Operating leverage is the estimated effect of the base business revenue changes on operating
income, assuming variable margins remain the same as the prior period. As manufacturing and
administrative overhead costs usually do not significantly change as a result of revenues
increasing or decreasing, the percentage change in operating income due to operating leverage is
usually more than the percentage change in the base business revenues.
A key element of the Company’s business strategy is its continuous 80/20 business process for both
existing businesses and new acquisitions. The basic concept of this 80/20 business process is to
focus on what is most important (the 20% of the items which account for 80% of the value) and to
spend less time and resources on the less important (the 80% of the items which account for 20% of
the value). The Company’s operations use this 80/20 business process to simplify and focus on the
key parts of their business, and as a result, reduce complexity that often disguises what is truly
important. The Company’s 875 operations utilize the 80/20 process in various aspects of their
business. Common applications of the 80/20 business process include:
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•
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Simplifying product lines by reducing the number of products offered by combining the features of similar
products, outsourcing products or, as a last resort, eliminating low-value products.
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•
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Segmenting the customer base by focusing on the 80/20 customers separately and finding alternative ways to
serve the 20/80 customers.
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•
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Simplifying the supplier base by partnering with 80/20 suppliers and reducing the number of 20/80 suppliers.
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•
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Designing business processes, systems and measurements around the 80/20 activities.
|
The result of the application of this 80/20 business process is that the Company has over time
improved its long-term operating and financial performance. These 80/20 efforts can result in
restructuring projects that reduce costs and improve margins. Corporate management works closely
with those businesses that have operating results below expectations to help those businesses
better apply this 80/20 business process and improve their results.
34
2008 Annual Report
CONSOLIDATED RESULTS OF OPERATIONS
The Company’s consolidated results of operations for 2008, 2007 and 2006 are summarized as follows:
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DOLLARS IN THOUSANDS
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2008
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2007
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2006
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|
|
|
Operating revenues
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|
$
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15,869,354
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$
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14,871,076
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$
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12,784,342
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|
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Operating income
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2,338,236
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2,448,888
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2,208,035
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Margin %
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14.7
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%
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16.5
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%
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17.3
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%
|
In 2008 and 2007, the changes in revenues, operating income and operating margins over the prior
year were primarily due to the following factors:
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2008 COMPARED TO 2007
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2007 COMPARED TO 2006
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% POINT INCREASE
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% POINT INCREASE
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% INCREASE (DECREASE)
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(DECREASE)
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% INCREASE (DECREASE)
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(DECREASE)
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OPERATING
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|
|
OPERATING
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|
OPERATING
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|
OPERATING
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OPERATING
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OPERATING
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REVENUES
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INCOME
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MARGINS
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REVENUES
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INCOME
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MARGINS
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Base business:
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Revenue change/Operating leverage
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(2.5
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)%
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(6.5
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)%
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(0.7
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)%
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1.8
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%
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4.3
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%
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|
0.4
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%
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|
Changes in variable margins and
overhead costs
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—
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(1.0
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)
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(0.2
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)
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—
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(0.3
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)
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|
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—
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(2.5
|
)
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(7.5
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)
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(0.9
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)
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1.8
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4.0
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0.4
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Acquisitions and divestitures
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6.5
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1.5
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(0.7
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)
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10.3
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3.1
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(1.2
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)
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Restructuring costs
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—
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(1.1
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)
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(0.2
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)
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—
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(0.7
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)
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|
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(0.1
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)
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Impairment of goodwill and intangibles
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—
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—
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—
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—
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0.7
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0.1
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Translation
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2.8
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2.6
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—
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4.1
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3.9
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|
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—
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Other
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|
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(0.1
|
)
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|
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—
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—
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0.1
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|
|
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(0.1
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)
|
|
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—
|
|
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|
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6.7
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%
|
|
|
(4.5
|
)%
|
|
|
(1.8
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)%
|
|
|
16.3
|
%
|
|
|
10.9
|
%
|
|
|
(0.8
|
)%
|
|
Operating Revenues
Revenues increased 6.7% in 2008 over 2007 primarily due to revenues from acquisitions and the
favorable effect of currency translation in the first three quarters of 2008, due to a weakened
dollar, partially offset by a decrease in base revenues. During 2008, 50 businesses were acquired
worldwide with international businesses representing approximately 39% of the annualized acquired
revenue. Base revenues decreased in 2008 versus 2007 due to a 4.8% decline in North American base
revenues and flat international base revenues. North American base businesses were adversely
affected by steep declines in macro economic trends and related weak
industrial production, and a
continued decline in the construction and automotive markets. In addition, there was a significant
decrease in international industrial production in the fourth quarter of 2008.
Revenues increased 16.3% in 2007 over 2006 primarily due to revenues from acquisitions, the
favorable effect of currency translation due to the weakening dollar, and an increase in base
revenues. During 2007, 52 businesses were acquired worldwide with international businesses
representing 71% of the annualized acquired revenue. The base business revenues increased in 2007
versus 2006 primarily related to a 6.3% increase in international base business revenues. European
economic growth and market demand were strong during the first half of 2007 with a slight
moderation in the second half of 2007. In addition, the Company’s Asia Pacific end markets
continued to have strong growth. North American base business revenues decreased 0.7% primarily due
to a continued decline in the residential construction market and weak industrial production.
Operating Income
Operating income in 2008 declined 4.5% over 2007 due to the decline in base business revenues and
increased restructuring expenses, partially offset by the positive effect of currency translation
and income from acquisitions. Total margins declined 1.8% primarily due to the declines in base
revenues and the lower margins of acquired companies including
acquisition-related expenses,
which reduced overall margins. Restructuring projects and other cost
control measures were implemented to
better align operating businesses with the declining economic
conditions, which helped keep overhead
expenses favorable to last year and partially offset declines in variable margins.
Operating income in 2007 improved 10.9% over 2006 primarily due to the positive leverage effect
from growth in base revenues, the positive effect of currency translation and income from
acquisitions. Total operating margins declined 0.8% primarily due to the lower margins of acquired
companies, including acquisition-related expenses. Base margins increased 0.4% primarily as a result of
lower overhead costs due to the benefits of restructuring projects.
The Company anticipates that the current global economic downturn will continue through 2009 and
does not expect to see a recovery until at least 2010. As a result, the Company is forecasting
its 2009 results of operations to be below 2008 levels. Most of the Company’s key end markets are
expecting negative growth in 2009. The Company believes that its strong balance sheet,
decentralized business model and 80/20 process will allow it to respond appropriately to these
challenging business and economic conditions.
Illinois Tool Works Inc.
35
INDUSTRIAL PACKAGING
Businesses in this segment produce steel, plastic and paper products used for bundling, shipping
and protecting goods in transit.
In the Industrial Packaging segment, products include:
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|
•
|
|
steel and plastic strapping and related tools and equipment;
|
|
|
|
|
•
|
|
plastic stretch film and related equipment;
|
|
|
|
|
•
|
|
paper and plastic products that protect goods in transit; and
|
|
|
|
|
•
|
|
metal jacketing and other insulation products.
|
In 2008, this segment primarily served the primary metals (28%), general industrial (22%),
construction (12%) and food and beverage (12%) markets.
The results of operations for the Industrial Packaging segment for 2008, 2007 and 2006 were as
follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating revenues
|
|
$
|
2,591,091
|
|
|
$
|
2,400,832
|
|
|
$
|
2,164,822
|
|
|
Operating income
|
|
|
275,624
|
|
|
|
298,766
|
|
|
|
274,707
|
|
|
Margin %
|
|
|
10.6
|
%
|
|
|
12.4
|
%
|
|
|
12.7
|
%
|
In 2008 and 2007, the changes in revenues, operating income and operating margins over the prior
year were primarily due to the following factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 COMPARED TO 2007
|
|
|
2007 COMPARED TO 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
|
Base business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue change/Operating leverage
|
|
|
0.1
|
%
|
|
|
0.2
|
%
|
|
|
—
|
%
|
|
|
0.5
|
%
|
|
|
1.5
|
%
|
|
|
0.1
|
%
|
|
Changes in variable margins and
overhead costs
|
|
|
—
|
|
|
|
(8.8
|
)
|
|
|
(1.1
|
)
|
|
|
—
|
|
|
|
0.3
|
|
|
|
—
|
|
|
|
|
|
|
0.1
|
|
|
|
(8.6
|
)
|
|
|
(1.1
|
)
|
|
|
0.5
|
|
|
|
1.8
|
|
|
|
0.1
|
|
|
|
Acquisitions and divestitures
|
|
|
4.3
|
|
|
|
1.6
|
|
|
|
(0.3
|
)
|
|
|
5.5
|
|
|
|
0.5
|
|
|
|
(0.6
|
)
|
|
Restructuring costs
|
|
|
—
|
|
|
|
(3.7
|
)
|
|
|
(0.5
|
)
|
|
|
—
|
|
|
|
0.4
|
|
|
|
0.1
|
|
|
Impairment of goodwill and intangibles
|
|
|
—
|
|
|
|
0.1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.1
|
|
|
|
0.3
|
|
|
Translation
|
|
|
3.5
|
|
|
|
2.8
|
|
|
|
—
|
|
|
|
5.0
|
|
|
|
4.0
|
|
|
|
(0.1
|
)
|
|
Other
|
|
|
—
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
(0.1
|
)
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
7.9
|
%
|
|
|
(7.7
|
)%
|
|
|
(1.8
|
)%
|
|
|
10.9
|
%
|
|
|
8.8
|
%
|
|
|
(0.3
|
)%
|
|
Operating Revenues
Revenues increased 7.9% in 2008 over 2007 primarily due to revenues from acquired companies and the
favorable effect of currency translation. The increase in acquisition revenue was primarily due to
the purchase of a European industrial packaging business, a European stretch packaging business, a
U.S. protective packaging business and a U.S. equipment business. Total base revenues were
virtually flat as a 1.2% and 30.9% increase related to international strapping and worldwide insulation
systems, respectively, were offset by a 6.0% and 2.7% decrease
related to North American strapping and
worldwide protective packaging, respectively. These businesses were especially affected by the
ongoing weakness in the North American primary metals and construction industries.
Revenues increased 10.9% in 2007 over 2006 primarily due to revenues from acquired companies and
the favorable effect of currency translation. The increase in acquisition revenue was primarily due
to the purchase of four European businesses, a North American and an Australian business. Total
base revenues increased modestly as the 5.4% and 14.6% base revenue increase in the stretch
packaging and insulation products businesses, respectively, was partially offset by a 1.3% decrease
in the strapping business, primarily due to lower brick, block and lumber shipments to the North
American housing market.
Operating Income
Operating income declined 7.7% in 2008 over 2007 primarily due to a decrease in base variable
margins and increased restructuring costs partially offset by the favorable effect of currency
translation and income from acquisitions. The decrease in base variable margins is primarily due to
competitive pricing pressure, increased raw material costs and unfavorable product mix.
Operating income increased 8.8% in 2007 versus 2006 primarily as a result of the favorable effect
of currency translation and decreased goodwill and intangible impairment charges primarily related
to a 2006 impairment charge related to a North American stretch packaging equipment business. Total
operating margins decreased 0.3% due to lower margins of acquired businesses partially offset by
the impairment charge discussed above.
36
2008 Annual Report
POWER SYSTEMS & ELECTRONICS
Businesses in this segment produce equipment and consumables associated with specialty power
conversion, metallurgy and electronics.
In the Power Systems & Electronics segment, products include:
|
|
•
|
|
arc welding equipment;
|
|
|
|
|
•
|
|
metal arc welding consumables and related accessories;
|
|
|
|
|
•
|
|
metal solder materials for PC board fabrication;
|
|
|
|
|
•
|
|
equipment and services for microelectronics assembly;
|
|
|
|
|
•
|
|
electronic components and component packaging; and
|
|
|
|
|
•
|
|
airport ground support equipment.
|
In 2008, this segment primarily served the general industrial (43%), electronics (19%) and
construction (9%) markets.
The results of operations for the Power Systems & Electronics segment for 2008, 2007 and 2006 were
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating revenues
|
|
$
|
2,356,853
|
|
|
$
|
2,245,514
|
|
|
$
|
1,847,926
|
|
|
Operating income
|
|
|
461,442
|
|
|
|
449,200
|
|
|
|
406,405
|
|
|
Margin %
|
|
|
19.6
|
%
|
|
|
20.0
|
%
|
|
|
22.0
|
%
|
In 2008 and 2007, the changes in revenues, operating income and operating margins over the prior
year were primarily due to the following factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 COMPARED TO 2007
|
|
|
2007 COMPARED TO 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
|
Base business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue change/Operating leverage
|
|
|
0.2
|
%
|
|
|
0.5
|
%
|
|
|
—
|
%
|
|
|
5.3
|
%
|
|
|
9.0
|
%
|
|
|
0.8
|
%
|
|
Changes in variable margins and
overhead costs
|
|
|
—
|
|
|
|
1.8
|
|
|
|
0.4
|
|
|
|
—
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
|
|
|
0.2
|
|
|
|
2.3
|
|
|
|
0.4
|
|
|
|
5.3
|
|
|
|
9.5
|
|
|
|
0.9
|
|
|
|
Acquisitions and divestitures
|
|
|
3.2
|
|
|
|
(0.5
|
)
|
|
|
(0.7
|
)
|
|
|
14.3
|
|
|
|
(0.4
|
)
|
|
|
(2.8
|
)
|
|
Restructuring costs
|
|
|
—
|
|
|
|
(0.2
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.7
|
)
|
|
|
(0.1
|
)
|
|
Impairment of goodwill and intangibles
|
|
|
—
|
|
|
|
(0.2
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
0.6
|
|
|
|
0.1
|
|
|
Translation
|
|
|
1.5
|
|
|
|
1.3
|
|
|
|
—
|
|
|
|
2.0
|
|
|
|
1.6
|
|
|
|
—
|
|
|
Other
|
|
|
0.1
|
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
5.0
|
%
|
|
|
2.7
|
%
|
|
|
(0.4
|
)%
|
|
|
21.5
|
%
|
|
|
10.5
|
%
|
|
|
(2.0
|
)%
|
|
Operating Revenues
Revenues increased 5.0% in 2008 over 2007 primarily due to revenues from acquisitions and the
favorable effect of currency translation. Acquisitions included a worldwide PC board fabrication
business and a welding accessories business. Overall base revenues grew a modest 0.2% mainly due to
a 19.7% growth in international welding base businesses driven by strong demand in the energy,
heavy fabrications and ship building end markets. North American welding base business declined
3.6% primarily due to weak North American industrial production and falling end market demand in
key areas such as fabrication, construction, automotive and general industrial. Base revenues for
the ground support businesses grew 4.4% related to higher worldwide demand for both military and
commercial airport products. Base revenues for the PC board fabrication and electronics related businesses
declined 9.4% and 2.4%, respectively, due to lower worldwide market demand, especially in consumer
electronics.
Revenues increased 21.5% in 2007 over 2006 primarily due to revenues from acquisitions and base
revenue growth. Acquisitions included two worldwide suppliers to the electronic and microelectronic
assembly industry in 2006 and a North American producer of welding accessories in 2007. Base
revenues grew 6.3% for the welding businesses due to high demand in the energy, heavy fabrication
and general industrial markets in both the North American and international markets. Base revenues
for the ground support businesses increased 18.0% due to higher worldwide airport demand. Base
revenues for the electronics related businesses and PC board fabrication group declined 4.2% and
7.1%, respectively, due to lower worldwide market demand.
Operating Income
Operating income increased 2.7% in 2008 over 2007 primarily due to lower operating expenses and
reduced overhead spending within the PC board fabrication businesses, as a result of 2007 and 2008
restructuring projects, and the favorable effect of currency translation. Total operating margins
decreased 0.4% primarily due to lower margins from acquisitions after
acquisition-related expenses.
Operating income increased 10.5% in 2007 over 2006 primarily due to the positive leverage effect
from the increase in base revenues described above and the favorable effect of currency
translation, partially offset by an increase in restructuring expenses and a loss from acquisitions
after acquisition-related expenses. Total operating margins decreased 2.0% primarily due to the
negative acquisition income, partially offset by base margin increases due to revenue growth.
Illinois Tool
Works Inc.
37
TRANSPORTATION
Businesses
in this segment produce components, fasteners, fluids and polymers,
as
well as truck
remanufacturing and related parts and service.
In the Transportation segment, products include:
|
|
•
|
|
metal and plastic components, fasteners and assemblies for
automobiles and light trucks;
|
|
|
|
|
•
|
|
fluids and polymers 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.
|
In 2008, this segment primarily served the automotive original equipment manufacturers and tiers
(65%) and automotive aftermarket (23%) markets.
The results of operations for the Transportation segment for 2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating revenues
|
|
$
|
2,347,744
|
|
|
$
|
2,215,497
|
|
|
$
|
1,961,502
|
|
|
Operating income
|
|
|
277,632
|
|
|
|
373,448
|
|
|
|
335,787
|
|
|
Margin %
|
|
|
11.8
|
%
|
|
|
16.9
|
%
|
|
|
17.1
|
%
|
In 2008 and 2007, the changes in revenues, operating income and operating margins over the prior
year were primarily due to the following factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 COMPARED TO 2007
|
|
|
2007 COMPARED TO 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
|
Base business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue change/Operating leverage
|
|
|
(8.5
|
)%
|
|
|
(19.6
|
)%
|
|
|
(2.0
|
)%
|
|
|
2.3
|
%
|
|
|
5.1
|
%
|
|
|
0.5
|
%
|
|
Changes in variable margins and
overhead costs
|
|
|
—
|
|
|
|
(7.8
|
)
|
|
|
(1.4
|
)
|
|
|
—
|
|
|
|
(2.7
|
)
|
|
|
(0.5
|
)
|
|
|
|
|
|
(8.5
|
)
|
|
|
(27.4
|
)
|
|
|
(3.4
|
)
|
|
|
2.3
|
|
|
|
2.4
|
|
|
|
—
|
|
|
|
Acquisitions
|
|
|
10.9
|
|
|
|
0.2
|
|
|
|
(1.4
|
)
|
|
|
6.8
|
|
|
|
3.9
|
|
|
|
(0.5
|
)
|
|
Restructuring costs
|
|
|
—
|
|
|
|
(1.9
|
)
|
|
|
(0.4
|
)
|
|
|
—
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
Translation
|
|
|
3.6
|
|
|
|
3.5
|
|
|
|
0.2
|
|
|
|
3.9
|
|
|
|
4.4
|
|
|
|
0.1
|
|
|
Other
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
—
|
|
|
|
0.1
|
|
|
|
|
|
|
6.0
|
%
|
|
|
(25.7
|
)%
|
|
|
(5.1
|
)%
|
|
|
12.9
|
%
|
|
|
11.2
|
%
|
|
|
(0.2
|
)%
|
|
Operating Revenues
Revenues increased 6.0% in 2008 over 2007 due to acquisitions and the favorable effect of currency
translation partially offset by an 8.5% decline in base revenues. Acquisition revenue was primarily
related to the purchase of a North American truck remanufacturing and parts business and a
worldwide components business. Base revenues for the North American automotive businesses declined
15.2% primarily due to a 21.0% and 10.1% decline in automotive production by the Detroit 3 and new
domestic automotive manufacturers, respectively. The combined 16% decline in automotive builds was
driven by low consumer demand and existing high inventory levels. International base automotive
revenues declined 6.3% due to unfavorable customer mix and a 2.6% decline in European vehicle
production which experienced large decreases in the fourth quarter of 2008. Base revenues for the
automotive aftermarket businesses in this segment increased 2.3% mainly due to strong sales of
automotive additives from North American businesses to Chinese end markets.
Revenues increased 12.9% in 2007 over 2006 due to acquisitions, the favorable effect of currency
translation and base revenue growth. Acquisition revenue was primarily related to an Asian
components business, a European fastener business and two automotive aftermarket businesses. Base
revenues for the fasteners and components businesses increased 2.7% and 0.1% respectively,
primarily due to a 5.6% increase in automotive production and penetration gains in key Western
European markets and increased product penetration at the foreign-owned manufacturers operating in
North America. These increases were partially offset by a decline in automotive production at the
Detroit 3 automotive manufacturers. Base revenues for the automotive aftermarket businesses in this
segment increased 6.6% and the transportation repair businesses increased 3.4%.
Operating Income
Operating income decreased 25.7% in 2008 over 2007 primarily due to the negative leverage effect of
the decline in base revenues described above, lower base margins and higher restructuring expenses
partially offset by the favorable impact of currency translation. The increase in operating
expenses is primarily due to unrecovered raw material price increases and competitive pricing
pressure. Base margins declined 3.4% primarily due to the reduction in base revenues, start up
costs to support production at foreign-owned manufacturers operating in North America and
additional accounts receivable bad debt reserves.
Operating income increased 11.2% in 2007 over 2006 primarily due the positive leverage effect from
the increase in base revenues described above, the favorable effect of currency translation and
income from acquisitions, partially offset by increased operating expenses. Base margins were flat
as the leverage from revenue growth was offset by higher raw material costs, price pressure and
investments in new programs to support future growth.
38
2008 Annual Report
FOOD EQUIPMENT
Businesses in this segment produce commercial food equipment and related service.
In the Food Equipment segment, products include:
|
|
•
|
|
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; and
|
|
|
|
|
•
|
|
kitchen exhaust, ventilation and pollution control systems.
|
In 2008, this segment primarily served the food institutional/restaurant (55%), service (28%) and
food retail (13%) markets.
The results of operations for the Food Equipment segment for 2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating revenues
|
|
$
|
2,133,186
|
|
|
$
|
1,930,281
|
|
|
$
|
1,520,990
|
|
|
Operating income
|
|
|
317,873
|
|
|
|
300,713
|
|
|
|
274,784
|
|
|
Margin %
|
|
|
14.9
|
%
|
|
|
15.6
|
%
|
|
|
18.1
|
%
|
In 2008 and 2007, the changes in revenues, operating income and operating margins over the prior
year were primarily due to the following factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 COMPARED TO 2007
|
|
|
2007 COMPARED TO 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
|
Base business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue change/Operating leverage
|
|
|
1.8
|
%
|
|
|
4.9
|
%
|
|
|
0.5
|
%
|
|
|
9.3
|
%
|
|
|
22.6
|
%
|
|
|
2.2
|
%
|
|
Changes in variable margins and
overhead costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(19.5
|
)
|
|
|
(3.2
|
)
|
|
|
|
|
|
1.8
|
|
|
|
4.9
|
|
|
|
0.5
|
|
|
|
9.3
|
|
|
|
3.1
|
|
|
|
(1.0
|
)
|
|
|
Acquisitions
|
|
|
6.3
|
|
|
|
1.9
|
|
|
|
(0.6
|
)
|
|
|
13.5
|
|
|
|
3.0
|
|
|
|
(1.4
|
)
|
|
Restructuring costs
|
|
|
—
|
|
|
|
(3.2
|
)
|
|
|
(0.5
|
)
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
|
—
|
|
|
Translation
|
|
|
2.4
|
|
|
|
2.1
|
|
|
|
—
|
|
|
|
4.1
|
|
|
|
3.5
|
|
|
|
—
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
10.5
|
%
|
|
|
5.7
|
%
|
|
|
(0.7
|
)%
|
|
|
26.9
|
%
|
|
|
9.4
|
%
|
|
|
(2.5
|
)%
|
|
Operating Revenues
Revenues increased 10.5% in 2008 over 2007 due to revenues from acquisitions, the favorable effect
of currency translation and base revenue growth. The acquired revenues were primarily attributable
to the acquisition of two food processing businesses and two European food equipment businesses.
Internationally, base revenues increased 3.2% primarily due to strong institutional and service
revenue growth in Asia Pacific and Europe. North American base revenues were flat over 2007 as
increased service revenues and retail sales were offset by lower demand for equipment in areas such
as casual dining restaurants, hotels and airports.
Revenues increased 26.9% in 2007 over 2006 primarily due to revenues from acquired companies, base
revenue growth and the favorable effect of currency translation. The acquired revenues are
primarily attributable to the acquisition of a European food equipment business. The North American
base revenues grew 6.3% from strong institutional/restaurant and service demand, which was
partially offset by weak retail equipment demand. In addition, price increases were implemented to
offset stainless steel raw material cost increases. Internationally, base revenues grew 14.6%
primarily as a result of strong European institutional/restaurant demand.
Operating Income
Operating income increased 5.7% in 2008 over 2007 due to the positive effect of leverage from the
revenue increase described above, the favorable effect of currency translation and income from
acquisitions, partially offset by higher restructuring expenses. Operating margins decreased 0.7%
due to lower margins of acquired businesses and higher restructuring expenses partially offset by
margin gains from growth in base revenues.
Operating income increased 9.4% in 2007 versus 2006 primarily as a result of the positive effect of
leverage from the revenue increase described above, the favorable effect of currency translation
and income from acquisitions. Operating margins decreased 2.5% due to lower margins of acquired
businesses and lower base margins as a result of substantial raw material price increases, only
partially offset by price increases, and an unfavorable product mix. In addition, overhead expenses
increased due to investment in service capacity and new product development.
Illinois Tool Works Inc.
39
CONSTRUCTION PRODUCTS
Businesses in this segment produce tools, fasteners and other products for construction
applications.
In the Construction Products segment, products include:
|
|
•
|
|
fasteners and related fastening tools for wood 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.
|
In 2008, this segment primarily served the residential construction (43%), renovation construction
(28%) and commercial construction (26%) markets.
The results of operations for the Construction Products segment for 2008, 2007 and 2006 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating revenues
|
|
$
|
1,990,683
|
|
|
$
|
2,064,477
|
|
|
$
|
1,897,690
|
|
|
Operating income
|
|
|
238,143
|
|
|
|
283,061
|
|
|
|
256,934
|
|
|
Margin %
|
|
|
12.0
|
%
|
|
|
13.7
|
%
|
|
|
13.5
|
%
|
In 2008 and 2007, the changes in revenues, operating income and operating margins over the prior
year were primarily due to the following factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 COMPARED TO 2007
|
|
|
2007 COMPARED TO 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
|
Base business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue change/Operating leverage
|
|
|
(7.3
|
)%
|
|
|
(22.3
|
)%
|
|
|
(2.2
|
)%
|
|
|
(1.0
|
)%
|
|
|
(2.9
|
)%
|
|
|
(0.3
|
)%
|
|
Changes in variable margins and
overhead costs
|
|
|
—
|
|
|
|
1.5
|
|
|
|
0.2
|
|
|
|
—
|
|
|
|
5.4
|
|
|
|
0.7
|
|
|
|
|
|
|
(7.3
|
)
|
|
|
(20.8
|
)
|
|
|
(2.0
|
)
|
|
|
(1.0
|
)
|
|
|
2.5
|
|
|
|
0.4
|
|
|
|
Acquisitions and divestitures
|
|
|
0.5
|
|
|
|
(1.0
|
)
|
|
|
(0.2
|
)
|
|
|
3.7
|
|
|
|
1.3
|
|
|
|
(0.3
|
)
|
|
Restructuring costs
|
|
|
—
|
|
|
|
2.2
|
|
|
|
0.3
|
|
|
|
—
|
|
|
|
(3.6
|
)
|
|
|
(0.5
|
)
|
|
Impairment of goodwill and intangibles
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.3
|
|
|
|
0.3
|
|
|
Translation
|
|
|
3.3
|
|
|
|
3.6
|
|
|
|
0.1
|
|
|
|
6.0
|
|
|
|
7.7
|
|
|
|
0.2
|
|
|
Other
|
|
|
(0.1
|
)
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
—
|
|
|
|
0.1
|
|
|
|
|
|
|
(3.6
|
)%
|
|
|
(15.9
|
)%
|
|
|
(1.7
|
)%
|
|
|
8.8
|
%
|
|
|
10.2
|
%
|
|
|
0.2
|
%
|
|
Operating Revenues
Revenues declined 3.6% in 2008 over 2007 largely as a result of a 7.3% decline in base business
partially offset by the favorable effect of currency translation. Base revenues for the North
American and European businesses declined 14.6% and 7.0%, respectively, in 2008 while revenues for
the Asia Pacific region increased 4.4% on strong first half 2008 market demand and new product
introductions. This decline in base revenues is a result of the ongoing weakness in the residential
and commercial construction markets in North America and Europe as indicated by a 31% and 19%
decline in North American housing starts and commercial construction square footage activity,
respectively, in 2008. European construction activity slowed substantially in the fourth quarter of
2008.
Revenues increased 8.8% in 2007 over 2006 primarily due to the favorable effect of currency
translation and revenues from acquisitions, partially offset by a decline in base revenues.
Acquisition revenue was primarily related to the acquisition of a building components business and
a tool and fasteners business. Base revenues for the North American fasteners and worldwide
building components businesses decreased 7.1% and 13.8%, respectively, due to the ongoing weakness
in the North American residential construction market as indicated by a 25.8% decline in housing
starts. Base revenue for Europe and Australasia increased 6.2% and 7.6%, respectively, due to
strong market demand and new product introductions.
Operating Income
Operating income and margins decreased 15.9% and 1.7%, respectively, in 2008 over 2007 primarily
due to the revenue decline described above partially offset by the favorable effect of currency
translation, lower restructuring expenses and lower operating costs resulting from prior year
restructuring projects and tight cost controls.
Operating income increased 10.2% in 2007 over 2006 primarily due to the favorable effect of
currency translation and lower goodwill and intangible impairment charges, partially offset by
increased restructuring expenses and the negative effect of the decline in base revenues described
above. Base operating expenses declined primarily due to the implementation of restructuring
projects meant to better align businesses to current market conditions, partially offset by higher
European sales and marketing expenses.
40
2008
Annual Report
POLYMERS & FLUIDS
Businesses in this segment produce adhesives, sealants, lubrication and cutting fluids and
hygiene products.
In the Polymers & Fluids segment, products include:
|
|
•
|
|
adhesives for industrial, construction and consumer purposes;
|
|
|
|
|
•
|
|
chemical fluids that clean or add lubrication to machines;
|
|
|
|
|
•
|
|
epoxy and resin-based coating products for industrial applications;
|
|
|
|
|
•
|
|
hand wipes and cleaners for industrial applications; and
|
|
|
|
|
•
|
|
pressure-sensitive adhesives and components for telecommunications, electronics, medical
and transportation applications.
|
In 2008, this segment primarily served the general industrial (27%), maintenance, repair and
operations (15%), construction (14%) and automotive aftermarket (7%) markets.
The results of operations for the Polymers & Fluids segment for 2008, 2007 and 2006 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating revenues
|
|
$
|
1,255,914
|
|
|
$
|
943,767
|
|
|
$
|
706,474
|
|
|
Operating income
|
|
|
178,889
|
|
|
|
155,783
|
|
|
|
120,045
|
|
|
Margin %
|
|
|
14.2
|
%
|
|
|
16.5
|
%
|
|
|
17.0
|
%
|
In 2008 and 2007, the changes in revenues, operating income and operating margins over the prior
year were primarily due to the following factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 COMPARED TO 2007
|
|
|
2007 COMPARED TO 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
|
Base business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue change/Operating leverage
|
|
|
0.2
|
%
|
|
|
0.6
|
%
|
|
|
0.1
|
%
|
|
|
6.7
|
%
|
|
|
17.2
|
%
|
|
|
1.7
|
%
|
|
Changes in variable margins and
overhead costs
|
|
|
—
|
|
|
|
0.7
|
|
|
|
0.1
|
|
|
|
—
|
|
|
|
(4.8
|
)
|
|
|
(0.8
|
)
|
|
|
|
|
|
0.2
|
|
|
|
1.3
|
|
|
|
0.2
|
|
|
|
6.7
|
|
|
|
12.4
|
|
|
|
0.9
|
|
|
|
Acquisitions
|
|
|
28.9
|
|
|
|
10.0
|
|
|
|
(2.5
|
)
|
|
|
20.8
|
|
|
|
12.9
|
|
|
|
(1.2
|
)
|
|
Restructuring costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.2
|
)
|
|
|
—
|
|
|
Impairment of goodwill and intangibles
|
|
|
—
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
—
|
|
|
|
(0.9
|
)
|
|
|
(0.1
|
)
|
|
Translation
|
|
|
3.7
|
|
|
|
3.0
|
|
|
|
—
|
|
|
|
6.2
|
|
|
|
5.8
|
|
|
|
—
|
|
|
Other
|
|
|
0.3
|
|
|
|
—
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
33.1
|
%
|
|
|
14.8
|
%
|
|
|
(2.3
|
)%
|
|
|
33.6
|
%
|
|
|
29.8
|
%
|
|
|
(0.5
|
)%
|
|
Operating Revenues
Revenues increased 33.1% in 2008 over 2007 primarily due to revenues from acquisitions and the
favorable effect of currency translation. Acquisition revenue was primarily the result of the
purchase of three polymers and industrial adhesives businesses, an international fluid products
business, an Australian polymers business, two North American construction adhesives businesses and
a South American sealant business. Total base revenues were essentially flat as a 2.2% increase in
worldwide polymers revenue was offset by a 3.6% decline in worldwide fluids revenue. Strong growth
in North American polymers and industrial adhesives businesses, as well as increased demand in
Brazil, India and China, was offset by substantially weaker demand for fluid products in North
American and European industrial based end markets.
Revenues increased 33.6% in 2007 over 2006 primarily due to revenues from acquisitions, base
revenue growth and the favorable effect of currency translation. Acquisition revenue was primarily
from three fluid products businesses and four polymers businesses. Base revenue increased for
fluids and polymers primarily due to growth in European demand partially offset by a decrease in
revenues for those businesses that serve the North American residential construction market.
Operating Income
Operating income increased 14.8% in 2008 over 2007 primarily due to income from acquisitions and
the favorable effect of currency translation. Total operating margins declined 2.3% primarily due
to the dilutive effect of the lower margins of acquired businesses. Variable margins decreased due
to higher raw material costs and unfavorable product mix, offset by overhead cost reductions.
Operating income increased 29.8% in 2007 over 2006 primarily due to positive leverage effect from
the increase in revenues described above, acquisition income and the favorable effect of currency
translation. Total operating margins decreased 0.5% due to lower margins of acquired businesses,
partially offset by continued base business margin improvements at previously acquired businesses.
Illinois Tool
Works Inc.
41
ALL OTHER
This segment includes all other operating segments.
In the All Other segment, products include:
|
|
•
|
|
equipment and related software for testing and measuring of materials and structures;
|
|
|
|
|
•
|
|
plastic reclosable packaging for consumer food storage;
|
|
|
|
|
•
|
|
plastic reclosable bags for storage of clothes and home goods;
|
|
|
|
|
•
|
|
plastic consumables that multi-pack cans and bottles and related equipment;
|
|
|
|
|
•
|
|
plastic fasteners and components for appliances, furniture and industrial uses;
|
|
|
|
|
•
|
|
metal fasteners and components for appliances and industrial applications;
|
|
|
|
|
•
|
|
swabs, wipes and mats for clean room usage;
|
|
|
|
|
•
|
|
foil, film and related equipment used to decorate consumer products;
|
|
|
|
|
•
|
|
product coding and marking equipment and related consumables;
|
|
|
|
|
•
|
|
paint spray and adhesive dispensing equipment; and
|
|
|
|
|
•
|
|
static and contamination control equipment.
|
In 2008, this segment primarily served the general industrial (25%), consumer durables (18%), food
and beverage (17%) and electronics (7%) markets.
The results of operations for the All Other segment for 2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating revenues
|
|
$
|
3,248,127
|
|
|
$
|
3,117,364
|
|
|
$
|
2,744,253
|
|
|
Operating income
|
|
|
588,633
|
|
|
|
587,917
|
|
|
|
539,373
|
|
|
Margin %
|
|
|
18.1
|
%
|
|
|
18.9
|
%
|
|
|
19.7
|
%
|
In 2008 and 2007, the changes in revenues, operating income and operating margins over the prior
year were primarily due to the following factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 COMPARED TO 2007
|
|
|
2007 COMPARED TO 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
|
|
|
|
|
|
% POINT INCREASE
|
|
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
% INCREASE (DECREASE)
|
|
|
(DECREASE)
|
|
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
OPERATING
|
|
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
REVENUES
|
|
|
INCOME
|
|
|
MARGINS
|
|
|
|
Base business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue change/Operating leverage
|
|
|
(2.7
|
)%
|
|
|
(6.7
|
)%
|
|
|
(0.8
|
)%
|
|
|
(3.5
|
)%
|
|
|
(8.0
|
)%
|
|
|
(0.9
|
)%
|
|
Changes in variable margins and
overhead costs
|
|
|
—
|
|
|
|
2.6
|
|
|
|
0.5
|
|
|
|
—
|
|
|
|
9.5
|
|
|
|
1.9
|
|
|
|
|
|
|
(2.7
|
)
|
|
|
(4.1
|
)
|
|
|
(0.3
|
)
|
|
|
(3.5
|
)
|
|
|
1.5
|
|
|
|
1.0
|
|
|
|
Acquisitions and divestitures
|
|
|
4.6
|
|
|
|
2.3
|
|
|
|
(0.4
|
)
|
|
|
13.9
|
|
|
|
5.1
|
|
|
|
(1.7
|
)
|
|
Restructuring costs
|
|
|
—
|
|
|
|
(0.5
|
)
|
|
|
(0.1
|
)
|
|
|
—
|
|
|
|
(1.2
|
)
|
|
|
(0.2
|
)
|
|
Impairment of goodwill and intangibles
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
Translation
|
|
|
2.2
|
|
|
|
2.4
|
|
|
|
0.1
|
|
|
|
3.1
|
|
|
|
3.1
|
|
|
|
—
|
|
|
Other
|
|
|
0.1
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
0.1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
4.2
|
%
|
|
|
—
|
%
|
|
|
(0.8
|
)%
|
|
|
13.6
|
%
|
|
|
9.0
|
%
|
|
|
(0.8
|
)%
|
|
Operating Revenues
Revenues increased 4.2% in 2008 versus 2007 primarily due to revenues from acquired companies and
the favorable effect of currency translation partially offset by a decline in base revenues. The
increase in acquisition revenue was primarily due to the purchase of three test and measurement
businesses and a label business. Base revenues declined 7.8%, 3.2% and 3.0% for the industrial
plastics and metals, consumer packaging and finishing businesses, respectively, due to a notable
decrease in end market demand in the second half of the year. These decreases were partially offset
by an 8.0% base business increase in test and measurement due to strong sales of equipment used in
the materials and structural testing markets, particularly in Asia.
Revenues increased 13.6% in 2007 versus 2006 primarily due to revenues from acquired companies and
the favorable effect of currency translation. The increase in acquisition revenue was primarily due
to the purchase of two worldwide foils and transfer ribbon businesses, a worldwide graphics
business, two test and measurement businesses and a software business. Base revenues for the
decorating products and equipment businesses and the industrial plastic and metal businesses
declined 6.5% and 1.9%, respectively, primarily due to decreased North American end market demand.
These decreases were offset by increases in base revenue for the finishing and the test and
measurement businesses of 6.7% and 3.6%, respectively, due to continued growth of international
capital equipment purchases.
42
2008
Annual Report
Operating Income
Operating income was flat in 2008 over 2007 primarily due to the negative leverage effect of the
decrease in revenues described above partially offset by the favorable effect of currency
translation and income from acquired companies. Total operating margins declined 0.8% primarily due
to lower margins for both base business and acquired businesses. Base operating margins decreased
0.3% as the gains from tight cost controls and the benefits of prior year restructuring projects
were offset by the impact of lower revenues.
Operating income increased 9.0% in 2007 versus 2006 primarily due to improved operating
efficiencies, income from acquired companies and the favorable effect of currency translation.
Operating margins declined 0.8% due to lower margins from acquired businesses, partially offset by
base margin increases. Base margin increases were due to lower overhead costs from benefits of
restructuring projects and favorable product mix.
AMORTIZATION AND IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS
Amortization
expense increased to $183.9 million in 2008 and $144.8 million in 2007, versus $103.5
million in 2006, due to intangible amortization related to newly acquired businesses.
Total goodwill and intangible asset impairment charges by segment for the years ended December 31,
2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Industrial Packaging
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,610
|
|
|
Power Systems & Electronics
|
|
|
824
|
|
|
|
—
|
|
|
|
2,492
|
|
|
Transportation
|
|
|
13
|
|
|
|
258
|
|
|
|
2
|
|
|
Food Equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
2,263
|
|
|
Construction Products
|
|
|
—
|
|
|
|
394
|
|
|
|
6,312
|
|
|
Polymers & Fluids
|
|
|
251
|
|
|
|
884
|
|
|
|
—
|
|
|
All Other
|
|
|
487
|
|
|
|
618
|
|
|
|
3,099
|
|
|
|
|
|
$
|
1,575
|
|
|
$
|
2,154
|
|
|
$
|
17,778
|
|
|
See the Goodwill and Intangible Assets note for further details of the impairment charges.
INTEREST EXPENSE
Interest expense increased to $152.5 million in 2008 versus $102.0 million in 2007 primarily as a
result of interest expense on the 5.25% Euro notes issued in October 2007 and higher average
borrowings of short-term commercial paper, partially offset by lower market rates in 2008. Interest
expense increased to $102.0 million in 2007 versus $85.4 million in 2006 primarily as a result of
interest expense on the 5.25% Euro notes and higher average borrowings of short-term commercial
paper. The weighted-average interest rate on commercial paper was 2.4% in 2008, 5.2% in 2007 and
5.1% in 2006.
OTHER INCOME
Other income decreased to $5.6 million in 2008 from $57.8 million in 2007, primarily due to a
German transfer tax charge of $44.0 million in 2008. Additionally, income from a venture capital
limited partnership was essentially flat in 2008 versus income of $25.3 million in 2007 related to
mark-to-market adjustments; and the Company incurred a charge of
$18.8 million related to the timing of tax deductions of leveraged
leases in 2008. This was partially offset by higher income of
$10.7 million related to a mortgage-backed security and a $9.6 million increase in interest income.
Other income decreased to $57.8 million in 2007 from $91.1 million in 2006, primarily due to income
from mortgage investments of $40.1 million in 2006 related to the liquidation of the mortgage
investments, as discussed below. Additionally, interest income of $19.4 million in 2007 was lower
than 2006 interest income of $30.1 million due to lower
international interest.
In 1995, 1996 and 1997, the Company, through its investments in separate mortgage entities,
acquired three distinct pools of mortgage-related assets in exchange for aggregate nonrecourse
notes payable of $739.7 million, preferred stock of subsidiaries of $60.0 million and cash of
$240.0 million. The mortgage-related assets acquired in these transactions related to office
buildings, apartment buildings and shopping malls located throughout the United States. In
conjunction with these transactions, the mortgage entities simultaneously entered into 10-year swap
agreements and other related agreements whereby a third party received a portion of the interest
and net operating cash flow from the mortgage-related assets in excess of specified semi-annual
amounts and a portion of the proceeds from the disposition of the mortgage-related assets and
principal repayments, in exchange for the third party making the contractual principal and interest
payments on the nonrecourse notes payable. In December 2005, in accordance with the 10-year term of
the transaction, all remaining mortgage-related assets pertaining to the 1995 mortgage investment
transaction (the “First Mortgage Transaction”) were sold and the swap and other related agreements
were terminated.
In November 2006, in accordance with the 10-year term of the transaction, all remaining
mortgage-related assets pertaining to the 1996 mortgage investment transaction (the “Second
Mortgage Transaction”) were sold and the swap and other related agreements were terminated. In
December 2006, the Company received $157.1 million for its share of the disposition proceeds
related to the Second Mortgage Transaction, and in January 2007, the Company paid $34.6 million for
the redemption of preferred stock of a subsidiary and related accrued dividends.
In December 2006, the mortgage-related assets pertaining to the 1997 mortgage investment
transaction (the “Third Mortgage Transaction”) were sold and the swap and other related agreements
were terminated. In December 2006, the Company received $168.6 million for its share of the
disposition proceeds related to the Third Mortgage Transaction, and in January 2007, the Company
paid $34.6 million for the redemption of preferred stock of a subsidiary and related accrued
dividends. After the January 2, 2007 preferred stock payments, there are no remaining assets or
liabilities related to the Second or Third Mortgage Transactions.
Illinois Tool
Works Inc.
43
INCOME TAXES
The effective tax rate was 27.7% in 2008, 28.8% in 2007 and 29.2% in 2006. The effective tax rate
differs from the U.S. federal statutory rate primarily due to state taxes, lower foreign tax rates,
non-taxable foreign interest income, taxes on foreign dividends and tax relief provided to U.S.
manufacturers under the American Jobs Creation Act of 2004. See the Income Taxes note for a
reconciliation of the U.S. federal statutory rate to the effective tax rate.
INCOME FROM CONTINUING OPERATIONS
Income from continuing operations in 2008 of $1.6 billion ($3.04 per diluted share) was 7.5% lower
than 2007 income of $1.7 billion ($3.08 per diluted share). Income from continuing operations in
2007 was 9.2% higher than 2006 income of $1.6 billion ($2.75 per diluted share).
FOREIGN CURRENCY
The weakening of the U.S. dollar against foreign currencies increased operating revenues by
approximately $415 million in 2008 and $511 million in 2007 and increased income from continuing
operations by approximately 8 cents per diluted share in 2008 and 11 cents per diluted share in
2007.
DISCONTINUED OPERATIONS
Income (loss) from discontinued operations was a loss of $64.3 million in 2008 versus income of
$157.9 million in 2007, primarily due to 2008 impairment on goodwill of $132.6 million, reserve on
assets held for sale of $64.0 million and lower gains on sales of discontinued operations. Income
from discontinued operations was $157.9 million in 2007 versus $150.7 million in 2006. See the
Discontinued Operations note for further information.
NEW ACCOUNTING PRONOUNCEMENTS
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value
Measurements (“SFAS 157”). SFAS 157 defines fair value and provides guidance for measuring fair
value and the necessary disclosures. This standard does not require any new fair value
measurements, but rather applies to all other accounting pronouncements that require or permit fair
value measurements. In February 2008, the FASB issued a FASB Staff Position (“FSP”) on SFAS 157
that permits a one year delay of the effective date for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value on a recurring basis. The
partial adoption of this statement in 2008 did not have a material impact on the Company’s
financial position or results of operations. The Company will adopt the remaining provisions of
SFAS 157 on January 1, 2009 and is currently evaluating this statement to determine its effect, if
any, on the Company’s results of operations and financial position.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised
2007), Business Combinations (“SFAS 141R”). SFAS 141R requires an entity to recognize assets
acquired, liabilities assumed, contractual contingencies and contingent consideration at their fair
value on the acquisition date. SFAS 141R also requires that (1) acquisition-related costs be
expensed as incurred; (2) restructuring costs generally be recognized as post-acquisition
expenses; and (3) changes in deferred tax asset valuation allowances and income tax uncertainties
after the measurement period impact income tax expense. The Company will adopt SFAS 141R on January
1, 2009 and does not anticipate SFAS 141R will materially affect the Company’s financial position
or results of operations.
44
2008
Annual Report
LIQUIDITY AND CAPITAL RESOURCES
The Company’s primary sources of liquidity are free operating cash flows and short-term credit
facilities. The Company’s targeted debt-to-capital ratio is 20% to 30%, excluding the impact of any
larger acquisitions.
The primary uses of liquidity are:
|
|
•
|
|
dividend payments — the Company’s dividend payout guidelines are 25% to 35% of the last
two years’ average income from continuing operations;
|
|
|
|
|
•
|
|
acquisitions; and
|
|
|
|
|
•
|
|
any excess liquidity may be used for share repurchases. The Company’s
open-ended share repurchase program allows it flexibility in
achieving the targeted
debt-to-capital ratio.
|
The
Company has notes of $500 million due March 1, 2009. The Company
currently has sufficient cash flow and short-term credit facilities to
fund the repayment.
The Company believes that based on its current free operating cash flow, debt-to-capitalization
ratios and credit ratings, it could readily obtain additional financing if necessary.
Cash Flow
Free operating cash flow is used to measure normal cash flow generated by operations that is
available for dividends, acquisitions, share repurchases and debt repayment. Free operating cash
flow is a measurement that is not the same as net cash flow from operating activities per the
statement of cash flows and may not be consistent with similarly titled measures used by other
companies.
Summarized cash flow information for the three years ended December 31, 2008, 2007 and 2006 was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Net cash provided by operating activities
|
|
$
|
2,222,884
|
|
|
$
|
2,484,297
|
|
|
$
|
2,066,028
|
|
|
Additions to plant and equipment
|
|
|
(355,472
|
)
|
|
|
(353,355
|
)
|
|
|
(301,006
|
)
|
|
|
Free operating cash flow
|
|
$
|
1,867,412
|
|
|
$
|
2,130,942
|
|
|
$
|
1,765,022
|
|
|
|
Acquisitions
|
|
$
|
(1,546,982
|
)
|
|
$
|
(812,757
|
)
|
|
$
|
(1,378,708
|
)
|
|
Purchases of investments
|
|
|
(19,583
|
)
|
|
|
(28,734
|
)
|
|
|
(25,347
|
)
|
|
Proceeds from investments
|
|
|
26,932
|
|
|
|
91,184
|
|
|
|
367,365
|
|
|
Cash dividends paid
|
|
|
(598,690
|
)
|
|
|
(502,430
|
)
|
|
|
(398,846
|
)
|
|
Repurchases of common stock
|
|
|
(1,390,594
|
)
|
|
|
(1,757,761
|
)
|
|
|
(446,876
|
)
|
|
Net proceeds of debt
|
|
|
1,467,216
|
|
|
|
777,386
|
|
|
|
178,441
|
|
|
Other
|
|
|
109,715
|
|
|
|
339,487
|
|
|
|
158,739
|
|
|
|
Net increase (decrease) in cash and equivalents
|
|
$
|
(84,574
|
)
|
|
$
|
237,317
|
|
|
$
|
219,790
|
|
|
On August 20, 2007, the Company’s Board of Directors authorized a stock repurchase program,
which provides for the buyback of up to $3.0 billion of the Company’s common stock over an
open-ended period of time. Through December 31, 2008, the Company repurchased 39.8 million shares
of its common stock under this program at an average price of $44.72 per share. There are
approximately $1.2 billion of authorized repurchases remaining under this program.
On August 4, 2006, the Company’s Board of Directors authorized a stock repurchase program which
provided for the buyback of up to 35.0 million shares. This stock repurchase program was completed
in November 2007.
Return on Average Invested Capital
The Company uses return on average invested capital (“ROIC”) to measure the effectiveness of its
operations’ use of invested capital to generate profits. ROIC for the three years ended December
31, 2008, 2007 and 2006 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating income after taxes of 27.7%, 28.8% and 29.2%, respectively
|
|
$
|
1,689,376
|
|
|
$
|
1,743,363
|
|
|
$
|
1,563,068
|
|
|
|
Invested Capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
$
|
2,426,124
|
|
|
$
|
2,915,546
|
|
|
$
|
2,471,273
|
|
|
Inventories
|
|
|
1,673,175
|
|
|
|
1,625,820
|
|
|
|
1,482,508
|
|
|
Net plant and equipment
|
|
|
1,968,636
|
|
|
|
2,194,010
|
|
|
|
2,053,457
|
|
|
Investments
|
|
|
465,894
|
|
|
|
507,567
|
|
|
|
595,083
|
|
|
Goodwill and intangible assets
|
|
|
6,278,255
|
|
|
|
5,683,341
|
|
|
|
5,138,687
|
|
|
Accounts payable and accrued expenses
|
|
|
(1,892,990
|
)
|
|
|
(2,190,121
|
)
|
|
|
(1,895,182
|
)
|
|
Net assets held for sale
|
|
|
318,022
|
|
|
|
137,685
|
|
|
|
—
|
|
|
Other, net
|
|
|
(639,416
|
)
|
|
|
(50,696
|
)
|
|
|
(194
|
)
|
|
|
Total invested capital
|
|
$
|
10,597,700
|
|
|
$
|
10,823,152
|
|
|
$
|
9,845,632
|
|
|
|
Average invested capital
|
|
$
|
11,225,553
|
|
|
$
|
10,326,990
|
|
|
$
|
9,160,712
|
|
|
|
Return on average invested capital
|
|
|
15.0
|
%
|
|
|
16.9
|
%
|
|
|
17.1
|
%
|
|
Illinois Tool
Works Inc.
45
The 190 basis point decrease in ROIC in 2008 versus 2007 was the result of average invested capital
increasing 8.7%, primarily due to acquisitions, while after-tax operating income decreased 3.1%, primarily due to a decrease in
base business operating income.
The 20 basis point decrease in ROIC in 2007 versus 2006 was the result of average invested capital
increasing 12.7% while after-tax operating income only increased 11.5%, primarily due to lower
returns from acquired companies.
Working Capital
Net working capital at December 31, 2008 and 2007 is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
(DECREASE)
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
$
|
742,950
|
|
|
$
|
827,524
|
|
|
$
|
(84,574
|
)
|
|
Trade receivables
|
|
|
2,426,124
|
|
|
|
2,915,546
|
|
|
|
(489,422
|
)
|
|
Inventories
|
|
|
1,673,175
|
|
|
|
1,625,820
|
|
|
|
47,355
|
|
|
Other
|
|
|
562,695
|
|
|
|
653,236
|
|
|
|
(90,541
|
)
|
|
Assets held
for sale
|
|
|
518,774
|
|
|
|
143,529
|
|
|
|
375,245
|
|
|
|
|
|
|
5,923,718
|
|
|
|
6,165,655
|
|
|
|
(241,937
|
)
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
2,433,482
|
|
|
|
410,512
|
|
|
|
2,022,970
|
|
|
Accounts payable and accrued expenses
|
|
|
1,892,990
|
|
|
|
2,190,121
|
|
|
|
(297,131
|
)
|
|
Other
|
|
|
348,357
|
|
|
|
353,808
|
|
|
|
(5,451
|
)
|
|
Liabilities
held for sale
|
|
|
200,752
|
|
|
|
5,844
|
|
|
|
194,908
|
|
|
|
|
|
|
4,875,581
|
|
|
|
2,960,285
|
|
|
|
1,915,296
|
|
|
|
Net Working Capital
|
|
$
|
1,048,137
|
|
|
$
|
3,205,370
|
|
|
$
|
(2,157,233
|
)
|
|
|
Current Ratio
|
|
|
1.21
|
|
|
|
2.08
|
|
|
|
|
|
|
Short-term debt increased primarily due to the issuance of commercial paper to fund stock
repurchases, acquisitions, dividends and tax payments, and the
reclassification of $500 million of long-term
debt due March 1, 2009 to short-term debt. Trade receivables, accounts payable and accrued expenses
decreased primarily due to the reclassification of assets and
liabilities of businesses held for sale, lower demand
for products, lower purchase activity and currency translation,
partially offset by acquisitions. Inventories increased primarily due to
acquisitions and lower overall demand for products, partially offset
by currency translation.
Debt
Total debt at December 31, 2008 and 2007 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE
|
|
|
DOLLARS IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
(DECREASE)
|
|
|
|
Short-term debt
|
|
$
|
2,433,482
|
|
|
$
|
410,512
|
|
|
$
|
2,022,970
|
|
|
Long-term debt
|
|
|
1,243,693
|
|
|
|
1,888,839
|
|
|
|
(645,146
|
)
|
|
|
Total debt
|
|
$
|
3,677,175
|
|
|
$
|
2,299,351
|
|
|
$
|
1,377,824
|
|
|
|
Total debt to total capitalization
|
|
|
32.4
|
%
|
|
|
19.7
|
%
|
|
|
|
|
|
The
Company issues commercial paper to fund general corporate needs and
to fund small and medium-sized acquisitions. As of
December 31, 2008, the Company had approximately $1.8 billion outstanding under its commercial paper
program. The Company also has committed lines of credit of $3.0 billion in the U.S. to support the
issuances of commercial paper. Of this amount, $2.5 billion is provided under a line of credit agreement
with a termination date of June 12, 2009 and the remaining $500 million is under a revolving credit facility
that terminates on June 15, 2012. No amounts are outstanding under these two facilities. The
Company’s foreign operations also have unused capacity on uncommitted facilities of approximately
$325 million.
As discussed above, included in short-term debt is $500 million of 5.75% Notes due March 1, 2009. The
Company currently has sufficient cash flows and short-term credit facilities to fund the repayment.
The Company believes that based on its current free operating cash flow, debt-to-capitalization ratios and
credit ratings, it could readily obtain additional financing if
necessary. If the Company were to refinance commercial paper by
issuing long-term debt, the interest rate would likely be higher than
rates
currently available under the commercial paper program, which would result in higher overall interest cost to the
Company in the near future.
46
2008 Annual Report
Stockholders’ Equity
The changes to stockholders’ equity during 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Beginning balance
|
|
$
|
9,351,325
|
|
|
$
|
9,017,508
|
|
|
Net income
|
|
|
1,519,003
|
|
|
|
1,869,862
|
|
|
Cash dividends declared
|
|
|
(604,988
|
)
|
|
|
(533,519
|
)
|
|
Repurchases of common stock
|
|
|
(1,390,594
|
)
|
|
|
(1,757,761
|
)
|
|
Stock option and restricted stock activity
|
|
|
105,514
|
|
|
|
173,647
|
|
|
Pension and other postretirement benefit adjustments, net of tax
|
|
|
(432,618
|
)
|
|
|
180,110
|
|
|
Currency translation adjustments
|
|
|
(874,952
|
)
|
|
|
424,037
|
|
|
Cumulative effect of adopting new accounting standard, net of tax
|
|
|
(9,215
|
)
|
|
|
(22,559
|
)
|
|
|
Ending balance
|
|
$
|
7,663,475
|
|
|
$
|
9,351,325
|
|
|
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
The Company’s contractual obligations as of December 31, 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 AND
|
|
|
IN THOUSANDS
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
FUTURE YEARS
|
|
|
|
Total debt
|
|
$
|
509,432
|
|
|
$
|
9,786
|
|
|
$
|
256,590
|
|
|
$
|
5,765
|
|
|
$
|
5,155
|
|
|
$
|
966,397
|
|
|
Interest payments on notes and preferred debt securities
|
|
|
82,387
|
|
|
|
67,735
|
|
|
|
67,457
|
|
|
|
50,820
|
|
|
|
50,582
|
|
|
|
43,149
|
|
|
Minimum lease payments
|
|
|
137,933
|
|
|
|
101,408
|
|
|
|
72,838
|
|
|
|
49,601
|
|
|
|
40,425
|
|
|
|
77,528
|
|
|
Affordable housing capital obligations
|
|
|
14,742
|
|
|
|
13,262
|
|
|
|
3,243
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Maximum venture capital contributions
|
|
|
5,174
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
$
|
749,668
|
|
|
$
|
192,191
|
|
|
$
|
400,128
|
|
|
$
|
106,186
|
|
|
$
|
96,162
|
|
|
$
|
1,087,074
|
|
|
The Company has recorded current income taxes payable of $193.6 million and non-current tax
liabilities of $193.6 million including liabilities for
unrecognized tax benefits. The Company is not able to reasonably estimate the timing of
payments related to the non-current tax obligations.
The Company has provided guarantees related to the debt of certain unconsolidated affiliates of
$24.0 million at December 31, 2008. In the event one of these affiliates defaults on its debt, the
Company would be liable for the debt repayment. The Company has recorded liabilities related to
these guarantees of $17.0 million at December 31, 2008. At December 31, 2008, the Company had open
stand-by letters of credit of $198.0 million, substantially all of which expire in 2009. The
Company had no other significant off-balance sheet commitments at December 31, 2008.
MARKET RISK
Interest Rate Risk
The Company’s exposure to market risk for changes in interest rates relates primarily to the
Company’s debt.
The Company has commercial paper outstanding of $1.8 billion and $201.0 million as of December 31,
2008 and 2007, respectively. Commercial paper is issued at a discount and generally matures 30 to
90 days from the date of issuance. The weighted average interest rate on commercial paper was 1.4%
at December 31, 2008 and 4.1% at December 31, 2007.
The Company has no cash flow exposure on its long-term obligations related to changes in market
interest rates, other than $100.0 million of debt which has been hedged by the interest rate swap
discussed below. The Company primarily enters into long-term debt obligations for general corporate
purposes, including the funding of capital expenditures and acquisitions. In December 2002, the
Company entered into an interest rate swap with a notional value of $100.0 million to hedge a
portion of the fixed rate debt. Under the terms of the interest rate swap, the Company receives
interest at a fixed rate of 5.75% and pays interest at a variable rate of LIBOR plus 1.96%. The
maturity date of the interest rate swap is March 1, 2009. The carrying value of the notes has been
adjusted to reflect the fair value of the interest rate swap.
Illinois Tool Works Inc.
47
The following table presents the Company’s financial instruments for which fair value is subject to
changing market interest rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.55%
|
|
|
|
|
|
|
|
|
|
|
5.25%
|
|
|
5.75%
|
|
|
PREFERRED DEBT
|
|
|
4.88%
|
|
|
|
|
|
|
|
|
EURO NOTES DUE
|
|
|
NOTES DUE
|
|
|
SECURITIES DUE
|
|
|
NOTES DUE
|
|
|
|
|
|
|
IN THOUSANDS
|
|
OCT 1, 2014
|
|
|
MARCH 1, 2009
|
|
|
DEC 31, 2011
|
|
|
DEC 31, 2020
|
|
|
|
|
|
|
|
As of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated cash outflow by
year of principal maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
$
|
—
|
|
|
$
|
500,000
|
|
|
$
|
—
|
|
|
$
|
5,679
|
|
|
|
|
|
|
2010
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,713
|
|
|
|
|
|
|
2011
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
5,351
|
|
|
|
|
|
|
2012
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,882
|
|
|
|
|
|
|
2013
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,312
|
|
|
|
|
|
|
2014 and thereafter
|
|
|
952,575
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,409
|
|
|
|
|
|
|
Estimated fair value
|
|
|
856,355
|
|
|
|
503,550
|
|
|
|
269,598
|
|
|
|
31,555
|
|
|
|
|
|
|
Carrying value
|
|
|
951,545
|
|
|
|
501,812
|
|
|
|
249,857
|
|
|
|
33,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total estimated cash outflow
|
|
$
|
1,097,250
|
|
|
$
|
500,000
|
|
|
$
|
250,000
|
|
|
$
|
38,819
|
|
|
|
|
|
|
Estimated fair value
|
|
|
1,119,305
|
|
|
|
509,350
|
|
|
|
262,140
|
|
|
|
39,261
|
|
|
|
|
|
|
Carrying value
|
|
|
1,095,895
|
|
|
|
499,604
|
|
|
|
249,815
|
|
|
|
38,819
|
|
|
|
|
|
Foreign Currency Risk
The Company operates in the United States and 53 other countries. In general, the Company’s
products are primarily manufactured and sold within the same country. The initial funding for the
foreign manufacturing operations was provided primarily through the permanent investment of equity
capital from the U.S. parent company. Therefore, the Company and its subsidiaries do not have
significant assets or liabilities denominated in currencies other than their functional currencies.
As such, the Company does not have any significant derivatives or other financial instruments that
are subject to foreign currency risk at December 31, 2008 or 2007.
In October 2007, the Company issued
€
750.0 million of 5.25% Euro notes due October 1, 2014. The
Company has significant operations with the Euro as their functional currency. The Company believes
that the Euro cashflows from these businesses will be more than adequate to fund the debt
obligations under these notes.
CRITICAL ACCOUNTING POLICIES
The Company has six accounting policies which it believes are most important to the Company’s financial
condition and results of operations, and which require the Company to make estimates about matters
that are inherently uncertain.
These critical accounting policies are as follows:
Realizability of Inventories
—
Inventories are stated at the lower of cost or market. Generally,
the Company’s businesses perform an analysis of the historical sales usage of the individual
inventory items on hand and a reserve is recorded to adjust inventory cost to market value based on
the following usage criteria:
|
|
|
|
|
|
|
|
|
|
|
USAGE CLASSIFICATION
|
|
CRITERIA
|
RESERVE %
|
|
|
|
Active
|
|
Quantity on hand is less than prior 6 months’ usage
|
|
0
|
%
|
|
|
Slow-moving
|
|
Some usage in last 12 months, but quantity on hand exceeds prior 6 months’ usage
|
|
50
|
%
|
|
|
Obsolete
|
|
No usage in the last 12 months
|
|
90
|
%
|
|
In addition, for approximately half of the U.S. operations, the Company has elected to use the
last-in, first-out (“LIFO”) method of inventory costing. Generally, this method results in a lower
inventory value than the first-in, first-out (“FIFO”) method due to the effects of inflation.
Collectibility of Accounts Receivable
—
The Company estimates the allowance for uncollectible
accounts based on the greater of a specific reserve or a reserve calculated based on the historical
write-off percentage over the last two years. In addition, the allowance for uncollectible accounts
includes reserves for customer credits and cash discounts, which are also estimated based on past
experience.
Depreciation of Plant and Equipment
—
The Company’s U.S. businesses compute depreciation on an
accelerated basis, as follows:
|
|
|
|
|
Buildings and improvements
|
|
150% declining balance
|
|
Machinery and equipment
|
|
200% declining balance
|
The majority of the international businesses compute depreciation on a straight-line basis to
conform to their local statutory accounting and tax regulations.
Income Taxes
—
The Company provides deferred income tax assets and liabilities based on the
estimated future tax effects of differences between the financial and tax bases of assets and
liabilities based on currently enacted tax laws. The Company’s deferred and other tax balances are
based on management’s interpretation of the tax regulations and rulings in numerous taxing
jurisdictions. Income tax expense and liabilities recognized by the Company also reflect its best
estimates and assumptions regarding, among other things, the level of future taxable income and
effect of the Company’s various tax planning strategies. Future tax authority rulings and changes
in tax laws, changes in projected levels of taxable income and future tax planning strategies could
affect the actual effective tax rate and tax balances recorded by the Company.
48
2008 Annual Report
Goodwill and Intangible Assets
— The Company’s business acquisitions typically result in recording
goodwill and other intangible assets, which affect the amount of amortization expense and possibly
impairment expense that the Company will incur in future periods. The Company follows the guidance
prescribed in Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible
Assets” to test goodwill and intangible assets for impairment. On an annual basis in the first
quarter of each year, or more frequently if triggering events occur, the Company compares the fair
value of its 60 reporting units to the carrying value of each reporting unit to determine if a
goodwill impairment exists. In calculating the fair value of the reporting units, management relies
on a number of factors, including operating results, business plans, economic projections,
anticipated future cash flows, comparable transactions and other market data. There are inherent
uncertainties related to these factors and management’s judgment in applying them in the impairment
tests of goodwill and other intangible assets.
As of December 31, 2008, the Company had goodwill and intangible assets of $6.3 billion allocated
to its 60 reporting units. The Company’s risk of significant impairment charges is mitigated by the
number of diversified businesses and end markets represented by its 60 reporting units. In
addition, the individual businesses in most of its reporting units have been acquired over a long
period of time, and therefore have been able to improve their performance, primarily as a result of
the application of the Company’s 80/20 business simplification process. The amount of goodwill and
intangibles allocated to individual reporting units range from approximately $10 million to $550
million, with the average amount equal to $105 million. Goodwill and intangible asset impairments
related to continuing operations were $1.6 million in 2008, $2.2 million in 2007 and $17.8 million
in 2006.
Fair value determinations require considerable judgment and are sensitive to changes in the factors
described above. Due to the inherent uncertainties associated with these factors and economic
conditions in the Company’s global end markets, as well as the
potential effects of the adoption of SFAS 157, impairment
charges related to one or more reporting units could occur in future periods.
Retirement Plans and Postretirement Benefits
— The Company has various company-sponsored defined
benefit retirement plans covering a substantial portion of U.S. employees and many employees
outside the United States. Pension expense and obligations are determined based on actuarial
valuations. Pension benefits associated with these plans are generally based primarily on each
participant’s years of service, future compensation, and age at retirement or termination.
Important assumptions in determining pension and postretirement expense and obligations are the
discount rate, the expected long-term return on plan assets and healthcare cost trend rates. See
the notes to financial statements for additional discussion of actuarial assumptions used in
determining pension and postretirement health care liabilities and expenses.
The Company determines the discount rate used to measure plan liabilities as of the December 31
measurement date for the U.S. pension and postretirement benefit plans. The discount rate reflects
the current rate at which the associated liabilities could theoretically be effectively settled at
the end of the year. In estimating this rate, the Company looks at rates of return on high-quality
fixed income investments, with similar duration to the liabilities in the plan. A 25 basis point
decrease in the discount rate would increase the present value of the U.S. primary pension plan
obligation by approximately $25 million.
The expected long-term return on plan assets is based on historical and expected long-term returns
for similar investment allocations among asset classes. For the U.S. primary pension plan, the
Company’s assumption for the expected return on plan assets was 8.5% for 2008 and will be 8.5% for
2009. A 25 basis point decrease in the expected return on plan assets would increase the annual
pension expense by approximately $3 million. See the Retirement Plans and Postretirement Benefits
note for information on how this rate is determined.
The Company believes that the above critical policies have resulted in past actual results
approximating the estimated amounts in those areas.
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, that may be identified by the use of words such as “believe,”
“expect,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “anticipate,”
“guidance,” and other similar words, including, without limitation, statements regarding the timing
of disposal of businesses held for sale, the adequacy of internally generated funds and its credit
facilities, the meeting of dividend payout objectives, the ability to fund debt service
obligations, payments under guarantees, expected contributions to the Company’s pension and
postretirement plans, the availability of additional financing, the outcome of outstanding legal
proceedings, the impact of adopting new accounting pronouncements, and the estimated amount of
unrecognized tax benefits. These statements are subject to certain risks, uncertainties, and other
factors, which could cause actual results to differ materially from those anticipated. Important
risks that may influence future results include (1) a further downturn in the construction, general
industrial, automotive, or food institutional/restaurant and service
markets, (2) changes or deterioration in
international and domestic business and economic conditions, particularly in North America, Europe,
Asia or Australia, (3) the unfavorable impact of foreign currency fluctuations and costs of raw
materials, (4) decreases in credit availability, (5) an interruption in, or reduction in, introducing new products into the Company’s
product lines, (6) an unfavorable environment for making acquisitions, domestic and international,
including adverse accounting or regulatory requirements and market
values of candidates, and (7)
unfavorable tax law changes and tax authority rulings. The risks covered here are not all inclusive
and given these and other possible risks and uncertainties, investors should not place undue
reliance on forward-looking statements as a prediction of actual
results. A more detailed description of these risks is set forth in
the Company’s Form
10-K
for 2008.
The Company practices fair disclosure for all interested parties. Investors should be aware that
while the Company regularly communicates with securities analysts and other investment
professionals, it is against the Company’s policy to disclose to them any material non-public
information or other confidential commercial information. Shareholders should not assume that the
Company agrees with any statement or report issued by any analyst irrespective of the content of
the statement or report.
Illinois Tool Works Inc.
49
Management Report on Internal Control over Financial Reporting
The management of Illinois Tool Works Inc. (“ITW”) is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f). ITW’s internal control system was designed to provide reasonable assurance to the
Company’s management and Board of Directors regarding the preparation and fair presentation of
published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore,
even those systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
ITW management assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2008. In making this assessment, it used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal
Control—Integrated Framework.
Based on our assessment we believe that, as of December 31, 2008,
the Company’s internal control over financial reporting is effective based on those criteria.
The effectiveness of the Company’s internal control over financial reporting as of December 31,
2008 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm,
as stated in their report herein.
|
|
|
|
|
|
|
/s/ David B. Speer
|
|
/s/ Ronald D. Kropp
|
|
David B. Speer
|
|
Ronald D. Kropp
|
|
Chairman & Chief Executive Officer
|
|
Senior Vice President & Chief Financial Officer
|
|
February 27, 2009
|
|
February 27, 2009
|
50
2008 Annual Report
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Illinois Tool Works Inc.:
We have audited the accompanying statement of financial position of Illinois Tool Works Inc. and
Subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related statements of
income, income reinvested in the business, comprehensive income and cash flows for each of the
three years in the period ended December 31, 2008. We also have audited the Company’s internal
control over financial reporting as of December 31, 2008, based on the criteria established in
Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Company’s management is responsible for these financial statements, for
maintaining effective internal control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying management
report on internal control over financial reporting. Our responsibility is to express an opinion
on these financial statements and an opinion on the Company’s internal control over financial
reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement and
whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the financial statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. Our audit of internal control over financial reporting included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
A company’s internal control over financial reporting is a process designed by, or under the
supervision of, the company’s principal executive and principal financial officers, or persons
performing similar functions, and effected by the company’s board of directors, management, and
other personnel 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. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis. Also, projections of any
evaluation of the effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Illinois Tool Works Inc. and Subsidiaries as of December 31,
2008 and 2007, and the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2008, in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2008, based on the
criteria established in
Internal Control — Integrated Framework
issued by the Committee of
Sponsoring Organizations of the Treadway Commission
.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Chicago, Illinois
February 27, 2009
Illinois Tool
Works Inc.
51
Statement of Income
Illinois Tool Works Inc. and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE YEARS ENDED DECEMBER 31
|
|
|
IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating Revenues
|
|
$
|
15,869,354
|
|
|
$
|
14,871,076
|
|
|
$
|
12,784,342
|
|
|
Cost of revenues
|
|
|
10,272,595
|
|
|
|
9,532,841
|
|
|
|
8,182,014
|
|
|
Selling, administrative, and research and development expenses
|
|
|
3,073,075
|
|
|
|
2,742,351
|
|
|
|
2,273,017
|
|
|
Amortization and impairment of goodwill and other intangible assets
|
|
|
185,448
|
|
|
|
146,996
|
|
|
|
121,276
|
|
|
|
Operating Income
|
|
|
2,338,236
|
|
|
|
2,448,888
|
|
|
|
2,208,035
|
|
|
Interest expense
|
|
|
(152,472
|
)
|
|
|
(101,976
|
)
|
|
|
(85,363
|
)
|
|
Other income
|
|
|
5,602
|
|
|
|
57,787
|
|
|
|
91,056
|
|
|
|
Income from Continuing Operations Before Income Taxes
|
|
|
2,191,366
|
|
|
|
2,404,699
|
|
|
|
2,213,728
|
|
|
Income taxes
|
|
|
608,100
|
|
|
|
692,763
|
|
|
|
646,672
|
|
|
|
Income from Continuing Operations
|
|
|
1,583,266
|
|
|
|
1,711,936
|
|
|
|
1,567,056
|
|
|
Income (Loss) from Discontinued Operations
|
|
|
(64,263
|
)
|
|
|
157,926
|
|
|
|
150,690
|
|
|
|
Net Income
|
|
$
|
1,519,003
|
|
|
$
|
1,869,862
|
|
|
$
|
1,717,746
|
|
|
|
Income Per Share from Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.05
|
|
|
$
|
3.10
|
|
|
$
|
2.77
|
|
|
|
Diluted
|
|
$
|
3.04
|
|
|
$
|
3.08
|
|
|
$
|
2.75
|
|
|
|
Income (Loss) Per Share from Discontinued Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.12
|
)
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
|
Diluted
|
|
$
|
(0.12
|
)
|
|
$
|
0.28
|
|
|
$
|
0.26
|
|
|
|
Net Income Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.93
|
|
|
$
|
3.39
|
|
|
$
|
3.04
|
|
|
|
Diluted
|
|
$
|
2.91
|
|
|
$
|
3.36
|
|
|
$
|
3.01
|
|
|
Statement of Income Reinvested in the Business
Illinois Tool Works Inc. and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE YEARS ENDED DECEMBER 31
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Beginning Balance
|
|
$
|
9,879,065
|
|
|
$
|
10,406,511
|
|
|
$
|
9,112,328
|
|
|
Net income
|
|
|
1,519,003
|
|
|
|
1,869,862
|
|
|
|
1,717,746
|
|
|
Cash dividends declared
|
|
|
(604,988
|
)
|
|
|
(533,519
|
)
|
|
|
(423,563
|
)
|
|
Retirement of treasury shares
|
|
|
(1,583,827
|
)
|
|
|
(1,841,230
|
)
|
|
|
—
|
|
|
Cumulative effect of adopting new accounting standards, net of tax
|
|
|
(12,788
|
)
|
|
|
(22,559
|
)
|
|
|
—
|
|
|
|
Ending Balance
|
|
$
|
9,196,465
|
|
|
$
|
9,879,065
|
|
|
$
|
10,406,511
|
|
|
Statement of Comprehensive Income
Illinois Tool Works Inc. and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE YEARS ENDED DECEMBER 31
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Net Income
|
|
$
|
1,519,003
|
|
|
$
|
1,869,862
|
|
|
$
|
1,717,746
|
|
|
Other Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(874,952
|
)
|
|
|
424,037
|
|
|
|
495,697
|
|
|
Pension and other postretirement benefit adjustments, net of tax
|
|
|
(432,618
|
)
|
|
|
180,110
|
|
|
|
8,967
|
|
|
|
Comprehensive Income
|
|
$
|
211,433
|
|
|
$
|
2,474,009
|
|
|
$
|
2,222,410
|
|
|
The Notes to Financial Statements are an integral part of these statements.
52
2008 Annual Report
Statement of Financial Position
Illinois Tool Works Inc. and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
DECEMBER 31
|
|
|
IN THOUSANDS EXCEPT SHARES
|
|
2008
|
|
|
2007
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
$
|
742,950
|
|
|
$
|
827,524
|
|
|
Trade receivables
|
|
|
2,426,124
|
|
|
|
2,915,546
|
|
|
Inventories
|
|
|
1,673,175
|
|
|
|
1,625,820
|
|
|
Deferred income taxes
|
|
|
194,995
|
|
|
|
189,093
|
|
|
Prepaid expenses and other current assets
|
|
|
367,700
|
|
|
|
464,143
|
|
|
Assets held for sale
|
|
|
518,774
|
|
|
|
143,529
|
|
|
|
Total current assets
|
|
|
5,923,718
|
|
|
|
6,165,655
|
|
|
|
Plant and Equipment:
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
217,024
|
|
|
|
226,208
|
|
|
Buildings and improvements
|
|
|
1,347,989
|
|
|
|
1,476,673
|
|
|
Machinery and equipment
|
|
|
3,369,771
|
|
|
|
3,852,241
|
|
|
Equipment leased to others
|
|
|
164,504
|
|
|
|
154,111
|
|
|
Construction in progress
|
|
|
94,207
|
|
|
|
109,267
|
|
|
|
|
|
|
5,193,495
|
|
|
|
5,818,500
|
|
|
Accumulated depreciation
|
|
|
(3,224,859
|
)
|
|
|
(3,624,490
|
)
|
|
|
Net plant and equipment
|
|
|
1,968,636
|
|
|
|
2,194,010
|
|
|
|
Investments
|
|
|
465,894
|
|
|
|
507,567
|
|
|
Goodwill
|
|
|
4,504,285
|
|
|
|
4,387,165
|
|
|
Intangible Assets
|
|
|
1,773,970
|
|
|
|
1,296,176
|
|
|
Deferred Income Taxes
|
|
|
76,269
|
|
|
|
61,416
|
|
|
Other Assets
|
|
|
500,311
|
|
|
|
913,873
|
|
|
|
|
|
$
|
15,213,083
|
|
|
$
|
15,525,862
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
2,433,482
|
|
|
$
|
410,512
|
|
|
Accounts payable
|
|
|
642,121
|
|
|
|
854,148
|
|
|
Accrued expenses
|
|
|
1,250,869
|
|
|
|
1,335,973
|
|
|
Cash dividends payable
|
|
|
154,726
|
|
|
|
148,427
|
|
|
Income taxes payable
|
|
|
193,631
|
|
|
|
205,381
|
|
|
Liabilities held for sale
|
|
|
200,752
|
|
|
|
5,844
|
|
|
|
Total current liabilities
|
|
|
4,875,581
|
|
|
|
2,960,285
|
|
|
|
Noncurrent Liabilities:
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
1,243,693
|
|
|
|
1,888,839
|
|
|
Deferred income taxes
|
|
|
114,556
|
|
|
|
260,658
|
|
|
Other
|
|
|
1,315,778
|
|
|
|
1,064,755
|
|
|
|
Total noncurrent liabilities
|
|
|
2,674,027
|
|
|
|
3,214,252
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
Issued—531,789,730 shares in 2008 and 562,522,026 shares in 2007
|
|
|
5,318
|
|
|
|
5,625
|
|
|
Additional paid-in-capital
|
|
|
105,497
|
|
|
|
173,610
|
|
|
Income reinvested in the business
|
|
|
9,196,465
|
|
|
|
9,879,065
|
|
|
Common stock held in treasury
|
|
|
(1,390,594
|
)
|
|
|
(1,757,761
|
)
|
|
Accumulated other comprehensive income
|
|
|
(253,211
|
)
|
|
|
1,050,786
|
|
|
|
Total stockholders’ equity
|
|
|
7,663,475
|
|
|
|
9,351,325
|
|
|
|
|
|
$
|
15,213,083
|
|
|
$
|
15,525,862
|
|
|
The Notes to Financial Statements are an integral part of these statements.
Illinois Tool
Works Inc.
53
Statement of Cash Flows
Illinois Tool Works Inc. and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR THE YEARS ENDED DECEMBER 31
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Cash Provided by (Used for) Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,519,003
|
|
|
$
|
1,869,862
|
|
|
$
|
1,717,746
|
|
|
Adjustments to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
367,615
|
|
|
|
363,701
|
|
|
|
319,362
|
|
|
Amortization and impairment of goodwill and other intangible
assets
|
|
|
324,292
|
|
|
|
161,043
|
|
|
|
124,544
|
|
|
Change in deferred income taxes
|
|
|
(95,857
|
)
|
|
|
(5,522
|
)
|
|
|
167,003
|
|
|
Provision for uncollectible accounts
|
|
|
15,806
|
|
|
|
5,998
|
|
|
|
8,727
|
|
|
Loss on sale of plant and equipment
|
|
|
3,708
|
|
|
|
743
|
|
|
|
1,149
|
|
|
Income from investments
|
|
|
(17,017
|
)
|
|
|
(47,880
|
)
|
|
|
(78,608
|
)
|
|
(Gain) loss on sale of operations and affiliates
|
|
|
43,522
|
|
|
|
(34,807
|
)
|
|
|
(16,795
|
)
|
|
Stock compensation expense
|
|
|
41,686
|
|
|
|
30,471
|
|
|
|
34,781
|
|
|
Other non-cash items, net
|
|
|
2,270
|
|
|
|
(3,141
|
)
|
|
|
510
|
|
|
Change in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) decrease in—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
247,239
|
|
|
|
(56,971
|
)
|
|
|
(45,581
|
)
|
|
Inventories
|
|
|
(104,789
|
)
|
|
|
(4,543
|
)
|
|
|
(60,204
|
)
|
|
Prepaid expenses and other assets
|
|
|
(77,323
|
)
|
|
|
(15,676
|
)
|
|
|
(63,930
|
)
|
|
Increase (decrease) in—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
(188,973
|
)
|
|
|
(37,823
|
)
|
|
|
10,941
|
|
|
Accrued expenses and other liabilities
|
|
|
(14,548
|
)
|
|
|
(2,301
|
)
|
|
|
1,314
|
|
|
Income taxes receivable and payable
|
|
|
127,703
|
|
|
|
260,427
|
|
|
|
(55,261
|
)
|
|
Other, net
|
|
|
28,547
|
|
|
|
716
|
|
|
|
330
|
|
|
|
Net cash provided by operating activities
|
|
|
2,222,884
|
|
|
|
2,484,297
|
|
|
|
2,066,028
|
|
|
|
Cash Provided by (Used for) Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of businesses (excluding cash and equivalents) and
additional interest in affiliates
|
|
|
(1,546,982
|
)
|
|
|
(812,757
|
)
|
|
|
(1,378,708
|
)
|
|
Additions to plant and equipment
|
|
|
(355,472
|
)
|
|
|
(353,355
|
)
|
|
|
(301,006
|
)
|
|
Purchases of investments
|
|
|
(19,583
|
)
|
|
|
(28,734
|
)
|
|
|
(25,347
|
)
|
|
Proceeds from investments
|
|
|
26,932
|
|
|
|
91,184
|
|
|
|
367,365
|
|
|
Proceeds from sale of plant and equipment
|
|
|
23,801
|
|
|
|
21,821
|
|
|
|
14,190
|
|
|
Proceeds from sale of operations and affiliates
|
|
|
106,053
|
|
|
|
160,457
|
|
|
|
40,303
|
|
|
Other, net
|
|
|
9,181
|
|
|
|
(2,664
|
)
|
|
|
8,788
|
|
|
|
Net cash used for investing activities
|
|
|
(1,756,070
|
)
|
|
|
(924,048
|
)
|
|
|
(1,274,415
|
)
|
|
|
Cash Provided by (Used for) Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid
|
|
|
(598,690
|
)
|
|
|
(502,430
|
)
|
|
|
(398,846
|
)
|
|
Issuance of common stock
|
|
|
56,189
|
|
|
|
116,665
|
|
|
|
78,969
|
|
|
Repurchases of common stock
|
|
|
(1,390,594
|
)
|
|
|
(1,757,761
|
)
|
|
|
(446,876
|
)
|
|
Net proceeds (repayments) of debt with original maturities of three months or less
|
|
|
1,509,977
|
|
|
|
(266,968
|
)
|
|
|
194,896
|
|
|
Proceeds from debt with original maturities of more than three months
|
|
|
118,662
|
|
|
|
1,062,108
|
|
|
|
177
|
|
|
Repayments of debt with original maturities of more than three months
|
|
|
(161,423
|
)
|
|
|
(17,754
|
)
|
|
|
(16,632
|
)
|
|
Excess tax benefits from share-based compensation
|
|
|
4,003
|
|
|
|
16,212
|
|
|
|
13,086
|
|
|
Repayment of preferred stock of subsidiary
|
|
|
—
|
|
|
|
(40,000
|
)
|
|
|
—
|
|
|
|
Net cash used for financing activities
|
|
|
(461,876
|
)
|
|
|
(1,389,928
|
)
|
|
|
(575,226
|
)
|
|
|
Effect of Exchange Rate Changes on Cash and Equivalents
|
|
|
(89,512
|
)
|
|
|
66,996
|
|
|
|
3,403
|
|
|
|
Cash and Equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) during the year
|
|
|
(84,574
|
)
|
|
|
237,317
|
|
|
|
219,790
|
|
|
Beginning of year
|
|
|
827,524
|
|
|
|
590,207
|
|
|
|
370,417
|
|
|
|
End of year
|
|
$
|
742,950
|
|
|
$
|
827,524
|
|
|
$
|
590,207
|
|
|
|
Cash Paid During the Year for Interest
|
|
$
|
155,188
|
|
|
$
|
132,757
|
|
|
$
|
75,026
|
|
|
|
Cash Paid During the Year for Income Taxes, Net of Refunds
|
|
$
|
619,885
|
|
|
$
|
448,102
|
|
|
$
|
646,647
|
|
|
|
Liabilities Assumed from Acquisitions
|
|
$
|
577,035
|
|
|
$
|
465,303
|
|
|
$
|
448,561
|
|
|
The Notes to Financial Statements are an integral part of this statement. See the Acquisitions note
for information regarding non-cash transactions.
54
2008
Annual Report
Notes to Financial Statements
The Notes to Financial Statements
furnish additional information on items in the financial
statements. The notes have been arranged in the same order as the related items appear in the
statements.
Illinois Tool Works Inc. (the “Company” or “ITW”) is a multinational manufacturer of a diversified
range of industrial products and equipment with approximately 875 operations in 54 countries. The
Company primarily serves the construction, automotive, general industrial and food
institutional/restaurant markets.
Significant accounting principles and policies of the Company are in italics. Certain
reclassifications of prior years’ data have been made to conform to current year reporting.
The preparation of the Company’s financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and the notes to financial statements. Actual results could
differ from those estimates. The significant estimates included in the preparation of the financial
statements are related to inventories, trade receivables, plant and equipment, income taxes,
goodwill and intangible assets, product liability matters, litigation, product warranties,
pensions, other postretirement benefits, environmental matters and stock options.
Consolidation and Translation
—The financial statements
include the Company and substantially all
of its majority-owned subsidiaries. All significant intercompany transactions are eliminated from
the financial statements. Substantially all of the Company’s foreign subsidiaries outside North
America have November 30 fiscal year-ends to facilitate inclusion of their financial statements in
the December 31 consolidated financial statements.
Foreign subsidiaries’ assets and liabilities are translated to U.S. dollars at end-of-period
exchange rates. Revenues and expenses are translated at average rates for the period. Translation
adjustments are reported as a component of accumulated other comprehensive income in stockholders’
equity.
Discontinued
Operations
—The Company periodically reviews its 875
operations for businesses which may no longer be aligned with its
long-term objectives. In August 2008, the Company’s Board of Directors authorized the
divestiture of the Decorative Surfaces segment and Click Commerce industrial software business
which was previously reported in the All Other segment. The Company is actively marketing these
businesses and expects to dispose of both businesses in 2009. These businesses have been classified
as held for sale beginning in the third quarter of 2008.
Previously, in 2006, the Company divested a construction business. In 2007, the Company divested an automotive machinery business and a consumer packaging business. In the fourth
quarter of 2007, the Company classified an automotive components business and a second consumer
packaging business as held for sale. The consumer packaging business was sold in 2008. The Company
is actively marketing the automotive components business and expects to dispose of it in the first
half of 2009.
The consolidated statements of income and the notes to financial statements have been restated to
present the operating results of the held for sale and previously divested businesses as
discontinued operations for 2008, 2007 and 2006.
Results of the discontinued operations for the years ended December 31, 2008, 2007 and 2006 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating revenues
|
|
$
|
1,348,540
|
|
|
$
|
1,407,788
|
|
|
$
|
1,270,707
|
|
|
|
Income (loss) before taxes
|
|
$
|
(11,457
|
)
|
|
$
|
215,169
|
|
|
$
|
231,518
|
|
|
Income tax expense
|
|
|
(52,806
|
)
|
|
|
(57,243
|
)
|
|
|
(80,828
|
)
|
|
|
Income (loss) from discontinued operations
|
|
$
|
(64,263
|
)
|
|
$
|
157,926
|
|
|
$
|
150,690
|
|
|
Income (loss) before taxes in 2008 includes goodwill impairment charges of $132,563,000 related to
the Click Commerce business and a loss on anticipated sale of $64,000,000 related to the Click
Commerce business and the automotive components business held for sale.
Income (loss) before taxes also includes pre-tax gains on disposals of $19,942,000 in 2008,
$33,168,000 in 2007 and $19,120,000 in 2006, related to the completed divestitures of two consumer
packaging, a certain construction and a certain automotive machinery business.
Illinois Tool Works Inc.
55
As of December 31, 2008, the assets and liabilities of the Decorative Surfaces segment, Click
Commerce business and a certain automotive components business were included in assets and
liabilities held for sale. As of December 31, 2007, the Company had recorded the assets and
liabilities of a certain consumer packaging business and a certain automotive business as held for
sale. The total assets and liabilities held for sale as of December 31, 2008 and 2007 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
DECEMBER 31, 2008
|
|
|
DECEMBER 31, 2007
|
|
|
|
Accounts receivable
|
|
|
$162,564
|
|
|
|
$14,790
|
|
|
Inventory
|
|
|
103,891
|
|
|
|
9,566
|
|
|
Net plant and equipment
|
|
|
152,104
|
|
|
|
16,266
|
|
|
Net goodwill and intangibles
|
|
|
127,369
|
|
|
|
100,341
|
|
|
Other
|
|
|
36,846
|
|
|
|
2,566
|
|
|
Loss reserve on assets held for sale
|
|
|
(64,000
|
)
|
|
|
—
|
|
|
|
Total assets held for sale
|
|
|
$518,774
|
|
|
|
$143,529
|
|
|
|
Accounts payable
|
|
|
$42,990
|
|
|
|
$3,903
|
|
|
Accrued liabilities
|
|
|
83,857
|
|
|
|
1,941
|
|
|
Other
|
|
|
73,905
|
|
|
|
—
|
|
|
|
Total liabilities held for sale
|
|
|
$200,752
|
|
|
|
$5,844
|
|
|
Acquisitions
—
The Company accounts for acquisitions under the purchase method, in which assets
acquired and liabilities assumed are recorded at fair value as of the date of acquisition. The
operating results of the acquired companies are included in the Company’s consolidated financial
statements from the date of acquisition.
Acquisitions, individually and in the aggregate, did not
materially affect the Company’s results of operations or financial position. Summarized information
related to acquisitions is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS EXCEPT NUMBER OF ACQUISITIONS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Number of acquisitions
|
|
|
50
|
|
|
|
52
|
|
|
|
53
|
|
|
Net cash paid during the year
|
|
$
|
1,546,982
|
|
|
$
|
812,757
|
|
|
$
|
1,378,708
|
|
|
Value of shares issued for acquisitions
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
162,898
|
|
There were no significant non-cash transactions in 2008 and 2007. The Company’s only significant
non-cash transaction during 2006 related to the exchange of the Company’s common stock as
consideration for an acquisition.
The premium over tangible net assets recorded for acquisitions based on purchase price allocations
during 2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
|
WEIGHTED-
|
|
|
|
|
|
|
WEIGHTED-
|
|
|
|
|
|
|
WEIGHTED-
|
|
|
|
|
|
|
|
AVERAGE
|
|
|
PREMIUM
|
|
|
AVERAGE
|
|
|
PREMIUM
|
|
|
AVERAGE
|
|
|
PREMIUM
|
|
|
IN THOUSANDS EXCEPT FOR WEIGHTED-AVERAGE LIVES (YEARS)
|
|
LIFE
|
|
|
RECORDED
|
|
|
LIFE
|
|
|
RECORDED
|
|
|
LIFE
|
|
|
RECORDED
|
|
|
|
Goodwill
|
|
|
|
|
|
$
|
684,505
|
|
|
|
|
|
|
$
|
395,087
|
|
|
|
|
|
|
$
|
798,489
|
|
|
Amortizable Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer lists and relationships
|
|
|
12.3
|
|
|
|
395,072
|
|
|
|
10.6
|
|
|
|
182,942
|
|
|
|
10.5
|
|
|
|
246,130
|
|
|
Patents and proprietary
technology
|
|
|
12.7
|
|
|
|
103,458
|
|
|
|
8.7
|
|
|
|
64,033
|
|
|
|
9.1
|
|
|
|
75,131
|
|
|
Trademarks and brands
|
|
|
18.1
|
|
|
|
154,298
|
|
|
|
16.8
|
|
|
|
52,771
|
|
|
|
15.4
|
|
|
|
67,940
|
|
|
Software
|
|
|
4.4
|
|
|
|
2,249
|
|
|
|
6.1
|
|
|
|
10,606
|
|
|
|
6.3
|
|
|
|
80,687
|
|
|
Noncompete agreements
|
|
|
3.1
|
|
|
|
23,028
|
|
|
|
3.9
|
|
|
|
12,271
|
|
|
|
4.0
|
|
|
|
20,413
|
|
|
Other
|
|
|
1.2
|
|
|
|
11,703
|
|
|
|
1.1
|
|
|
|
6,391
|
|
|
|
1.3
|
|
|
|
8,407
|
|
|
|
Total Amortizable Intangible Assets
|
|
|
13.1
|
|
|
|
689,808
|
|
|
|
10.6
|
|
|
|
329,014
|
|
|
|
9.9
|
|
|
|
498,708
|
|
|
Indefinite-lived Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks and brands
|
|
|
|
|
|
|
40,386
|
|
|
|
|
|
|
|
28,426
|
|
|
|
|
|
|
|
4,190
|
|
|
|
Total Premium Recorded
|
|
|
|
|
|
$
|
1,414,699
|
|
|
|
|
|
|
$
|
752,527
|
|
|
|
|
|
|
$
|
1,301,387
|
|
|
Of the total goodwill recorded for acquisitions, the Company expects goodwill of $81,293,000 in
2008, $105,843,000 in 2007, and $87,223,000 in 2006 will be tax deductible. The Company anticipates
subsequent purchase accounting adjustments will change the initial amounts recorded for goodwill
and intangible assets for certain 2008 acquisitions, primarily due to the completion of valuations.
In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standards No. 141 (revised 2007), Business Combinations (“SFAS 141R”). SFAS 141R
requires an entity to recognize assets acquired, liabilities assumed, contractual contingencies and
contingent consideration at their fair value on the acquisition date. SFAS 141R also requires that
(1) acquisition-related costs be expensed as incurred; (2) restructuring costs generally be
recognized as a post-acquisition expense; and (3) changes in deferred tax asset valuation
allowances and income tax uncertainties after the measurement period impact income tax expense. The
Company will adopt SFAS 141R on January 1, 2009 and does not anticipate SFAS 141R will materially
affect the Company’s results of operations and financial position.
56
2008 Annual Report
Operating Revenues
are recognized when the risks and rewards of ownership are transferred to the
customer,
which is generally at the time of product shipment. No single customer accounted for more
than 5% of consolidated revenues in 2008, 2007 or 2006.
Research and Development Expenses
are recorded as expense in the year incurred.
These costs were
$210,719,000 in 2008, $195,081,000 in 2007 and $143,377,000 in 2006.
Rental Expense
was $153,518,000 in 2008, $138,484,000 in 2007 and $116,951,000 in 2006. Future
minimum lease payments for the years ending December 31 are as follows:
|
|
|
|
|
|
|
IN THOUSANDS
|
|
|
|
|
|
|
2009
|
|
$
|
137,933
|
|
|
2010
|
|
|
101,408
|
|
|
2011
|
|
|
72,838
|
|
|
2012
|
|
|
49,601
|
|
|
2013
|
|
|
40,425
|
|
|
2014 and future years
|
|
|
77,528
|
|
|
|
|
|
$
|
479,733
|
|
|
Advertising Expenses
are recorded as expense in the year incurred.
These costs were $88,664,000 in
2008, $86,845,000 in 2007 and $71,711,000 in 2006.
Other Income (Expense)
consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Interest income
|
|
$
|
29,089
|
|
|
$
|
19,416
|
|
|
$
|
30,102
|
|
|
Investment income
|
|
|
17,017
|
|
|
|
47,880
|
|
|
|
78,608
|
|
|
Losses on foreign currency transactions
|
|
|
(752
|
)
|
|
|
(11,767
|
)
|
|
|
(9,105
|
)
|
|
German transfer tax settlement
|
|
|
(44,002
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Other, net
|
|
|
4,250
|
|
|
|
2,258
|
|
|
|
(8,549
|
)
|
|
|
|
|
$
|
5,602
|
|
|
$
|
57,787
|
|
|
$
|
91,056
|
|
|
Illinois Tool
Works Inc.
57
Income Taxes—
The Company utilizes the asset and liability method of accounting for income taxes.
Deferred income taxes are determined based on the estimated future tax effects of differences
between the financial and tax bases of assets and liabilities given the provisions of the enacted
tax laws.
The components of the provision for income taxes were as shown
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
U.S. federal income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
301,491
|
|
|
$
|
386,559
|
|
|
$
|
307,298
|
|
|
Deferred
|
|
|
(17,353
|
)
|
|
|
59,831
|
|
|
|
123,436
|
|
|
Benefit of net operating loss and foreign tax credits carryforwards
|
|
|
—
|
|
|
|
(2,212
|
)
|
|
|
(24,755
|
)
|
|
|
|
|
$
|
284,138
|
|
|
$
|
444,178
|
|
|
$
|
405,979
|
|
|
|
Foreign income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
289,822
|
|
|
$
|
229,401
|
|
|
$
|
258,299
|
|
|
Deferred
|
|
|
(11,854
|
)
|
|
|
(4,858
|
)
|
|
|
6,026
|
|
|
Benefit of net operating loss carryforwards
|
|
|
(1,532
|
)
|
|
|
(22,128
|
)
|
|
|
(58,273
|
)
|
|
|
|
|
$
|
276,436
|
|
|
$
|
202,415
|
|
|
$
|
206,052
|
|
|
|
State income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
75,460
|
|
|
$
|
42,082
|
|
|
$
|
39,659
|
|
|
Deferred
|
|
|
(27,934
|
)
|
|
|
4,088
|
|
|
|
(5,018
|
)
|
|
|
|
|
$
|
47,526
|
|
|
$
|
46,170
|
|
|
$
|
34,641
|
|
|
|
|
|
$
|
608,100
|
|
|
$
|
692,763
|
|
|
$
|
646,672
|
|
|
Income from continuing operations before income taxes for domestic and foreign operations was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Domestic
|
|
$
|
1,087,509
|
|
|
$
|
1,513,144
|
|
|
$
|
1,325,845
|
|
|
Foreign
|
|
|
1,103,857
|
|
|
|
891,555
|
|
|
|
887,883
|
|
|
|
|
|
$
|
2,191,366
|
|
|
$
|
2,404,699
|
|
|
$
|
2,213,728
|
|
|
The reconciliation between the U.S. federal statutory tax rate and the effective tax rate was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
U.S. federal statutory tax rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
State income taxes, net of U.S. federal tax benefit
|
|
|
1.5
|
|
|
|
1.3
|
|
|
|
1.0
|
|
|
Differences between U.S. federal statutory and foreign tax rates
|
|
|
(3.3
|
)
|
|
|
(1.8
|
)
|
|
|
(1.2
|
)
|
|
Nontaxable foreign interest income
|
|
|
(3.3
|
)
|
|
|
(2.8
|
)
|
|
|
(2.6
|
)
|
|
Tax effect of foreign dividends
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
0.2
|
|
|
Tax relief for U.S. manufacturers
|
|
|
(1.0
|
)
|
|
|
(0.9
|
)
|
|
|
(0.5
|
)
|
|
Other, net
|
|
|
(1.4
|
)
|
|
|
(2.3
|
)
|
|
|
(2.7
|
)
|
|
|
Effective tax rate
|
|
|
27.7
|
%
|
|
|
28.8
|
%
|
|
|
29.2
|
%
|
|
Deferred U.S. federal income taxes and foreign withholding taxes have not been provided on the
remaining undistributed earnings of certain international subsidiaries of
approximately$4,500,000,000 and $4,000,000,000 as of December 31, 2008 and 2007, respectively, as
these earnings are considered permanently invested.
Upon repatriation of these earnings to the
United States in the form of dividends or otherwise, the Company may be subject to U.S. income
taxes and foreign withholding taxes. The actual U.S. tax cost would depend on income tax laws and
circumstances at the time of distribution. Determination of the related tax liability is not
practicable because of the complexities associated with the hypothetical calculation.
58
2008
Annual Report
The components of deferred income tax assets and liabilities at December 31, 2008 and 2007 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
IN THOUSANDS
|
|
ASSET
|
|
|
LIABILITY
|
|
|
ASSET
|
|
|
LIABILITY
|
|
|
|
Goodwill and intangible assets
|
|
$
|
209,810
|
|
|
$
|
(748,440
|
)
|
|
$
|
157,520
|
|
|
$
|
(532,052
|
)
|
|
Inventory reserves, capitalized tax cost and LIFO inventory
|
|
|
55,105
|
|
|
|
(19,567
|
)
|
|
|
53,268
|
|
|
|
(17,208
|
)
|
|
Investments
|
|
|
13,940
|
|
|
|
(118,047
|
)
|
|
|
18,204
|
|
|
|
(233,839
|
)
|
|
Plant and equipment
|
|
|
30,215
|
|
|
|
(84,364
|
)
|
|
|
22,580
|
|
|
|
(88,092
|
)
|
|
Accrued expenses and reserves
|
|
|
111,420
|
|
|
|
—
|
|
|
|
121,760
|
|
|
|
—
|
|
|
Employee benefit accruals
|
|
|
302,376
|
|
|
|
—
|
|
|
|
282,431
|
|
|
|
—
|
|
|
Foreign tax credit carryforwards
|
|
|
94,653
|
|
|
|
—
|
|
|
|
102,818
|
|
|
|
—
|
|
|
Net operating loss carryforwards
|
|
|
358,592
|
|
|
|
—
|
|
|
|
357,285
|
|
|
|
—
|
|
|
Capital loss carryforwards
|
|
|
52,625
|
|
|
|
—
|
|
|
|
74,586
|
|
|
|
—
|
|
|
Allowances for uncollectible accounts
|
|
|
17,200
|
|
|
|
—
|
|
|
|
14,812
|
|
|
|
—
|
|
|
Pension (assets) liabilities
|
|
|
147,007
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(99,554
|
)
|
|
Other
|
|
|
101,496
|
|
|
|
(33,259
|
)
|
|
|
102,988
|
|
|
|
(29,386
|
)
|
|
|
Gross deferred income tax assets (liabilities)
|
|
|
1,494,439
|
|
|
|
(1,003,677
|
)
|
|
|
1,308,252
|
|
|
|
(1,000,131
|
)
|
|
Valuation allowances
|
|
|
(334,054
|
)
|
|
|
—
|
|
|
|
(318,270
|
)
|
|
|
—
|
|
|
|
Total deferred income tax assets (liabilities)
|
|
$
|
1,160,385
|
|
|
$
|
(1,003,677
|
)
|
|
$
|
989,982
|
|
|
$
|
(1,000,131
|
)
|
|
Valuation allowances are established when it is estimated that it is more likely than not that the
tax benefit of the deferred tax asset will not be realized.
The valuation allowances recorded at
December 31, 2008 and 2007 relate primarily to certain net operating loss carryforwards and capital
loss carryforwards.
At December 31, 2008, the Company had net operating loss carryforwards available to offset future
taxable income in the United States and certain foreign jurisdictions, which expire as follows:
|
|
|
|
|
|
|
IN THOUSANDS
|
|
GROSS NET OPERATING LOSS CARRYFORWARDS
|
|
|
|
2009
|
|
$
|
7,353
|
|
|
2010
|
|
|
6,249
|
|
|
2011
|
|
|
5,677
|
|
|
2012
|
|
|
8,532
|
|
|
2013
|
|
|
16,297
|
|
|
2014
|
|
|
1,193
|
|
|
2015
|
|
|
2,430
|
|
|
2016
|
|
|
5,295
|
|
|
2017
|
|
|
1,319
|
|
|
2018
|
|
|
32,922
|
|
|
2019
|
|
|
13,964
|
|
|
2020
|
|
|
69,723
|
|
|
2021
|
|
|
74,074
|
|
|
2022
|
|
|
22,314
|
|
|
2023
|
|
|
20,455
|
|
|
2024
|
|
|
17,338
|
|
|
2025
|
|
|
9,354
|
|
|
2026
|
|
|
54
|
|
|
2027
|
|
|
1,605
|
|
|
2028
|
|
|
1,418
|
|
|
Do not expire
|
|
|
811,258
|
|
|
|
|
|
$
|
1,128,824
|
|
|
Illinois Tool
Works Inc.
59
On January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes — an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement recognition and
measurement of tax positions taken and expected to be taken in tax returns and provides guidance
related to uncertain tax positions on derecognition, classification, and interest and penalties. As
a result of the implementation of FIN 48, the Company did not recognize any change in its liability for
unrecognized tax benefits.
The
changes in the amount of unrecognized tax benefits during 2008 and
2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Beginning balance
|
|
$
|
773,000
|
|
|
$
|
688,000
|
|
|
Additions based on tax positions related to the current year
|
|
|
67,000
|
|
|
|
55,000
|
|
|
Additions for tax positions of prior years
|
|
|
107,000
|
|
|
|
116,000
|
|
|
Reductions for tax positions of prior years
|
|
|
(66,000
|
)
|
|
|
(86,000
|
)
|
|
Settlements
|
|
|
—
|
|
|
|
(26,000
|
)
|
|
Foreign currency translation
|
|
|
(81,000
|
)
|
|
|
26,000
|
|
|
|
Ending balance
|
|
$
|
800,000
|
|
|
$
|
773,000
|
|
|
Included in the balance at December 31, 2008, are approximately $450,000,000 of tax positions that,
if recognized, would impact the Company’s effective tax rate.
As part of the Australia audit for 2003, the Australian Tax Office is reviewing an intercompany
financing transaction between the U.S. and Australia. In the U.S., the Internal Revenue Service has
completed its audits for the years 2001-2005 and has proposed several adjustments which the Company
is protesting, the most significant of which is related to leveraged leases. The Company has
recorded its best estimate of the exposure for these two audits; however, it is reasonably possible
that the Company will resolve the Australian financing and leveraged lease issues within the next
12 months and that the amount of the Company’s unrecognized tax benefits may decrease by a range of
approximately $197 million up to $295 million.
The Company files numerous consolidated and separate tax returns in the United States Federal
jurisdiction and in many state and foreign jurisdictions. The following table summarizes the open
tax years for the Company’s major jurisdictions:
|
|
|
|
|
|
|
JURISDICTION
|
|
OPEN TAX YEARS
|
|
|
|
United States — Federal
|
|
|
2001-2008
|
|
|
United Kingdom
|
|
|
2000-2008
|
|
|
Germany
|
|
|
2002-2008
|
|
|
France
|
|
|
2000-2008
|
|
|
Australia
|
|
|
2003-2008
|
|
The Company recognizes interest and penalties related to income tax matters in income tax expense.
There were no significant accruals for interest and penalties recorded as of December 31, 2008.
Income from Continuing Operations Per Share
is computed by dividing income from continuing
operations by the weighted-average number of shares outstanding for the period. Income from
continuing operations per diluted share is computed by dividing income from continuing operations
by the weighted-average number of shares assuming dilution for stock options and restricted stock.
Dilutive shares reflect the potential additional shares that would be outstanding if the dilutive
stock options outstanding were exercised and the unvested restricted stock vested during the
period. The computation of income from continuing operations per share was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS EXCEPT PER SHARE AMOUNTS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Income from continuing operations
|
|
$
|
1,583,266
|
|
|
$
|
1,711,936
|
|
|
$
|
1,567,056
|
|
|
|
Income from continuing operations per share—Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
|
|
|
518,609
|
|
|
|
551,549
|
|
|
|
565,632
|
|
|
|
Income from continuing operations per share—Basic
|
|
|
$3.05
|
|
|
|
$3.10
|
|
|
|
$2.77
|
|
|
|
Income from continuing operations per share—Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
|
|
|
518,609
|
|
|
|
551,549
|
|
|
|
565,632
|
|
|
Effect of dilutive stock options and restricted stock
|
|
|
2,604
|
|
|
|
4,481
|
|
|
|
4,260
|
|
|
|
Weighted-average common shares assuming dilution
|
|
|
521,213
|
|
|
|
556,030
|
|
|
|
569,892
|
|
|
|
Income from continuing operations per share—Diluted
|
|
|
$3.04
|
|
|
|
$3.08
|
|
|
|
$2.75
|
|
|
Options that were considered antidilutive were not included in the computation of diluted income
from continuing operations per share.
The antidilutive options outstanding as of December 31, 2008,
2007 and 2006 were 11,729,898, 3,658,862 and 8,172,240, respectively.
Cash and Equivalents
included interest-bearing instruments of $339,901,000 at December 31, 2008 and
$367,824,000 at December 31, 2007.
Interest-bearing instruments have maturities of 90 days or less
and are stated at cost, which approximates market.
60
2008
Annual Report
Trade Receivables
were net of allowances for uncollectible accounts. The changes in the allowances
for uncollectible accounts during 2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Beginning balance
|
|
$
|
(74,816
|
)
|
|
$
|
(61,649
|
)
|
|
$
|
(51,178
|
)
|
|
Provision charged to expense
|
|
|
(15,806
|
)
|
|
|
(5,998
|
)
|
|
|
(8,727
|
)
|
|
Write-offs, net of recoveries
|
|
|
11,247
|
|
|
|
10,156
|
|
|
|
10,465
|
|
|
Acquisitions and divestitures
|
|
|
(9,898
|
)
|
|
|
(12,886
|
)
|
|
|
(8,658
|
)
|
|
Foreign currency translation
|
|
|
9,037
|
|
|
|
(4,929
|
)
|
|
|
(3,452
|
)
|
|
Transfer to assets held for sale
|
|
|
7,883
|
|
|
|
381
|
|
|
|
—
|
|
|
Other
|
|
|
2,185
|
|
|
|
109
|
|
|
|
(99
|
)
|
|
|
Ending balance
|
|
$
|
(70,168
|
)
|
|
$
|
(74,816
|
)
|
|
$
|
(61,649
|
)
|
|
Inventories
at December 31, 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Raw material
|
|
$
|
570,204
|
|
|
$
|
516,914
|
|
|
Work-in-process
|
|
|
163,225
|
|
|
|
182,990
|
|
|
Finished goods
|
|
|
939,746
|
|
|
|
925,916
|
|
|
|
|
|
$
|
1,673,175
|
|
|
$
|
1,625,820
|
|
|
Inventories are stated at the lower of cost or market and include material, labor and factory
overhead. The last-in, first-out (“LIFO”) method is used to determine the cost of the inventories
of approximately half of the U.S. operations.
Inventories priced at LIFO were 23% and 27% of total
inventories as of December 31, 2008 and 2007, respectively.
The first-in, first-out (“FIFO”)
method, which approximates current cost, is used for all other inventories.
If the FIFO method was
used for all inventories, total inventories would have been approximately $133,896,000 and
$124,019,000 higher than reported at December 31, 2008 and 2007, respectively.
Prepaid Expenses and Other Current Assets
as of December 31, 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Income tax refunds receivable
|
|
$
|
142,168
|
|
|
$
|
236,735
|
|
|
Value-added-tax receivables
|
|
|
44,223
|
|
|
|
52,834
|
|
|
Insurance
|
|
|
28,970
|
|
|
|
30,229
|
|
|
Other
|
|
|
152,339
|
|
|
|
144,345
|
|
|
|
|
|
$
|
367,700
|
|
|
$
|
464,143
|
|
|
Plant and Equipment
are stated at cost less accumulated depreciation. Renewals and improvements
that increase the useful life of plant and equipment are capitalized. Maintenance and repairs are
charged to expense as incurred.
Depreciation
was $351,338,000 in 2008, $333,275,000 in 2007 and $291,464,000 in 2006, and was
reflected primarily in cost of revenues. Discontinued operations
depreciation was $16,277,000 in
2008, $30,426,000 in 2007 and $27,898,000 in 2006 and was reflected in income (loss) from
discontinued operations.
Depreciation of plant and equipment for financial reporting purposes is
computed on an accelerated basis for U.S. businesses and on a straight-line basis for a majority of
the international businesses.
The range of useful lives used to depreciate plant and equipment is as follows:
|
|
|
|
|
|
|
Buildings and improvements
|
|
10—50 years
|
|
Machinery and equipment
|
|
3—20 years
|
|
Equipment leased to others
|
|
Term of lease
|
Investments
as of December 31, 2008 and 2007 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Leases of equipment
|
|
$
|
265,278
|
|
|
$
|
278,549
|
|
|
Affordable housing limited partnerships
|
|
|
79,161
|
|
|
|
97,022
|
|
|
Venture capital limited partnership
|
|
|
69,053
|
|
|
|
81,462
|
|
|
Properties held for sale
|
|
|
28,876
|
|
|
|
28,608
|
|
|
Property developments
|
|
|
23,526
|
|
|
|
21,926
|
|
|
|
|
|
$
|
465,894
|
|
|
$
|
507,567
|
|
|
Illinois Tool
Works Inc.
61
Leases of Equipment
The components of the investment in leases of equipment at December 31, 2008 and 2007 were as shown
below:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Leveraged, direct financing and sales-type leases:
|
|
|
|
|
|
|
|
|
|
Gross lease contracts receivable, net of nonrecourse debt service
|
|
$
|
145,842
|
|
|
$
|
146,109
|
|
|
Estimated residual value of leased assets
|
|
|
247,512
|
|
|
|
248,119
|
|
|
Unearned income
|
|
|
(139,020
|
)
|
|
|
(127,589
|
)
|
|
|
|
|
|
254,334
|
|
|
|
266,639
|
|
|
Equipment under operating leases
|
|
|
10,944
|
|
|
|
11,910
|
|
|
|
|
|
$
|
265,278
|
|
|
$
|
278,549
|
|
|
Deferred tax liabilities related to leveraged and direct financing leases were $110,079,000 and
$226,549,000 at December 31, 2008 and 2007, respectively.
The investment in leases of equipment at December 31, 2008 and 2007 relates to the following types
of equipment:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Telecommunications
|
|
$
|
168,252
|
|
|
$
|
174,212
|
|
|
Air traffic control
|
|
|
58,997
|
|
|
|
64,540
|
|
|
Aircraft
|
|
|
37,603
|
|
|
|
39,296
|
|
|
Manufacturing
|
|
|
426
|
|
|
|
501
|
|
|
|
|
|
$
|
265,278
|
|
|
$
|
278,549
|
|
|
In 2003, the Company entered into a leveraged lease transaction related to air traffic control
equipment in Australia with a cash investment of $48,763,000. In 2002, the Company entered into
leveraged leasing transactions related to mobile telecommunications equipment with two major
European telecommunications companies with a cash investment of $144,676,000. Under the terms of
the telecommunications and air traffic control lease transactions, the lessees have made upfront
payments to third-party financial institutions that are acting as payment undertakers. These
payment undertakers are obligated to make the required scheduled payments directly to the
nonrecourse debt holders and to the lessors, including the Company. In the event of default by the
lessees, the Company has the right to recover its net investment from the payment undertakers. In
addition, the lessees are required to purchase residual value insurance from a creditworthy third
party at a date near the end of the lease term.
The expense from leveraged, direct financing and sales-type leases was $10,158,000 in 2008. The
income from leveraged, direct financing and sales-type leases was $8,280,000 and $2,567,000 for the
years ended December 31, 2007 and 2006, respectively.
Unearned income related to leveraged leases is recognized as lease income
over the life of the lease based on the effective yield of the lease.
The Company adjusts recognition of lease income on its leveraged
leases when there is a change in assumptions affecting total income
or the timing of cash flows associated with the lease. The residual values of leased
assets are estimated at the inception of the lease based on market appraisals and reviewed for
impairment at least annually.
On January 1, 2007, the Company adopted FASB staff position No. FAS 13-2, Accounting for a Change
or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged
Lease Transaction (“FSP 13-2”). FSP 13-2 addresses how a change or projected change in the timing
of cash flows relating to income taxes generated by a leveraged lease transaction affects the
accounting by a lessor for that lease. Upon adoption of FSP 13-2, the Company recorded an after-tax
charge to equity of $22,559,000, resulting from a change in the timing of expected cash flows
related to income tax benefits of the Company’s leveraged lease transactions.
Other Investments
The Company has entered into several affordable housing limited partnerships primarily to receive
tax benefits in the form of tax credits and tax deductions from operating losses.
These affordable
housing investments are accounted for using the effective yield method, in which the investment is
amortized to income tax expense as the tax benefits are received. The tax credits are credited to
income tax expense as they are allocated to the Company.
The Company entered into a venture capital limited partnership in 2001 that invests primarily in
late-stage venture capital opportunities. The Company has a 25% limited partnership interest and
accounts for this investment using the equity method, whereby the Company recognizes its
proportionate share of the partnership’s income or loss. The partnership’s financial statements are
prepared on a mark-to-market basis.
The Company has invested in property developments with a residential construction developer through
partnerships in which the Company has a 50% interest.
These partnership investments are accounted
for using the equity method, whereby the Company recognizes its proportionate share of the
partnerships’ income or loss.
The Company neither bears the majority of the risk of loss nor enjoys the majority of any residual
returns relative to the property development investments and affordable housing investments,
therefore it does not consolidate those entities.
The Company’s maximum exposure to loss related to
the property development investments and affordable housing investments is $31,151,000 and
$79,161,000, respectively, as of December 31, 2008.
62
2008
Annual Report
Cash Flows
Cash flows related to investments during 2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Cash used to purchase investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affordable housing limited partnerships
|
|
$
|
(16,078
|
)
|
|
$
|
(16,789
|
)
|
|
$
|
(17,814
|
)
|
|
Venture capital limited partnership
|
|
|
(1,566
|
)
|
|
|
(8,252
|
)
|
|
|
(1,926
|
)
|
|
Property developments
|
|
|
(1,739
|
)
|
|
|
(3,414
|
)
|
|
|
(4,885
|
)
|
|
Other
|
|
|
(200
|
)
|
|
|
(279
|
)
|
|
|
(722
|
)
|
|
|
|
|
$
|
(19,583
|
)
|
|
$
|
(28,734
|
)
|
|
$
|
(25,347
|
)
|
|
|
Cash proceeds from investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Venture capital limited partnership
|
|
$
|
12,723
|
|
|
$
|
44,792
|
|
|
$
|
25,085
|
|
|
Leases of equipment
|
|
|
5,746
|
|
|
|
7,085
|
|
|
|
4,467
|
|
|
Properties held for sale
|
|
|
4,933
|
|
|
|
5,149
|
|
|
|
1,698
|
|
|
Affordable housing limited partnerships
|
|
|
2,552
|
|
|
|
—
|
|
|
|
—
|
|
|
Property developments
|
|
|
972
|
|
|
|
2,506
|
|
|
|
2,073
|
|
|
Prepaid forward contract
|
|
|
—
|
|
|
|
31,629
|
|
|
|
—
|
|
|
Mortgage investments
|
|
|
—
|
|
|
|
—
|
|
|
|
333,976
|
|
|
Other
|
|
|
6
|
|
|
|
23
|
|
|
|
66
|
|
|
|
|
|
$
|
26,932
|
|
|
$
|
91,184
|
|
|
$
|
367,365
|
|
|
Goodwill and Intangible Assets
—Goodwill represents the excess cost over fair value of the net
assets of purchased businesses.
The Company does not amortize goodwill and intangible assets that
have indefinite lives. In the first quarter of each year, the Company performs an annual impairment
assessment of goodwill and intangible assets with indefinite lives based on the fair value of the
related reporting unit or intangible asset.
When performing its annual impairment assessment, the Company compares the fair value of each
of its 60 reporting units to its carrying value. Fair values are determined primarily by discounting
estimated future cash flows at an estimated cost of capital of 10%. Estimated future cash flows are
based either on current operating cash flows or on a detailed cash flow forecast prepared by the
relevant reporting unit. When the discounted cash flow method is not solely representative of
fair value, the Company may also employ additional valuation techniques, such as market
comparables. If the fair value of a reporting unit is less than its carrying value, an
impairment loss is recorded for the difference between the implied fair value and carrying value of
the reporting unit’s goodwill.
Amortization and impairment of goodwill and other intangible assets for the years ended December
31, 2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Goodwill:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
|
|
$
|
137
|
|
|
$
|
988
|
|
|
$
|
14,793
|
|
|
Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
183,873
|
|
|
|
144,842
|
|
|
|
103,498
|
|
|
Impairment
|
|
|
1,438
|
|
|
|
1,166
|
|
|
|
2,985
|
|
|
|
|
|
$
|
185,448
|
|
|
$
|
146,996
|
|
|
$
|
121,276
|
|
|
Income (loss) from discontinued operations included goodwill impairment charges of $132,563,000 in
2008 and amortization of $6,281,000 in 2008, $14,047,000 in 2007 and $3,268,000 in 2006.
The Company performed its annual impairment testing of its goodwill and intangible assets, which
resulted in immaterial impairment charges for continuing operations in 2008 and 2007. In 2006, the
Company recorded goodwill impairment charges of $14,793,000, which were primarily related to a U.S.
building components joist business, a Canadian stretch packaging equipment business, a European
food equipment business, a U.S. thermal transfer ribbon business and an Asian construction
business, and resulted from lower estimated future cash flows than previously expected. Also in
2006, intangible asset impairments of $2,985,000 were recorded to reduce to the estimated fair
value the carrying value of trademarks, patents and customer-related intangible assets primarily
related to a U.S. welding components business in the Power Systems & Electronics segment and a U.S.
contamination control business in the All Other segment.
Illinois Tool Works Inc.
63
The changes in the carrying amount of goodwill by segment for the years ended December 31, 2008 and
2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
POWER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIAL
|
|
|
SYSTEMS &
|
|
|
TRANSPOR-
|
|
|
FOOD
|
|
|
CONSTRUCTION
|
|
|
DECORATIVE
|
|
|
POLYMERS
|
|
|
ALL
|
|
|
|
|
|
IN THOUSANDS
|
|
PACKAGING
|
|
|
ELECTRONICS
|
|
|
TATION
|
|
|
EQUIPMENT
|
|
|
PRODUCTS
|
|
|
SURFACES
|
|
|
& FLUIDS
|
|
|
OTHER
|
|
|
TOTAL
|
|
|
|
Balance Dec 31, 2006
|
|
$
|
654,790
|
|
|
$
|
361,515
|
|
|
$
|
417,040
|
|
|
$
|
88,778
|
|
|
$
|
499,791
|
|
|
$
|
12,008
|
|
|
$
|
441,730
|
|
|
$
|
1,549,401
|
|
|
$
|
4,025,053
|
|
|
2007 activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
&
divestitures
|
|
|
14,992
|
|
|
|
14,804
|
|
|
|
44,055
|
|
|
|
75,609
|
|
|
|
26,818
|
|
|
|
2,311
|
|
|
|
84,348
|
|
|
|
17,008
|
|
|
|
279,945
|
|
|
Impairment
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
(107
|
)
|
|
|
—
|
|
|
|
(308
|
)
|
|
|
—
|
|
|
|
(573
|
)
|
|
|
—
|
|
|
|
(988
|
)
|
|
Foreign currency
translation
|
|
|
41,662
|
|
|
|
11,604
|
|
|
|
22,629
|
|
|
|
9,979
|
|
|
|
28,065
|
|
|
|
1,459
|
|
|
|
17,419
|
|
|
|
50,253
|
|
|
|
183,070
|
|
|
Transfer to assets
held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(99,915
|
)
|
|
|
(99,915
|
)
|
|
|
Balance Dec 31, 2007
|
|
|
711,444
|
|
|
|
387,923
|
|
|
|
483,617
|
|
|
|
174,366
|
|
|
|
554,366
|
|
|
|
15,778
|
|
|
|
542,924
|
|
|
|
1,516,747
|
|
|
|
4,387,165
|
|
|
2008 activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions &
divestitures
|
|
|
32,699
|
|
|
|
27,256
|
|
|
|
138,162
|
|
|
|
39,693
|
|
|
|
10,332
|
|
|
|
—
|
|
|
|
302,739
|
|
|
|
202,568
|
|
|
|
753,449
|
|
|
Impairment
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(132,700
|
)
|
|
|
(132,700
|
)
|
|
Foreign currency
translation
|
|
|
(72,698
|
)
|
|
|
(22,134
|
)
|
|
|
(47,667
|
)
|
|
|
(21,004
|
)
|
|
|
(60,228
|
)
|
|
|
(1,135
|
)
|
|
|
(84,490
|
)
|
|
|
(103,222
|
)
|
|
|
(412,578
|
)
|
|
Transfer to assets
held for sale
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(14,643
|
)
|
|
|
—
|
|
|
|
(76,408
|
)
|
|
|
(91,051
|
)
|
|
Intersegment
goodwill transfers
|
|
|
—
|
|
|
|
—
|
|
|
|
(23,083
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,083
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Balance Dec 31, 2008
|
|
$
|
671,445
|
|
|
$
|
393,045
|
|
|
$
|
551,029
|
|
|
$
|
193,055
|
|
|
$
|
504,470
|
|
|
$
|
—
|
|
|
$
|
784,256
|
|
|
$
|
1,406,985
|
|
|
$
|
4,504,285
|
|
|
Intangible assets as of December 31, 2008 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED
|
|
|
|
|
|
|
|
|
|
ACCUMULATED
|
|
|
|
|
IN THOUSANDS
|
|
COST
|
|
|
AMORTIZATION
|
|
NET
|
|
|
COST
|
|
|
AMORTIZATION
|
|
NET
|
|
|
|
Amortizable Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer lists and relationships
|
|
$
|
1,012,487
|
|
|
$
|
(200,116
|
)
|
|
$
|
812,371
|
|
|
$
|
676,672
|
|
|
$
|
(127,681
|
)
|
|
$
|
548,991
|
|
|
Patents and proprietary technology
|
|
|
403,058
|
|
|
|
(137,748
|
)
|
|
|
265,310
|
|
|
|
323,830
|
|
|
|
(106,777
|
)
|
|
|
217,053
|
|
|
Trademarks and brands
|
|
|
400,945
|
|
|
|
(60,210
|
)
|
|
|
340,735
|
|
|
|
247,452
|
|
|
|
(42,606
|
)
|
|
|
204,846
|
|
|
Software
|
|
|
184,688
|
|
|
|
(115,747
|
)
|
|
|
68,941
|
|
|
|
204,952
|
|
|
|
(96,753
|
)
|
|
|
108,199
|
|
|
Noncompete agreements
|
|
|
142,194
|
|
|
|
(96,362
|
)
|
|
|
45,832
|
|
|
|
122,651
|
|
|
|
(85,966
|
)
|
|
|
36,685
|
|
|
Other
|
|
|
118,036
|
|
|
|
(78,371
|
)
|
|
|
39,665
|
|
|
|
76,856
|
|
|
|
(70,256
|
)
|
|
|
6,600
|
|
|
|
Total Amortizable Intangible Assets
|
|
|
2,261,408
|
|
|
|
(688,554
|
)
|
|
|
1,572,854
|
|
|
|
1,652,413
|
|
|
|
(530,039
|
)
|
|
|
1,122,374
|
|
|
Indefinite-lived Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks and brands
|
|
|
201,116
|
|
|
|
—
|
|
|
|
201,116
|
|
|
|
173,802
|
|
|
|
—
|
|
|
|
173,802
|
|
|
|
Total Intangible Assets
|
|
$
|
2,462,524
|
|
|
$
|
(688,554
|
)
|
|
$
|
1,773,970
|
|
|
$
|
1,826,215
|
|
|
$
|
(530,039
|
)
|
|
$
|
1,296,176
|
|
|
Amortizable intangible assets are being amortized primarily on a straight-line basis over their
estimated useful lives of 3 to 20 years.
The estimated amortization expense of intangible assets for the future years ending December 31 is
as follows:
|
|
|
|
|
|
|
IN THOUSANDS
|
|
|
|
|
|
|
2009
|
|
|
$197,300
|
|
|
2010
|
|
|
186,200
|
|
|
2011
|
|
|
175,300
|
|
|
2012
|
|
|
164,600
|
|
|
2013
|
|
|
146,900
|
|
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value
Measurements (“SFAS 157”). SFAS 157 defines fair value and provides guidance for measuring fair
value and the necessary disclosures. This standard does not require any new fair value
measurements, but rather applies to all other accounting pronouncements that require or permit fair
value measurements. In February 2008, the FASB issued a FASB Staff Position (“FSP”) on SFAS 157
that permits a one year delay of the effective date for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value on a recurring basis. The
partial adoption of this statement did not have a material impact on the Company’s financial
position or results of operations. The Company will adopt the remaining provisions of SFAS 157 on
January 1, 2009 and is currently evaluating this statement to determine its effect, if any, on the
Company’s results of operations and financial position.
Other Assets
as of December 31, 2008 and 2007 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Cash surrender value of life insurance policies
|
|
$
|
313,028
|
|
|
$
|
331,524
|
|
|
Customer tooling
|
|
|
56,331
|
|
|
|
57,787
|
|
|
Noncurrent receivables
|
|
|
39,867
|
|
|
|
35,182
|
|
|
Prepaid pension assets
|
|
|
9,909
|
|
|
|
404,791
|
|
|
Other
|
|
|
81,176
|
|
|
|
84,589
|
|
|
|
|
|
$
|
500,311
|
|
|
$
|
913,873
|
|
|
64
2008 Annual Report
Retirement Plans and Postretirement Benefits
—The Company has both funded and unfunded defined
benefit pension plans. The U.S. primary plan covers a substantial portion of its U.S. employees
and provides benefits based on years of service and final average salary. Beginning January 1,
2007, the U.S. primary defined benefit plan was closed to new participants. Newly hired employees
and employees from acquired businesses that are not participating in this plan are eligible for
additional Company contributions under the existing defined contribution retirement plan.
The Company also has other postretirement benefit plans covering the majority of its U.S.
employees. The primary postretirement health care plan is contributory with the participants’
contributions adjusted annually. The postretirement life insurance plans are noncontributory.
The Company has various defined benefit pension plans in foreign countries, predominantly the
United Kingdom, Germany, Canada and Australia.
On
December 31, 2006, the Company adopted SFAS No. 158,
Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of
FASB Statements No. 87, 88, 106 and 132(R) (“SFAS 158”). This statement requires employers to
recognize the overfunded or underfunded status of defined benefit pension and postretirement plans
as an asset or liability in its statement of financial position and previously unrecognized changes
in that funded status through accumulated other comprehensive income. The Company recorded an
after-tax charge to accumulated other comprehensive income of $180,037,000 in 2006 to recognize the
funded status of its benefit plans.
On January 1, 2008, the Company adopted the measurement date provisions of SFAS 158, which required
the Company to change its measurement date to correspond with the Company’s fiscal year end. The
Company previously used a September 30 measurement date. As allowed under SFAS 158, the Company
elected to remeasure its plan assets and benefit obligation as of the beginning of the fiscal year.
Upon adoption, the Company recorded an after-tax charge of $12,788,000 to beginning retained
earnings and an after-tax gain to accumulated other comprehensive income of $3,573,000 related to
the three months ended December 31, 2007.
Summarized information regarding the Company’s significant defined benefit pension and
postretirement health care and life insurance benefit plans related to both continuing and
discontinued operations was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSION
|
|
|
OTHER POSTRETIREMENT BENEFITS
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
110,381
|
|
|
$
|
115,009
|
|
|
$
|
107,335
|
|
|
$
|
14,340
|
|
|
$
|
14,957
|
|
|
$
|
16,747
|
|
|
Interest cost
|
|
|
119,436
|
|
|
|
106,670
|
|
|
|
97,044
|
|
|
|
32,615
|
|
|
|
32,133
|
|
|
|
32,330
|
|
|
Expected return on plan assets
|
|
|
(167,391
|
)
|
|
|
(156,058
|
)
|
|
|
(137,866
|
)
|
|
|
(15,391
|
)
|
|
|
(11,594
|
)
|
|
|
(7,982
|
)
|
|
Amortization of actuarial (gain) loss
|
|
|
2,543
|
|
|
|
20,146
|
|
|
|
25,036
|
|
|
|
(914
|
)
|
|
|
1,989
|
|
|
|
21,126
|
|
|
Amortization of prior service (income) cost
|
|
|
(2,420
|
)
|
|
|
(2,382
|
)
|
|
|
(2,170
|
)
|
|
|
6,261
|
|
|
|
6,261
|
|
|
|
6,269
|
|
|
Amortization of transition amount
|
|
|
92
|
|
|
|
15
|
|
|
|
64
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Settlement/curtailment (income) loss
|
|
|
13,226
|
|
|
|
5,766
|
|
|
|
2,624
|
|
|
|
(1,929
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
Net periodic benefit cost
|
|
$
|
75,867
|
|
|
$
|
89,166
|
|
|
$
|
92,067
|
|
|
$
|
34,982
|
|
|
$
|
43,746
|
|
|
$
|
68,490
|
|
|
Amounts were included in the statement of income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSION
|
|
|
OTHER POSTRETIREMENT BENEFITS
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Income from continuing operations
|
|
$
|
56,846
|
|
|
$
|
82,399
|
|
|
$
|
84,695
|
|
|
$
|
30,390
|
|
|
$
|
38,077
|
|
|
$
|
59,785
|
|
|
Income (loss) from discontinued operations
|
|
|
19,021
|
|
|
|
6,767
|
|
|
|
7,372
|
|
|
|
4,592
|
|
|
|
5,669
|
|
|
|
8,705
|
|
|
|
Total
|
|
$
|
75,867
|
|
|
$
|
89,166
|
|
|
$
|
92,067
|
|
|
$
|
34,982
|
|
|
$
|
43,746
|
|
|
$
|
68,490
|
|
|
Illinois Tool Works Inc.
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSION
|
|
|
OTHER POSTRETIREMENT BENEFITS
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
Change in benefit obligation as of December 31, 2008 and September 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of period
|
|
$
|
2,077,660
|
|
|
$
|
2,027,636
|
|
|
$
|
514,146
|
|
|
$
|
557,344
|
|
|
Service cost
|
|
|
110,381
|
|
|
|
115,009
|
|
|
|
14,340
|
|
|
|
14,957
|
|
|
Interest cost
|
|
|
119,436
|
|
|
|
106,670
|
|
|
|
32,615
|
|
|
|
32,133
|
|
|
Plan participants’ contributions
|
|
|
7,307
|
|
|
|
7,875
|
|
|
|
14,945
|
|
|
|
16,039
|
|
|
Amendments
|
|
|
949
|
|
|
|
(67
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Actuarial gain
|
|
|
(123,608
|
)
|
|
|
(85,300
|
)
|
|
|
(37,259
|
)
|
|
|
(60,824
|
)
|
|
Acquisitions
|
|
|
20,601
|
|
|
|
16,314
|
|
|
|
—
|
|
|
|
—
|
|
|
Benefits paid
|
|
|
(148,868
|
)
|
|
|
(162,475
|
)
|
|
|
(54,947
|
)
|
|
|
(45,380
|
)
|
|
Medicare subsidy received
|
|
|
—
|
|
|
|
—
|
|
|
|
3,342
|
|
|
|
3,486
|
|
|
Liabilities from other plans
|
|
|
6,026
|
|
|
|
4,776
|
|
|
|
8,119
|
|
|
|
—
|
|
|
Adoption of SFAS 158 measurement date provision
|
|
|
(16,118
|
)
|
|
|
—
|
|
|
|
(10,392
|
)
|
|
|
—
|
|
|
Settlement/curtailment
loss (gain)
|
|
|
12,256
|
|
|
|
(301
|
)
|
|
|
1,110
|
|
|
|
(3,609
|
)
|
|
Foreign currency translation
|
|
|
(153,360
|
)
|
|
|
47,523
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Benefit obligation at end of period
|
|
$
|
1,912,662
|
|
|
$
|
2,077,660
|
|
|
$
|
486,019
|
|
|
$
|
514,146
|
|
|
|
Change in plan assets as of December 31, 2008 and September 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of period
|
|
$
|
2,261,930
|
|
|
$
|
1,986,416
|
|
|
$
|
194,449
|
|
|
$
|
149,240
|
|
|
Actual return on plan assets
|
|
|
(597,295
|
)
|
|
|
261,140
|
|
|
|
(57,620
|
)
|
|
|
16,340
|
|
|
Company contributions
|
|
|
41,627
|
|
|
|
132,870
|
|
|
|
78,532
|
|
|
|
58,210
|
|
|
Plan participants’ contributions
|
|
|
7,307
|
|
|
|
7,875
|
|
|
|
14,945
|
|
|
|
16,039
|
|
|
Acquisitions
|
|
|
19,893
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Benefits paid
|
|
|
(148,868
|
)
|
|
|
(162,475
|
)
|
|
|
(54,947
|
)
|
|
|
(45,380
|
)
|
|
Assets from other plans
|
|
|
4,222
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Adoption of SFAS 158 measurement date provision
|
|
|
(26,492
|
)
|
|
|
—
|
|
|
|
19,094
|
|
|
|
—
|
|
|
Foreign currency translation
|
|
|
(139,846
|
)
|
|
|
36,104
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Fair value of plan assets at end of period
|
|
$
|
1,422,478
|
|
|
$
|
2,261,930
|
|
|
$
|
194,453
|
|
|
$
|
194,449
|
|
|
|
Funded status
|
|
$
|
(490,184
|
)
|
|
$
|
184,270
|
|
|
$
|
(291,566
|
)
|
|
$
|
(319,697
|
)
|
|
Contributions after measurement date
|
|
|
—
|
|
|
|
3,443
|
|
|
|
—
|
|
|
|
29,731
|
|
|
Other immaterial plans
|
|
|
(17,385
|
)
|
|
|
(16,028
|
)
|
|
|
(4,545
|
)
|
|
|
(7,994
|
)
|
|
|
Net asset (liability) at end of year
|
|
$
|
(507,569
|
)
|
|
$
|
171,685
|
|
|
$
|
(296,111
|
)
|
|
$
|
(297,960
|
)
|
|
|
The amounts recognized in the statement of financial position as of
December 31 consisted of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
$
|
9,909
|
|
|
$
|
404,791
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Accrued expenses
|
|
|
(18,209
|
)
|
|
|
(16,299
|
)
|
|
|
(10,287
|
)
|
|
|
(11,411
|
)
|
|
Liabilities held for sale
|
|
|
(25,123
|
)
|
|
|
—
|
|
|
|
(439
|
)
|
|
|
—
|
|
|
Other noncurrent liabilities
|
|
|
(474,146
|
)
|
|
|
(216,807
|
)
|
|
|
(285,385
|
)
|
|
|
(286,549
|
)
|
|
|
Net asset (liability) at end of year
|
|
$
|
(507,569
|
)
|
|
$
|
171,685
|
|
|
$
|
(296,111
|
)
|
|
$
|
(297,960
|
)
|
|
|
The pre-tax amounts recognized in accumulated other comprehensive income
consisted of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (gain)
|
|
$
|
706,520
|
|
|
$
|
66,576
|
|
|
$
|
(5,598
|
)
|
|
$
|
(42,512
|
)
|
|
Prior service cost
|
|
|
5,353
|
|
|
|
1,166
|
|
|
|
24,160
|
|
|
|
32,527
|
|
|
Net transition obligation
|
|
|
2,474
|
|
|
|
2,352
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
$
|
714,347
|
|
|
$
|
70,094
|
|
|
$
|
18,562
|
|
|
$
|
(9,985
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated benefit obligation for all
significant
defined benefit pension plans
|
|
$
|
1,672,185
|
|
|
$
|
1,798,993
|
|
|
|
|
|
|
|
|
|
|
|
Plans with accumulated benefit obligation in
excess of plan assets as of December 31, 2008
and September 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation
|
|
$
|
1,521,757
|
|
|
$
|
251,569
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated benefit obligation
|
|
$
|
1,354,777
|
|
|
$
|
230,736
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets
|
|
$
|
1,035,360
|
|
|
$
|
38,920
|
|
|
|
|
|
|
|
|
|
|
66
2008 Annual Report
Assumptions
The weighted-average assumptions used in the valuations of pension and other postretirement
benefits were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSION
|
|
|
OTHER POSTRETIREMENT BENEFITS
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Assumptions used to determine benefit obligations at December 31,
2008 and September 30, 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
6.59
|
%
|
|
|
6.02
|
%
|
|
|
5.50
|
%
|
|
|
6.50
|
%
|
|
|
6.50
|
%
|
|
|
5.95
|
%
|
|
Rate of compensation increases
|
|
|
4.19
|
|
|
|
4.35
|
|
|
|
4.26
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Assumptions used to determine net cost for years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
6.18
|
%
|
|
|
5.50
|
%
|
|
|
5.30
|
%
|
|
|
6.75
|
%
|
|
|
5.95
|
%
|
|
|
5.50
|
%
|
|
Expected return on plan assets
|
|
|
8.32
|
|
|
|
8.35
|
|
|
|
8.33
|
|
|
|
7.00
|
|
|
|
7.00
|
|
|
|
7.00
|
|
|
Rate of compensation increases
|
|
|
4.35
|
|
|
|
4.26
|
|
|
|
4.20
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
The expected long-term rate of return for pension plans was developed using historical returns
while factoring in current market conditions such as inflation, interest rates and equity
performance. The expected long-term rate of return for the primary postretirement health care plan
was developed from similar factors as the pension plans, less factors for insurance costs and
mortality charges.
Assumed health care cost trend rates have an effect on the amounts reported for the postretirement
health care benefit plans. The assumed health care cost trend rates used to determine the
postretirement benefit obligation at December 31, 2008 and September 30, 2007 and 2006 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Health care cost trend rate assumed for the next year
|
|
|
8.71
|
%
|
|
|
10.40
|
%
|
|
|
11.00
|
%
|
|
Ultimate trend rate
|
|
|
5.00
|
%
|
|
|
5.00
|
%
|
|
|
5.00
|
%
|
|
Year that the rate reaches the ultimate trend rate
|
|
|
2016
|
|
|
|
2014
|
|
|
|
2014
|
|
A one-percentage-point change in assumed health care cost trend rates would have the following
effects:
|
|
|
|
|
|
|
|
|
|
|
|
|
1-PERCENTAGE-
|
|
|
1-PERCENTAGE-
|
|
|
IN THOUSANDS
|
|
POINT INCREASE
|
|
|
POINT DECREASE
|
|
|
|
Effect on total of service and interest cost components for 2008
|
|
|
$ 1,460
|
|
|
|
$ (1,643
|
)
|
|
Effect on postretirement benefit obligation at December 31, 2008
|
|
|
$17,392
|
|
|
|
$(16,962
|
)
|
Plan Assets
The target asset allocation and weighted-average asset allocations for the Company’s significant
pension plans at December 31, 2008 and September 30, 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERCENTAGE OF PLAN ASSETS
|
|
|
|
|
|
|
ASSET CATEGORY
|
|
TARGET ALLOCATION
|
|
|
DECEMBER 31, 2008
|
|
|
SEPTEMBER 30, 2007
|
|
|
|
Equity securities
|
|
|
60 - 75
|
%
|
|
|
59
|
%
|
|
|
67
|
%
|
|
Debt securities
|
|
|
20 - 35
|
|
|
|
33
|
|
|
|
28
|
|
|
Real estate
|
|
|
0 - 1
|
|
|
|
2
|
|
|
|
1
|
|
|
Other
|
|
|
0 - 10
|
|
|
|
6
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
The Company’s overall investment strategy for the assets in the pension funds is to achieve a
balance between the goals of growing plan assets and keeping risk at a reasonable level over a
long-term investment horizon. In order to reduce unnecessary risk, the pension funds are
diversified across several asset classes, securities and investment managers with a focus on total
return. Additionally, the Company does not use derivatives for the purpose of speculation,
leverage, circumventing investment guidelines or taking risks that are inconsistent with specified
guidelines.
The assets in the Company’s primary postretirement health care plan are invested in life insurance
policies. The Company’s overall investment strategy for the assets in the postretirement health
care fund is to invest in assets that provide a reasonable rate of return while preserving capital
and are exempt from U.S. federal income taxes.
Illinois Tool Works Inc.
67
Cash Flows
The Company generally funds its pension plans to the extent such contributions are tax deductible.
The Company expects to contribute $37,800,000 to its pension plans and $37,700,000 to its other
postretirement benefit plans in 2009. The Company has not determined the amount, if any, of
voluntary contributions to its U.S. primary pension plan.
The Company’s portion of the benefit payments that are expected to be paid during the years ending
December 31 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
|
|
|
|
|
|
|
|
|
POSTRETIREMENT
|
|
|
IN THOUSANDS
|
|
PENSION BENEFITS
|
|
|
BENEFITS
|
|
|
|
2009
|
|
|
$ 177,852
|
|
|
|
$ 37,723
|
|
|
2010
|
|
|
181,103
|
|
|
|
39,591
|
|
|
2011
|
|
|
186,951
|
|
|
|
41,687
|
|
|
2012
|
|
|
191,569
|
|
|
|
42,964
|
|
|
2013
|
|
|
198,708
|
|
|
|
42,092
|
|
|
Years 2014-2018
|
|
|
1,032,033
|
|
|
|
233,582
|
|
In addition to the above pension benefits, the Company sponsors defined contribution retirement
plans covering the majority of its U.S. employees. The Company’s expense for these plans was
$66,700,000 in 2008, $60,100,000 in 2007 and $44,698,000 in 2006.
Short-Term Debt
as of December 31, 2008 and 2007 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Bank overdrafts
|
|
$
|
53,592
|
|
|
$
|
37,992
|
|
|
Commercial paper
|
|
|
1,820,423
|
|
|
|
200,977
|
|
|
Current maturities of long-term debt
|
|
|
509,432
|
|
|
|
158,590
|
|
|
Other borrowings
|
|
|
50,035
|
|
|
|
12,953
|
|
|
|
|
|
$
|
2,433,482
|
|
|
$
|
410,512
|
|
|
Commercial paper is issued at a discount and generally matures 30 to 90 days from the date of
issuance. The weighted-average interest rate on commercial paper was 1.4% at December 31, 2008 and
4.1% at December 31, 2007.
The weighted-average interest rate on other borrowings was 1.7% at December 31, 2008 and 2.2% at
December 31, 2007.
In June 2008, the Company entered into a $1,500,000,000 Line of Credit Agreement with a termination
date of June 12, 2009. In October 2008, the Company amended the Line of Credit Agreement in order
to increase the line of credit to $2,500,000,000. No amounts were outstanding under this facility
at December 31, 2008.
As of December 31, 2008, the Company has unused capacity of approximately $325,000,000 under
international debt facilities.
Accrued Expenses
as of December 31, 2008 and 2007 consisted of accruals for:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Compensation and employee benefits
|
|
$
|
452,798
|
|
|
$
|
515,069
|
|
|
Deferred revenue and customer deposits
|
|
|
215,226
|
|
|
|
220,412
|
|
|
Rebates
|
|
|
111,553
|
|
|
|
141,195
|
|
|
Warranties
|
|
|
54,540
|
|
|
|
71,210
|
|
|
Current portion of pension and other postretirement benefit obligations
|
|
|
28,496
|
|
|
|
27,710
|
|
|
Current portion of affordable housing capital obligations
|
|
|
14,742
|
|
|
|
14,040
|
|
|
Other
|
|
|
373,514
|
|
|
|
346,337
|
|
|
|
|
|
$
|
1,250,869
|
|
|
$
|
1,335,973
|
|
|
The Company accrues for product warranties based on historical experience.
The changes in accrued
warranties during 2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Beginning balance
|
|
$
|
71,210
|
|
|
$
|
70,119
|
|
|
$
|
70,882
|
|
|
Charges
|
|
|
(50,657
|
)
|
|
|
(51,443
|
)
|
|
|
(51,300
|
)
|
|
Provision charged to expense
|
|
|
45,276
|
|
|
|
47,636
|
|
|
|
45,418
|
|
|
Acquisitions and divestitures
|
|
|
4,430
|
|
|
|
2,848
|
|
|
|
3,176
|
|
|
Foreign currency translation
|
|
|
(4,298
|
)
|
|
|
2,050
|
|
|
|
1,943
|
|
|
Transfer to liabilities held for sale
|
|
|
(11,421
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
Ending balance
|
|
$
|
54,540
|
|
|
$
|
71,210
|
|
|
$
|
70,119
|
|
|
68
2008 Annual Report
Long-Term Debt
at December 31, 2008 and 2007 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
6.875% notes due November 15, 2008
|
|
$
|
—
|
|
|
$
|
149,984
|
|
|
5.75% notes due March 1, 2009
|
|
|
501,812
|
|
|
|
499,604
|
|
|
6.55% preferred debt securities due December 31, 2011
|
|
|
249,857
|
|
|
|
249,815
|
|
|
5.25% Euro notes due October 1, 2014
|
|
|
951,545
|
|
|
|
1,095,895
|
|
|
4.88% senior notes due thru December 31, 2020
|
|
|
33,346
|
|
|
|
38,819
|
|
|
Other borrowings
|
|
|
16,565
|
|
|
|
13,312
|
|
|
|
|
|
|
1,753,125
|
|
|
|
2,047,429
|
|
|
Current maturities
|
|
|
(509,432
|
)
|
|
|
(158,590
|
)
|
|
|
|
|
$
|
1,243,693
|
|
|
$
|
1,888,839
|
|
|
In 1998, the Company issued $150,000,000 of 6.875% notes at 99.228% of face value. The estimated
market price of the notes exceeded the carrying value by approximately $3,136,000 at December 31,
2007. The balance outstanding at December 31, 2007 was repaid at maturity in November 2008.
In 1999, the Company issued $500,000,000 of 5.75% redeemable notes at 99.281% of face value. The
effective interest rate of the notes is 5.8%. The estimated market price of the notes exceeded the
carrying value by approximately $1,738,000 at December 31, 2008 and $9,746,000 at December 31,
2007. In December 2002, the Company entered into an interest rate swap with a notional value of
$100,000,000 to hedge a portion of the fixed-rate debt. Under the terms of the swap, the Company
receives interest at a fixed rate of 5.75% and pays interest at a variable rate of LIBOR plus
1.96%. The variable interest rate under the swap was 4.16% at December 31, 2008 and 7.08% at
December 31, 2007. The maturity date of the interest rate swap is March 1, 2009. The carrying value
of the 5.75% notes has been adjusted to reflect the fair value of the interest rate swap.
In 2002, a subsidiary of the Company issued $250,000,000 of 6.55% preferred debt securities at
99.849% of face value. The effective interest rate of the preferred debt securities is 6.7%. The
estimated fair value of the securities exceeded the carrying value by approximately $19,741,000 at
December 31, 2008 and $12,325,000 at December 31, 2007.
In 2005, the Company issued $53,735,000 of 4.88% senior notes at 100% of face value. The estimated
fair value of the notes was below the carrying value by approximately $1,791,000 at December 31,
2008 and exceeded the carrying value by approximately $443,000 at December 31, 2007.
In 2007, the Company, through its wholly-owned subsidiary ITW Finance Europe S.A., issued
€
750,000,000 of 5.25% Euro notes due October 1, 2014, at 99.874% of face value. The effective
interest rate of the notes is 5.27%. The estimated fair value of the notes was below the carrying
value by approximately $95,190,000 at December 31, 2008 and exceeded the carrying value by
approximately $23,410,000 at December 31, 2007.
In 2007, the Company entered into a $500,000,000 revolving credit facility with a termination date
of June 15, 2012. No amounts were outstanding under this facility at December 31, 2008.
The Company’s debt agreements’ financial covenants limit total debt, including guarantees, to 50%
of total capitalization. The Company’s total debt, including guarantees, was 33% of total
capitalization as of December 31, 2008, which was in compliance with these covenants.
Other debt outstanding at December 31, 2008, bears interest at rates ranging from 0.3% to 13.9%,
with maturities through the year 2029.
Scheduled maturities of long-term debt for the years ending December 31 are as follows:
|
|
|
|
|
|
|
IN THOUSANDS
|
|
|
|
|
|
|
2010
|
|
$
|
9,786
|
|
|
2011
|
|
|
256,590
|
|
|
2012
|
|
|
5,765
|
|
|
2013
|
|
|
5,155
|
|
|
2014 and future years
|
|
|
966,397
|
|
|
|
|
|
$
|
1,243,693
|
|
|
In connection with forming joint ventures, the Company has provided debt guarantees of $24,000,000
at December 31, 2008. The Company has recorded liabilities related to these guarantees of
$17,000,000 at December 31, 2008.
At December 31, 2008, the Company had open stand-by letters of credit of $198,000,000,
substantially all of which expire in 2009.
Illinois Tool Works Inc.
69
Other Noncurrent Liabilities
at December 31, 2008 and 2007 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
|
Pension benefit obligation
|
|
$
|
474,146
|
|
|
$
|
216,807
|
|
|
Postretirement benefit obligation
|
|
|
285,385
|
|
|
|
286,549
|
|
|
Noncurrent tax reserves
|
|
|
193,560
|
|
|
|
182,601
|
|
|
Affordable housing capital obligations
|
|
|
16,505
|
|
|
|
30,483
|
|
|
Other
|
|
|
346,182
|
|
|
|
348,315
|
|
|
|
|
|
$
|
1,315,778
|
|
|
$
|
1,064,755
|
|
|
Commitments and Contingencies
—The Company is subject to various legal proceedings and claims that
arise in the ordinary course of business, including those involving environmental, product
liability (including toxic tort) and general liability claims.
The Company accrues for such
liabilities when it is probable that future costs will be incurred and such costs can be reasonably
estimated.
Such accruals are based on developments to date, the Company’s estimates of the outcomes
of these matters and its experience in contesting, litigating and settling other similar matters.
The Company believes resolution of these matters, individually and in the aggregate, will not have
a material adverse effect on the Company’s financial position, liquidity or future operations.
Among the toxic tort cases in which the Company is a defendant, the Company as well as its
subsidiaries Hobart Brothers Company and Miller Electric Mfg. Co., have been named, along with
numerous other defendants, in lawsuits alleging injury from exposure to welding consumables. The
plaintiffs in these suits claim unspecified damages for injuries resulting from the plaintiffs’
alleged exposure to asbestos, manganese and/or toxic fumes in connection with the welding process.
Based upon the Company’s experience in defending these claims, the Company believes that the
resolution of these proceedings will not have a material adverse effect on the Company’s financial
position, liquidity or future operations. The Company has not recorded any significant reserves
related to these cases.
In January 2009, the Company reached an agreement with German tax authorities to settle liabilities
for transfer taxes related to legal entity reorganizations for
$44,000,000. A $44,000,000 reserve
had been recorded for this matter as of December 31, 2008.
Preferred Stock
, without par value, of which 300,000 shares are authorized, is issuable in series.
The Board of Directors is authorized to fix by resolution the designation and characteristics of
each series of preferred stock. The Company has no present commitment to issue its preferred stock.
70
2008 Annual Report
Common Stock
, with a par value of $.01,
Additional Paid-In-Capital
and
Common Stock Held in
Treasury
transactions during 2008, 2007 and 2006 are shown below. On May 5, 2006, the stockholders
approved an amendment to the Restated Certificate of Incorporation changing the number of
authorized shares of common stock from 350,000,000 shares to
700,000,000 shares in order to effect
a two-for-one split of the Company’s common stock, with a distribution date of May 25, 2006, at a
rate of one additional share for each common share held by stockholders of record on May 18, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
|
|
|
|
|
|
|
|
COMMON STOCK
|
|
|
PAID-IN-CAPITAL
|
|
|
COMMON STOCK HELD IN TREASURY
|
|
|
IN THOUSANDS EXCEPT SHARES
|
|
SHARES
|
|
|
AMOUNT
|
|
|
AMOUNT
|
|
|
SHARES
|
|
|
AMOUNT
|
|
|
|
Balance, December 31, 2005
|
|
|
312,043,289
|
|
|
$
|
3,120
|
|
|
$
|
1,082,611
|
|
|
|
(31,229,721
|
)
|
|
$
|
(2,773,176
|
)
|
|
During 2006—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to reflect May 2006 stock split
|
|
|
312,043,289
|
|
|
|
3,151
|
|
|
|
(3,151
|
)
|
|
|
(31,229,721
|
)
|
|
|
—
|
|
|
Shares issued for stock options
|
|
|
3,096,786
|
|
|
|
19
|
|
|
|
85,033
|
|
|
|
—
|
|
|
|
—
|
|
|
Shares surrendered on exercise of stock options and
vesting of restricted stock
|
|
|
(125,568
|
)
|
|
|
—
|
|
|
|
(6,082
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Stock compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
34,781
|
|
|
|
—
|
|
|
|
—
|
|
|
Tax benefits related to stock options and restricted
stock
|
|
|
—
|
|
|
|
—
|
|
|
|
13,086
|
|
|
|
—
|
|
|
|
—
|
|
|
Restricted stock forfeitures
|
|
|
(10,610
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Tax benefits related to defined contribution plans
|
|
|
—
|
|
|
|
—
|
|
|
|
8,944
|
|
|
|
—
|
|
|
|
—
|
|
|
Shares issued for acquisitions
|
|
|
3,853,556
|
|
|
|
19
|
|
|
|
163,365
|
|
|
|
(11,011
|
)
|
|
|
(486
|
)
|
|
Repurchases of common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9,680,731
|
)
|
|
|
(446,876
|
)
|
|
|
Balance, December 31, 2006
|
|
|
630,900,742
|
|
|
|
6,309
|
|
|
|
1,378,587
|
|
|
|
(72,151,184
|
)
|
|
|
(3,220,538
|
)
|
|
During 2007—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement of treasury shares
|
|
|
(72,151,184
|
)
|
|
|
(721
|
)
|
|
|
(1,378,587
|
)
|
|
|
72,151,184
|
|
|
|
3,220,538
|
|
|
Shares issued for stock options
|
|
|
3,768,417
|
|
|
|
37
|
|
|
|
116,736
|
|
|
|
—
|
|
|
|
—
|
|
|
Shares surrendered on exercise of stock options
|
|
|
(1,950
|
)
|
|
|
—
|
|
|
|
(108
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Shares issued for stock compensation
|
|
|
6,001
|
|
|
|
—
|
|
|
|
310
|
|
|
|
—
|
|
|
|
—
|
|
|
Stock compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
30,471
|
|
|
|
—
|
|
|
|
—
|
|
|
Tax benefits related to stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
16,212
|
|
|
|
—
|
|
|
|
—
|
|
|
Tax benefits related to defined contribution plans
|
|
|
—
|
|
|
|
—
|
|
|
|
9,989
|
|
|
|
—
|
|
|
|
—
|
|
|
Repurchases of common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(32,425,297
|
)
|
|
|
(1,757,761
|
)
|
|
|
Balance, December 31, 2007
|
|
|
562,522,026
|
|
|
|
5,625
|
|
|
|
173,610
|
|
|
|
(32,425,297
|
)
|
|
|
(1,757,761
|
)
|
|
During 2008—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement of treasury shares
|
|
|
(32,425,297
|
)
|
|
|
(324
|
)
|
|
|
(173,610
|
)
|
|
|
32,425,297
|
|
|
|
1,757,761
|
|
|
Shares issued for stock options
|
|
|
1,669,780
|
|
|
|
17
|
|
|
|
54,972
|
|
|
|
—
|
|
|
|
—
|
|
|
Shares issued for stock compensation
|
|
|
23,221
|
|
|
|
—
|
|
|
|
1,201
|
|
|
|
—
|
|
|
|
—
|
|
|
Stock compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
41,686
|
|
|
|
—
|
|
|
|
—
|
|
|
Tax benefits related to stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
4,844
|
|
|
|
—
|
|
|
|
—
|
|
|
Tax benefits related to defined contribution plans
|
|
|
—
|
|
|
|
—
|
|
|
|
2,794
|
|
|
|
—
|
|
|
|
—
|
|
|
Repurchases of common stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(32,674,759
|
)
|
|
|
(1,390,594
|
)
|
|
|
Balance, December 31, 2008
|
|
|
531,789,730
|
|
|
$
|
5,318
|
|
|
$
|
105,497
|
|
|
|
(32,674,759
|
)
|
|
$
|
(1,390,594
|
)
|
|
|
Authorized, December 31, 2008
|
|
|
700,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On August 20, 2007, the Company’s Board of Directors authorized a stock repurchase program,
which provides for the buyback of up to $3,000,000,000 of the Company’s common stock over an
open-ended period of time. Through December 31, 2008, the Company had repurchased 39,780,787 shares
of its common stock for $1,778,942,000 at an average price of $44.72 per share.
On August 4, 2006, the Company’s Board of Directors authorized a stock repurchase program, which
provided for the buyback of up to 35,000,000 shares. This program was completed in November 2007.
Cash Dividends
declared were $1.18 per share in 2008, $0.98 per share in 2007 and $0.75 per share
in 2006. Cash dividends paid were $1.15 per share in 2008, $0.91 per share in 2007 and $0.705 per
share in 2006.
Illinois Tool Works Inc.
71
Accumulated Other Comprehensive Income
—Comprehensive income is defined as the changes in equity
during a period from transactions and other events and circumstances from non-owner sources. It
includes all changes in equity during a period except those resulting from investments by
stockholders and distributions to stockholders. The changes in accumulated other comprehensive
income during 2008, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Beginning balance
|
|
$
|
1,050,786
|
|
|
$
|
446,639
|
|
|
$
|
122,012
|
|
|
Foreign currency translation adjustments
|
|
|
(874,952
|
)
|
|
|
424,037
|
|
|
|
495,697
|
|
|
Minimum pension liability, net of tax of $5,683
|
|
|
—
|
|
|
|
—
|
|
|
|
8,967
|
|
|
Adjustment to initially apply SFAS 158, net of
tax of $(3,954) in 2008 and $133,713 in 2006
|
|
|
3,573
|
|
|
|
—
|
|
|
|
(180,037
|
)
|
|
Pension and other postretirement benefits
actuarial gains (losses) net of tax of
$249,724 in 2008 and $89,207 in 2007
|
|
|
(433,430
|
)
|
|
|
167,146
|
|
|
|
—
|
|
|
Amortization of unrecognized pension and other
postretirement benefits costs, net of tax of
$(3,034) in 2008 and $15,562 in 2007
|
|
|
2,532
|
|
|
|
10,467
|
|
|
|
—
|
|
|
Pension and other postretirement benefits
settlements, curtailments and other, net of
tax of $1,019 in 2008 and $3,586 in 2007
|
|
|
(1,720
|
)
|
|
|
2,497
|
|
|
|
—
|
|
|
|
Ending balance
|
|
$
|
(253,211
|
)
|
|
$
|
1,050,786
|
|
|
$
|
446,639
|
|
|
As of December 31, 2008 and 2007, the ending balance of accumulated comprehensive income consisted
of cumulative translation adjustment income of $196,217,000 and $1,071,169,000, respectively, and
unrecognized pension and other postretirement benefits costs of $449,428,000 and $20,383,000,
respectively. The estimated unrecognized benefit cost that will be amortized from accumulated other
comprehensive income into net periodic benefit cost in 2009 is $6,813,000 for pension and
$6,679,000 for other postretirement benefits.
Stock-Based Compensation
—Stock options and restricted stock units have been issued to officers
and other management employees under ITW’s 2006 Stock Incentive Plan (the “Plan”), which is an
amendment and restatement of ITW’s 1996 Stock Incentive Plan. The stock options generally vest over
a four-year period and have a maturity of ten years from the issuance date. Restricted stock units
are valued using the closing market price on the date of grant and generally vest after a
three-year period.
To cover the exercise of vested options and
non-restricted Common Stock awards, the Company generally issues new shares from its authorized but
unissued share pool. At December 31, 2008, 63,305,328 shares of ITW common stock were reserved for
issuance under the Plan. Option exercise prices are equal to the common stock fair market value on
the date of grant. The Company records compensation expense for the fair value of stock awards over
the remaining service periods of those awards.
The following summarizes the Company’s stock-based compensation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Pre-tax compensation expense
|
|
$
|
40,874
|
|
|
$
|
30,020
|
|
|
$
|
34,278
|
|
|
Tax benefit
|
|
|
(12,262
|
)
|
|
|
(8,518
|
)
|
|
|
(10,111
|
)
|
|
|
Total stock-based compensation recorded as expense, net of tax
|
|
$
|
28,612
|
|
|
$
|
21,502
|
|
|
$
|
24,167
|
|
|
Discontinued
operations pre-tax stock-based compensation was $812,000 in 2008,
$451,000 in 2007 and
$503,000 in 2006 and was reflected in income (loss) from discontinued operations.
The following summarizes stock option activity under the Plan as of December 31, 2008, and changes
during the year then ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE
|
|
|
|
|
|
|
|
NUMBER
|
|
|
WEIGHTED-AVERAGE
|
|
|
REMAINING
|
|
|
AGGREGATE
|
|
|
OPTIONS
|
|
OF SHARES
|
|
|
EXERCISE PRICE
|
|
|
CONTRACTUAL TERM
|
|
|
INTRINSIC VALUE
|
|
|
|
Under option, January 1, 2008
|
|
|
20,635,795
|
|
|
|
$39.70
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
3,995,750
|
|
|
|
48.51
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(1,669,780
|
)
|
|
|
32.93
|
|
|
|
|
|
|
|
|
|
|
Cancelled or expired
|
|
|
(253,025
|
)
|
|
|
47.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under option, December 31,
2008
|
|
|
22,708,740
|
|
|
|
41.66
|
|
|
5.75 years
|
|
|
|
$36,642,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, December 31, 2008
|
|
|
15,392,513
|
|
|
|
38.20
|
|
|
4.42 years
|
|
|
|
$36,642,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72
2008 Annual Report
As of
February 13, 2009, the Compensation Committee of the Board of Directors approved an annual
equity award consisting of stock options, restricted stock units (“RSUs”) and qualifying restricted
stock units (“QRSUs”). The form of RSU, provides for full “cliff” vesting three years
from the date of grant.
The form of QRSU provides for full “cliff” vesting after
three years if the Compensation Committee
certifies that the performance goals set with respect to the QRSU are met. Upon vesting, the holder will receive one share of common stock of the
Company for each vested RSU or QRSU. Stock options were
granted on 2,172,271 shares at an exercise price of $35.12 per share.
Additionally, 1,107,616 RSUs
and QRSUs were issued at the grant date share price of $35.12. The Company uses a binomial option
pricing model to estimate the fair value of the options granted. The following summarizes the
assumptions used in the models:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Risk-free interest rate
|
|
0.6-3.3
|
%
|
|
|
|
1.9-3.9
|
%
|
|
|
4.7-5.1
|
%
|
|
Weighted-average volatility
|
|
33.0
|
%
|
|
|
|
27.0
|
%
|
|
|
22.0
|
%
|
|
Dividend yield
|
|
2.34
|
%
|
|
|
|
1.96
|
%
|
|
|
1.65
|
%
|
|
Expected years until exercise
|
|
7.3-7.7
|
|
|
|
|
7.3-7.9
|
|
|
|
6.7-7.0
|
|
Lattice-based option valuation models, such as the binomial option pricing model, incorporate
ranges of assumptions for inputs. The risk-free rate of interest for periods within the contractual
life of the option is based on a zero-coupon U.S. government instrument over the contractual term
of the equity instrument. Expected volatility is based on implied volatility from traded options on
the Company’s stock and historical volatility of the Company’s stock. The Company uses historical
data to estimate option exercise timing and employee termination rates within the valuation model.
Separate groups of employees that have similar historical exercise behavior are considered
separately for valuation purposes. The expected term of options granted is derived from the output
of the option valuation model and represents the period of time that options granted are expected
to be outstanding. The ranges presented result from separate groups of employees assumed to exhibit
different behavior.
The weighted-average grant-date fair value of options granted during 2009, 2008, 2007 and 2006 was
$10.24, $13.32, $14.37 and $11.87 per share, respectively. The aggregate intrinsic value of options
exercised during the years ended December 31, 2008, 2007 and 2006, was $23,502,000, $86,253,000
and $63,255,000, respectively. Exercise of options during the years ended December 31, 2008, 2007
and 2006, resulted in cash receipts of $54,988,000, $116,665,000 and $78,969,000, respectively. As
of December 31, 2008 there was $69,083,000 of total unrecognized compensation cost related to
non-vested equity awards. That cost is expected to be recognized over a weighted-average period of
2.5 years. The total fair value of options vested during the years ended December 31, 2008, 2007
and 2006 was $30,185,000, $20,841,000 and $35,505,000, respectively.
Segment Information
—The Company has approximately 875 operations in 54 countries. These 875
businesses are internally reported as 60 operating segments to senior management. The Company’s 60
operating segments have been aggregated into the following seven external reportable segments:
Industrial Packaging; Power Systems & Electronics; Transportation; Construction Products; Food
Equipment; Polymers & Fluids; and All Other.
Industrial Packaging
-
Steel, plastic and paper products used for bundling, shipping and protecting
goods in transit.
Power Systems & Electronics
- Equipment and consumables associated with specialty power conversion,
metallurgy and electronics.
Transportation
- Transportation-related components, fasteners, fluids and
polymers, as well as truck remanufacturing and related parts and service.
Food Equipment
- Commercial food equipment and related service.
Construction Products
- Tools, fasteners and other products for construction applications.
Polymers & Fluids
- Adhesives, sealants, lubrication and cutting fluids, and
hygiene products.
All Other
- All other operating segments.
Illinois Tool Works Inc.
73
Segment information for 2008, 2007 and 2006 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Packaging
|
|
$
|
2,591,091
|
|
|
$
|
2,400,832
|
|
|
$
|
2,164,822
|
|
|
Power Systems & Electronics
|
|
|
2,356,853
|
|
|
|
2,245,514
|
|
|
|
1,847,926
|
|
|
Transportation
|
|
|
2,347,744
|
|
|
|
2,215,497
|
|
|
|
1,961,502
|
|
|
Food Equipment
|
|
|
2,133,186
|
|
|
|
1,930,281
|
|
|
|
1,520,990
|
|
|
Construction Products
|
|
|
1,990,683
|
|
|
|
2,064,477
|
|
|
|
1,897,690
|
|
|
Polymers & Fluids
|
|
|
1,255,914
|
|
|
|
943,767
|
|
|
|
706,474
|
|
|
All Other
|
|
|
3,248,127
|
|
|
|
3,117,364
|
|
|
|
2,744,253
|
|
|
Intersegment revenues
|
|
|
(54,244
|
)
|
|
|
(46,656
|
)
|
|
|
(59,315
|
)
|
|
|
|
|
$
|
15,869,354
|
|
|
$
|
14,871,076
|
|
|
$
|
12,784,342
|
|
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Packaging
|
|
$
|
275,624
|
|
|
$
|
298,766
|
|
|
$
|
274,707
|
|
|
Power Systems & Electronics
|
|
|
461,442
|
|
|
|
449,200
|
|
|
|
406,405
|
|
|
Transportation
|
|
|
277,632
|
|
|
|
373,448
|
|
|
|
335,787
|
|
|
Food Equipment
|
|
|
317,873
|
|
|
|
300,713
|
|
|
|
274,784
|
|
|
Construction Products
|
|
|
238,143
|
|
|
|
283,061
|
|
|
|
256,934
|
|
|
Polymers & Fluids
|
|
|
178,889
|
|
|
|
155,783
|
|
|
|
120,045
|
|
|
All Other
|
|
|
588,633
|
|
|
|
587,917
|
|
|
|
539,373
|
|
|
|
|
|
$
|
2,338,236
|
|
|
$
|
2,448,888
|
|
|
$
|
2,208,035
|
|
|
|
Depreciation and amortization and impairment of goodwill and intangible
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Packaging
|
|
$
|
65,048
|
|
|
$
|
62,308
|
|
|
$
|
57,868
|
|
|
Power Systems & Electronics
|
|
|
55,584
|
|
|
|
48,604
|
|
|
|
37,984
|
|
|
Transportation
|
|
|
101,303
|
|
|
|
87,406
|
|
|
|
72,986
|
|
|
Food Equipment
|
|
|
41,493
|
|
|
|
34,166
|
|
|
|
25,578
|
|
|
Construction Products
|
|
|
80,367
|
|
|
|
79,636
|
|
|
|
80,433
|
|
|
Polymers & Fluids
|
|
|
52,348
|
|
|
|
35,914
|
|
|
|
22,190
|
|
|
All Other
|
|
|
140,643
|
|
|
|
132,237
|
|
|
|
115,701
|
|
|
|
|
|
$
|
536,786
|
|
|
$
|
480,271
|
|
|
$
|
412,740
|
|
|
|
Plant and equipment additions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Packaging
|
|
$
|
34,047
|
|
|
$
|
59,206
|
|
|
$
|
28,129
|
|
|
Power Systems & Electronics
|
|
|
44,372
|
|
|
|
38,101
|
|
|
|
29,639
|
|
|
Transportation
|
|
|
83,100
|
|
|
|
76,952
|
|
|
|
71,049
|
|
|
Food Equipment
|
|
|
49,430
|
|
|
|
33,733
|
|
|
|
22,585
|
|
|
Construction Products
|
|
|
35,767
|
|
|
|
40,141
|
|
|
|
50,167
|
|
|
Decorative Surfaces
|
|
|
11,276
|
|
|
|
20,621
|
|
|
|
19,533
|
|
|
Polymers & Fluids
|
|
|
22,258
|
|
|
|
13,553
|
|
|
|
9,331
|
|
|
All Other
|
|
|
75,222
|
|
|
|
71,048
|
|
|
|
70,573
|
|
|
|
|
|
$
|
355,472
|
|
|
$
|
353,355
|
|
|
$
|
301,006
|
|
|
|
Identifiable assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial Packaging
|
|
$
|
1,809,493
|
|
|
$
|
1,865,356
|
|
|
$
|
1,695,389
|
|
|
Power Systems & Electronics
|
|
|
1,331,356
|
|
|
|
1,279,390
|
|
|
|
1,189,321
|
|
|
Transportation
|
|
|
1,924,711
|
|
|
|
1,739,696
|
|
|
|
1,552,934
|
|
|
Food Equipment
|
|
|
1,080,487
|
|
|
|
1,084,595
|
|
|
|
693,903
|
|
|
Construction Products
|
|
|
1,357,493
|
|
|
|
1,584,253
|
|
|
|
1,473,591
|
|
|
Decorative Surfaces
|
|
|
—
|
|
|
|
503,295
|
|
|
|
384,826
|
|
|
Polymers & Fluids
|
|
|
1,307,718
|
|
|
|
1,125,652
|
|
|
|
923,469
|
|
|
All Other
|
|
|
3,199,224
|
|
|
|
3,259,077
|
|
|
|
3,374,556
|
|
|
Corporate
|
|
|
2,683,826
|
|
|
|
2,941,019
|
|
|
|
2,592,450
|
|
|
Assets held for sale
|
|
|
518,775
|
|
|
|
143,529
|
|
|
|
—
|
|
|
|
|
|
$
|
15,213,083
|
|
|
$
|
15,525,862
|
|
|
$
|
13,880,439
|
|
|
Identifiable assets by segment are those assets that are specifically used in that segment.
Corporate assets are principally cash and equivalents, investments and other general corporate
assets.
74
2008 Annual Report
Enterprise-wide information for 2008, 2007 and 2006 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN THOUSANDS
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
Operating Revenues by Geographic Region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
6,517,442
|
|
|
$
|
6,528,416
|
|
|
$
|
6,244,358
|
|
|
Europe
|
|
|
5,423,020
|
|
|
|
4,867,424
|
|
|
|
3,728,400
|
|
|
Asia
|
|
|
1,583,173
|
|
|
|
1,364,321
|
|
|
|
1,014,790
|
|
|
Other North America
|
|
|
944,936
|
|
|
|
936,417
|
|
|
|
852,512
|
|
|
Australia/New Zealand
|
|
|
764,744
|
|
|
|
722,192
|
|
|
|
596,521
|
|
|
Other
|
|
|
636,039
|
|
|
|
452,306
|
|
|
|
347,761
|
|
|
|
|
|
$
|
15,869,354
|
|
|
$
|
14,871,076
|
|
|
$
|
12,784,342
|
|
|
Operating revenues by geographic region are based on the customers’ location.
The
Company has thousands of product lines within its 875 businesses, therefore providing operating
revenues by product line is not practicable.
Total noncurrent assets excluding deferred tax assets and financial instruments were $8,800,000,000
and $8,842,000,000 at December 31, 2008 and 2007, respectively. Of these amounts, approximately 52%
and 53% was attributed to U.S. operations for 2008 and 2007, respectively. The remaining amounts
were attributed to the Company’s foreign operations, with no single country accounting for a
significant portion.
Illinois Tool Works Inc.
75
Quarterly and Common Stock
Data (Unaudited)
Quarterly Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
|
|
|
IN THOUSANDS
|
|
MARCH 31
|
|
|
JUNE 30
|
|
|
SEPTEMBER 30
|
|
|
DECEMBER 31
|
|
|
EXCEPT PER SHARE AMOUNTS
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
Operating revenues
|
|
$
|
3,823,278
|
|
|
$
|
3,420,745
|
|
|
$
|
4,219,925
|
|
|
$
|
3,797,496
|
|
|
$
|
4,147,757
|
|
|
$
|
3,744,402
|
|
|
$
|
3,678,394
|
|
|
$
|
3,908,433
|
|
|
Cost of revenues
|
|
|
2,465,943
|
|
|
|
2,201,143
|
|
|
|
2,694,930
|
|
|
|
2,423,219
|
|
|
|
2,699,268
|
|
|
|
2,389,520
|
|
|
|
2,412,454
|
|
|
|
2,518,959
|
|
|
Operating income
|
|
|
579,381
|
|
|
|
539,560
|
|
|
|
705,779
|
|
|
|
641,059
|
|
|
|
638,963
|
|
|
|
649,557
|
|
|
|
414,113
|
|
|
|
618,712
|
|
|
Income from continuing operations
|
|
|
369,861
|
|
|
|
358,576
|
|
|
|
496,806
|
|
|
|
445,731
|
|
|
|
443,289
|
|
|
|
464,101
|
|
|
|
273,310
|
|
|
|
443,528
|
|
|
Income (loss) from discontinued operations
|
|
|
(66,240
|
)
|
|
|
43,859
|
|
|
|
31,284
|
|
|
|
59,875
|
|
|
|
10,229
|
|
|
|
26,987
|
|
|
|
(39,536
|
)
|
|
|
27,205
|
|
|
Net income
|
|
|
303,621
|
|
|
|
402,435
|
|
|
|
528,090
|
|
|
|
505,606
|
|
|
|
453,518
|
|
|
|
491,088
|
|
|
|
233,774
|
|
|
|
470,733
|
|
|
Income per share from continuing
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.70
|
|
|
|
0.64
|
|
|
|
0.95
|
|
|
|
0.80
|
|
|
|
0.86
|
|
|
|
0.84
|
|
|
|
0.54
|
|
|
|
0.82
|
|
|
Diluted
|
|
|
0.70
|
|
|
|
0.64
|
|
|
|
0.95
|
|
|
|
0.79
|
|
|
|
0.85
|
|
|
|
0.84
|
|
|
|
0.54
|
|
|
|
0.82
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
.58
|
|
|
|
.72
|
|
|
|
1.01
|
|
|
|
.91
|
|
|
|
.88
|
|
|
|
.89
|
|
|
|
.46
|
|
|
|
.87
|
|
|
Diluted
|
|
|
.57
|
|
|
|
.71
|
|
|
|
1.01
|
|
|
|
.90
|
|
|
|
.87
|
|
|
|
.89
|
|
|
|
.46
|
|
|
|
.87
|
|
Prior quarterly periods have been restated to reflect discontinued operations.
Common Stock Price and Dividend Data
—The common stock of Illinois Tool Works Inc. was listed on the
New York Stock Exchange and Chicago Stock Exchange for 2008 and 2007. Quarterly market price and dividend data for 2008 and 2007 were as shown
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARKET PRICE PER SHARE
|
|
|
DIVIDENDS
DECLARED
|
|
|
|
|
HIGH
|
|
|
LOW
|
|
|
PER SHARE
|
|
|
|
2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth quarter
|
|
|
$43.90
|
|
|
|
$28.50
|
|
|
|
$.31
|
|
|
Third quarter
|
|
|
51.00
|
|
|
|
41.95
|
|
|
|
.31
|
|
|
Second quarter
|
|
|
55.59
|
|
|
|
46.22
|
|
|
|
.28
|
|
|
First quarter
|
|
|
53.98
|
|
|
|
45.02
|
|
|
|
.28
|
|
|
|
|
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth quarter
|
|
|
$60.00
|
|
|
|
$51.41
|
|
|
|
$.28
|
|
|
Third quarter
|
|
|
60.00
|
|
|
|
50.58
|
|
|
|
.28
|
|
|
Second quarter
|
|
|
56.70
|
|
|
|
50.51
|
|
|
|
.21
|
|
|
First quarter
|
|
|
53.65
|
|
|
|
45.60
|
|
|
|
.21
|
|
The
approximate number of holders of record of common stock as of January
30, 2009 was 10,856. This
number does not include beneficial owners of the Company’s securities held in the name of nominees.
76
2008 Annual Report
* $100
invested on 12/31/03 in stock or index funds, including reinvestment of
dividends. Fiscal year ending December 31.
Illinois Tool Works Inc.
77
Exhibit 21
Illinois Tool Works Inc.
Subsidiaries and Affiliates
January 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
145 ES (Canada) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Nova Scotia
|
|
9055-1599 Quebec Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Quebec
|
|
A 3 Sud S.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
AB Sjötofta Tråddrageri
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
ACCULUBE Manufacturing GmbH- Schmiermittel und-gerate
|
|
Direct
|
|
|
50
|
%
|
|
Germany
|
|
Airhammer-Haubold s.r.o
|
|
Indirect
|
|
|
100
|
%
|
|
Czech Republic
|
|
Alfamacchine 2 s.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Allen France SAS
|
|
Direct
|
|
|
49
|
%
|
|
France
|
|
Alpine Automation Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Alpine Holdings, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Alpine Systems Corporation
|
|
Indirect
|
|
|
100
|
%
|
|
Ontario
|
|
Ameri-Cad Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Texas
|
|
Anaerobicos do Brasil Adesivos Ltda.
|
|
Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
Anaerobicos S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Argentina
|
|
Anahol S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Argentina
|
|
AOC Hi-Tech Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
Appleton Investments II L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Appleton Investments L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Applied Australia Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ApS Strapex Omsnoringsmaskiner
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
Ark-Les Components S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Atlantic Mills, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
New Jersey
|
|
Auralex du Mont de Magny SCI SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
AV Co. 1 Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
AV Co. 2 Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
AV Co. 3 Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Avery Berkel France SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Avery India Limited
|
|
Indirect
|
|
|
58
|
%
|
|
India
|
|
Avery Malaysia Sdn Bhd
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
Avery Weigh-Tronix (Suzhou) Co Limited
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Avery Weigh-Tronix B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Avery Weigh-Tronix Finance Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Avery Weigh-Tronix Holdings Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Avery Weigh-Tronix International Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Avery Weigh-Tronix Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Avery Weigh-Tronix Private Limited
|
|
Indirect
|
|
|
100
|
%
|
|
India
|
|
Avery Weigh-Tronix Properties Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Avery Weigh-Tronix S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Avery Weigh-Tronix UK Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Avery Weigh-Tronix, LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
AWT Scales Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
AXA Power ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
B.C. Immo S.C.I.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
B.V. Gamko H.M.S.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Bates Cargo-Pak ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
Bayshore Truck Equipment Company
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Bei Si Ya (Shanghai) Trade Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Berkel (Ireland) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Ireland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
Berrington (UK)
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Betterway Ventures Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
British Virgin Island
|
|
Bézy SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Binks
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Bonnet (UK)
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Bonnet Grande Cuisine SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Bonnet-Thirode Belgium BVBA
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Buehler GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Buehler Ltd.
|
|
Direct
|
|
|
100
|
%
|
|
Illinois
|
|
Buell Industries, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Burseryds Bruk AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
Bycotest AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
Calibra Weighing Systems Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Cal-Sensors, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
California
|
|
Capital Ventures (Australasia) S.à r.l
|
|
Indirect
|
|
|
100
|
%
|
|
Luxembourg
|
|
CCC Heavy Duty Truck Parts Company
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
CCC Parts Company
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
CCC Truck Parts Company
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
CCI Corporation
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
CCI Realty Company
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Ceast Asia Pte Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Ceast GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Ceast S.p.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Ceast USA Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Celcor Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Ontario
|
|
Celix Transform. De Espumas Técnicas SA
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
CER Foils SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
CER SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Cetram Pty. Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
CFC Europe (UK) Limited
|
|
Direct
|
|
|
100
|
%
|
|
United Kingdom
|
|
CFC Europe GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
CFC INTERNATIONAL (Europe) GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Chapas Y Herrajes Eternos, S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Chiltern Adh. Product Supplies Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Chris Kay (UK) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Chris Kay Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Ireland
|
|
CKFE Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Hong Kong
|
|
Clarén Kemi AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
Cleanman Cleaning Devices Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Taiwan
|
|
Click Commerce, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Click Procure, Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
CLK Kemi AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
Cofiva s.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Comercial Quimisol, S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Comercializadora West Bend S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Compagnie de Matériel et d’Equipements Techniques — COMET
SAS
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
France
|
|
Compagnie Hobart S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Constructions Isothermiques Bontami
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Constructora De Basculas S.A. de C.V.
|
|
Indirect
|
|
|
49
|
%
|
|
Mexico
|
|
Coolpart B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Coolpart Production B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Corporación Coral S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Crane Carrier (Canada) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Canada
|
|
Crane Carrier Company
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
CS (Australasia) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
CS (Australia) Pty Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
CS (Europe) Holdings Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
CS (Far East) Holding Company Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
CS (Finance) Europe S.a.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Luxembourg
|
|
CS (Global) Holdings Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
CS Financing I LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
CS Packaging Corporation Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
British Virgin Island
|
|
CS PMI Holdings Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
CSMTS INC.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
CSTS L.L.C.
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
Cullen Building Products Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Cullen Building Products Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Ireland
|
|
Cullen Building Products SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Cullen Building Products, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Canada
|
|
Cumberland Leasing Co.
|
|
Indirect
|
|
|
100
|
%
|
|
Illinois
|
|
Cyclone Industries Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
D.F. International, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Dacro B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
DaeLim Placo Company, Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
DaeLim Plastic Industrial Company, Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
D-Clean profi, s.r.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Czech Republic
|
|
De Ville Australia Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
De Ville Marketing Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Deben Systems Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Densit ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
Densit Asia Pacific Sdn. Bhd.
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
Densit U.S.A. Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Lousiana
|
|
Deutsche Capital Solutions GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Devcon Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Ireland
|
|
Devilbiss Company Limited, The
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
DeVilbiss Equipamentos para Pinturas Ltda
|
|
Direct and Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
DeVilbiss Europa Unterstuetzungskasse GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
DeVilbiss Ransburg de Mexico S.A. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
DGFC Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
DHP (Thailand) Limited
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Thailand
|
|
DHP Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
Diagraph Corporation Sdn. Bhd
|
|
Direct
|
|
|
100
|
%
|
|
Malaysia
|
|
Diagraph ITW Mexico, S. de R.L. De C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Diagraph Mexico, S.A. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Distribuidora de Productos Sebring, S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Dongguan Ark-Les Electric Components Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Dongguan CK Branding Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Dorbyl U.K. (Holdings) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Drive Train Specialists of Tulsa, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Duo-Fast Corporation
|
|
Direct
|
|
|
100
|
%
|
|
Illinois
|
|
Duo-Fast de Espana S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Duo-Fast Korea Co. Ltd.
|
|
Indirect
|
|
|
49
|
%
|
|
South Korea
|
|
E.C.S. d.o.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Croatia
|
|
Eddie Connally & Co Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Ireland
|
|
EDS Belgium N.V.
|
|
Indirect
|
|
|
80
|
%
|
|
Belgium
|
|
Elance Software Technology Private Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
India
|
|
Elastomeric Roofing Systems, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Minnesota
|
|
Electric Light Development Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
British Virgin Island
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
Elga AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
Elga Skandinavian AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
Elisphere Sarl
|
|
Indirect
|
|
|
50
|
%
|
|
France
|
|
Eltex-Elektrostatik-GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Emballages Diffusion Service
|
|
Indirect
|
|
|
80
|
%
|
|
France
|
|
Empaques Sultana, S. de R.L. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Endra B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Envases Multipac, S.A. de C.V.
|
|
Direct
|
|
|
49
|
%
|
|
Mexico
|
|
Envopak Group
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Epirez Australia Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Equipamentos Cientificos Instron Ltda.
|
|
Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
Equipment Maintenance Services Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Eserre Corporation
|
|
Direct
|
|
|
100
|
%
|
|
California
|
|
Euco Densit LLC
|
|
Indirect
|
|
|
40
|
%
|
|
Ohio
|
|
Eurofoil Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Euromere Spraycore SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Eurotec s.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Exportadora Lerma SA
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
F.B. Johnston Graphics, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
South Carolina
|
|
Falcon Leasing Systems Ltd.
|
|
Direct
|
|
|
51
|
%
|
|
Bermuda
|
|
Farmadan AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
FEG Investments L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Fellowell Holdings Co. Ltd.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Thailand
|
|
Filtertek B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Filtertek De Mexico de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Filtertek De Mexico Holding Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Filtertek do Brazil Industria E Commercio Ltda
|
|
Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
Filtertek GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Filtertek Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
Filtertek S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Flejes MISA, S. de R.L. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Forkardt Deutschland GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Forkardt France SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Forkardt International Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Forkardt Schweiz GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Switzerland
|
|
Forte Administration Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Forte Lubricants Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Foster Canada Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Canada
|
|
Foster Refrigerator (U.K.)
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Foster Refrigerator France S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Franklynn Industries U.K. Ltd.
|
|
Direct
|
|
|
100
|
%
|
|
United Kingdom
|
|
Franklynn Industries, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Ohio
|
|
Fuseon Graphics Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Gamko B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Gamko Beheer B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Gamko Holding B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Gamko Horecatechniek B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Gamko Kühltechnik GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Gamko Réfrigération S.a.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Gamko Refrigeration U.K. Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Gamko Refrigerazione Srl
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Gamko Slovakia S.R.O.
|
|
Indirect
|
|
|
100
|
%
|
|
Slovak Republic
|
|
Gamko Vyroba S.R.O.
|
|
Indirect
|
|
|
80
|
%
|
|
Slovak Republic
|
|
GC Financement SA
|
|
Indirect
|
|
|
50
|
%
|
|
France
|
|
GSE Holdings Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
GSE IP LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
H.A. Springer marine + industrie service GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Hallrank Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Haubold Befestigungstechnik GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Haubold Paslode GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Switzerland
|
|
Haubold-Kihlberg bvba
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Haubold-Kihlberg GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Austria
|
|
Heat-Seal (Textiles) Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Heatseal Designs Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Heavy Duty Parts, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Heger Belgium BVBA
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Heger GmbH European Diamond Tools
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Heger Holland B.V
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Heikaus Verpackungssysteme GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
High Mind International Offshore Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
British Virgin Island
|
|
Highland Champ Corporation
|
|
Indirect
|
|
|
100
|
%
|
|
British Virgin Island
|
|
Higiene Integral Medioambiental, S.L
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
HMI Grande Cuisine SA
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Hobart (Japan) K.K.
|
|
Indirect
|
|
|
100
|
%
|
|
Japan
|
|
Hobart Andina S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Colombia
|
|
Hobart Argentina S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Argentina
|
|
Hobart Brothers Company
|
|
Indirect
|
|
|
100
|
%
|
|
Ohio
|
|
Hobart Brothers International Limitada
|
|
Indirect
|
|
|
100
|
%
|
|
Chile
|
|
Hobart Canada Corp.
|
|
Indirect
|
|
|
100
|
%
|
|
Canada
|
|
Hobart Corporation
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Hobart Dayton Mexicana S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Hobart do Brasil Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
Hobart Food Equipment Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Hobart Foster (South Africa) Pty. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Africa
|
|
Hobart Foster Belgium B.V.B.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Hobart Foster Holland B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Hobart Foster International GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Hobart Foster Scandinavia ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
Hobart Foster Techniek B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
HOBART Gesellschaft mit beschränkter
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Hobart International (Singapore) Pte. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Hobart International (South Asia), Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Hobart Korea Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
Hobart Manufacturing Company Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Canada
|
|
Hobart Manufacturing Company, The
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Hobart Sales & Service, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Ohio
|
|
Hôpital Services Systemes S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Horis SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Houchin Aerospace
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
HsbSOFT Cia Ltda
|
|
Indirect
|
|
|
100
|
%
|
|
Ecuador
|
|
HsbSOFT Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Ireland
|
|
HsbSOFT, NV
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Hsb-SYSTEMS GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Hwa Meir Packing Daily Commodities Co.,
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
I.T.W. Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Illinois
|
|
I.W.D. Strapping Sales Pty. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Ice Freeze de Mexico, S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Illinois Tool Works (ITW) Nederland B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Illinois Tool Works Norway AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
Immobiliere — Services — Industries — Isis SNC
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Indiana Pickling and Processing Company
|
|
Direct
|
|
|
35
|
%
|
|
Indiana
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
Industrias Concepto del Pacifico
|
|
Indirect
|
|
|
100
|
%
|
|
Guatemala
|
|
Industrias Quimicas Kimsa, S.L.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
InHold (NZ) Finance Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
InHold (UK) Finance Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
Inmobillaria Cit., S.A. de C.F.
|
|
Direct
|
|
|
49
|
%
|
|
Mexico
|
|
INN SP Z.o.o.
|
|
Indirect
|
|
|
20
|
%
|
|
Poland
|
|
Innova Temperlite 1200, S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Innova Temperlite Servicios, S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Instron Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Instron (Hong Kong) Pte Limited
|
|
Direct
|
|
|
100
|
%
|
|
Hong Kong
|
|
Instron (Shanghai) Experiment Equipment Trade Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Instron (Thailand) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Thailand
|
|
Instron Canada Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Canada
|
|
Instron Deutschland GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Instron Foreign Sales Corp. Limited
|
|
Direct
|
|
|
100
|
%
|
|
Jamaica
|
|
Instron Holdings Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Instron India Private Limited
|
|
Indirect
|
|
|
100
|
%
|
|
India
|
|
Instron International Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Instron Japan Company, Ltd.
|
|
Direct
|
|
|
100
|
%
|
|
Massachusetts
|
|
Instron Korea Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
Instron Proprietary Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Instron S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Instron Singapore Pte Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Instron Structural Testing Systems GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Instron Structural Testing Systems Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Instron Testing Systems (M) SDN. BHD.
|
|
Direct
|
|
|
100
|
%
|
|
Malaysia
|
|
International Leasing Company
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Interstrap B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
IPHC LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
IQ Algorithms Limited
|
|
Direct
|
|
|
100
|
%
|
|
New Zealand
|
|
Irathane Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
IST Enterprises Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
ITW (China) Investment Company Limited
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW (Deutschland) GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW (EU) Holdings Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
ITW (Europe) GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW (Malaysian) Holdings Company Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
ITW Acmor (Shanghai) Company Limited
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Administration GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW AEP LLC
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
ITW AFC Pty Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW Aircraft Investments Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Airport Ground Equipment (Beijing)
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Alpha Sárl
|
|
Indirect
|
|
|
100
|
%
|
|
Luxembourg
|
|
ITW Ampang Industries Philippines, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Philippines
|
|
ITW Angleboard AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
ITW Ark-Les Corporation
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Australia Pty. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW Austria Vertriebs GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Austria
|
|
ITW Automotive Components & Fasteners Japan K.K.
|
|
Indirect
|
|
|
100
|
%
|
|
Japan
|
|
ITW Automotive Fasteners (Shanghai) Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Automotive Italia s.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW Automotive Products GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Automotive Products-Verwaltungs GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Bailly Comte S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Befestigungssysteme GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
ITW Belgium S.p.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
ITW Bevestigingssystemen B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
ITW Brazilian Nominee L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Building Components Group Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Bulgaria EOOD
|
|
Indirect
|
|
|
100
|
%
|
|
Bulgaria
|
|
ITW Canada
|
|
Indirect
|
|
|
100
|
%
|
|
Ontario
|
|
ITW Canada Holdings Company
|
|
Indirect
|
|
|
100
|
%
|
|
Nova Scotia
|
|
ITW Canada Management
|
|
Indirect
|
|
|
100
|
%
|
|
Nova Scotia
|
|
ITW Cayman
|
|
Indirect
|
|
|
100
|
%
|
|
Cayman Islands
|
|
ITW Chemical Products Ltda
|
|
Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
ITW Chemical Products Scandinavia ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
ITW Chemische Produkte GmbH & Co. KG
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Construction Products (SEA) Pte.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
ITW Construction Products (Suzhou) Co.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Construction Products ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
ITW Construction Products CR, s.r.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Czech Republic
|
|
ITW Construction Products Espana S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
ITW Construction Products Italy s.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW Construction Systems Australia Pty
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW Contamination Control (Wujiang)
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Covid Security Group Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
ITW CP Distribution Center Holland BV
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
ITW CPM S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Cupids LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Cupids, L.P.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW de France S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW DelFast do Brasil Ltda.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
ITW Delta Sárl
|
|
Indirect
|
|
|
100
|
%
|
|
Luxembourg
|
|
ITW Denmark ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
ITW Devcon Industrial Products GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW do Brazil Industrial e Comercial Ltda.
|
|
Direct and Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
ITW Domestic Finance II Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Domestic Holdings Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW D-Tech Holdings GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Dynatec (Hong Kong) Limited
|
|
Direct
|
|
|
50
|
%
|
|
Hong Kong
|
|
ITW Dynatec GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Dynatec Kabushiki Kaisha
|
|
Direct
|
|
|
100
|
%
|
|
Japan
|
|
ITW Dynatec Singapore Pte. Ltd.
|
|
Direct
|
|
|
50
|
%
|
|
Singapore
|
|
ITW Dynatec Thailand Ltd.
|
|
Direct
|
|
|
20
|
%
|
|
Thailand
|
|
ITW Electronic Business Asia Co., Limited
|
|
Direct
|
|
|
100
|
%
|
|
Taiwan
|
|
ITW Electronic Component Manufacturing Company d.o.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Slovenia
|
|
ITW Electronic Components/Products (Shanghai) Company
Limited
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Electronic Packaging (Malta) Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Malta
|
|
ITW Epsilon Sárl
|
|
Indirect
|
|
|
100
|
%
|
|
Luxembourg
|
|
ITW Erste Beteiligungs-GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Espana S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
ITW European Participations LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Fastex de Argentina S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Argentina
|
|
ITW Fastex France S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW FEG Hong Kong Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Hong Kong
|
|
ITW Finance Europe SA
|
|
Direct
|
|
|
100
|
%
|
|
Luxembourg
|
|
ITW Finance II L.L.C.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Finishing Equipment (Shanghai) Co.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Finishing LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
ITW Fluid Handling Equipment (Suzhou)
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Foils
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Foils B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
ITW Foils Srl
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW Foils, S.L.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
ITW Food Equipment Group LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Gamma Sárl
|
|
Indirect
|
|
|
100
|
%
|
|
Luxembourg
|
|
ITW Gema (Shanghai) Co Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Gema GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Switzerland
|
|
ITW Gema s.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW German Management LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW Global Investments Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Graphics France Sarl
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Great Britain Investment & Licensing Holding Company
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Group European Finance Company
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
ITW Group France
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Guatemala Holdings LLC
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Gunther S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Heller GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Henschel GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Hi-Cone Japan Limited
|
|
Direct
|
|
|
100
|
%
|
|
Japan
|
|
ITW HLP Thailand Co. Ltd.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Thailand
|
|
ITW Holding Química B.C., S.L.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Spain
|
|
ITW Holdings Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW Holdings UK
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
ITW Idle Facilities L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW ILC Holdings I Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW ILC Holdings II Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Imaden Industria e Comercio Ltda.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
ITW India Limited
|
|
Direct
|
|
|
100
|
%
|
|
India
|
|
ITW Industrial Components s.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW Industrial Packaging Australia Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW Industrial Products Trading (Shanghai) Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Industry Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Japan
|
|
ITW Industry SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW International Finance S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW International Holdings LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Investment GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Investments Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
ITW Ireland
|
|
Indirect
|
|
|
100
|
%
|
|
Ireland
|
|
ITW Ireland Holdings
|
|
Indirect
|
|
|
100
|
%
|
|
Ireland
|
|
ITW Ispracontrols Bulgaria EOOD
|
|
Indirect
|
|
|
100
|
%
|
|
Bulgaria
|
|
ITW Italy Finance Srl
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW Italy Holding S.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
ITW Litec France S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Lombard Holdings Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Meritex Sdn. Bhd.
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
ITW Metal Fasteners, S.L.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
ITW Metalflex, družba za proizvodnjo delov za gospodinjske
aparate, d.o.o. TOLMIN
|
|
Indirect
|
|
|
100
|
%
|
|
Slovenia
|
|
ITW Mexico Capital, S. DE R.L. DE C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
ITW Mexico Holding Company S DE RL DE CV
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
ITW Mexico Holding Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
ITW México, S. de R.L. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
ITW Mima Films L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Mima Holdings L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Mima Systems S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Minigrip (Thailand) Co., Ltd.
|
|
Direct and Indirect
|
|
|
100
|
%
|
|
Thailand
|
|
ITW Morlock GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Mortgage Investments I, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Mortgage Investments II, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Mortgage Investments III, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Mortgage Investments IV, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW New Zealand Limited
|
|
Indirect
|
|
|
100
|
%
|
|
New Zealand
|
|
ITW Novadan ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
ITW NZ Holdco
|
|
Indirect
|
|
|
100
|
%
|
|
New Zealand
|
|
ITW Oberflaechentechnik GmbH & Co. KG
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Operations Australia Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW P&F Holdings Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW Packaging (Malaysia) Sdn Bhd
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
ITW Packaging (Shanghai) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Packaging Systems Group GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Packaging Systems OOO
|
|
Indirect
|
|
|
100
|
%
|
|
Russia
|
|
ITW Paris E.U.R.L.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Participations S.à r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Luxembourg
|
|
ITW Pension Funds Trustee Company
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
ITW Performance Polymers & Fluids OOO
|
|
Indirect
|
|
|
100
|
%
|
|
Russia
|
|
ITW Performance Polymers (Wujiang) Co.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Performance Polymers and Fluids Pte. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
ITW Performance Polymers and Fluids (Hong Kong) Co. Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Hong Kong
|
|
ITW Performance Polymers and Fluids Trading (Wujiang) Co.,
Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Philippines Holdings LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Philippines, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Philippines
|
|
ITW PMI Investments, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Poly Mex, S.A. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
ITW Poly Recycling GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Switzerland
|
|
ITW Pronovia Plus s.r.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Czech Republic
|
|
ITW Pronovia s.r.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Czech Republic
|
|
ITW Real Estate Management GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Real Estate Management GmbH & Co KG
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Reid Holdings Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW Residuals III L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Residuals IV L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Retail Group Pty Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW Reyflex France SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Rivex S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Servicios, S. de R.L. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
ITW Shippers S.p.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
ITW Siewer Automotiv s.r.o
|
|
Indirect
|
|
|
100
|
%
|
|
Czech Republic
|
|
ITW Siewer Jarmutechnikai Bt
|
|
Indirect
|
|
|
100
|
%
|
|
Hungary
|
|
ITW Siewer Vagyonkezelo Kft
|
|
Indirect
|
|
|
100
|
%
|
|
Hungary
|
|
ITW Signode Australasia Pty Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
ITW Signode Holding GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW Signode Polska Sp. z.o.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Poland
|
|
ITW Singapore (Pte) Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
ITW SMPI S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW SP Europe S.a.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Luxembourg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
ITW Spain Holdings, S.L.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
ITW Specialty Film Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
ITW Specialty Films France
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Spraytec
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Strapping (Shenyang) Company Limited
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Surfaces & Finitions S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Sverige AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
ITW Sweden Holding AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
ITW Syn-Tex México. S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
ITW Syn-Tex Service México. S.A. de
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
ITW Tech Spray L.L.C.
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
ITW Test & Measurement (Shanghai) Co.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Thermal Films (Shanghai) Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
ITW Thermal Films Italy Srl
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW Tiede Non-destructive testing GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
ITW UK
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
ITW Universal L.L.C.
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
ITW V.A.C. B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
ITW Welding Products B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
ITW Welding Products Group S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
ITW Welding Products Italy Srl
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
ITW Welding S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Welding Singapore Pte. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
ITW Zweite Beteiligungs-GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
James Briggs Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
James Briggs Holdings LTd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Japan Polymark Co. Ltd.
|
|
Indirect
|
|
|
40
|
%
|
|
Japan
|
|
Jemco de Mexico, S.A. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Josef Kihlberg AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
Josef Kihlberg AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
Josef Kihlberg Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Josef Kihlberg of America, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
New York
|
|
Kartro Balti OU
|
|
Indirect
|
|
|
100
|
%
|
|
Estonia
|
|
KB Sektionen 1
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
KCPL Holdings Private Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
KCPL Mauritius Holdings
|
|
Indirect
|
|
|
100
|
%
|
|
Mauritius
|
|
Kester Asia Holdings, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Kester Canada Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Quebec
|
|
Kester Components (M) Sdn. Bhd.
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
Kester Components Private Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Kester Electronic Materials (Suzhou) Co.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Kester GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Kester Metais do Brasil-Indústria e Comércio de Produtos
Electrônicos Ltda.
|
|
Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
Kester, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Kiwiplan Asia Sdn Bhd
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
Kiwiplan Europe Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Kiwiplan GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Kiwiplan, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Ohio
|
|
Kiwiplan NZ Limited
|
|
Indirect
|
|
|
100
|
%
|
|
New Zealand
|
|
Kleinmann GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Kotka Professional — Sak Oy
|
|
Indirect
|
|
|
100
|
%
|
|
Finland
|
|
KP Comercio e Industria de Productos Para Automoveis e
Lubrificantes, S.A
|
|
Indirect
|
|
|
100
|
%
|
|
Portugal
|
|
Krafft Argentina, S.A.
|
|
Indirect
|
|
|
80
|
%
|
|
Argentina
|
|
Krafft, S.L.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
Lachenmeier ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
Lachenmeier Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Florida
|
|
Lachenmeier UK Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Lajota S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Argentina
|
|
Lebo S.L.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Liljendals Bruk AB
|
|
Indirect
|
|
|
100
|
%
|
|
Finland
|
|
Loma International, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Illinois
|
|
Loma Systems (Canada) Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Canada
|
|
Loma Systems sro
|
|
Indirect
|
|
|
100
|
%
|
|
Czech Republic
|
|
Lombard Pressings Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
LSPS Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Lumex, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Illinois
|
|
Lys Fusion Poland Sp. z.o.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Poland
|
|
M&C Specialties (Ireland) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Ireland
|
|
M&C Specialties (Shenzhen) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
M&C Specialties (Tianjin) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
M&C Specialties Co.
|
|
Direct
|
|
|
100
|
%
|
|
Pennsylvania
|
|
M&C Specialties Company HK Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Hong Kong
|
|
M.P.S. Metal Plastik Sanayi Cember ve Paketleme Sistemleri
Imalat ve Ticaret A.S
|
|
Indirect
|
|
|
50
|
%
|
|
Turkey
|
|
Magna Industrial Co. Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Hong Kong
|
|
Magnaflux Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Manhattan Lynch Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Manufacturing Avancee S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Morocco
|
|
Maquilas y Componentes Industriales
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Marescol SA
|
|
Indirect
|
|
|
48
|
%
|
|
France
|
|
Marvil Mexicana S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Mbelish.com Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
MBM France S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Meritex Technology (Suzhou) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Metalas Industrializados, S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Metro Sport International Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Metro Sport Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Metropolitan Oils (Proprietary) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
South Africa
|
|
Meyercord Revenue Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
Mezger Heftsysteme GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Miller Beijing Electric Manufacturing Co.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Miller Electric Mfg. Co.
|
|
Indirect
|
|
|
100
|
%
|
|
Wisconsin
|
|
Miller Insurance Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
Mima Films L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Mima Films S.a.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Luxembourg
|
|
Mima Films Sprl
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Minigrip Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Modern Maintenance Products International
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Moon 2000 Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Morgan Polimer Seals, S. de R.L. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Morgan Polymers Seals, L.L.C.
|
|
Direct
|
|
|
100
|
%
|
|
California
|
|
National Fleet Service, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
National Fleet Supply Corporation
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
National Truck Parts of Florida, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
National Truck Parts of Georgia, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
National Truck Parts of the Midwest, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
National Truck Parts, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
NDT Holding LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
New West Products, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
California
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
Norden Czech s.r.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Czech Republic
|
|
NorDen Holding Hadsund A/S
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
Norden Olje AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
NorDen Olje ApS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
Norden Olje AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
Norden Sp. Z.o.o. Polen
|
|
Indirect
|
|
|
100
|
%
|
|
Poland
|
|
Nordic SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Nordisk Kartro AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
Nordisk Kartro AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
Norsk Signode AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
Novadan AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
Novadan Sp. Z.o.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Poland
|
|
Noza Holdings Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
NSC Europe Limited
|
|
Direct
|
|
|
100
|
%
|
|
United Kingdom
|
|
NuTrus LLC
|
|
Direct
|
|
|
50
|
%
|
|
Delaware
|
|
NYCO-KRAFFT, S.A.
|
|
Indirect
|
|
|
50
|
%
|
|
Spain
|
|
Odesign, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Illinois
|
|
Opto Diode Corporation
|
|
Direct
|
|
|
100
|
%
|
|
California
|
|
Optum, BV
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Orama Fabrications
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Orama Holdings
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
ORBIMATIC GmbH Orbital- und Sonderschweißtechnik
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Orbitalum Tools GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Orgapack GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Switzerland
|
|
OY Josef Kihlberg AB
|
|
Indirect
|
|
|
100
|
%
|
|
Finland
|
|
Oy Kartro AB
|
|
Indirect
|
|
|
100
|
%
|
|
Finland
|
|
Oy M. Haloila AB
|
|
Indirect
|
|
|
100
|
%
|
|
Finland
|
|
Pacific Concept Industries (USA) LLC
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
Pacific Concept Industries Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Pacific Concept Industries Limited (Enping)
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Pacific Concept Industries Limited (HK)
|
|
Indirect
|
|
|
100
|
%
|
|
Hong Kong
|
|
Pacific Concept Industries Tekstil Sanayi Ve Dis Ticaret
Limited Sirketi
|
|
Indirect
|
|
|
100
|
%
|
|
Turkey
|
|
Pacific Concept Italy S.R.L.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Pacific Concept Korea Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
Pacific Concepts Industries B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Pacific Concepts Industries S.L
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Pacific Polymers, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
California
|
|
Packaging Leasing Systems Inc.
|
|
Direct
|
|
|
51
|
%
|
|
Delaware
|
|
PanCon GmbH Gesellschaft fuer elektromechanische Bauelemente
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Paradym Investments Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Bermuda
|
|
Paslode Duo-Fast Industry Benelux BV
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Paslode Fasteners (Shanghai) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Paul Forkardt Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
PCI Shanghai/Pacific Concept Shanghai
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Perlite Products Sdn. Bhd
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
Perron SAS
|
|
Indirect
|
|
|
34
|
%
|
|
France
|
|
Plásticos Iberotec SL
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
PMI Food Equipment Group (Malaysia), Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
PMI Food Equipment Group Canada Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Ontario
|
|
Polimeros Morgan, S. de R.L. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Polymark Export Limited
|
|
Direct
|
|
|
100
|
%
|
|
United Kingdom
|
|
Polyrey (UK) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Polyrey Benelux BVBA
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Polyrey Deutschland GmbH i.L.
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
Polyrey Iberica SL
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Polyrey S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
PolySpec (TX), LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Texas
|
|
PolySpec L.P.
|
|
Indirect
|
|
|
100
|
%
|
|
Texas
|
|
PolySpec NV, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Nevada
|
|
Prairie Technologies, LLC
|
|
Direct
|
|
|
100
|
%
|
|
Minnesota
|
|
Precision Brake & Clutch, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Premark FEG Beteiligungsgesellschaft mbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Premark FEG L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Premark HII Holdings, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Ohio
|
|
Premark International Holdings B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Premark International, LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Premark N.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherland Antilles
|
|
Premark RWP Holdings, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Premark Verwaltungs GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Prodex Selbstklebeprodukte GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Prokem, S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Prolex, Sociedad Anónima
|
|
Indirect
|
|
|
100
|
%
|
|
Costa Rica
|
|
Pryda (Malaysia) Sdn Bhd
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
Pryda (Thailand) Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Thailand
|
|
PT Pryda Indonesia
|
|
Indirect
|
|
|
100
|
%
|
|
Indonesia
|
|
PT2 Holdings Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
PTO Sales Corporation
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
PTX de Mexico, S.A. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
QSA Global Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Quandel Verpackungs- und
|
|
Indirect
|
|
|
100
|
%
|
|
German
|
|
Quantum Marketing, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Florida
|
|
Quimica Industrial Mediterranea, S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Quimica Tecnica, S.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Quimica TF, S.A. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Quipp Systems, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Florida
|
|
Quipp, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Florida
|
|
Ramset Fasteners (Hong Kong) Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Hong Kong
|
|
Ransburg Industrial Finishing K.K.
|
|
Indirect
|
|
|
100
|
%
|
|
Japan
|
|
Ransburg Manufacturing Corporation
|
|
Direct
|
|
|
100
|
%
|
|
Indiana
|
|
Ransburg-Gema UK Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Rapid Cook LLC
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Redfish Photonics, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Reid Construction Systems Pty. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Requisite Technology Canada, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
New Brunswick
|
|
Requisite Technology Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Resopal GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Resopal-Unterstuetzungseinrichtung GmbH in Gross-Umstadt
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Reydet Plastique Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Canada
|
|
Rippey Technology Private Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Rocol
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Rocol Korea Limited
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
Rocol Site Safety Systems
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Salter India Private Limited
|
|
Indirect
|
|
|
58
|
%
|
|
India
|
|
Sarsfield Corporation N.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherland Antilles
|
|
SCANTECH Finland Oi
|
|
Indirect
|
|
|
100
|
%
|
|
Finland
|
|
SCANTECH Holding AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
SCANTECH Norge A/S
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
SCANTECH Sverige AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
SCANTECH Tools AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
Schember GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Austria
|
|
Schnee-Morehead, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Texas
|
|
Scybele S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Servicios de Reynosa, S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
SG Invest Holding GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Shanghai ITW Plastic & Metal Company Limited
|
|
Indirect
|
|
|
93
|
%
|
|
China
|
|
Siddons Ramset Holdings Pty Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Signode (Thailand) Limited
|
|
Direct
|
|
|
100
|
%
|
|
Thailand
|
|
Signode AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
Signode Brasileria Ltda.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
Signode BVBA
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Signode ErÇem Çemberleme Sanayi ve Ticaret Anonim Sirketi
|
|
Indirect
|
|
|
100
|
%
|
|
Turkey
|
|
Signode Hong Kong Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Hong Kong
|
|
Signode Ireland Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Signode Kabushiki Kaisha
|
|
Indirect
|
|
|
100
|
%
|
|
Japan
|
|
Signode Korea Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
South Korea
|
|
Signode Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Signode México, S. de R.L. de C.V.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Signode Packaging Systems Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Kenya
|
|
Signode Service GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Signode Singapore Investments Pte. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Signode Singapore Pte. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Signode System GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Simco (Nederland) B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Simco Japan, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Japan
|
|
Six States Distributors, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Utah
|
|
Smart Home Products Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Sn Investors, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
Société Civile Immobilière des Baquets
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Société Civile Immobilière Rousseau Ivry
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Societe de Constructions Elbeuvienne de Materiels our
L’Alimentation SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Solutions Group Transaction Subsidiary
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Sonotech, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Washington
|
|
Specialty Equipment International B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Spectrum Inspection Services BV
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Speedline Holdings I, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Speedline Holdings I, L.L.C.
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
Speedline Technologies Asia Pte. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Speedline Technologies GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Speedline Technologies Mexico Services, S. de R.L. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Speedline Technologies Mexico, S. de R.L. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Speedline Technologies, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
SPIT S.A.S. (Societe de Prospection et d’Inventions
Techniques S.A.S.)
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Spray Nine Corporation
|
|
Direct
|
|
|
100
|
%
|
|
New York
|
|
Sraennik Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
SRB Manufacturing Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
St. Jude Polymer Corp.
|
|
Direct
|
|
|
100
|
%
|
|
Pennsylvania
|
|
Standard Parts Corporation
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Steelfast Asia Sdn Bhd
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
Stokvis Celix Portugal LDA
|
|
Indirect
|
|
|
100
|
%
|
|
Portugal
|
|
Stokvis Denmark AS
|
|
Indirect
|
|
|
100
|
%
|
|
Denmark
|
|
Stokvis Promi Czech s.r.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Czech Republic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
Stokvis Promi Slovakia s.r.o.
|
|
Indirect
|
|
|
100
|
%
|
|
Slovak Republic
|
|
Stokvis Prostick Pvt. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
India
|
|
Stokvis Spain Holding SL
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Stokvis Tape Group B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Stokvis Tapes (Beijing) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Stokvis Tapes (Hong Kong) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Hong Kong
|
|
Stokvis Tapes (Shanghai) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Stokvis Tapes (Shenzhen) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Stokvis Tapes (Taiwan) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Taiwan
|
|
Stokvis Tapes Deutschland GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Stokvis Tapes Deutschland Holding GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Stokvis Tapes Estonia OÜ
|
|
Indirect
|
|
|
100
|
%
|
|
Estonia
|
|
Stokvis Tapes Finland Oy
|
|
Indirect
|
|
|
100
|
%
|
|
Finland
|
|
Stokvis Tapes France SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Stokvis Tapes Holding B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Stokvis Tapes India Pvt. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
India
|
|
Stokvis Tapes Italy Srl
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Stokvis Tapes Magyarorszag Kft
|
|
Indirect
|
|
|
100
|
%
|
|
Hungary
|
|
Stokvis Tapes N.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Stokvis Tapes Nederland B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Stokvis Tapes Norge AS
|
|
Indirect
|
|
|
100
|
%
|
|
Norway
|
|
Stokvis Tapes Polska Spzoo
|
|
Indirect
|
|
|
100
|
%
|
|
Poland
|
|
Stokvis Tapes Singapore Pte. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Stokvis Tapes Sverige AB
|
|
Indirect
|
|
|
100
|
%
|
|
Sweden
|
|
Stokvis Tapes U.K. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Stokvis Tapes UK Holding Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Strapex Embalagem L.d.a.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Strapex GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Austria
|
|
Strapex GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Strapex Holding GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Switzerland
|
|
Strapex Holdings Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Strapex Nederland B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Strapex Packaging India Limited
|
|
Indirect
|
|
|
100
|
%
|
|
India
|
|
Strapex S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Strapex S.p.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Strapex s.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Strapex U.K.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Strategic Holdings L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Sunrise Arkansas, Inc.
|
|
Direct
|
|
|
100
|
%
|
|
Arkansas
|
|
Superior Spring Company
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Supreme Plastics Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Supreme Plastics Holdings
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
SWT Holdings B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
SysPack do Brasil Participações Ltda.
|
|
Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
SysPack Indústria e Comércio de Sistemas de Embalagens
Industriais Ltda.
|
|
Indirect
|
|
|
100
|
%
|
|
Brazil
|
|
Systemcare Marketing Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Systemcare Products Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
TAG Staples Sdn Bhd
|
|
Indirect
|
|
|
100
|
%
|
|
Malaysia
|
|
Tarutin Kester Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Japan
|
|
Technographics UK
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Tecnoquimica Integral, S.L.
|
|
Indirect
|
|
|
100
|
%
|
|
Spain
|
|
Tecnotapes s.n.c.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Tectaloy Sales Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Ten Plus S.A.S.
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
ITW Texwipe Philippines, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Philippines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
|
|
|
|
Company Name
|
|
Type (a)
|
|
Percentage
|
|
Primary Jurisdiction
|
|
|
|
The Loveshaw Corporation
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
The Three Russells, Sociedad Anónima
|
|
Indirect
|
|
|
100
|
%
|
|
Costa Rica
|
|
The Weighing Company Holdings Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Thirode Grandes Cuisines Poligny SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Tien Tai Electrode (Kun Shan) Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Tien Tai Electrode Co., Ltd.
|
|
Direct
|
|
|
100
|
%
|
|
Taiwan
|
|
Trilectron Europe Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Troy Investments I L.L.C.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Truck Parts Specialists, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Truswal Systems Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Twinaplate Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
U-Joints, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
United Lubricant Co. of Australia Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Valeron Strength Films B.V.B.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Varybond Chemie Holding AG
|
|
Indirect
|
|
|
100
|
%
|
|
Liechtenstein
|
|
Veneta Decalcogomme s.r.l.
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Vitronics Soltec B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Vitronics Soltec Corporation
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Vitronics Soltec GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Vitronics Soltec Pte. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Singapore
|
|
Vitronics Soltec Technologies (Suzhou) Co., Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
VS Acquisition Holding Co.
|
|
Direct
|
|
|
100
|
%
|
|
Delaware
|
|
VS European Holdco Coöperatief U.A.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
VS Holding Co.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Vulcan-Hart Canada Corp.
|
|
Indirect
|
|
|
100
|
%
|
|
Canada
|
|
W & T Avery (Malawi) Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Malawi
|
|
WAB Truck Parts, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Weigh-Tronix Canada, ULC
|
|
Indirect
|
|
|
100
|
%
|
|
Nova Scotia
|
|
Weigh-Tronix UK Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Welding Industries Pty Limited
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Welding Products Group FZE
|
|
Indirect
|
|
|
100
|
%
|
|
UAE -Dubai
|
|
West Bend de Mexico S.A. de C.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Wilsonart (Shanghai) Co. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
China
|
|
Wilsonart (Thailand) Co. Ltd.
|
|
Direct & Indirect
|
|
|
100
|
%
|
|
Thailand
|
|
Wilsonart International, Inc.
|
|
Indirect
|
|
|
100
|
%
|
|
Delaware
|
|
Wilsonart Limited
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Wilsonart Taiwan Corp. Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
Taiwan
|
|
Wynn Oil (South Africa) (Pty) Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
South Africa
|
|
Wynn Oil (UK)
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Wynn Oil Holdings BV
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Wynn’s Australia Pty Ltd
|
|
Indirect
|
|
|
100
|
%
|
|
Australia
|
|
Wynn’s Belgium BVBA
|
|
Indirect
|
|
|
100
|
%
|
|
Belgium
|
|
Wynn’s Deutschland GmbH
|
|
Indirect
|
|
|
100
|
%
|
|
Germany
|
|
Wynn’s France Automotive SAS
|
|
Indirect
|
|
|
100
|
%
|
|
France
|
|
Wynn’s Friction Proofing Mexico
|
|
Indirect
|
|
|
100
|
%
|
|
Mexico
|
|
Wynn’s Italia Srl
|
|
Indirect
|
|
|
100
|
%
|
|
Italy
|
|
Wynn’s Mekuba India Pvt Ltd
|
|
Indirect
|
|
|
51
|
%
|
|
India
|
|
Xelus, Ltd.
|
|
Indirect
|
|
|
100
|
%
|
|
United Kingdom
|
|
Zip-Pak International B.V.
|
|
Indirect
|
|
|
100
|
%
|
|
Netherlands
|
|
Zip-Pak Japan Company Limited
|
|
Direct
|
|
|
100
|
%
|
|
Japan
|
