Illinois Tool Works (ITW) Q4 2009 earnings summary

Executive summary

• FY 2009 revenue fell 18.8% to $13.88B and operating income fell 44.6% to $1.39B amid recession-driven demand weakness, restructuring costs and impairment charges.

• Q4 2009 revenue was $3.76B, operating income $476.3M, continuing income $495.6M and net income $507.4M; quarterly results included $163.0M of favorable discrete tax adjustments.

Financial highlights

• FY 2009 continuing income was $969.5M, down 42.7% YoY; diluted continuing EPS was $1.93 versus $3.24 in 2008.

• Net income was $947.0M versus $1.52B in 2008; diluted net EPS was $1.89 versus $2.91.

• Operating cash flow was $2.15B and free operating cash flow was $1.90B; capital additions were $247.1M.

Outlook and guidance

• Management anticipated modest expansion across a variety of worldwide end markets in 2010; no quantified earnings or revenue target was stated.

• Internally generated cash flows were expected to fund debt service, dividends, internal growth and small-to-medium acquisitions.