GLENVIEW, Ill., July 20 /PRNewswire-FirstCall/ -- Illinois Tool Works Inc. (NYSE: ITW) today reported 2010 second quarter diluted income per share from continuing operations of $0.83, a 131 percent improvement versus diluted income per share of $0.36 in the 2009 second quarter. The growth in earnings was achieved even though the Company experienced a higher than expected tax rate, which had a negative impact of $0.03 per share. The 2010 second quarter tax rate of 31.6 percent was 260 basis points higher than the rate the Company originally forecasted in April of 2010.

The Company's second quarter revenues of $4.076 billion were 20.1 percent higher than the year-ago period. Base revenues grew 15.1 percent in the second quarter, with North American base revenues increasing 15.8 percent and international base revenues growing 14.2 percent. Notably, international end markets showed no discernable signs of slowing as the second quarter progressed. Acquisitions and currency translation added 3.0 percent and 2.3 percent, respectively, to second quarter revenues.

Second quarter operating income of $652.7 million was 95 percent higher than the year-ago period. Income from continuing operations totaled $420.8 million, a 135 percent improvement versus the year-earlier period. Second quarter operating margins of 16.0 percent were 610 basis points higher than the year-ago period, with base businesses accounting for 470 basis points of improvement. Restructuring benefits added 160 basis points to second quarter operating margins.

"Our very strong second quarter operating performance was due to a combination of better than expected end market demand as well as contributions from restructuring programs over the past two years," said David B. Speer, chairman and chief executive officer. "Notably, end markets associated with the automotive OEM, industrial packaging, welding, electronics and polymers and fluids businesses all showed strength in the quarter. Our second half forecast indicates base revenue growth in a range of 7 percent to 10 percent compared to the 2009 second half. Acquisition activity continues to show improvement as we closed approximately $280 million in annualized revenues in the first half of the year."

Segment highlights for the 2010 second quarter include:

Total worldwide revenues for the Power Systems and Electronics segment grew 24.6 percent in the second quarter versus the year-ago period. Base revenues increased 22.6 percent in the quarter due to strong end market demand associated with both the welding and electronics businesses. Worldwide welding base revenues grew 13.5 percent in the second quarter versus the year-ago period, with North American welding increasing 20.6 percent. International welding base revenues were flat. The welding base revenue performance represented a significant improvement versus the first quarter of 2010. Driven by ongoing strong consumer electronics demand, the PC board fabrication business grew its base revenues 89.8 percent versus the 2009 second quarter.

Total worldwide revenues for the Industrial Packaging segment increased 23.5 percent in the second quarter compared to the year-earlier period. Base revenues grew 17.7 percent in the quarter largely as a result of increased demand in key North American industries such as automotive, construction and appliance for plastic and steel strapping consumables. As a result, total North American industrial packaging base revenues grew 22.5 percent in the second quarter versus the year-ago period. Total international industrial packaging base revenues increased 11.9 percent in the second quarter compared to the 2009 second quarter.

The Company is forecasting third quarter 2010 diluted income per share from continuing operations to be in a range of $0.72 to $0.84. The 2010 third quarter forecast assumes a total revenue growth range of 9 percent to 13 percent. For full-year 2010, the Company is forecasting diluted income per share from continuing operations to be in a range of $2.82 to $3.08. The 2010 full-year forecast assumes a total revenue growth range of 11 percent to 13 percent. The new full-year midpoint guidance represents an upward adjustment from the Company's prior full-year earnings range of $2.72 to $3.08. In addition, the Company has raised its forecasted range of annualized acquired revenues to $500 million - $700 million from $300 million - $500 million.

This Earnings Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding diluted income per share from continuing operations, total revenue growth, base revenue growth and acquired revenues. The statements are subject to certain risks, uncertainties and other factors which could cause actual results to differ materially from those anticipated. Such factors are contained in ITW's Form 10-K for 2009.

With $13.9 billion in 2009 revenues, ITW is a multi-national manufacturer of a diversified range of value-adding and short-lead time industrial products and equipment. The Company consists of nearly 800 business units in 57 countries and employs approximately 59,000 people.

                            ILLINOIS TOOL WORKS INC.
                      (In thousands except per share data)

                                      THREE MONTHS ENDED
                                           JUNE 30,
                                           --------
    STATEMENT OF INCOME                 2010            2009
    -------------------                 ----            ----
    Operating Revenues            $4,076,252      $3,392,906
       Cost of revenues            2,595,954       2,248,253
       Selling,
        administrative, and
        R&D expenses                 773,649         757,871
       Amortization of
        intangible assets             53,911          51,947
       Impairment of
        goodwill and other
        intangible assets                  -               -
                                         ---             ---
    Operating Income                 652,738         334,835
       Interest expense              (43,687)        (43,886)
       Investment income
       Other income                    5,741         (19,839)
                                       -----         -------
    Income from
     Continuing
     Operations Before
     Taxes                           614,792         271,110
       Income taxes                  194,000          92,167
                                     -------          ------
    Income  from
     Continuing
     Operations                     $420,792        $178,943
    Loss from
     Discontinued
     Operations                            -          (2,378)
    Net Income                      $420,792        $176,565
                                    ========        ========


    Income Per Share from
     Continuing
     Operations:
        Basic                          $0.84           $0.36
        Diluted                        $0.83           $0.36

    Loss Per Share from
     Discontinued
     Operations:
        Basic                             $-          $(0.00)
        Diluted                           $-          $(0.00)

    Net Income Per Share:
        Basic                          $0.84           $0.35
        Diluted                        $0.83           $0.35

    Shares outstanding
     during the period:
         Average                     503,265         499,389
         Average assuming
          dilution                   506,297         500,875

                                       SIX MONTHS ENDED
                                           JUNE 30,
                                           --------
    STATEMENT OF INCOME                 2010            2009
    -------------------                 ----            ----
    Operating Revenues            $7,682,641      $6,539,285
       Cost of revenues            4,916,706       4,401,080
       Selling,
        administrative, and
        R&D expenses               1,522,253       1,519,562
       Amortization of
        intangible assets            107,014         102,517
       Impairment of
        goodwill and other
        intangible assets                  -          89,997
                                         ---          ------
    Operating Income               1,136,668         426,129
       Interest expense              (88,264)        (75,322)
       Investment income
       Other income                   11,719         (24,180)
                                      ------         -------
    Income from
     Continuing
     Operations Before
     Taxes                         1,060,123         326,627
       Income taxes                  345,000         155,700
                                     -------         -------
    Income  from
     Continuing
     Operations                     $715,123        $170,927
    Loss from
     Discontinued
     Operations                            -         (33,736)
    Net Income                      $715,123        $137,191
                                    ========        ========


    Income Per Share from
     Continuing
     Operations:
        Basic                          $1.42           $0.34
        Diluted                        $1.41           $0.34

    Loss Per Share from
     Discontinued
     Operations:
        Basic                             $-          $(0.07)
        Diluted                           $-          $(0.07)

    Net Income Per Share:
        Basic                          $1.42           $0.27
        Diluted                        $1.41           $0.27

    Shares outstanding
     during the period:
         Average                     502,847         499,290
         Average assuming
          dilution                   505,479         500,617

    ESTIMATED FREE
     OPERATING
     CASH FLOW          THREE MONTHS ENDED             SIX MONTHS ENDED
    --------------
                             June 30,                      JUNE 30,
                             --------                      --------
                         2010              2009      2010              2009
                         ----              ----      ----              ----

      Net cash
       provided by
       operating
       activities    $338,442          $624,082  $617,848        $1,071,083
      Less:
       Additions to
       PP&E           (62,663)          (57,402) (123,385)         (121,338)
      Free operating
       cash flow     $275,779          $566,680  $494,463          $949,745
                     ========          ========  ========          ========

                               ILLINOIS TOOL WORKS INC.
                                    (In thousands)

                                     JUNE 30,      MAR 31,      DEC 31,
    STATEMENT OF FINANCIAL POSITION        2010         2010         2009
    -------------------------------        ----         ----         ----
    ASSETS
    ------
    Cash & equivalents               $1,265,237   $1,417,566   $1,318,772
    Trade receivables                 2,582,663    2,450,438    2,491,492
    Inventories                       1,458,179    1,413,084    1,356,233
    Deferred income taxes               217,032      229,049      231,858
    Prepaids and other current
     assets                             243,359      282,214      276,240
    Assets held for sale                      -            -            -
       Total current assets           5,766,470    5,792,351    5,674,595
                                      ---------    ---------    ---------

    Net plant & equipment             1,943,878    2,035,503    2,136,527
    Investments                         445,156      445,707      451,293
    Goodwill                          4,672,253    4,742,039    4,860,732
    Intangible assets                 1,712,933    1,677,346    1,723,417
    Deferred income taxes               589,752      623,196      673,044
    Other assets                        541,517      550,416      562,376
                                    $15,671,959  $15,866,558  $16,081,984
                                    ===========  ===========  ===========

    LIABILITIES and STOCKHOLDERS'
     EQUITY
    -----------------------------
    Short-term debt                    $305,917     $324,386     $213,681
    Accounts payable                    731,714      696,293      689,572
    Accrued expenses                  1,273,037    1,282,647    1,359,394
    Cash dividends payable              156,088      155,770      155,724
    Income taxes payable                309,804      381,481      417,267
    Liabilities held for sale                 -            -            -
       Total current liabilities      2,776,560    2,840,577    2,835,638
                                      ---------    ---------    ---------

    Long-term debt                    2,724,342    2,807,180    2,914,874
    Deferred income taxes               179,674      187,056      207,677
    Other liabilities                 1,259,519    1,288,772    1,305,919
       Total noncurrent liabilities   4,163,535    4,283,008    4,428,470
                                      ---------    ---------    ---------

    Common stock                          5,362        5,352        5,350
    Additional paid-in capital          344,473      288,687      270,985
    Income reinvested in the
     business                         9,925,004    9,660,300    9,521,740
    Common stock held in treasury    (1,390,594)  (1,390,594)  (1,390,594)
    Accumulated other comprehensive
     income                            (162,181)     169,493      400,726
    Noncontrolling interest               9,800        9,735        9,669
         Total stockholders' equity   8,731,864    8,742,973    8,817,876
                                      ---------    ---------    ---------
                                    $15,671,959  $15,866,558  $16,081,984
                                    ===========  ===========  ===========

SOURCE Illinois Tool Works Inc.