GLENVIEW, IL -- Illinois Tool Works Inc. (ITW) announced that its board of directors approved a share repurchase program which authorizes management to buy back up to 35 million shares over an open-ended period of time. It also announced a new dividend guideline which resulted in a 27 percent increase in the dividend rate.

The share repurchase program encompasses approximately 6 percent of ITW’s shares outstanding. ITW had approximately 568 million shares outstanding as of June 30. The program will utilize excess free cash flow to repurchase shares over an open-ended time frame.

The new dividend guideline provides for the dividend payout rate to be in a range of 25 percent to 35 percent of the ITW's trailing two years of net income. The board of directors declared a regular quarterly cash dividend of 21 cents per share versus the current dividend rate of 16.5 cents per share. The new annual dividend payout of 84 cents per share compares to the previous annual payout of 66 cents per share. This represents a dividend payout of 31 percent of the prior two years net income. The dividend will be paid on Oct. 16 to stockholders of record on Sept. 30. All dividend amounts reflect ITW’s two-for-one stock split which was effective in May 2006.

"We believe our share repurchase program and our improved dividend pay out results in enhanced value to our shareholders as well as increased balance sheet flexibility for the company," said David Speer, chairman and CEO. "The share repurchase program gives us additional capability to better use our excess cash flow based on acquisition activity levels."

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