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ITW Reports 25 Percent Increase in Third Quarter Diluted Income Per Share

Company reports diluted income per share from continuing operations of $1 in the 2011 third quarter, a 25 percent increase. Total revenues grew 16.2 percent.

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GLENVIEW, Ill. — Illinois Tool Works Inc. (ITW) has reported third quarter 2011 diluted income per share from continuing operations of $1, a 25 percent increase compared to the 2010 third quarter. Total revenues of $4.6 billion increased 16.2 percent versus the year-ago period.
 
Third quarter 2011 financial highlights versus the prior-year period included:
 
·      Organic or base revenues grew 6.2 percent, with North American organic revenues increasing 7.8 percent and international organic revenues growing 4.2 percent. In Europe and China, organic revenues increased 3.8 percent and 16.2 percent, respectively.
 
·      Acquisitions net of divestitures added 5.3 percent to revenues. Currency translation contributed 4.7 percent to total revenues. Contributions from currency translation moderated as the quarter progressed.
 
·      While total company operating margins of 15.6 percent decreased 10 basis points, base operating margins increased 30 basis points. The dilutive impact of acquisitions negatively impacted operating margins by 30 basis points.
 
·      Free operating cash flow totaled $704 million in the third quarter, representing a free operating cash flow conversion ratio of 139 percent versus net income. Free cash flow was utilized to support dividends of $167 million, acquisitions of $451 million and share repurchase of $400 million in the quarter.  The company also announced a 6 percent dividend increase in August 2011. For the full year, the company has finalized 21 acquisitions with total annualized revenues of $781 million, and has spent $950 million to repurchase 18.1 million shares.
 
"Our financial performance in the third quarter was helped by solid growth in both our total revenues and our organic revenues," said David Speer, chairman and CEO. "Overall, end-market demand in the quarter was essentially in line with second quarter levels and our forecast expectations. We also generated strong free operating cash flow in the quarter, allowing us to continue to have a well balanced capital allocation approach around dividends, acquisitions and share repurchase."
 
For the 2011 full-year, the company is forecasting diluted income per share from continuing operations to be in the range $4.04 to $4.12 and assumes a total revenue growth range of 15.1 percent to 15.9 percent. The full-year forecast includes the 33 cents per share one-time tax benefit recorded in the 2011 first quarter. Excluding the one-time tax gain in the 2011 first quarter, the midpoint of the full-year earnings range would be $3.75.
 

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