GLENVIEW, IL — Illinois Tool Works Inc. (ITW) has reported 11 percent growth in diluted net income per share in the 2007 second quarter. Diluted net income per share was 90 cents versus 81 cents in the 2006 second quarter. In addition, the company’s second quarter net income increased 9 percent.

The double-digit growth in second quarter earnings per share was in part due to continued strong performance from a broad variety of international end markets tempered by slower end market activity in North America. As a result, total company revenues increased 16.2 percent in the quarter. Base revenues grew 2.4 percent, with international base revenues increasing 8 percent and North American base revenues declining 1.4 percent. Notably, the North American base revenue growth rate improved 210 basis points from the 2007 first quarter. Also, acquisitions net of divestitures added 10.7 percent of growth to revenues while translation contributed 3.6 percent. Other income was $18.4 million higher than the year ago period largely due to a previously announced gain on a sale of an automotive machinery business in April of 2007.

For the 2007 second quarter, revenues were $4.160 billion versus $3.579 billion for the prior year period. Second quarter operating income improved to $698.7 million from $659.8 million a year ago. Net income was $505.6 million compared to $465.9 million in the prior year period. The company’s second quarter operating margins of 16.8 percent were 160 basis points lower than the year ago period largely due to the significantly higher level of acquisitions in both full-year 2006 and the first half of 2007. In fact, base business margins increased 20 basis points in the second quarter.

For the first half of 2007, revenues increased 15 percent, operating income grew 6 percent, net income rose 9 percent and diluted net income per share was 10 percent higher than the year ago period. Operating revenues were $7.919 billion versus $6.877 billion for the prior year period. First half operating income improved to $1.267 billion from $1.2 billion a year ago. Net income was $908 million compared to $832.4 million and diluted net income per share was $1.61 versus $1.46 in the prior year period. The company’s 2007 first half operating margins of 16 percent were 140 basis points lower than the year earlier period.

The company’s free operating cash flow was a strong $443 million in the second quarter. This cash was utilized to acquire 10 companies in the most recent quarter representing $213 million of annualized revenues. Through June 30, the company acquired 19 companies totaling $612 million of annualized revenues and in aggregate paid less than one time revenues. In the second quarter, the company also repurchased $300 million of shares as part of its open-ended buyback program. Year to date, the company has spent a total of $480 million to repurchase shares.

"The company’s solid performance in the second quarter highlights our growing international diversification as well as strong operating discipline in an assortment of North American businesses where some end markets remained challenging," said David Speer, chairman and chief executive officer. "We also continue to be optimistic about our acquisition environment and, as a result, we have increased our acquisition range to $900 million to $1.2 billion for the full year."

Looking ahead, the company is forecasting a 2007 third quarter diluted earnings per share range of 85 cents to 89 cents and a full-year range of $3.31 to $3.41. Total company base revenues are expected to grow in a range of 3 percent to 5 percent in the third quarter and 2.1 percent to 4.1 percent for full-year 2007. If the company achieves the midpoints of these forecasted ranges, the diluted earnings per share growth would be 12 percent for both the third quarter and the full year.

For more information about ITW, go to: http://www.itw.com.