6309 Monarch Park Place, Suite 203
Niwot, CO 80503, USA
Phone (303) 443-5060
Toll free (888) 742-5060
On a comparable basis excluding goodwill amortization, income from continuing operations in the 2002 second quarter was $265.2 million, versus $252.1 million in the prior year period. The strengthening of the company's financial results occurred against a backdrop of improving North American and international end markets and continuing restructuring for a number of ITW businesses. For the most recent quarter, operating revenues were $2.43 billion versus $2.42 billion in the year earlier period.
For the six-month period, income from continuing operations excluding goodwill amortization increased 2 percent to $459.6 million from $451.1 million for the prior year period. Operating revenues decreased 2 percent to $4.64 billion in the 2002 first half from $4.71 billion in the prior year period. While income from continuing operations excluding goodwill amortization grew in the six-month period, net income declined 41 percent in the 2002 first half due to a previously disclosed non-cash charge to earnings in the first quarter of this year. This charge represents the cumulative impact of evaluating goodwill for impairment based on the new fair value method as required by Statement of Financial Accounting Standards No.142. No additional charges were taken in the 2002 second quarter.
The company's free operating cash flow continued to be strong in the most recent quarter and reflected reduced working capital needs and capital expenditures as a result of the mixed economy. For the second quarter, free operating cash flow was approximately $256 million.
"We were extremely pleased with our performance in the second quarter as a number of our end markets, especially in North America, showed improvement and our businesses continued to generate better operating leverage," said W. James Farrell, chairman and CEO. "Base business revenues continued to improve, moving to minus 2 percent in the second quarter from minus 6 percent in the first quarter. By effectively managing our overhead structures in our businesses via our 80/20 process, total company operating margins moved up 100 basis points to 17.6 percent in the recently concluded quarter."
Segment highlights include:
North American Engineered Products revenues increased 4 percent and operating income grew 11 percent in the second quarter principally as a result of strength in businesses associated with the automotive, construction and industrial-related end markets. Operating margins of 19.2 percent were up 120 basis points from the prior year period. For the first half, operating revenues and operating income increased 2 percent and 12 percent, respectively, and operating margins of 18.1 percent were 170 basis points higher than the 2001 first half.
International Engineered Products second quarter revenues and operating income increased 3 percent and 21 percent, respectively, largely due to contributions from businesses in the construction and industrial-based sectors. Operating margins of 15.0 percent in the quarter were 230 basis points higher than the year earlier period.
For the first half, operating revenues declined 2 percent and operating income was flat. Even so, operating margins improved 30 basis points to 12.0 percent.
North American Specialty Systems revenues were flat and operating income was up 6 percent in the quarter mainly due to contributions from businesses which serve the industrial packaging, food equipment and