FORM 11K
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR ALL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT
TO SECTION 15(d) OF THE SECURITIES ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number: Form S-8 Reg. No. 333-17473
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
ITW Bargaining Savings and Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Illinois Tool Works Inc.
3600 West Lake Avenue
Glenview, Illinois 60025
ITW Bargaining Savings and Investment Plan
Financial Statements
As of December 31, 2002 and 2001
Together With Auditors' Report
Employer Identification Number 36-1258310
Plan Number 003
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Employee Benefits Committee of Illinois Tool Works Inc.:
We have audited the accompanying statement of net assets available for benefits
of the ITW Bargaining Savings and Investment Plan (the "Plan") as of December
31, 2002, and the related statement of changes in net assets available for
benefits for the year then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The statement of net
assets available for benefits of ITW Bargaining Savings and Investment Plan as
of December 31, 2001, was audited by other auditors who have ceased operations.
Those auditors expressed an unqualified opinion on that financial statement in
their report dated May 9, 2002.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2002, and the changes in net assets available for benefits for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
/s/ GRANT THORNTON LLP
Chicago, Illinois
June 11, 2003
This is a copy of the audit report previously issued by Arthur Andersen LLP in
connection with the Plan's filing on Form 11-K for the year ended December 31,
2001. This audit report has not been reissued by Arthur Andersen LLP in
connection with the filing on Form 11-K. See Exhibit for further discussion.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Employee Benefits Committee of Illinois Tool Works Inc.:
We have audited the accompanying statements of net assets available for benefits
of the ITW Bargaining Savings and Investment Plan, formerly known as the Premark
International, Inc. Bargaining Retirement Savings Plan, as of December 31, 2001
and 2000, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2001. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2001 and 2000, and the changes in net assets available for benefits
for the year ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
May 9, 2002
ITW BARGAINING SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 2002 and 2001
Employer Identification Number 36-1258310, Plan Number 039
2002 2001
ASSETS: ----------- -----------
Other receivable $ 23 $ --
Proportianate share of
Master Trust assets 10,731,819 14,231,433
----------- -----------
Total assets 10,731,842 14,231,433
LIABILITIES:
Fees payable 8 --
----------- -----------
NET ASSETS AVAILABLE
FOR BENEFITS $10,731,834 $14,231,433
The accompanying notes to financial statements
are an integral part of these statements.
ITW BARGAINING SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year Ended December 31, 2002
Employer Identification Number 36-1258310, Plan Number 039
INCREASES (DECREASES):
Contributions-
Company $ 284,065
Participant 1,044,061
Rollover 1,400
---------------
Total contributions 1,329,526
Proportionate share of Master Trust net investment loss (1,398,252)
Benefits paid to participants (3,516,760)
Administrative expenses (15)
Transfers from other plans (Note 10) 85,902
---------------
Net decrease (3,499,599)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 14,231,433
---------------
End of year $ 10,731,834
===============
The accompanying notes to financial statements
are an integral part of this statement.
ITW BARGAINING SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
Employer Identification Number 36-1258310, Plan Number 039
1. DESCRIPTION OF THE PLAN AND INVESTMENT PROGRAM
The following describes the major provisions of the ITW Bargaining Savings and
Investment Plan (the "Plan"). Participants should refer to the plan document for
a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan in which employees covered by collective
bargaining agreements of participating business units of Illinois Tool Works
Inc. and its subsidiaries (the "Company") are eligible to participate in the
Plan on the first day of the month following the completion of six months of
service. Established on January 1, 1991 and as subsequently amended, the Plan is
subject to provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
The funding vehicle for the Plan is the ITW Savings and Investment Trust (the
"Master Trust") at Putnam Fiduciary Trust (the "Trustee"). The Trustee serves as
investment manager for the Putnam funds, recordkeeper, and trustee.
Participant and Company Contributions
Effective January 1, 2002, participants may contribute amounts from a minumum of
1% to a maximum of 50% of eligible compensation to their pre-tax and after-tax
accounts. Separately, the maximum pre-tax account contribution is 50% of
eligible compensation, while the maximum after-tax account contributions is 10%.
The combined pre-tax and after-tax contributions cannot exceed 50% of eligible
compensation. Participants may change their contribution percentages with each
payroll. Prior to January 1, 2002, the maximum pre-tax contribution was 16% and
the combined pre-tax and after-tax contribution could not exceed 16%.
Beginning September 1, 2002, partipants who are at least age 50 during the plan
year may be eligible to contibute an additional amount to the Plan on a pre-tax
basis. This additional amount, known as a "catch-up" contribution, is subject to
an annual maximum amount.
Participant and Company contributions may begin with the attainment of the
eligibility requirements of the Plan. The Company provides a contribution based
on formulas set forth for each participating business unit of the Company.
Investment Funds
Effective August 19, 2002, there are twenty-eight investment options in which
participants may choose to invest. Previously, there were thirty investment
options in which participants chose to invest. Investment income in each fund is
allocated daily among the participants' balances in each fund, except for the
Putnam Money Market Fund and the Stable Asset Fund. These two funds allocate
income to participant account balances monthly.
For each of the funds valued daily, investment income is allocated to
participant accounts based on the previous day's closing share value times the
number of shares in their account. For the monthly valued funds, a month-end
share value is determined by the Trustee from the investments and allocated to
participant accounts based on the number of shares in their account.
Participants may change their investment elections or transfer their balances
between funds in multiples of 1% on any given day.
Vesting
Participants' interest in their employee contribution accounts are fully vested
at all times. Effective January 1, 2002, eligible participants' interest in
their Company contribution accounts will be fully vested. Prior to January 1,
2002, participants' interest in their Company contribution accounts vest as
shown in the following table:
Years of Vested
Vesting Service Percentage
--------------- ------------
Less than 1 0
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
Participant Loans
Participants may borrow up to 50% of their vested account balance, up to
$50,000, with a minimum loan amount of $1,000 from the vested portion of their
accounts. Loans bear a reasonable rate of interest, are secured by a portion of
the participants' accounts and are repayable over a period not to exceed five
years. Amounts borrowed do not share in the earnings of the investment funds but
are credited with the interest payments made pursuant to the loan agreements.
Benefits
Upon termination of employment or death of a plan member, participants may
receive a lump-sum payment of their account balances. Additional optional
payment forms are available at the election of the participant.
Forfeitures
Forfeitures, representing the unvested portion of the Company's contributions,
previously were used to reduce future Company contributions pursuant to the
terms of the Plan. There were no unvested amounts remaining from participant
accounts as of December 31, 2002 and $373 as of December 31, 2001.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared on the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
Investments (other than those of the Stable Asset Fund) are reported at fair
values based on quoted market prices of the underlying securities in which each
fund invests. Investments of the Stable Asset Fund consist of fully
benefit-responsive investment contracts and are reported at contract value,
which approximates fair market value.
Purchases and sales of securities are recorded on a trade date basis. Interest
income is recorded on an accrual basis. Dividend income is recorded on the
ex-dividend date.
The Plan provides for investments that, in general, are exposed to various
risks, such as interest rate, credit, and overall market volatility risks. Due
to the level of risk associated with certain investment securities, it is
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect the amounts
reported in the statement of net assets available for benefits.
Net Appreciation/Depreciation
Net appreciation/depreciation on investments is based on the value of the assets
at the beginning of the year or at the date of purchase during the year, rather
than the original cost at the time of purchase. The Plan's unrealized
appreciation (depreciation) and realized gain (loss) are included in the Plan's
proportionate share of the Master Trust net investment income or loss.
3. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Plan has benefit-responsive investment contracts. The accounts for these
contracts are credited with earnings on the underlying investments and charged
for participant withdrawals and administrative expenses. The contracts are
included in the financial statements at contract value. Contract value
represents contributions made under the contract, plus earnings, less
participant withdrawals and administrative expenses.
There are no reserves against contract value for credit risk of the contract
issuer or otherwise. The average yield and crediting interest rates were
approximately 5 and 6 percent for 2002 and 2001, respectively.
4. ADMINISTRATIVE EXPENSES
Investment evaluation and Trustee expenses are paid through the Master Trust.
Effective with the 3rd quarter 2002, Trustee expenses are allocated to the plans
in the Master Trust. These expenses are prorated to the Plan based on the Plan
assets in relation to the Master Trust assets. Prior to that time, none of the
Trustee expenses were allocated to the Plan. Investment evaluation expenses are
not allocated to the Plan and deducted from Plan assets.
In addition, certain administrative expenses of the Plan are paid from plan
assets to the extent permissible by law. Other outside professional and
administrative services are paid by or provided by the Company.
5. ADMINISTRATION
All funds are deposited with and held for safekeeping by the Trustee under a
master trust agreement with the Company. The master trust agreement provides,
among other things, that the Trustee shall keep accounts of all trust
transactions and report them periodically to the Company. Investment decisions,
within the guidelines of the investment funds, are made by the Trustee and
investment managers. The Trustee may use an independent agent to effect
purchases and sales of common stock of the Company for the Illinois Tool Works
Inc. Common Stock Fund. Other administrative services, such as participant
recordkeeping, are performed by the Trustee.
6. RELATED PARTY TRANSACTIONS
The Trustee is a party-in-interest according to Section 3(14) of ERISA. Through
the Master Trust, the Trustee serves as plan fiduciary, investment manager and
custodian to the Plan. As defined by ERISA, any person or organization which
provides these services to the Plan is a related party-in-interest. Fees paid by
the Master Trust to the Trustee were $104,355 for the year ended December 31,
2002.
The Company is also a party-in-interest according to Section 3(14) of ERISA. The
Illinois Tool Works Inc. Common Stock Fund is a Plan investment option.
7. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
8. TAX STATUS
The Plan obtained its latest determination letter on March 12, 2003, in which
the Internal Revenue Service stated that the Plan and related trust, as adopted,
was designed in accordance with the applicable requirements of the Internal
Revenue Code. The plan administrator believes that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, the plan administrator believes that the
Plan was qualified and the related trust was tax-exempt as of the financial
statement dates.
9. MASTER TRUST
The Master Trust was established for the investment assets of the Plan and other
Company sponsored retirement plans. Certain amounts in the Plan's financial
statements represent the Plan's proportionate share of the corresponding total
of the Master Trust net assets and investment income.
The net Master Trust assets as of December 31, 2002 and 2001 are as follows:
2002 2001
---------- ----------
Assets-
Dividends receivable $ 1,311,606 $ --
Investments, at fair value-
Interest - bearing cash 15,378,187 23,814,926
Company common stock 369,872,990 409,166,071
Participant loans 56,216,158 53,947,526
Value of interest in common/collective trusts
59,972,096 74,025,136
Value of interest in registered investment
companies 793,179,746 939,722,911
Investment contracts with insurance companies 225,089,452 201,743,550
-------------- --------------
Total investments 1,519,708,629 1,702,420,120
-------------- --------------
Net Master Trust assets $1,521,020,235 $1,702,420,120
============== ==============
The Plan's proportionate share of the Master Trust's assets represents the
specific assets which are identifiable to the Plan and an allocation of the
common assets. The Plan's proportionate share of the Master Trust's assets was
1% at December 31, 2002 and 2001.
Net investment income relating to the common assets of the Master Trust are
allocated to the individual plans based upon average monthly balances invested
by each plan. For the year ended December 31, 2002, the earnings on investments
of the Master Trust are as follows:
Investment income-
Interest-
Interest-bearing cash $ 246
Interest from investment contracts with insurance companies 11,662,693
Participant loans 3,966,795
------------
Total interest 15,629,734
Dividends on Company common stock 6,544,188
Net gain on sale of assets 34,670,648
Unrealized depreciation of assets (49,249,104)
Net investment loss from common/collective trusts (16,919,209)
Net investment loss from registered investment companies (155,493,064)
Other income 483,474
------------
Net investment loss $(164,333,333)
============
The Plan's proportionate share of the Master Trust's net investment loss
represents an allocation of the common loss.
10. TRANSFER FROM OTHER PLAN
Effective October 31, 2002, the Medalist 401(k) Plan was merged into the Plan.
Substantially all of the assets were transferred in November 2002. The assets
transferred to the Plan totaled $85,902.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on June 11, 2003.
ITW BARGAINING SAVINGS AND INVESTMENT PLAN
By: /s/ Robert Callahan
---------------------------
Robert Callahan,
Senior Vice President, Human Resources
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report, included or incorporated by reference in this Form 11-K, into the
Illinois Tool Works Inc.'s previously filed registration statements on Form S-8
(File Nos. 333-105731, 333-22035, 333-37068, 333-75767 and 333-69542), Form S-4
(File Nos. 333-02671, 333-25471 and 333-88801) and Form S-3 (File Nos. 33-5780
and 333-70691) and Premark International, Inc.'s previously filed registration
statements on Form S-3 (File No.'s 33-35137 and 333-62105).
/s/ GRANT THORNTON LLP
Chicago, Illinois
June 11, 2003