Yesterday, Illinois Tool Works Inc. (ITW) posted operating revenues for the three months ended Aug 31. Operating revenues decreased 21% year over year primarily due to a 19% fall in base revenues and a 7% decline in contributions from currency translation.
Based on the ongoing contributions from restructuring activities and improvements in discrete end markets such as automotive and construction, the company raised its earnings forecast range for the third quarter. The company is expected to spend $50 million to $70 million on restructuring efforts in the second half of the year.
Illinois now expects third quarter income per share from continuing operations to be in a range of 48 cents to 56 cents, up from its prior forecast of 39 cents to 51 cents per share. Thus, total revenues are expected to increase in the range of 3% to 6% versus the previous quarter.
Management reported that base revenues for the recent three month period have modestly improved versus the previous three month period  largely due to improvements in discrete end markets. The company expects minimal end market recovery in the second half of the year and into 2010.
During the second quarter, the company acquired five companies, which added $54 million to the annual revenues. Despite these acquisitions, the company was able to generate strong free operating cash flow, part of which was utilized for debt payments. For the three months ended Aug 31, acquisitions contributed 5% to operating revenues. The management continues to see more acquisitions in the pipeline, which will further help Illinois grow in future.
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