June Update

Steve Mitchell

Agenda

• Update on year to date – how are we doing?

• ITW Enterprise Strategy

• Key Programs

– Hi Tek

– Asian Push

– New Products

• Policies

How are we doing?

• How are we doing?

– 5 months to May

• On plan

• China and Europe still strong

– Added people in China

• Rebecca Wang South China Sales

• South China Service

ITW Enterprise

• Company wide program

• Plan to grow and prosper

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ITW’s Enterprise Strategy

Driving Our PerformanceMarch 2013

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What We’ll Cover

● Our current environment

and challenges

● ITW’s Enterprise Strategy

● What the Enterprise

Strategy will mean

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● What the Enterprise

Strategy won’t mean

● What we’ll achieve

● Your role

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“ITW’s Enterprise Strategy refocuses the company on our

unique core capabilities – our 80/20 business process,

sustainable differentiation through innovation, and our

decentralized entrepreneurial culture – to drive our

performance and make ITW an even better company.”

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Where We Stand Today

● Fundamental changes to the competitive landscape

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● Slower growth in

the immediate

years ahead

● Different

expectations

for returns

We are underperforming our potential and

need to improve our results.

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ITW Has the Potential to be a Best-in-class

Company, Yet Today We…

● Haven’t leveraged 80/20 to its full capacity

● Aren’t as focused on differentiation as we need to be

● Don’t maximize our purchasing power – ITW has $11 billion in underleveraged spend

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Thinking About Our Part of the Business…

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What could

we be doing

better?

What

changes are

you seeing?

What

changes do

you want to

see?

What’s

possible

when we’re

at our best?

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We’ve overcome challenges before,

and we will again by taking control of our destiny

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Enterprise Strategy: 2012 – 2017

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ITW’s Unique

Core Capabilities

80/20 Business

Process

Sustainable

Differentiation

through

Innovation

Decentralized

Entrepreneurial

Culture

Differentiated

Performance

Solid Growth

Strong

Returns

Best-in-Class

Operator

Key Enterprise Initiatives

• Portfolio Management

• Business Structure

Simplification

• Strategic Sourcing

• Leadership Development

and Talent Management

• 80/20 Execution and

Impact

• Enterprise Brand Strategy

Integrity Simplicity Trust Respect Shared Risk

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Our Enterprise Strategy Goals by 2017

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Solid growth

• Organic growth of 200

basis points above

global industrial

production by 2017

Strong returns

• Return on invested

capital: 20%+ by

2017

Best-in-class

operator

• Target operating

margins: 20%+ by

2017

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The Six Enterprise Strategy Key Initiatives

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1. Portfolio Management

2. Business Structure Simplification

3. Strategic Sourcing

4. Leadership Development and

Talent Management

5. 80/20 Execution and Impact

6. Enterprise Brand Strategy

Externally visible Internally focused

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Portfolio Management

● Focus on businesses with strong

differentiation attributes and organic

growth potential

● Execute fewer, but more focused, strategic

acquisitions

● Look beyond a business’ performance, at

its core competitive advantages

● Some businesses will be sold – narrowing

ITW’s focus and providing the business

with a more suitable environment

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Business Structure Simplification

● Simplify our decentralized operating approach

to improve global competitiveness and enhance

our ability to invest resources

● Reduce the number of divisions by combining

them and scaling up their size

● Preserve ITW’s entrepreneurial culture

● Continue to provide flexibility within a

framework

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Business Structure Simplification

●What does this mean for us?

●What changes are we seeing, or do we anticipate seeing?

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Strategic Sourcing

● Transform sourcing into a core strategic function

● Leverage ITW’s purchasing scale

● Enhance global profitability and global competitiveness

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Leadership Development and Talent Management

● Identify and grow ITW’s leaders of today and tomorrow

● Make our leadership pipeline more diverse

● Foster an inclusive environment

● Offer more opportunities for broader career paths

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80/20 Execution and Impact

● Reinvigorate 80/20

● Apply 80/20 to our now larger divisions

● Looking at every element of the business to

understand the resources available and those needed

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● What does this means for us?

● How will we apply 80/20?

● What changes are we seeing, or do we anticipate seeing?

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80/20 Execution and Impact

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Enterprise Brand Strategy

● Speak to employees and investors in a consistent way

● Build a positive image and value proposition for key audiences

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What’s Not Changing

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ITW’s

core values

ITW’s

decentralized

entrepreneurial

culture

ITW’s

core commitments

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Our Core Values

● Integrity

● Simplicity

● Trust

● Respect

● Shared Risk

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Our Entrepreneurial Culture

● Decentralization

● Flexibility within a framework

● Accountability and autonomy

● Results driven

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Our Core Commitments

● Engagement with our employees

● Connection with our customers

● Culture of innovation

● Flexibility to operate in a framework

● Community involvement

● The highest ethical standards in

everything we do

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What This Means for Us

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What’s

working well

that we must

continue?

What do we

need to do

different,

and why?

What does

success look

like for us?

How will we

know it’s

working?

For Our Area of the Business…

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What we’ll achieve –

for the company, employees,

customers and investors…

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Company

● Best-in-class

performance

● Better able to

compete

globally

● More

targeted

investments

● Increased

growth

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Employees

● New career opportunities

● Even greater focus on

long-term business health

● Work at a strong, leading

company

● More inclusive

● New professional

development resources

Customers

● More

innovative

solutions

● Solution-

oriented

products and

services

Investors

● Increased value

● Best-in-class total

shareholder

returns over the

long-term

The company will be less complex and easier for everyone to understand.

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Our roles in executing

the Enterprise Strategy

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What You Can Expect from Leadership

Executive Leaders will:

● Set strategy to improve ITW’s results

● Communicate the strategy to the

divisions

● Provide updates on progress

● Share information with the divisions

as it becomes available

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Group Presidents, VP/GMs and

key functional leaders will also:

● Implement the Strategy

● Drive a mindset of differentiation

● Communicate the strategy,

progress and information to their

area of the business

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Your Role

● Understand and support the Enterprise Strategy

● Lead global business growth

● Be a change agent

● Make decisions consistent with the Enterprise Strategy

● Ask questions on the Enterprise Strategy and what it means for you

● Take pride that ITW is doing what’s right

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Enterprise Strategy: 2012 – 2017

35

ITW’s Unique

Core Capabilities

80/20 Business

Process

Sustainable

Differentiation

through

Innovation

Decentralized

Entrepreneurial

Culture

Differentiated

Performance

Solid Growth

Strong

Returns

Best-in-Class

Operator

Key Enterprise Initiatives

• Portfolio Management

• Business Structure

Simplification

• Strategic Sourcing

• Leadership Development

and Talent Management

• 80/20 Execution and

Impact

• Enterprise Brand Strategy

Integrity Simplicity Trust Respect Shared Risk

Key ProgramsHiTek

• Teknek Key advantage

– Technical capability

– Scale

• In the last 12months we made around 10,000 rollers

• How do we use it

– Need to tell the world

– Develop ways to win sales arguments

– Make more high level presentations

Asian Push

• Key markets such as Flat Panel Display located in Asia

– Our technology works best

– Competitors working hard to catch up.

• Started several research projects with Universities to accelerate development

– Sheffied Uni Science of cleaning

– Birmingham University Advanced Organic Polymers

– Holst Institute Clean4Yield

• SFM to spend more time in Asia

– High level presentations

– Spread the HiTek word

– Help out with Polymer development

• Ruaridh to help out with Operations

New Products

• BC 460

– PCB Board cleaner for volume production

– Emphasis on Asia

• New roller polymers

– Launched later in 13/14