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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

Commission file number 1-4797

ILLINOIS TOOL WORKS INC.

Registrant’s telephone number, including area code: (847) 724-7500

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]

          The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 12, 2002, was approximately $18,600,000,000.

          Shares of Common Stock outstanding at March 12, 2002 — 305,895,308.

Documents Incorporated by Reference

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PART I

ITEM 1. Business

General

     Illinois Tool Works Inc. (the “Company” or “ITW”) was founded in 1912 and incorporated in 1915. The Company is a worldwide manufacturer of highly engineered products and specialty systems.

     The Company has approximately 600 operations in 43 countries which are aggregated and organized for internal reporting purposes into the following five continuing segments:

     Engineered Products — North America: Businesses that are located in North America and the manufacture short lead-time plastic and metal components and fasteners, and specialty products such as polymers, fluid products and resealable packaging.

     Engineered Products — International: Businesses that are located outside North America and that manufacture short lead-time plastic and metal components and fasteners, and specialty products such as polymers, fluid products and electronic component packaging.

     Specialty Systems — North America: Businesses that are located in North America and that produce longer lead-time machinery and related consumables, and specialty equipment for applications such as food service and industrial finishing.

     Specialty Systems — International: Businesses that are located outside North America and that manufacture longer lead-time machinery and related consumables, and specialty equipment for applications such as food service and industrial finishing.

     Leasing & Investments: Businesses that make opportunistic investments in mortgage-related assets, leveraged and direct financing leases of aircraft and other equipment, properties and property developments, affordable housing and a venture capital fund.

     In November 1999, a wholly owned subsidiary of ITW merged with Premark International, Inc. (“Premark”), a commercial manufacturer of food equipment and laminate products. Shareholders of Premark received .8081 shares of ITW common stock in exchange for each share of Premark common stock outstanding. A total of 49,781,665 of ITW common shares were issued to the former Premark shareholders in connection with the merger.

     The merger was accounted for under the pooling-of-interests accounting method. Accordingly, ITW’s historical financial statements for periods prior to the merger have been restated to include the results of operations, financial position and cash flows of Premark as though the companies had been combined during such periods.

     In December 2001, the Company’s Board of Directors authorized the divestiture of the Consumer Products segment. These businesses became part of ITW in 1999 with the Premark merger. The segment is comprised of the following businesses: Precor specialty exercise equipment, West Bend appliances and premium cookware, and Florida Tile ceramic tile. The Company’s consolidated financial statements have been restated for all periods to present these businesses as discontinued operations in accordance with Accounting Principles Board Opinion No. 30. The Company intends to divest these businesses through sale transactions in 2002 and does not expect to incur a loss on their disposal.

     During the five-year period ending December 31, 2001, the Company acquired and disposed of numerous other operations which did not materially impact consolidated results.

Current Year Developments

     Refer to pages 25 through 33, Management’s Discussion and Analysis, in the Company’s 2001 Annual Report to Stockholders.

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Financial Information about Segments and Markets

     Segment and geographic data are included on pages 25 through 29 and 51 through 52 of the Company’s 2001 Annual Report to Stockholders.

     The principal markets served by the Company’s four continuing manufacturing segments are as follows:

     Operating results of the segments are described on pages 25 through 29 and 51 through 52 of the Company’s 2001 Annual Report to Stockholders.

     The Company’s manufacturing businesses distribute their products directly to industrial manufacturers and through independent distributors.

Backlog

     Backlog generally is not considered a significant factor in the Company’s businesses as relatively short delivery periods and rapid inventory turnover are characteristic of most of its products. Backlog by continuing manufacturing segment as of December 31, 2001 and 2000 is summarized as follows:

     Backlog orders scheduled for shipment beyond calendar year 2002 were not material in any manufacturing segment as of December 31, 2001.

     The information set forth below is applicable to all industry segments of the Company unless otherwise noted:

Competition

     The Company’s global competitive environment is complex because of the wide diversity of products the Company manufactures and the many markets it serves. Depending on the product or market, the Company may compete with a few other companies or with many others.

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     The Company is a leading producer of plastic, metal and laminate components and fasteners; polymers and fluid products; tooling for specialty applications; welding products; packaging machinery and related consumables; food service equipment; and industrial finishing equipment.

Raw Materials

     The Company uses raw materials of various types, primarily metals, plastics and paper that are available from numerous commercial sources. The availability of materials and energy has not resulted in any significant business interruptions or other major problems, nor are any such problems anticipated.

Research and Development

     The Company’s growth has resulted from developing new and improved products, broadening the application of established products, continuing efforts to improve and develop new methods, processes and equipment, and from acquisitions. Many new products are designed to reduce customers’ costs by eliminating steps in their manufacturing processes, reducing the number of parts in an assembly, or by improving the quality of customers’ assembled products. Typically, the development of such products is accomplished by working closely with customers on specific applications. Identifiable research and development costs are set forth on page 39 of the Company’s 2001 Annual Report to Stockholders.

     The Company owns approximately 3,000 unexpired United States patents covering articles, methods and machines. Many counterparts of these patents have also been obtained in various foreign countries. In addition, the Company has approximately 1,200 applications for patents pending in the United States Patent Office, but there is no assurance that any patent will be issued. The Company maintains an active patent department for the administration of patents and processing of patent applications.

     The Company believes that many of its patents are valuable and important. Nevertheless, the Company credits its leadership in the markets it serves to engineering capability; manufacturing techniques, skills and efficiency; marketing and sales promotion; and service and delivery of quality products to its customers.

Trademarks

     Many of the Company’s products are sold under various trademarks owned or licensed by the Company. Among the most significant are: ITW, Apex, Bernard, Buildex, Chemtronics, Corex, Deltar, Devcon, DeVilbiss, Dymon, Dynatec, Fastex, Foster, Hi-Cone, Hobart, Keps, LPS, Magna, Magnaflux, Miller, Mima, Minigrip, Paktron, Paslode, Precor, Ramset, Ransburg, Red Head, Rocol, Shakeproof, Signode, Stero, Teks, Tempil, Tenax, Texwipe, Traulsen, Tri-Mark, Vulcan, West Bend, Wilsonart, and Zip-Pak.

Environmental

     The Company believes that its plants and equipment are in substantial compliance with applicable environmental regulations. Additional measures to maintain compliance are not expected to materially affect the Company’s capital expenditures, competitive position, financial position or results of operations.

     Various legislative and administrative regulations concerning environmental issues have become effective or are under consideration in many parts of the world relating to manufacturing processes, and the sale or use of certain products. To date, such developments have not had a substantial adverse impact on the Company’s sales or earnings. The Company has made considerable efforts to develop and sell environmentally compatible products resulting in new and expanding marketing opportunities.

Employees

     The Company employed approximately 52,000 persons as of December 31, 2001 and considers its employee relations to be excellent.

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International

     The Company’s international operations include subsidiaries, joint ventures and licensees in 42 countries on six continents. These operations serve such markets as construction, automotive, food retail and service, general industrial, and others on a worldwide basis. The Company’s international operations contributed approximately 37% of operating revenues in 2001 and 36% in 2000.

     Refer to pages 25 through 33 and 51 through 52 in the Company’s 2001 Annual Report to Stockholders for additional information on international activities. International operations are subject to certain risks inherent in conducting business in foreign countries, including price controls, exchange controls, limitations on participation in local enterprises, nationalization, expropriation and other governmental action, and changes in currency exchange rates.

Forward-looking Statements

     This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding the availability of raw materials and energy, the cost of compliance with environmental regulations, adequacy of internally generated funds, the recoverability of the Company’s investment in mortgage-related assets, the meeting of dividend payout objectives, the profitable divestiture of the Consumer Products segment in 2002, Premark’s target operating margins, the availability of additional financing and the Company’s 2002 forecasts. These statements are subject to certain risks, uncertainties, and other factors, which could cause actual results to differ materially from those anticipated, including, without limitation, the risks described herein. Important factors that may influence future results include (1) a further downturn in the construction, automotive, general industrial, food retail and service, or real estate markets, (2) further deterioration in global and domestic business and economic conditions, particularly in North America, Europe and Australia, (3) an interruption in, or reduction in, introducing new products into the Company’s product line, (4) an unfavorable environment for making acquisitions or dispositions, domestic and international, including adverse accounting or regulatory requirements and market value of candidates, and (5) uncertainties arising from the aftermath of the September 11th tragedy.

Executive Officers

     Executive Officers of the Company as of March 15, 2002:

     The executive officers of the Company serve at the pleasure of the Board of Directors. Except for Messrs. Flood, Gresh, Hansen, Ringler, and Sutherland, each of the foregoing officers has been employed by

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ITEM 2. Properties

     As of December 31, 2001 the Company operated the following plants and office facilities, excluding regional sales offices and warehouse facilities:

     The principal plants outside of the U.S. are in Australia, Belgium, Brazil, Canada, Denmark, France, Germany, Italy, Mexico, Spain, Switzerland and the United Kingdom.

     The Company’s properties are primarily of steel, brick or concrete construction and are maintained in good operating condition. Productive capacity, in general, currently exceeds operating levels. Capacity levels are somewhat flexible based on the number of shifts operated and on the number of overtime hours worked. The Company adds productive capacity from time to time as required by increased demand. Additions to capacity can be made within a reasonable period of time due to the nature of the businesses.

ITEM 3. Legal Proceedings

     The United States Environmental Protection Agency has issued a proposed fine of $1,259,000 against one of the Company’s businesses for alleged violation of hazardous waste regulations issued under the Resource Conservation and Recovery Act of 1976. The proposed fine principally relates to activities at a facility in Kansas City that took place prior to ITW’s acquisition of the business in July 1998. The Company never operated at the Kansas City facility. The former owners of the business have indemnified ITW with respect to the matter, insofar as it relates to pre-acquisition activities. ITW and the former owners are in current negotiations with The United States Environmental Protection Agency regarding the amount of the fine.

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ITEM 4. Submission of Matters to a Vote of Security Holders

     Not applicable.

PART II

ITEM 5. Market for the Registrant’s Common Equity and Related Stockholder Matters

     This information is incorporated by reference to page 53 of the Company’s 2001 Annual Report to Stockholders.

ITEM 6. Selected Financial Data

     This information is incorporated by reference to page 54 and 55 of the Company’s 2001 Annual Report to Stockholders.

ITEM 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

     This information is incorporated by reference to pages 25 through 33 of the Company’s 2001 Annual Report to Stockholders.

ITEM 7A.     Quantitative and Qualitative Disclosures about Market Risk

     This information is incorporated by reference to pages 31 and 32 of the Company’s 2001 Annual Report to Stockholders.

ITEM 8.     Financial Statements and Supplementary Data

     The financial statements and report thereon of Arthur Andersen LLP dated January 28, 2002, as found on pages 34 through 52 and the supplementary data found on page 53 of the Company’s 2001 Annual Report to Stockholders, are incorporated by reference.

     The report of Ernst & Young LLP dated January 24, 2000 on the financial statements of Premark International, Inc. is included as Exhibit 13(b).

ITEM 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

     Not applicable.

PART III

ITEM 10.     Directors and Executive Officers of the Company

     Information regarding the Directors of the Company is incorporated by reference to the information under the caption “Election of Directors” in the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders.

     Information regarding the Executive Officers of the Company can be found in Part I of this Annual Report on Form 10-K on pages 4 and 5.

     Information regarding compliance with Section 16(a) of the Exchange Act is incorporated by reference to the information under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders.

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ITEM 11.     Executive Compensation

     This information is incorporated by reference to the information under the caption “Executive Compensation” and “Director Compensation” in the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders.

ITEM 12.     Security Ownership of Certain Beneficial Owners and Management

     This information is incorporated by reference to the information under the caption “Ownership of ITW Stock” in the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders.

ITEM 13.     Certain Relationships and Related Transactions

     Additional information is incorporated by reference to the information under the captions “Director Compensation” and “Executive Compensation” in the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders.

PART IV

ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a)(1) Financial Statements

     The financial statements and report thereon of Arthur Andersen LLP dated January 28, 2002 as found on pages 34 through 52 and the supplementary data found on page 53 of the Company’s 2001 Annual Report to Stockholders, are incorporated by reference.

     The report of Ernst & Young LLP dated January 24, 2000 on the financial statements of Premark International, Inc. is included as Exhibit 13(b).

     (2) Exhibits

     (i)  See the Exhibit Index on pages 9 and 10 of this Form 10-K.

     (ii) Pursuant to Regulation S-K, Item 601(b)(4)(iii), the Company has not filed with Exhibit 4 any debt instruments for which the total amount of securities authorized thereunder are less than 10% of the total assets of the Company and its subsidiaries on a consolidated basis as of December 31, 2001, with the exception of the agreements related to the 5 3/4% and 6 7/8% Notes, which are filed with Exhibit 4. The Company agrees to furnish a copy of the agreements related to the debt instruments which have not been filed with Exhibit 4 to the Securities and Exchange Commission upon request.

     No reports on Form 8-K have been filed during the three months ended December 31, 2001.

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SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 21st day of March 2002.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on this 21st day of March 2002.

     Original powers of attorney authorizing W. James Farrell to sign this Annual Report on Form 10-K and amendments thereto on behalf of the above-named directors of the registrant have been filed with the Securities and Exchange Commission as part of this Annual Report on Form 10-K (Exhibit 24).

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EXHIBIT INDEX

ANNUAL REPORT on FORM 10-K

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