Illinois Tool Works (ITW) 10-K risk factor changes: FY2022 vs FY2021

[removed: The Company's business, financial condition, results of operations and cash flows are subject to various risks, including, but] not limited to, those set forth below, which could cause actual results to vary materially from recent results or from anticipated future results.

The full and long-term extent of the effects of the COVID-19 pandemic [added: or other outbreaks, pandemics, or public health crises] on our business depend on future events that continue to be highly uncertain and cannot be predicted.

The COVID-19 pandemic and the [removed: continued] measures taken globally to reduce its spread have negatively impacted the global economy, disrupted consumer/customer demand and global supply chains, and created significant volatility and disruption of financial markets.

The COVID-19 pandemic continues to have the potential to [removed: significantly and extendedly] alter demand for our products and to disrupt our supply chain as a result of shifts in demand, illness, [removed: quarantine,] travel restrictions, transportation disruptions, increased border controls or closures, or financial hardship.

The ultimate significance of the COVID-19 pandemic [added: or other outbreaks, pandemics or public health crises] on our business will depend on events that are beyond our control and that we cannot predict.

[added: Slower economic growth, financial market instability, inflation, natural disasters, public health crises (such as the COVID-19 pandemic), labor market challenges, supply chain disruptions, armed conflicts (such as the Russia and Ukraine conflict), government deficit reduction, sequestration and other austerity measures impacting the] markets the Company serves can adversely affect the Company's businesses by reducing demand for the Company's products and services, limiting financing available to the Company's customers, causing production delays, increasing order cancellations and the difficulty in collecting accounts receivable, increasing price competition, or increasing the risk that counterparties to the Company's contractual arrangements will become insolvent or otherwise unable to fulfill their obligations.

Over 50% of the Company's net sales are derived from customers outside the United States, and the Company currently operates in [removed: 52] [added: 51] countries.

- political, social and economic instability and [removed: disruptions;][added: disruptions, including political unrest and armed conflicts;]

- government [removed: embargoes] [added: embargoes, sanctions] or foreign trade restrictions;

Further changes in U.S. trade policy (including new or additional increases in duties or tariffs) and retaliatory actions by U.S. trade [removed: partners] [added: partners, including sanctions against Russia and developments in U.S.-China trade relations,] could result in a worsening of economic conditions.

Additionally, other core activities of the enterprise strategy related to portfolio discipline and organic growth, including customer-back innovation and strategic sales excellence, may not [added: have the desired impact on future operating results.]

The Company has recorded significant goodwill and other identifiable intangible assets on its balance sheet as a result of acquisitions, including the acquisition of the MTS Test & Simulation business in [added: December] 2021.

The Company [removed: has] [added: and its customers have] experienced supply chain disruptions related to the COVID-19 [removed: pandemic,] [added: pandemic] and [added: the global reaction to Russia's ongoing invasion of Ukraine, and] continued disruptions to the supply chain could adversely affect the Company's ability to meet commitments to customers.

Prices for raw materials necessary for production have fluctuated significantly in the past and the Company [removed: is currently experiencing] [added: has experienced] upward pricing pressure on raw materials such as steel, resins and chemicals.

In particular, inflation, changes in trade policies, the imposition of duties and tariffs, potential retaliatory countermeasures, public health crises (such as the COVID-19 [removed: pandemic)] [added: pandemic), threatened or actual military conflicts] and severe weather events could adversely impact the price or availability of raw materials.

Although the cyber-attacks experienced to date have not had a material impact, future security breaches [added: of our technology networks and systems or those of our vendors and third-party service providers] could result in unauthorized disclosure of confidential information or personal data belonging to our employees, partners, customers or suppliers, which could cause reputational and legal harm as we are subject to data privacy laws, including the EU General Data Protection Regulation, in the various countries in which we operate.

If our information technology systems suffer severe damage, disruption, or shutdown, and business continuity plans do not effectively resolve the issues in a timely manner, or if we [removed: violate data privacy laws, there could be a negative impact on operating results or the Company may suffer financial or reputational damage.]

The Company has engaged in various acquisitions in the past, such as the [removed: recently completed] acquisition of the MTS Test & Simulation [removed: business,] [added: business in December 2021,] and could choose to acquire additional businesses in the future.

The Company has had significant divestiture activity in the past in accordance with its portfolio management initiative, and it [added: divested two businesses in the fourth quarter of 2022 as it] continues portfolio refinements to maintain portfolio discipline.

The Company's businesses expose it to potential costs and adverse rulings associated with commercial, intellectual property, [added: employment,] toxic tort and other product liability [removed: claims.][added: claims and lawsuits.]

[removed: Even if it maintains adequate insurance programs, claims, judgements, fines or settlements] could have a material adverse effect on the Company's financial condition, liquidity and results of operations and on its ability to obtain suitable, adequate or cost-effective insurance in the future.

The Company may incur fines or penalties, damage to its reputation or other adverse consequences if its employees, agents or business partners violate anti-bribery, competition, export and import, [added: trade sanctions, data privacy,] environmental, human rights or other laws.

The Company cannot ensure that its internal controls will always protect against reckless or criminal acts committed by its employees, agents or business partners that might violate U.S. and/or non-U.S. laws, including anti-bribery, competition, export and import, [added: trade sanctions, data privacy,] environmental and human rights laws.

As recent years have seen a substantial increase in the global enforcement of anti-corruption laws and adoption of new [added: trade sanctions and] human rights laws, any such improper actions could subject the Company to civil or criminal investigations, could lead to substantial civil or criminal monetary and non-monetary penalties against the Company or its subsidiaries, or could damage its reputation.

[added: Forward-looking statements may be identified by the use of words such as "believe," "expect," "plans," "intend," "may," "strategy," "prospects," "estimate," "will," "should," "could," "project," "target,"] "anticipate," "guidance," "forecast," and other similar words, and may include, without limitation, statements regarding the duration and potential effects of the COVID-19 pandemic and global supply chain challenges, related government actions and the Company's strategy in response thereto on the Company's business, future financial and operating performance, free cash flow, economic and regulatory conditions in various geographic regions, the impact of foreign currency fluctuations, the timing and amount of benefits from the Company's enterprise strategy initiatives, the timing and amount of dividends and share repurchases, the protection of the Company's intellectual property, the likelihood of future goodwill or intangible asset impairment charges, the impact of adopting new accounting pronouncements, the adequacy of internally generated funds and credit facilities to service debt and finance the Company's capital allocation priorities, the sufficiency of U.S. generated cash to fund cash requirements in the U.S., the cost and availability of additional financing, the availability of raw materials and energy and the impact of raw material cost inflation, enterprise initiatives, the Company's portion of future benefit payments related to pension and postretirement benefits, the Company's information technology infrastructure, potential acquisitions and divestitures and the expected performance of acquired businesses and impact of divested businesses, the impact of U.S. and global tax legislation and the estimated timing and amount related to the resolution of tax matters, the cost of compliance with environmental regulations, the impact of failure of the Company's employees to comply with applicable laws and regulations, and the outcome of outstanding legal proceedings.

The Company's business, financial condition, results of operations and cash flows are subject to various risks, including, but

Rising interest rates could have a dampening effect on overall economic activity and/or the financial condition of the Company's customers, either or both of which could negatively affect customer demand for the Company's products and customers' ability to repay obligations to the Company.

Rising interest rates could have an impact on the Company and its customers' cost of capital.

violate data privacy laws, there could be a negative impact on operating results or the Company may suffer financial or reputational damage.

Even if it maintains adequate insurance programs, claims, judgments or settlements

These measures and the continued volatility of the global economy adversely affected our results of operations for 2020, and while most of our segments achieved strong results in 2021, we are currently unable to quantify the full and long-term impact of the pandemic on our financial condition, results of operations and liquidity.

The Company has implemented numerous actions in order to focus on the needs of its colleagues and customers, such as redesigning production processes, adjusting shift schedules and assignments and implementing aggressive new workplace sanitation practices and a coordinated response to ensure access to personal protective equipment to minimize infection risk.

Further actions may be required in response to evolving conditions such as renewed travel restrictions, quarantine, and stay-at-home orders as well as uncertainty regarding the emergence of new variants and the timing of widespread availability of testing, vaccines and treatments.

We cannot predict whether there will be pandemic-related facility closures in the future.

The Company has sought to implement a differentiated strategy to manage through the pandemic, including a focus on thoughtful cost management and continued investment in areas of strategic importance in order to maintain optionality and fully participate in the recovery phase.

Although some opportunities have already emerged from this strategy, the Company cannot estimate the extent or the timing of the benefits from this strategy, if any.

If the Company's strategy does not generate the expected benefits, the Company's long-term financial results could be adversely impacted.

Furthermore, the COVID-19 pandemic has the potential to impact the proper functioning of financial and capital markets.

If the economic recovery is protracted, we may not be able to access our short-term credit facilities and may be required to seek additional financing sources, which may not be available on reasonable terms or at all.

If the Company suffers a liquidity shortage, we may be forced to reduce our workforce, decrease or suspend dividend payments or share repurchases, or adopt other measures.

We cannot predict the likelihood, timing or the consequences of a future liquidity shortage in our business.

Slower economic growth, financial market instability, inflation, natural disasters, public health crises (such as the COVID-19 pandemic), labor market challenges, supply chain disruptions, government deficit reduction, sequestration and other austerity measures impacting the

have the desired impact on future operating results.

Forward-looking statements may be identified by the use of words such as "believe," "expect," "plans," "intend," "may," "strategy," "prospects," "estimate," "will," "should," "could," "project," "target,"

Illinois Tool Works Inc. (the "Company" or "ITW") is a global manufacturer of a diversified range of industrial products and equipment with [removed: 83] [added: 84] divisions in [removed: 52] [added: 51] countries.

As of December 31, [removed: 2021,] [added: 2022,] the Company employed approximately [removed: 45,000] [added: 46,000] people.

[removed: The ITW Business Model] [added: It] is the Company's competitive advantage and defines how ITW creates value for its shareholders.

[removed: It] [added: The ITW Business Model] is comprised of three unique elements:

[added: ITW's innovation efforts are] focused on understanding customer needs, particularly those in "80" markets with solid long-term growth fundamentals, and creating unique solutions to address those needs.

These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately [removed: 19,300] [added: 19,200] granted and pending patents;

ITW colleagues recognize their unique responsibilities to [removed: execute the Company's strategy and values.]

ITW now has [removed: 83] [added: 84] scaled-up divisions with significantly enhanced focus on growth investments, core customers and products, and customer-back innovation.

- The Strategic Sourcing initiative established sourcing as a core strategic and operational capability at ITW, delivering an average of one percent reduction in spend each year from 2013 through [removed: 2021] [added: 2022] and continues to be a key contributor to the Company's ongoing enterprise strategy.

Since the launch of the enterprise strategy, the Company has made considerable progress [removed: to position itself] [added: on our path] to [removed: reach] full potential.

The ITW Business Model and unique set of capabilities are a source of strong and enduring competitive advantage, [added: but for the Company to truly reach its full potential, every one of its divisions must also be operating at its full potential.]

To do so, the Company remains focused on its core [removed: principles to position ITW to perform to its full potential:][added: principles:]

The Company previously communicated its intent to explore options, including potential divestitures, for certain businesses with [added: annual] revenues totaling up to [removed: $1] [added: $1.0] billion.

In the fourth quarter of 2019, the Company completed the divestitures of three [removed: businesses and continues to evaluate options for certain other] businesses.

[removed: However, due] [added: Due] to the COVID-19 pandemic, the Company [removed: deferred] [added: chose to defer] any [removed: further] significant divestiture activity [removed: until 2022 or later.][added: in 2020 and 2021.]

The Company [removed: intends to reinitiate] [added: reinitiated] the divestiture process in 2022 for certain businesses with combined annual revenues of approximately $0.5 [removed: billion.][added: billion, subject to approval by the Company's Board of Directors.]

Financial Statements and Supplementary Data for further information regarding [removed: divestiture activity.][added: the Company's divestitures.]

While it was the challenges brought about by the COVID-19 pandemic that dominated the Company's attention starting in 2020, it was the collection of capabilities and competitive advantages that have been built and honed [removed: over the past nine years] [added: since 2012] through the execution of ITW's enterprise strategy that provided the Company with the options to respond.

[removed: As] [added: Throughout] the global [removed: pandemic continues,] [added: pandemic,] the Company [removed: continues to focus] [added: has focused] its efforts on (1) protecting the health and [removed: support] [added: supporting] the well-being of ITW's colleagues; (2) serving the Company's customers with excellence; (3) [removed: maintain] [added: maintaining] financial strength, liquidity and strategic optionality; and (4) [removed: leverage] [added: leveraging] the Company's strengths to position it to fully participate in the recovery.

The Company expects these efforts to contribute meaningfully to [added: accelerate its progress toward full-potential organic growth.]

In response to the outbreak, governments around the globe [removed: have taken] [added: took] various actions to reduce its spread, including travel restrictions, shutdowns of businesses deemed nonessential, and stay-at-home or similar orders.

The COVID-19 pandemic and the measures taken globally to reduce its spread have negatively impacted the global economy, causing significant disruptions in the Company's global operations starting primarily in the latter part of the first quarter of 2020 as COVID-19 [removed: continued to] spread and [removed: impact] [added: impacted] the countries in which the Company operates and the markets the Company serves.

[removed: For the duration of] [added: Throughout] the [removed: COVID-19] [added: global] pandemic, the Company [removed: is focusing] [added: has focused] on the following priorities: (1) [removed: protect] [added: protecting] the health and [removed: support] [added: supporting] the well-being of ITW's colleagues; (2) [removed: continue] [added: continuing] to serve the Company's customers with excellence to the best of its ability; (3) [removed: maintain] [added: maintaining] financial strength, liquidity and strategic optionality; and (4) [removed: leverage] [added: leveraging] the Company's strengths to position it to fully participate in the recovery.

To support its customers, the Company [removed: has] worked diligently to keep its facilities open and operating safely.

[added: The Company also adapted] customer service systems and practices to seamlessly serve its customers under "work from home" requirements in many parts of the world.

In some cases, this [removed: is] [added: was] because the Company's products directly [removed: impact] [added: impacted] the COVID-19 response effort.

In other cases, the Company's businesses [removed: are] [added: were] designated as critical because they [removed: play] [added: played] a vital role in serving and supporting industries that [removed: are] [added: were] deemed essential to the physical and economic health of our communities.

While the vast majority of the Company's facilities [removed: have] remained open and operational during the pandemic, many of these facilities were operating at a reduced capacity at various times since the outset of the pandemic.

The full extent of the COVID-19 outbreak and its impact on the markets served by the Company and on the Company's operations and financial position continues to be highly uncertain as conditions continue to fluctuate around the world, with vaccine administration rising in certain [removed: regions and] [added: regions,] spikes in infections (including the spread of variants) [removed: also being experienced.][added: continuing to be experienced and certain jurisdictions continuing to impose stay-at-home orders.]

[removed: A prolonged outbreak] [added: The pandemic and resurgence of outbreaks] could continue to [removed: interrupt] [added: adversely impact] the operations of the Company and its customers and suppliers.

[removed: The] [added: In a challenging and dynamic environment, the] Company delivered strong financial results in [removed: 2021] [added: 2022] primarily due to the continued successful execution of enterprise initiatives, including the "Win the Recovery" actions initiated over the course of the past year, and continued focus on the highly differentiated ITW Business Model.

Despite rising [removed: raw material] costs and a challenging global supply chain environment, the Company generated operating revenue growth of [removed: 15.0] [added: 10.2] percent and organic revenue growth of [removed: 12.3] [added: 12.1] percent, as all [added: seven] segments [removed: had] [added: achieved worldwide] organic revenue growth in [removed: 2021.][added: 2022.]

The MTS Test & Simulation business had operating revenue of $46 million for the one month ended December 31, [removed: 2021.][added: 2021 and $422 million for the twelve months ended December 31, 2022.]

The Company expects the MTS Test & Simulation business to [removed: be neutral to diluted earnings per share in the next twelve months, but expects improved earnings and] [added: improve] operating margin performance in later years through the application of the Company's 80/20 Front-to-Back process.

The Company's consolidated results of operations for [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019] [added: 2020] were as follows:

| | | | 2021 | | | | | | 2020 | | | | | | | | | | | | Inc (Dec) | | | | | | Organic | | | [removed: Acquisition/ Divestiture] [added: Acquisition/Divestiture] | | | Restructuring | | | [removed: | | |] Foreign Currency | | | Total | | |

[removed: Additionally, product] [added: Product] line simplification activities reduced organic revenue by [removed: 20] [added: 40] basis points.

- Operating margin of 24.1% increased 120 basis points primarily due to positive operating leverage of 250 basis points and benefits from the Company's enterprise initiatives of 110 basis points, partially offset by unfavorable price/cost of 150 basis points and higher [removed: overhead] [added: operating] expenses, including employee-related expenses.

The 2021 effective tax rate benefited from a discrete income tax benefit of $21 million in the third quarter related to the utilization of capital [removed: losses] [added: loss carryforwards] and a discrete income tax benefit of $112 million in the second quarter of 2021 related to the remeasurement of net deferred tax assets due to the enactment of the U.K. Finance Bill 2021, which increases the U.K. income tax rate from 19% to 25% effective April 1, 2023.

| | | | [removed: 2020] [added: 2022] | | | | | | [removed: 2019] [added: 2021] | | | | | | | | | | | | Inc (Dec) | | | | | | Organic | | | Acquisition/ Divestiture | | | Restructuring | | | | | | Foreign Currency | | | Total | | |

execute the Company's strategy and values.

In the second quarter of 2022, plans were approved to divest two businesses, including one business in the Polymers & Fluids segment and one business in the Food Equipment segment.

In the fourth quarter of 2022, both of these businesses were divested.

The business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million.

The business in the Food Equipment segment was sold for $59 million, subject to certain closing adjustments, resulting in a pre-tax gain of $41 million.

Operating revenue related to these divested businesses that was included in the Company's results of operations for the twelve months ended December 31, 2022, 2021 and 2020 was $106 million, $115 million and $113 million, respectively.

Pandemic Priorities and "Win the Recovery"

Despite the ongoing disruptions caused by the COVID-19 pandemic, the Company experienced solid recovery progress in many of its end markets during 2021 and, to a greater extent, in 2022 as vaccines became widely available and many governments reduced restrictions related to COVID-19.

During the first quarter of 2022, Russian military forces invaded Ukraine.

In response, the United States and several other countries imposed economic and other sanctions on Russia.

The Company has four immaterial Russian subsidiaries with total assets of approximately $25 million as of December 31, 2022.

The revenue for these four subsidiaries for the year ended December 31, 2022 was approximately $38 million.

Sales to customers in Russia represented less than one percent of ITW's total consolidated revenue and were not material to the Company's results of operations or financial position.

In the second quarter of 2022, plans were approved to divest two businesses, including one business in the Polymers & Fluids segment and one business in the Food Equipment segment.

These two businesses were classified as held for sale beginning in the second quarter of 2022.

In the fourth quarter of 2022, both of these businesses were divested.

On October 3, 2022, the business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million.

On December 1, 2022, the business in the Food Equipment segment was sold for $59 million, subject to certain closing adjustments, resulting in a pre-tax gain of $41 million.

The pre-tax gains were included in Other income (expense) in the Statement of Income.

Income taxes on the gains were mostly offset by the utilization of capital loss carryforwards of $32 million.

Operating revenue related to these divested businesses that was included in the Company's results of operations for the twelve months ended December 31, 2022, 2021 and 2020 was $106 million, $115 million and $113 million, respectively.

In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment.

This business was presented as held for sale in the Statement of Financial Position as of December 31, 2022 and had assets and liabilities held for sale of $8 million and $1 million, respectively.

Operating revenue for this business was approximately $37 million for the twelve months ended December 31, 2022.

The Company expects to sell this business within one year.

Operating income was $3.8 billion in 2022, an increase of 9.0 percent.

Operating margin was 23.8 percent in 2022.

2022 compared to 2021

| Operating revenue | | | $ | 15,932 | | | | | $ | 14,455 | | | | | | | | | | | 10.2 | | % | | | | 12.1 | | % | 2.4 | | % | — | | % | | | | (4.3) | | % | 10.2 | | % |

| Operating income | | | $ | 3,790 | | | | | $ | 3,477 | | | | | | | | | | | 9.0 | | % | | | | 14.3 | | % | (0.1) | | % | (0.7) | | % | | | | (4.5) | | % | 9.0 | | % |

- Operating revenue increased due to higher organic revenue and the MTS Test & Simulation acquisition, which was completed on December 1, 2021, partially offset by the unfavorable effect of foreign currency translation and the impact of divestiture activity in the fourth quarter of 2022.

- Organic revenue grew 12.1% with growth in all seven segments.

◦North American organic revenue increased 14.3% with growth in all seven segments primarily driven by the Food Equipment, Welding and Construction Products segments.

◦Asia Pacific revenue increased 8.3% due to growth in six segments, partially offset by a decline in the Specialty Products segment.

The results in 2022 were negatively impacted by the COVID-19 outbreak and government stay-at-home orders in China.

- Operating income of $3.8 billion increased 9.0% primarily due to higher organic revenue, partially offset by unfavorable foreign currency translation.

- The Company's effective tax rate for 2022 and 2021 was 21.0% and 19.0%, respectively.

The 2022 effective tax rate benefited from discrete income tax benefits of $32 million in the fourth quarter of 2022 related to the utilization of capital loss carryforwards and $51 million in the second quarter of 2022 related to a decrease in unrecognized tax benefits resulting from the resolution of a U.S. tax audit.

- Diluted earnings per share (EPS) of $9.77 in 2022 increased 14.8%.

Excluding the favorable impact of $0.60 per diluted share related to the pre-tax divestiture gains of $197 million in the fourth quarter of 2022, or $188 million after-tax including the impact of the $32 million discrete tax benefit noted above, EPS increased 7.8%.

ITW's innovation efforts are

but for the Company to truly reach its full potential, every one of its divisions must also be operating at its full potential.

Near-term Priorities

accelerate its progress toward full-potential organic growth.

The Company has adapted

Separately, the Company does not believe that tariffs imposed in recent years have had a material impact on its operating results.

As the global trade environment, including the regulatory environment, continues to evolve, the Company will continue to evaluate the impact of enacted and proposed tariffs on its businesses, as well as pricing actions to mitigate the impact of any raw material cost increases resulting from these tariffs.

Organic revenue for the Automotive OEM segment grew mid-single digits, but was adversely impacted by auto production reductions associated with the supply chain challenges affecting its customers, especially during the second half of 2021.

Operating income grew 20.6 percent in 2021.

Operating margin was 24.1 percent in 2021 as all segments achieved margin expansion compared to the prior year period.

The acquisition of the MTS Test & Simulation business did not have a material impact on the Company's results of operations or financial position for any period presented.

2020 compared to 2019

| Operating revenue | | | $ | 12,574 | | | | | $ | 14,109 | | | | | | | | | | | (10.9) | | % | | | | (9.8) | | % | (0.9) | | % | — | | % | | | | (0.2) | | % | (10.9) | | % |

| Operating income | | | $ | 2,882 | | | | | $ | 3,402 | | | | | | | | | | | (15.3) | | % | | | | (16.0) | | % | (0.3) | | % | 1.1 | | % | | | | (0.1) | | % | (15.3) | | % |

- Organic revenue decreased 9.8% primarily due to disruptions in the Company's global operations resulting from the COVID-19 pandemic as organic revenue declined in six of the seven segments.

The Food Equipment, Automotive OEM and Welding segments had more pronounced unfavorable impacts from the COVID-19 pandemic in 2020.

The Construction Products segment grew 1.5% primarily due to growth in North America.

◦Asia Pacific organic revenue decreased 2.0% as a decline in the Food Equipment, Welding, Specialty Products and Construction Products segments was offset by growth in the Automotive OEM, Test & Measurement and Electronics and Polymers & Fluids segments.

China organic revenue grew 0.3% as an increase in the Automotive OEM, Polymers & Fluids and Test & Measurement and Electronics segments was partially offset by a decline in the Food Equipment, Welding, Specialty Products and Construction Products segments.

- Operating income of $2.9 billion decreased 15.3% primarily due to lower organic revenue.

Additionally, operating income for 2019 included $11.8 million related to the businesses divested in 2019.

- The effective tax rate was 22.0% in 2020 compared to 23.3% in 2019.

Income Taxes in Item 8.

- Diluted earnings per share (EPS) were $6.63 for 2020.

The Company temporarily suspended its share repurchase program starting in March 2020 due to the COVID-19 pandemic, and resumed share repurchases in 2021.

on a quarterly and annual basis.

| Operating revenue | | | $ | 2,571 | | | | | $ | 3,063 | | | | | | | | | | | (16.1) | | % | | | | (16.0) | | % | — | | % | — | | % | (0.1) | | % | (16.1) | | % |

| Operating income | | | $ | 457 | | | | | $ | 659 | | | | | | | | | | | (30.6) | | % | | | | (32.3) | | % | — | | % | 1.5 | | % | 0.2 | | % | (30.6) | | % |

| Operating margin % | | | 17.8 | | % | | | | 21.5 | | % | | | | | | | | | | (370) bps | | | | | | (420) bps | | | — | | | 40 bps | | | 10 bps | | | (370) bps | | |

- Operating revenue declined due to lower organic revenue.

- Organic revenue declined 16.0% versus worldwide auto builds which decreased 16%.

Auto builds of foreign automotive manufacturers in China, where the Company has higher content, decreased 8%.

| Operating revenue | | | $ | 1,739 | | | | | $ | 2,188 | | | | | | | | | | | (20.5) | | % | | | | (20.6) | | % | — | | % | — | | % | 0.1 | | % | (20.5) | | % |

| Operating income | | | $ | 342 | | | | | $ | 578 | | | | | | | | | | | (40.9) | | % | | | | (41.1) | | % | — | | % | (0.1) | | % | 0.3 | | % | (40.9) | | % |

| Operating margin % | | | 19.6 | | % | | | | 26.4 | | % | | | | | | | | | | (680) bps | | | | | | (680) bps | | | — | | | — | | | — | | | (680) bps | | |

| Operating revenue | | | $ | 1,963 | | | | | $ | 2,121 | | | | | | | | | | | (7.4) | | % | | | | (4.9) | | % | (2.8) | | % | — | | % | | | | 0.3 | | % | (7.4) | | % |

| Operating income | | | $ | 507 | | | | | $ | 542 | | | | | | | | | | | (6.5) | | % | | | | (5.2) | | % | (1.3) | | % | (0.2) | | % | | | | 0.2 | | % | (6.5) | | % |

- Organic revenue decreased 4.9% in 2020.

◦Electronics organic revenue declined 2.1%.

The electronics assembly businesses decreased 6.9% primarily due to lower demand in North America.

The Company operates in the U.S. and [removed: 51] [added: 50] foreign countries.

The [removed: cumulative unrealized] [added: amount of] pre-tax gain (loss) [added: related to these notes] recorded in [removed: Accumulated other] [added: Other] comprehensive income (loss) [removed: related to] [added: for] the [removed: net investment hedge was a gain of $183 million as of] [added: twelve months ended] December 31, [added: 2022,] 2021 and [removed: a loss of $120] [added: 2020 was $205 million, $303] million [removed: as of December 31, 2020.][added: and $(359) million, respectively.]

Additionally, rising interest rates would negatively impact the amount of interest expense related to new issuances of commercial paper.

On February 22, 2022, €500 million of the Euro notes issued in May 2014 were redeemed in full.

Refer to Note 11.

Debt in Item 8.

Financial Statements and Supplemental Data for additional information regarding the redemption of these notes.

The Company is a global manufacturer of a diversified range of industrial products and equipment with [removed: 83] [added: 84] divisions in [removed: 52] [added: 51] countries.

As of December 31, [removed: 2021,] [added: 2022,] the Company employed approximately [removed: 45,000] [added: 46,000] people.

This segment primarily serves the electronics, general industrial, automotive original equipment manufacturers and tiers, [removed: industrial capital goods, energy and] [added: energy,] consumer durables [added: and industrial capital goods] markets.

This segment primarily serves the general industrial market, which includes fabrication, shipbuilding and other general industrial markets, and [removed: energy,] construction, [added: energy,] MRO, [added: industrial capital goods and] automotive original equipment manufacturers and [removed: tiers, and industrial capital goods] [added: tiers] markets.

This segment primarily serves the automotive aftermarket, general [removed: industrial, MRO] [added: industrial] and [removed: construction] [added: MRO] markets.

- [removed: line integration,] conveyor systems and line automation for the food and beverage industries;

[removed: The ITW Business Model] [added: It] is the Company's competitive advantage and defines how ITW creates value for its shareholders.

[removed: It] [added: The ITW Business Model] is comprised of three unique elements:

These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately [removed: 19,300] [added: 19,200] granted and pending patents;

ITW now has [removed: 83] [added: 84] scaled-up divisions with significantly enhanced focus on growth investments, core customers and products, and customer-back innovation.

- The Strategic Sourcing initiative established sourcing as a core strategic and operational capability at ITW, delivering an average of one percent reduction in spend each year from 2013 through [removed: 2021] [added: 2022] and continues to be a key contributor to the Company's ongoing enterprise strategy.

Since the launch of the enterprise strategy, the Company has made considerable progress [removed: to position itself] [added: on our path] to [removed: reach] full potential.

To do so, the Company remains focused on its core [removed: principles to position ITW to perform to its full potential:][added: principles:]

The Company previously communicated its intent to explore options, including potential divestitures, for certain businesses with [added: annual] revenues totaling up to [removed: $1] [added: $1.0] billion.

In the fourth quarter of 2019, the Company completed the divestitures of three [removed: businesses and continues to evaluate options for certain other] businesses.

[removed: However, due] [added: Due] to the COVID-19 pandemic, the Company [removed: deferred] [added: chose to defer] any [removed: further] significant divestiture activity [removed: until 2022 or later.][added: in 2020 and 2021.]

The Company [removed: intends to reinitiate] [added: reinitiated] the divestiture process in 2022 for certain businesses with combined annual revenues of approximately $0.5 [removed: billion.][added: billion, subject to approval by the Company's Board of Directors.]

Financial Statements and Supplementary Data for further information regarding [removed: divestiture activity.][added: the Company's divestitures.]

While it was the challenges brought about by the COVID-19 pandemic that dominated the Company's attention starting in 2020, it was the collection of capabilities and competitive advantages that have been built and honed [removed: over the past nine years] [added: since 2012] through the execution of ITW's enterprise strategy that provided the Company with the options to respond.

[removed: As] [added: Throughout] the global [removed: pandemic continues,] [added: pandemic,] the Company [removed: continues to focus] [added: has focused] its efforts on (1) protecting the health and [removed: support] [added: supporting] the well-being of ITW's colleagues; (2) serving the Company's customers with excellence; (3) [removed: maintain] [added: maintaining] financial strength, liquidity and strategic optionality; and (4) [removed: leverage] [added: leveraging] the Company's strengths to position it to fully participate in the recovery.

Total backlog was [removed: $2.9] [added: $2.7] billion and [removed: $1.6] [added: $2.9] billion as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] respectively.

Due to the predominately short-term nature of the Company's arrangements with its customers, backlog orders expected to be completed beyond calendar year [removed: 2022] [added: 2023] are not significant and represent approximately [removed: 5%] [added: 10%] of total backlog as of December 31, [removed: 2021.][added: 2022.]

With operations in [removed: 52] [added: 51] countries, the Company offers a wide range of products in a myriad of markets, many of which are fragmented, and the Company encounters a variety of competitors that vary by product line, end market and geographic area.

The Company owns approximately 3,900 unexpired U.S. patents and [removed: 9,700] [added: 9,600] foreign patents covering articles, methods and machines.

In addition, the Company has approximately [removed: 1,500] [added: 1,400] applications for patents pending in the U.S. Patent Office and [removed: 4,200] [added: 4,300] applications pending in foreign patent offices.

As of December 31, [removed: 2021,] [added: 2022,] the Company employed approximately [removed: 45,000] [added: 46,000] people, with approximately [removed: 17,000] [added: 18,000] people located in the United States and the remainder in multiple other countries where the Company's businesses operate.

Moreover, the Company's commitment to its employees was reinforced when the Company decided not to initiate any enterprise-wide employment reduction mandates or programs at any point [removed: in 2020 or 2021.][added: during the pandemic.]

The Company's Sustainability [removed: Report (formerly called the Corporate Social Responsibility Report),] [added: Report,] published annually and available on the Company's website (www.itw.com), contains more information about the Company's human capital and its programs, goals and progress.

Executive Officers of the Company as of February [removed: 11, 2022] [added: 10, 2023] were as follows:

| Name | | | Age | | | Present Position | | | Year Elected to Present Position | | | Other Positions Held During [removed: 2017-2021] [added: 2018-2022] | | |

| E. Scott Santi | | | [removed: 60] [added: 61] | | | Chairman & Chief Executive Officer | | | 2015 | | | [added: President & Chief Executive Officer, 2012-2015.] | | |

| Axel Beck | | | [removed: 56] [added: 57] | | | Executive Vice President | | | 2020 | | | Group President, food equipment businesses, 2016-2020. | | |

| Kenneth Escoe | | | [removed: 46] [added: 47] | | | Executive Vice President | | | 2020 | | | Vice President/General Manager, specialty products businesses, 2016-2019; Group President, specialty products businesses, 2019-2020. | | |

| Javier Gracia Carbonell | | | [removed: 49] [added: 50] | | | Executive Vice President | | | 2022 | | | Vice President/General Manager, construction businesses, 2017-2020; Group President, construction businesses, 2020-2021. | | |

| Patricia A. Hartzell | | | [removed: 45] [added: 46] | | | Executive Vice President | | | 2022 | | | Vice President/General Manager, test and measurement & electronics businesses, 2017-2020; Group President, test and measurement & electronics businesses, 2020-2021. | | |

| Michael M. Larsen | | | [removed: 53] [added: 54] | | | Senior Vice President & Chief Financial Officer | | | 2013 | | | | | |

| Mary K. Lawler | | | [removed: 56] [added: 57] | | | Senior Vice President & Chief Human Resources Officer | | | 2014 | | | | | |

| Christopher O'Herlihy | | | [removed: 58] [added: 59] | | | Vice Chairman | | | 2015 | | | | | |

| Randall J. Scheuneman | | | [removed: 54] [added: 55] | | | Vice President & Chief Accounting Officer | | | 2009 | | | | | |

| [removed: Lei Schlitz] [added: Michael R. Zimmerman] | | | [removed: 55] [added: 62] | | | Executive Vice President | | | 2015 | | | | | |

In the second quarter of 2022, plans were approved to divest two businesses, including one business in the Polymers & Fluids segment and one business in the Food Equipment segment.

In the fourth quarter of 2022, both of these businesses were divested.

The business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million.

The business in the Food Equipment segment was sold for $59 million, subject to certain closing adjustments, resulting in a pre-tax gain of $41 million.

Operating revenue related to these divested businesses that was included in the Company's results of operations for the twelve months ended December 31, 2022, 2021 and 2020 was $106 million, $115 million and $113 million, respectively.

Pandemic Priorities and "Win the Recovery"

Near-term Priorities

Refer to Note 3.

Acquisitions in Item 8.

Financial Statements and Supplementary Data for further information regarding this acquisition.

The increase in backlog as of December 31, 2021 was primarily due to increased customer orders and the global supply chain disruptions impacting the Company's customers, and the acquisition of the MTS Test & Simulation business.

Among its many actions and initiatives, the Company redesigned production processes to ensure proper social distancing practices, adjusted shift schedules and assignments to help colleagues who have child and elder care needs, and implemented aggressive workplace sanitation practices and a coordinated response to ensure access to personal protective equipment to minimize infection risk.

| John R. Hartnett | | | 61 | | | Executive Vice President | | | 2012 | | | | | |

| Michael R. Zimmerman | | | 61 | | | Executive Vice President | | | 2015 | | | | | |

For the fiscal year ended December 31, [removed: 2021][added: 2022]

ILLINOIS TOOL WORKS [removed: INC.][added: INC.]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the [removed: Exchange] Act).

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, [removed: 2021] [added: 2022] was approximately [removed: $70.1] [added: $56.3] billion based on the New York Stock Exchange closing sales price as of June 30, [removed: 2021.][added: 2022.]

| Portions of the [removed: 2022] [added: 2023] Proxy Statement for Annual Meeting of Stockholders to be held on May [removed: 6, 2022.] [added: 5, 2023.] | | | | | | Part III | | |

| [Item [removed: 1.](#ib46d86bff16b447d894b1f95e3b44acd_13)] [added: 1.](#i7fbe96023688499fa1dd5b825e658450_13)] | | | [removed: [Business](#ib46d86bff16b447d894b1f95e3b44acd_13)] [added: [Business](#i7fbe96023688499fa1dd5b825e658450_13)] | | | [removed: [3](#ib46d86bff16b447d894b1f95e3b44acd_13)] [added: [3](#i7fbe96023688499fa1dd5b825e658450_13)] | | |

| [Item [removed: 1A.](#ib46d86bff16b447d894b1f95e3b44acd_16)] [added: 1A.](#i7fbe96023688499fa1dd5b825e658450_16)] | | | [Risk [removed: Factors](#ib46d86bff16b447d894b1f95e3b44acd_16)] [added: Factors](#i7fbe96023688499fa1dd5b825e658450_16)] | | | [removed: [11](#ib46d86bff16b447d894b1f95e3b44acd_16)] [added: [10](#i7fbe96023688499fa1dd5b825e658450_16)] | | |

| [Item [removed: 1B.](#ib46d86bff16b447d894b1f95e3b44acd_19)] [added: 1B.](#i7fbe96023688499fa1dd5b825e658450_19)] | | | [Unresolved Staff [removed: Comments](#ib46d86bff16b447d894b1f95e3b44acd_19)] [added: Comments](#i7fbe96023688499fa1dd5b825e658450_19)] | | | [removed: [16](#ib46d86bff16b447d894b1f95e3b44acd_19)] [added: [16](#i7fbe96023688499fa1dd5b825e658450_19)] | | |

| [Item [removed: 2.](#ib46d86bff16b447d894b1f95e3b44acd_22)] [added: 2.](#i7fbe96023688499fa1dd5b825e658450_22)] | | | [removed: [Properties](#ib46d86bff16b447d894b1f95e3b44acd_22)] [added: [Properties](#i7fbe96023688499fa1dd5b825e658450_22)] | | | [removed: [16](#ib46d86bff16b447d894b1f95e3b44acd_22)] [added: [16](#i7fbe96023688499fa1dd5b825e658450_22)] | | |

| [Item [removed: 3.](#ib46d86bff16b447d894b1f95e3b44acd_25)] [added: 3.](#i7fbe96023688499fa1dd5b825e658450_25)] | | | [Legal [removed: Proceedings](#ib46d86bff16b447d894b1f95e3b44acd_25)] [added: Proceedings](#i7fbe96023688499fa1dd5b825e658450_25)] | | | [removed: [16](#ib46d86bff16b447d894b1f95e3b44acd_25)] [added: [16](#i7fbe96023688499fa1dd5b825e658450_25)] | | |

| [Item [removed: 4.](#ib46d86bff16b447d894b1f95e3b44acd_28)] [added: 4.](#i7fbe96023688499fa1dd5b825e658450_28)] | | | [Mine Safety [removed: Disclosures](#ib46d86bff16b447d894b1f95e3b44acd_28)] [added: Disclosures](#i7fbe96023688499fa1dd5b825e658450_28)] | | | [removed: [16](#ib46d86bff16b447d894b1f95e3b44acd_28)] [added: [16](#i7fbe96023688499fa1dd5b825e658450_28)] | | |

| [Item [removed: 5.](#ib46d86bff16b447d894b1f95e3b44acd_34)] [added: 5.](#i7fbe96023688499fa1dd5b825e658450_34)] | | | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ib46d86bff16b447d894b1f95e3b44acd_34)] [added: Securities](#i7fbe96023688499fa1dd5b825e658450_34)] | | | [removed: [17](#ib46d86bff16b447d894b1f95e3b44acd_34)] [added: [17](#i7fbe96023688499fa1dd5b825e658450_34)] | | |

| [Item [removed: 6](#ib46d86bff16b447d894b1f95e3b44acd_37).] [added: 6](#i7fbe96023688499fa1dd5b825e658450_37).] | | | [removed: [\[Reserved\]](#ib46d86bff16b447d894b1f95e3b44acd_37)] [added: [\[Reserved\]](#i7fbe96023688499fa1dd5b825e658450_37)] | | | [removed: [18](#ib46d86bff16b447d894b1f95e3b44acd_37)] [added: [18](#i7fbe96023688499fa1dd5b825e658450_37)] | | |

| [Item [removed: 7.](#ib46d86bff16b447d894b1f95e3b44acd_40)] [added: 7.](#i7fbe96023688499fa1dd5b825e658450_40)] | | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ib46d86bff16b447d894b1f95e3b44acd_40)] [added: Operations](#i7fbe96023688499fa1dd5b825e658450_40)] | | | [removed: [18](#ib46d86bff16b447d894b1f95e3b44acd_40)] [added: [18](#i7fbe96023688499fa1dd5b825e658450_40)] | | |

| [Item [removed: 7A.](#ib46d86bff16b447d894b1f95e3b44acd_115)] [added: 7A.](#i7fbe96023688499fa1dd5b825e658450_112)] | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#ib46d86bff16b447d894b1f95e3b44acd_115)] [added: Risk](#i7fbe96023688499fa1dd5b825e658450_112)] | | | [removed: [39](#ib46d86bff16b447d894b1f95e3b44acd_115)] [added: [42](#i7fbe96023688499fa1dd5b825e658450_112)] | | |

| [Item [removed: 8.](#ib46d86bff16b447d894b1f95e3b44acd_118)] [added: 8.](#i7fbe96023688499fa1dd5b825e658450_115)] | | | [Financial Statements and Supplementary [removed: Data](#ib46d86bff16b447d894b1f95e3b44acd_118)] [added: Data](#i7fbe96023688499fa1dd5b825e658450_115)] | | | [removed: [41](#ib46d86bff16b447d894b1f95e3b44acd_118)] [added: [43](#i7fbe96023688499fa1dd5b825e658450_115)] | | |

| [Item [removed: 9.](#ib46d86bff16b447d894b1f95e3b44acd_193)] [added: 9.](#i7fbe96023688499fa1dd5b825e658450_187)] | | | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#ib46d86bff16b447d894b1f95e3b44acd_193)] [added: Disclosure](#i7fbe96023688499fa1dd5b825e658450_187)] | | | [removed: [76](#ib46d86bff16b447d894b1f95e3b44acd_193)] [added: [77](#i7fbe96023688499fa1dd5b825e658450_187)] | | |

| [Item [removed: 9A.](#ib46d86bff16b447d894b1f95e3b44acd_196)] [added: 9A.](#i7fbe96023688499fa1dd5b825e658450_190)] | | | [Controls and [removed: Procedures](#ib46d86bff16b447d894b1f95e3b44acd_196)] [added: Procedures](#i7fbe96023688499fa1dd5b825e658450_190)] | | | [removed: [76](#ib46d86bff16b447d894b1f95e3b44acd_196)] [added: [77](#i7fbe96023688499fa1dd5b825e658450_190)] | | |

| [Item [removed: 9B.](#ib46d86bff16b447d894b1f95e3b44acd_199)] [added: 9B.](#i7fbe96023688499fa1dd5b825e658450_193)] | | | [Other [removed: Information](#ib46d86bff16b447d894b1f95e3b44acd_199)] [added: Information](#i7fbe96023688499fa1dd5b825e658450_193)] | | | [removed: [76](#ib46d86bff16b447d894b1f95e3b44acd_199)] [added: [77](#i7fbe96023688499fa1dd5b825e658450_193)] | | |

| [Item [removed: 9C.](#ib46d86bff16b447d894b1f95e3b44acd_2048)] [added: 9C.](#i7fbe96023688499fa1dd5b825e658450_196)] | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#ib46d86bff16b447d894b1f95e3b44acd_2048)] [added: Inspections](#i7fbe96023688499fa1dd5b825e658450_196)] | | | [removed: [77](#ib46d86bff16b447d894b1f95e3b44acd_2048)] [added: [78](#i7fbe96023688499fa1dd5b825e658450_196)] | | |

| [Item [removed: 10.](#ib46d86bff16b447d894b1f95e3b44acd_205)] [added: 10.](#i7fbe96023688499fa1dd5b825e658450_202)] | | | [Directors, Executive Officers and Corporate [removed: Governance](#ib46d86bff16b447d894b1f95e3b44acd_205)] [added: Governance](#i7fbe96023688499fa1dd5b825e658450_202)] | | | [removed: [77](#ib46d86bff16b447d894b1f95e3b44acd_205)] [added: [78](#i7fbe96023688499fa1dd5b825e658450_202)] | | |

| [Item [removed: 11.](#ib46d86bff16b447d894b1f95e3b44acd_208)] [added: 11.](#i7fbe96023688499fa1dd5b825e658450_205)] | | | [Executive [removed: Compensation](#ib46d86bff16b447d894b1f95e3b44acd_208)] [added: Compensation](#i7fbe96023688499fa1dd5b825e658450_205)] | | | [removed: [77](#ib46d86bff16b447d894b1f95e3b44acd_208)] [added: [78](#i7fbe96023688499fa1dd5b825e658450_205)] | | |

| [Item [removed: 12.](#ib46d86bff16b447d894b1f95e3b44acd_211)] [added: 12.](#i7fbe96023688499fa1dd5b825e658450_208)] | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ib46d86bff16b447d894b1f95e3b44acd_211)] [added: Matters](#i7fbe96023688499fa1dd5b825e658450_208)] | | | [removed: [77](#ib46d86bff16b447d894b1f95e3b44acd_211)] [added: [78](#i7fbe96023688499fa1dd5b825e658450_208)] | | |

| [Item [removed: 13.](#ib46d86bff16b447d894b1f95e3b44acd_214)] [added: 13.](#i7fbe96023688499fa1dd5b825e658450_211)] | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#ib46d86bff16b447d894b1f95e3b44acd_214)] [added: Independence](#i7fbe96023688499fa1dd5b825e658450_211)] | | | [removed: [77](#ib46d86bff16b447d894b1f95e3b44acd_214)] [added: [78](#i7fbe96023688499fa1dd5b825e658450_211)] | | |

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| [Item [removed: 15.](#ib46d86bff16b447d894b1f95e3b44acd_223)] [added: 15.](#i7fbe96023688499fa1dd5b825e658450_220)] | | | [Exhibits and Financial Statement [removed: Schedules](#ib46d86bff16b447d894b1f95e3b44acd_223)] [added: Schedules](#i7fbe96023688499fa1dd5b825e658450_220)] | | | [removed: [78](#ib46d86bff16b447d894b1f95e3b44acd_223)] [added: [79](#i7fbe96023688499fa1dd5b825e658450_220)] | | |

| [Item [removed: 16.](#ib46d86bff16b447d894b1f95e3b44acd_229)] [added: 16.](#i7fbe96023688499fa1dd5b825e658450_226)] | | | [Form 10-K [removed: Summary](#ib46d86bff16b447d894b1f95e3b44acd_229)] [added: Summary](#i7fbe96023688499fa1dd5b825e658450_226)] | | | [removed: [81](#ib46d86bff16b447d894b1f95e3b44acd_229)] [added: [81](#i7fbe96023688499fa1dd5b825e658450_226)] | | |

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Shares of common stock outstanding at January 31, 2023: 305,068,141.

| | | | [PART I](#i7fbe96023688499fa1dd5b825e658450_10) | | | | | |

| | | | [PART II](#i7fbe96023688499fa1dd5b825e658450_31) | | | | | |

| | | | [PART III](#i7fbe96023688499fa1dd5b825e658450_199) | | | | | |

| | | | [PART IV](#i7fbe96023688499fa1dd5b825e658450_217) | | | | | |

| | | | [Signatures](#i7fbe96023688499fa1dd5b825e658450_229) | | | [82](#i7fbe96023688499fa1dd5b825e658450_229) | | |

| 1.75% Euro Notes due 2022 | | | ITW22 | | | New York Stock Exchange | | |

Shares of common stock outstanding at January 31, 2022: 312,926,939.

| | | | [PART I](#ib46d86bff16b447d894b1f95e3b44acd_10) | | | | | |

| | | | [PART II](#ib46d86bff16b447d894b1f95e3b44acd_31) | | | | | |

| | | | [PART III](#ib46d86bff16b447d894b1f95e3b44acd_202) | | | | | |

| | | | [PART IV](#ib46d86bff16b447d894b1f95e3b44acd_220) | | | | | |

| | | | [Signatures](#ib46d86bff16b447d894b1f95e3b44acd_232) | | | [82](#ib46d86bff16b447d894b1f95e3b44acd_232) | | |

As of December 31, [removed: 2021,] [added: 2022,] the Company operated approximately [removed: 460] [added: 440] plants and office facilities, excluding regional sales offices and warehouse facilities.

Approximately [removed: 300] [added: 290] of the facilities were located outside of the United States.

There were approximately [removed: 4,967] [added: 4,748] holders of record of common stock as of January 31, [removed: 2022.][added: 2023.]

[removed: ][added: ]

*Assumes $100 invested on [removed: 12/31/16 in stock or index,] [added: December 31, 2017,] including reinvestment of dividends.

Copyright© [removed: 2022] [added: 2023] Standard & Poor's, a division of S&P Global.

The [removed: 2021] [added: 2022] Peer Group consists of the following 17 public companies:

Repurchases of Common Stock— On August 3, 2018, the Company's Board of Directors authorized a stock repurchase program which [removed: provides] [added: provided] for the repurchase of up to $3.0 billion of the Company's common stock over an open-ended period [added: of time (the "2018 Program").]

As of December 31, [removed: 2021,] [added: 2022,] there were approximately [removed: $240 million] [added: $1.5 billion] of authorized repurchases remaining under the [removed: 2018] [added: 2021] Program.

Share repurchase activity under the Company's share repurchase programs for the fourth quarter of [removed: 2021] [added: 2022] was as follows:

There were no changes in the Company's peer group in 2022.

The 2018 program was completed in the first quarter of 2022.

| October 2022 | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 1,990 | |

| November 2022 | | | 0.5 | | | | | | $ | 222.66 | | | | | 0.5 | | | | | | $ | 1,869 | |

| December 2022 | | | 1.8 | | | | | | $ | 221.25 | | | | | 1.8 | | | | | | $ | 1,490 | |

| Total | | | 2.3 | | | | | | | | | | | | 2.3 | | | | | | | | |

The 2021 Peer Group is consistent with the 2020 Peer Group.

Fortive Corporation was added to the Company's peer group in 2017 and was excluded from the 2020 Peer Group five-year cumulative total return as there was insufficient historical data due to its spin-off from Danaher Corporation in 2016.

For the 2021 Peer Group, Fortive Corporation was included in the five-year cumulative total return above.

of time (the "2018 Program").

As of December 31, 2021, there were $3.0 billion of authorized repurchases remaining under the 2021 Program.

| October 2021 | | | — | | | | | | $ | 227.47 | | | | | — | | | | | | $ | 3,480 | |

| November 2021 | | | 0.7 | | | | | | $ | 236.12 | | | | | 0.7 | | | | | | $ | 3,336 | |

| December 2021 | | | 0.4 | | | | | | $ | 239.66 | | | | | 0.4 | | | | | | $ | 3,240 | |

| Total | | | 1.1 | | | | | | | | | | | | 1.1 | | | | | | | | |

ITW management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, [removed: 2021.][added: 2022.]

Based on our assessment we believe that, as of December 31, [removed: 2021,] [added: 2022,] the Company's internal control over financial reporting is effective based on those criteria.

The effectiveness of the Company's internal control over financial reporting as of December 31, [removed: 2021] [added: 2022] has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report herein.

| /s/ E. Scott Santi E. Scott Santi Chairman & Chief Executive Officer February [removed: 11, 2022] [added: 10, 2023] | | | | | | /s/ Michael M. Larsen Michael M. Larsen Senior Vice President & Chief Financial Officer February [removed: 11, 2022] [added: 10, 2023] | | |

We have audited the accompanying consolidated statements of financial position of Illinois Tool Works Inc. and subsidiaries (the "Company") as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of income, comprehensive income, changes in stockholders' equity, and cash flows, for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] and the related notes (collectively referred to as the "financial statements").

We also have audited the [removed: Company’s] [added: Company's] internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in [removed: Internal] [added: *Internal] Control — Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in [removed: Internal] [added: *Internal] Control — Integrated Framework [removed: (2013)] [added: (2013)*] issued by COSO.

The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying [removed: Management] [added: *Management] Report on Internal Control Over Financial [removed: Reporting.][added: Reporting*.]

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the [added: financial statements and (2) involved our especially challenging, subjective, or complex judgments.]

The Company's income tax expense for [removed: 2021] [added: 2022] was [removed: $632] [added: $808] million and the liability recorded for unrecognized tax benefits as of December 31, [removed: 2021,] [added: 2022,] was [removed: $360] [added: $314] million.

| In millions except per share amounts | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Operating Revenue | | | $ | [removed: 14,455] [added: 15,932] | | | | | $ | [removed: 12,574] [added: 14,455] | | | | | $ | [removed: 14,109] [added: 12,574] | |

| Cost of revenue | | | [removed: 8,489] [added: 9,429] | | | | | | [removed: 7,375] [added: 8,489] | | | | | | [removed: 8,187] [added: 7,375] | | |

| Selling, administrative, and research and development expenses | | | [removed: 2,356] [added: 2,579] | | | | | | [removed: 2,163] [added: 2,356] | | | | | | [removed: 2,361] [added: 2,163] | | |

| Amortization and impairment of intangible assets | | | [removed: 133] [added: 134] | | | | | | [removed: 154] [added: 133] | | | | | | [removed: 159] [added: 154] | | |

| Operating Income | | | [removed: 3,477] [added: 3,790] | | | | | | [removed: 2,882] [added: 3,477] | | | | | | [removed: 3,402] [added: 2,882] | | |

| Interest expense | | | [removed: (202)] [added: (203)] | | | | | | [removed: (206)] [added: (202)] | | | | | | [removed: (221)] [added: (206)] | | |

| Other income (expense) | | | [removed: 51] [added: 255] | | | | | | [removed: 28] [added: 51] | | | | | | [removed: 107] [added: 28] | | |

| Income Before Taxes | | | [removed: 3,326] [added: 3,842] | | | | | | [removed: 2,704] [added: 3,326] | | | | | | [removed: 3,288] [added: 2,704] | | |

| Income taxes | | | [removed: 632] [added: 808] | | | | | | [removed: 595] [added: 632] | | | | | | [removed: 767] [added: 595] | | |

| Net Income | | | $ | [removed: 2,694] [added: 3,034] | | | | | $ | [removed: 2,109] [added: 2,694] | | | | | $ | [removed: 2,521] [added: 2,109] | |

| Basic | | | $ | [removed: 8.55] [added: 9.80] | | | | | $ | [removed: 6.66] [added: 8.55] | | | | | $ | [removed: 7.78] [added: 6.66] | |

| Diluted | | | $ | [removed: 8.51] [added: 9.77] | | | | | $ | [removed: 6.63] [added: 8.51] | | | | | $ | [removed: 7.74] [added: 6.63] | |

| In millions | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Foreign currency translation adjustments, net of tax | | | [removed: 5] [added: (242)] | | | | | | [removed: 4] [added: 5] | | | | | | [removed: (2)] [added: 4] | | |

| Pension and other postretirement benefit adjustments, net of tax | | | [removed: 135] [added: (97)] | | | | | | [removed: 59] [added: 135] | | | | | | [removed: (26)] [added: 59] | | |

| Other comprehensive income (loss) | | | [removed: 140] [added: (339)] | | | | | | [removed: 63] [added: 140] | | | | | | [removed: (28)] [added: 63] | | |

| Comprehensive Income | | | $ | [removed: 2,834] [added: 2,695] | | | | | $ | [removed: 2,172] [added: 2,834] | | | | | $ | [removed: 2,493] [added: 2,172] | |

| In millions except per share amounts | | | [added: 2022 | | | | | |] 2021 | | | | | | 2020 | | |

| Cash and equivalents | | | $ | [removed: 1,527] [added: 708] | | | | | $ | [removed: 2,564] [added: 1,527] | |

| Trade receivables | | | [removed: 2,840] [added: 3,171] | | | | | | [removed: 2,506] [added: 2,840] | | |

| Inventories | | | [removed: 1,694] [added: 2,054] | | | | | | [removed: 1,189] [added: 1,694] | | |

| Prepaid expenses and other current assets | | | [removed: 313] [added: 329] | | | | | | [removed: 264] [added: 313] | | |

| Total current assets | | | [removed: 6,374] [added: 6,270] | | | | | | [removed: 6,523] [added: 6,374] | | |

| Net plant and equipment | | | [removed: 1,809] [added: 1,848] | | | | | | [removed: 1,777] [added: 1,809] | | |

| Goodwill | | | [removed: 4,965] [added: 4,864] | | | | | | [removed: 4,690] [added: 4,965] | | |

| Intangible assets | | | [removed: 972] [added: 768] | | | | | | [removed: 781] [added: 972] | | |

| Deferred income taxes | | | [removed: 552] [added: 494] | | | | | | [removed: 533] [added: 552] | | |

| Other assets | | | [removed: 1,405] [added: 1,178] | | | | | | [removed: 1,308] [added: 1,405] | | |

| Net Income | | | $ | 3,034 | | | | | $ | 2,694 | | | | | $ | 2,109 | |

| In millions except per share amounts | | | 2022 | | | | | | 2021 | | |

| | | | $ | 15,422 | | | | | $ | 16,077 | |

| Liabilities held for sale | | | 1 | | | | | | — | | |

| | | | $ | 15,422 | | | | | $ | 16,077 | |

| Balance as of December 31, 2022 | | | $ | 6 | | $ | 1,501 | | $ | 25,799 | | $ | (22,377) | | $ | (1,841) | | $ | 1 | | $ | 3,089 | |

| Net income | | | $ | 3,034 | | | | | $ | 2,694 | | | | | $ | 2,109 | |

| Amortization and impairment of intangible assets | | | 134 | | | | | | 133 | | | | | | 154 | | |

| In millions | | | 2022 | | | | | | 2021 | | |

| In millions | | | 2022 | | | | | | 2021 | | |

revenue recognition guidance rather than at fair value.

In the fourth quarter of 2019, the Company completed the divestitures of three businesses.

Due to the COVID-19 pandemic, the Company chose to defer any significant divestiture activity in 2020 and 2021.

The Company reinitiated the divestiture process in 2022 for certain businesses with combined annual revenues of approximately $0.5 billion, subject to approval by the Company's Board of Directors.

In the fourth quarter of 2022, both of these businesses were divested.

On October 3, 2022, the business in the Polymers & Fluids segment was sold for $220 million, subject to certain closing adjustments, resulting in a pre-tax gain of $156 million.

On December 1, 2022, the business in the Food Equipment segment was sold for $59 million, subject to certain closing adjustments, resulting in a pre-tax gain of $41 million.

Income taxes on the gains were mostly offset by the utilization of capital loss carryforwards of $32 million.

In the fourth quarter of 2022, plans were approved to divest one business in the Specialty Products segment.

This business was presented as held for sale in the Statement of Financial Position as of December 31, 2022 and had assets and liabilities held for sale of $8 million and $1 million, respectively.

Operating revenue for this business was approximately $37 million for the twelve months ended December 31, 2022.

The Company expects to sell this business within one year.

| In millions | | | 2022 | | | | | | 2021 | | | | | | 2020 | | |

Gain (loss) on sale of operations and affiliates for the twelve months ended December 31, 2022 primarily related to two businesses divested in the fourth quarter of 2022.

Divestitures for further information regarding the Company's divestitures.

| In millions | | | 2022 | | | | | | 2021 | | | | | | 2020 | | |

| In millions | | | 2022 | | | | | | 2021 | | | | | | 2020 | | |

| Audit resolution | | | (1.4) | | | | | | (0.1) | | | | | | (0.1) | | |

| Other, net | | | (0.8) | | | | | | (0.9) | | | | | | 0.4 | | |

The 2022 effective tax rate benefited from discrete income tax benefits of $32 million in the fourth quarter of 2022 related to the utilization of capital loss carryforwards and $51 million in the second quarter of 2022 related to a decrease in unrecognized tax benefits resulting from the resolution of a U.S. tax audit.

| | | | 2022 | | | | | | | | | | | | 2021 | | | | | | | | |

| 2027 | | | 3 | | |

| 2028-2048 | | | 624 | | |

| In millions | | | 2022 | | | | | | 2021 | | | | | | 2020 | | |

| Australia | | | 2015-2022 | | |

| Net Income | | | $ | 3,034 | | | | | $ | 2,694 | | | | | $ | 2,109 | |

| Weighted-average common shares | | | 309.6 | | | | | | 315.1 | | | | | | 316.9 | | |

| Acquisitions / (divestitures) | | | — | | | | | | — | | | | | | 58 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 58 | | |

| Transfers to assets held for sale | | | — | | | | | | (2) | | | | | | — | | | | | | — | | | | | | (33) | | | | | | — | | | | | | (2) | | | | | | (37) | | |

| Balance, December 31, 2022 | | | $ | 459 | | | | | $ | 249 | | | | | $ | 1,729 | | | | | $ | 248 | | | | | $ | 823 | | | | | $ | 503 | | | | | $ | 853 | | | | | $ | 4,864 | |

financial statements and (2) involved our especially challenging, subjective, or complex judgments.

February 11, 2022

| Balance as of December 31, 2018 | | | $ | 6 | | $ | 1,253 | | $ | 21,217 | | $ | (17,545) | | $ | (1,677) | | $ | 4 | | $ | 3,258 | |

| Noncontrolling interest | | | — | | | (1) | | | — | | | — | | | — | | | — | | | (1) | | |

The deferred revenue and customer deposits as of December 31, 2021 included $108 million related to the MTS Test & Simulation business, which was acquired on December 1, 2021.

Acquisitions for additional information regarding this acquisition.

In June 2016, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance which changes the methodology used to measure credit losses for certain financial instruments.

Under prior guidance, credit loss reserves were estimated based on historical information.

The new guidance requires credit loss reserves to reflect the estimated credit losses expected to be incurred over the life of the financial asset.

The Company adopted this new guidance effective January 1, 2020

and applied it prospectively, which did not have a material impact on the Company's results of operations or financial position.

In January 2017, the FASB issued authoritative guidance which simplifies the assessment of goodwill for impairment.

Under prior guidance, when the estimated fair value of a reporting unit was less than its carrying value, the fair value of the goodwill was determined by valuing the other assets and liabilities of the reporting unit.

Under the new guidance, the requirement to determine the fair value of goodwill has been eliminated, and an impairment charge is recognized for the amount that the carrying value of the reporting unit exceeds its fair value.

Effective January 1, 2020, the Company adopted the new guidance prospectively and applied the new guidance during its annual assessment of goodwill in the third quarter of 2020 and 2021.

The adoption of this new accounting guidance had no impact on the Company's results of operations or financial position.

In December 2019, the FASB issued authoritative guidance which simplifies certain aspects of the accounting for income taxes, including the elimination of an exception to the methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated full year loss.

The Company early adopted this new guidance effective January 1, 2020 and applied it prospectively, which did not have a material impact on the Company's results of operations or financial position.

The full extent of the COVID-19 outbreak and its impact on the markets served by the Company and on the Company's operations continues to be highly uncertain as conditions continue to fluctuate around the world, with vaccine administration rising in certain regions and spikes in infections (including the spread of variants) also being experienced.

A prolonged outbreak could continue to interrupt the operations of the Company and its customers and suppliers.

Net cash paid for acquisitions during 2021 and 2019 was $731 million and $4 million, respectively.

There were no acquisitions in 2020.

Subsequent acquisition accounting adjustments may change the initial amounts recorded, including goodwill and intangible assets, primarily due to the completion of valuations.

The allocation of purchase price will be completed as soon as practicable, but no later than one year from the acquisition date.

In the fourth quarter of 2019, the Company divested three of the held for sale businesses which included one business in the Test & Measurement and Electronics segment, one business in the Welding segment, and one business in the Specialty Products segment.

For the twelve months ended December 31, 2019, the Company recorded net pre-tax gains on disposal of businesses of $44 million ($30 million after-tax, or $0.09 per diluted share) which was primarily due to the three divestitures of held for sale businesses discussed above.

The operating revenue for the twelve months ended December 31, 2019 of $134 million related to the businesses divested in 2019 included $62 million in the Welding segment, $58 million in the Test & Measurement and Electronics segment, and $14 million in the Specialty Products segment.

As of December 31, 2019, three of the businesses discussed above continued to be held for sale, including one business in the Test & Measurement and Electronics segment, one business in the Automotive OEM segment, and one business in the Specialty Products segment.

During 2020, the sales of the three remaining businesses held for sale were determined to no longer be probable of being completed within one year, primarily due to the disruptions and economic uncertainty resulting from the COVID-19 pandemic.

Accordingly, these businesses were no longer presented as held for sale.

for customers in diverse end markets.

Divestitures for further information regarding the Gain (loss) on disposal of operations and affiliates of $44 million for the twelve months ended December 31, 2019.

In connection with the

| Nontaxable foreign interest income | | | (1.6) | | | | | | (2.0) | | | | | | (1.4) | | |

| Other, net | | | (1.0) | | | | | | 0.3 | | | | | | (0.3) | | |

remeasurement of net deferred tax assets due to the enactment of the U.K. Finance Bill 2021, which increases the U.K. income tax rate from 19% to 25% effective April 1, 2023.

The 2019 effective tax rate benefited from a discrete income tax benefit of $21 million in the third quarter for the U.S. federal provision to return adjustment resulting primarily from changes in estimates related to the Act.

| 2022 | | | $ | 19 | |

| 2027-2047 | | | 574 | | |

| Australia | | | 2013-2021 | | |

The Company's management, with the participation of the Company's Chairman & Chief Executive Officer and Senior Vice President & Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of December 31, [removed: 2021.][added: 2022.]

Based on such evaluation, the Company's Chairman & Chief Executive Officer and Senior Vice President & Chief Financial Officer have concluded that, as of December 31, [removed: 2021,] [added: 2022,] the Company's disclosure controls and procedures were effective.

In connection with the evaluation by management, including the Company's Chairman & Chief Executive Officer and Senior Vice President & Chief Financial Officer, no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended December 31, [removed: 2021] [added: 2022] were identified that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

Information regarding the Directors of the Company who are standing for reelection and any persons nominated to become Directors of the Company is incorporated by reference from the information under the captions "Proposal 1 - Election of Directors" in the Company's Proxy Statement for the [removed: 2022] [added: 2023] Annual Meeting of Stockholders.

Information regarding the Audit Committee and its Financial Experts is incorporated by reference from the information under the captions [removed: "Proposal 1 - Election of Directors] [added: "Corporate Governance] - Board of Directors and [removed: Its] [added: its] Committees" and "Audit Committee Report" in the Company's Proxy Statement for the [removed: 2022] [added: 2023] Annual Meeting of Stockholders.

Information regarding the Company's code of ethics that applies to the Company's Chairman & Chief Executive Officer, Senior Vice President & Chief Financial Officer, and key financial and accounting personnel is incorporated by reference from the information under the caption [removed: "Proposal 1 - Election of Directors - Corporate] [added: "Corporate] Governance Policies and [removed: Practices"] [added: Code of Conduct"] in the Company's Proxy Statement for the [removed: 2022] [added: 2023] Annual Meeting of Stockholders.

Information regarding executive compensation is incorporated by reference from the information under the captions [removed: "NEO Compensation," "Proposal 1 - Election of Directors - Director] [added: "Director] Compensation," and [removed: "Compensation Discussion and Analysis"] [added: "Executive Compensation"] in the Company's Proxy Statement for the [removed: 2022] [added: 2023] Annual Meeting of Stockholders.

Information regarding security ownership of certain beneficial owners and management and related stockholder matters is incorporated by reference from the information under the captions [removed: "Proposal 1 - Election of Directors -] [added: "Beneficial] Ownership of [removed: ITW] [added: Common] Stock" and "NEO Compensation - Equity Compensation Plan Information" in the Company's Proxy Statement for the [removed: 2022] [added: 2023] Annual Meeting of Stockholders.

Information regarding certain relationships and related transactions [added: as well as director independence] is incorporated by reference from the information under the captions "Proposal 1 - Election of Directors - [removed: Ownership of ITW Stock," "Certain] [added: Board Independence," "Other Governance Matters - Certain] Relationships and Related Party Transactions" and [removed: "Proposal 1 - Election of Directors - Corporate] [added: "Corporate] Governance Policies and [removed: Practices"] [added: Code of Conduct"] in the Company's Proxy Statement for the [removed: 2022] [added: 2023] Annual Meeting of Stockholders.

Information regarding director independence is incorporated by reference from the information under the captions "Proposal 1 - Election of Directors - Corporate Governance Policies and Practices" and "Appendix A - Categorical Standards for Director Independence" in the Company's Proxy Statement for the 2022 Annual Meeting of Stockholders.

This information is incorporated by reference from the information under the caption "Proposal [removed: 2] [added: 4] - Ratification of the Appointment of Independent Registered Public Accounting Firm" in the Company's Proxy Statement for the [removed: 2022] [added: 2023] Annual Meeting of Stockholders.

| [removed: [10(a)(i)](http://www.sec.gov/Archives/edgar/data/49826/000004982619000098/itw-2019creditfacility.htm)] [added: [10(a)(i)](http://www.sec.gov/ix?doc=/Archives/edgar/data/49826/000004982622000057/itw-20221021.htm)] | | | | | | [removed: [Five Year Credit] [added: [Credit] Agreement dated as of [removed: September 27, 2019] [added: October 21, 2022] among Illinois Tool Works Inc., JPMorgan Chase Bank, N.A., as Agent, Citibank, N.A., as Syndication Agent, and a syndicate of lenders, filed as Exhibit 10(a) to the Company's Current Report on Form 8-K filed on October [removed: 3, 2019] [added: 26, 2022] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982619000098/itw-2019creditfacility.htm)] [added: reference.](http://www.sec.gov/ix?doc=/Archives/edgar/data/49826/000004982622000057/itw-20221021.htm)] | | |

| [10(a)(ii)](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm) | | | | | | [Suspension of Rights Agreement dated September 22, 2021 between Illinois Tool Works Inc. and JPMorgan Chase Bank, N.A., as Agent, under the Five Year Credit Agreement dated as of September 27, 2019, among Illinois Tool Works Inc., as Borrower, and JPMorgan Chase Bank, N.A., as Agent, and the Lenders thereto (as amended or otherwise modified from time to [removed: time)](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm)[, file](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm)[d](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm) [as] [added: time), filed as] Exhibit 10.1 to [removed: the](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm) [Company's] [added: the Company's] Quarterly Report [removed: o](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm)[n](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm) [Form] [added: on Form] 10-Q for the quarterly period ended [removed: September](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm) [30, 20](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm)[21] [added: September 30, 2021] (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm) | | |

| [removed: [10(d)*](http://www.sec.gov/Archives/edgar/data/49826/000004982612000012/itw8k991awardagreement.htm)] [added: [10(d)*](http://www.sec.gov/Archives/edgar/data/49826/000004982614000019/ex991universaloptiongrant.htm)] | | | | | | [Form of stock option terms filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on February [removed: 7, 2012] [added: 13, 2014] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982612000012/itw8k991awardagreement.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982614000019/ex991universaloptiongrant.htm)] | | |

| [removed: [10(e)*](http://www.sec.gov/Archives/edgar/data/49826/000004982614000019/ex991universaloptiongrant.htm)] [added: [10(e)*](http://www.sec.gov/Archives/edgar/data/49826/000004982616000135/exhibit991stockoptionterms.htm)] | | | | | | [Form of stock option terms filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on February [removed: 13, 2014] [added: 9, 2016] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982614000019/ex991universaloptiongrant.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982616000135/exhibit991stockoptionterms.htm)] | | |

| [removed: [10(f)*](http://www.sec.gov/Archives/edgar/data/49826/000004982616000135/exhibit991stockoptionterms.htm)] [added: [10(f)*](http://www.sec.gov/Archives/edgar/data/49826/000004982617000019/ex991awardsagrmnt4q2016.htm)] | | | | | | [Form of stock option terms filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on February 9, [removed: 2016] [added: 2017] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982616000135/exhibit991stockoptionterms.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982617000019/ex991awardsagrmnt4q2016.htm)] | | |

| [removed: [10(g)*](http://www.sec.gov/Archives/edgar/data/49826/000004982617000019/ex991awardsagrmnt4q2016.htm)] [added: [10(h)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex991.htm)] | | | | | | [Form of stock option terms filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on February [removed: 9, 2017] [added: 5, 2020] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982617000019/ex991awardsagrmnt4q2016.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex991.htm)] | | |

| [removed: [10(h)*](http://www.sec.gov/Archives/edgar/data/49826/000004982617000019/ex992awardsagrmnt4q2016.htm)] [added: [10(k)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex994.htm)] | | | | | | [Form of restricted stock unit terms filed as Exhibit [removed: 99.2] [added: 99.4] to the Company's Current Report on Form 8-K filed on February [removed: 9, 2017] [added: 5, 2020] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982617000019/ex992awardsagrmnt4q2016.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex994.htm)] | | |

| [removed: [10(i)*](http://www.sec.gov/Archives/edgar/data/49826/000004982619000017/a9912019universaloptionagr.htm)] [added: [10(g)*](http://www.sec.gov/Archives/edgar/data/49826/000004982619000017/a9912019universaloptionagr.htm)] | | | | | | [Form of stock option terms filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on February 14, 2019 (Commission File No. 1-4797) and incorporated herein by reference](http://www.sec.gov/Archives/edgar/data/49826/000004982619000017/a9912019universaloptionagr.htm) | | |

| [removed: [10(j)*](http://www.sec.gov/Archives/edgar/data/49826/000004982619000017/a992universalpsuagreementf.htm)] [added: [10(i)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex992.htm)] | | | | | | [Form of performance share unit terms filed as Exhibit 99.2 to the Company's Current Report on Form 8-K filed on February [removed: 14, 2019] [added: 5, 2020] (Commission File No. 1-4797) and incorporated herein by [removed: reference](http://www.sec.gov/Archives/edgar/data/49826/000004982619000017/a992universalpsuagreementf.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex992.htm)] | | |

| [removed: [10(k)*](http://www.sec.gov/Archives/edgar/data/49826/000004982619000017/a9932019universalperforman.htm)] [added: [10(j)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex993.htm)] | | | | | | [Form of performance cash terms filed as Exhibit 99.3 to the Company's Current Report on Form 8-K filed on February [removed: 14, 2019] [added: 5, 2020] (Commission File No. 1-4797) and incorporated herein by [removed: reference](http://www.sec.gov/Archives/edgar/data/49826/000004982619000017/a9932019universalperforman.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex993.htm)] | | |

| [removed: [10(l)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex991.htm)] [added: [10(n)*](http://www.sec.gov/Archives/edgar/data/49826/000129993310004465/exhibit3.htm)] | | | | | | [removed: [Form of stock option terms] [added: [Illinois Tool Works Inc. 2011 Change-in-Control Severance Compensation Policy,] filed as Exhibit [removed: 99.1] [added: 99.3] to the Company's Current Report on Form 8-K filed on [removed: February 5, 2020] [added: December 16, 2010] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex991.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000129993310004465/exhibit3.htm)] | | |

| [removed: [10(m)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex992.htm)] [added: [10(l)*](http://www.sec.gov/Archives/edgar/data/49826/000004982609000096/exhibit10.htm)] | | | | | | [removed: [Form of performance share unit terms] [added: [Illinois Tool Works Inc. Executive Contributory Retirement Income Plan as amended and restated, effective January 1, 2010,] filed as Exhibit [removed: 99.2] [added: 10] to the Company's Current Report on Form 8-K filed on [removed: February] [added: November] 5, [removed: 2020] [added: 2009] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex992.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982609000096/exhibit10.htm)] | | |

| [removed: [10(n)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex993.htm)] [added: [10(p)*](http://www.sec.gov/Archives/edgar/data/49826/000004982613000024/itwexhibit102.htm)] | | | | | | [removed: [Form of performance cash terms] [added: [First Amendment to the ITW Executive Contributory Retirement Income Plan dated February 15, 2013,] filed as Exhibit [removed: 99.3] [added: 10.2] to the Company's [removed: Current] [added: Quarterly] Report on Form [removed: 8-K filed on February 5, 2020] [added: 10-Q for the quarterly period ended March 31, 2013] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex993.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982613000024/itwexhibit102.htm)] | | |

| [removed: [10(p)*](http://www.sec.gov/Archives/edgar/data/49826/000129993310004465/exhibit1.htm)] [added: [10(m)*](http://www.sec.gov/Archives/edgar/data/49826/000095013709001368/c48856exv10wxpy.htm)] | | | | | | [Illinois Tool Works Inc. [removed: 2011 Executive Incentive] [added: Nonqualified Pension] Plan, [added: effective January 1, 2008, as amended and approved by the Board of Directors on December 22, 2008,] filed as Exhibit [removed: 99.1] [added: 10(p)] to the Company's [removed: Current] [added: Annual] Report on Form [removed: 8-K filed on] [added: 10-K for the fiscal year ended] December [removed: 16, 2010] [added: 31, 2008] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000129993310004465/exhibit1.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000095013709001368/c48856exv10wxpy.htm)] | | |

| [removed: [10(t)*](http://www.sec.gov/Archives/edgar/data/49826/000004982614000130/itw_exhibit101.htm)] [added: [10(o)*](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/amendedandrestateddirector.htm)] | | | | | | [Illinois Tool Works Inc. Amended and Restated [removed: Directors](http://www.sec.gov/Archives/edgar/data/49826/000004982614000130/itw_exhibit101.htm)['](http://www.sec.gov/Archives/edgar/data/49826/000004982614000130/itw_exhibit101.htm) [Deferred] [added: Directors' Deferred] Fee Plan effective May 2, 2014, [removed: filed] as [removed: Exhibit 10.1 to the Company's Quarterly Report] [added: amended] on [removed: Form 10-Q for the quarterly period ended June 30, 2014 (Commission File No. 1-4797)] [added: May 8, 2015] and [removed: incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982614000130/itw_exhibit101.htm)] [added: May 4, 2018, filed herewith.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/amendedandrestateddirector.htm)] | | |

| [removed: [21](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex21.htm)] [added: [21](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex21.htm)] | | | | | | [Subsidiaries and Affiliates of the [removed: Company.](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex21.htm)] [added: Company.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex21.htm)] | | |

| [removed: [23](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex23.htm)] [added: [23](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex23.htm)] | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex23.htm)] [added: Firm.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex23.htm)] | | |

| [removed: [24](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex24.htm)] [added: [24](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex24.htm)] | | | | | | [Powers of [removed: Attorney.](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex24.htm)] [added: Attorney.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex24.htm)] | | |

| [removed: [31](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex31.htm)] [added: [31](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex31.htm)] | | | | | | [Rule 13a-14(a) [removed: Certifications.](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex31.htm)] [added: Certifications.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex31.htm)] | | |

| [removed: [32](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex32.htm)] [added: [32](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex32.htm)] | | | | | | [Section 1350 [removed: Certification.](https://www.sec.gov/Archives/edgar/data/49826/000004982622000006/a20211231-ex32.htm)] [added: Certification.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex32.htm)] | | |

| | | | The following financial information from Illinois Tool Works Inc.'s Annual Report on Form 10-K for the year ended December 31, [removed: 2021,] [added: 2022,] formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Statement of Income, (ii) Statement of Comprehensive Income, (iii) Statement of Changes in Stockholders' Equity (iv) Statement of Financial Position, (v) Statement of Cash Flows and (vi) related Notes to Financial Statements. | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Exhibit Number | | | | | | Description | | |

| [10(o)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex994.htm) | | | | | | [Form of restricted stock unit terms filed as Exhibit 99.4 to the Company's Current Report on Form 8-K filed on February 5, 2020 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex994.htm) | | |

| [10(q)*](http://www.sec.gov/Archives/edgar/data/49826/000004982609000096/exhibit10.htm) | | | | | | [Illinois Tool Works Inc. Executive Contributory Retirement Income Plan as amended and restated, effective January 1, 2010, filed as Exhibit 10 to the Company's Current Report on Form 8-K filed on November 5, 2009 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982609000096/exhibit10.htm) | | |

| [10(r)*](http://www.sec.gov/Archives/edgar/data/49826/000095013709001368/c48856exv10wxpy.htm) | | | | | | [Illinois Tool Works Inc. Nonqualified Pension Plan, effective January 1, 2008, as amended and approved by the Board of Directors on December 22, 2008, filed as Exhibit 10(p) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000095013709001368/c48856exv10wxpy.htm) | | |

| [10(s)*](http://www.sec.gov/Archives/edgar/data/49826/000129993310004465/exhibit3.htm) | | | | | | [Illinois Tool Works Inc. 2011 Change-in-Control Severance Compensation Policy, filed as Exhibit 99.3 to the Company's Current Report on Form 8-K filed on December 16, 2010 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000129993310004465/exhibit3.htm) | | |

| [10(u)*](http://www.sec.gov/Archives/edgar/data/49826/000129993311001474/exhibit2.htm) | | | | | | [Illinois Tool Works Inc. 2011 Cash Incentive Plan, filed as Exhibit 99.1 to the Company's Form 8-K filed on May 12, 2011 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000129993311001474/exhibit2.htm) | | |

| [10(v)*](http://www.sec.gov/Archives/edgar/data/49826/000004982613000024/itwexhibit102.htm) | | | | | | [First Amendment to the ITW Executive Contributory Retirement Income Plan dated February 15, 2013, filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982613000024/itwexhibit102.htm) | | |

| [10(w)*](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm) | | | | | | [Consulting Agreement dated June 9, 2021 between Illinois Tool Works Inc. and SLM Advisory Services LLC](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm)[, filed as Exhibit 10(a) to the Company's](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm) [Q](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm)[uarterly](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm) [R](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm)[eport on Form 10-Q/A for the quarterly period ended June 30, 2021 (Commission File No. 1-](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm)[4797) and inc](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm)[orporated her](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm)[ein by reference](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm)[.](http://www.sec.gov/Archives/edgar/data/49826/000004982621000059/exhibit10-consultingagreem.htm) | | |

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 [removed: 11th] [added: 10th] day of February [removed: 2022.][added: 2023.]

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 [removed: 11th] [added: 10th] day of February [removed: 2022.][added: 2023.]

| KELLY J. GRIER | | | | | | Director | | |

| | | | | | | | | |