Illinois Tool Works (ITW) 10-K risk factor changes: FY2023 vs FY2022

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

Slower economic growth, financial market instability, [removed: inflation,] [added: supply chain disruptions,] natural disasters, public health crises (such as the COVID-19 pandemic), labor market challenges, [removed: supply chain disruptions,] [added: rapid inflation,] armed conflicts (such as [removed: the Russia and Ukraine conflict),] [added: Russia's ongoing invasion of Ukraine),] 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.

- [added: supply chain disruptions, including] transportation delays and disruptions;

- the impact of widespread public health crises [removed: (such as the COVID-19 pandemic);][added: and pandemics;]

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

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

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 [added: violate data privacy laws, there could be a negative impact on operating results and/or the financial reporting process and the Company may suffer financial or reputational damage.]

The Company has had significant divestiture activity in the past in accordance with its portfolio management initiative, and it divested [removed: two businesses] [added: one business] in the [removed: fourth] [added: first] quarter of [removed: 2022] [added: 2023] as it continues portfolio refinements to maintain portfolio discipline.

[added: Even if it maintains adequate insurance programs, claims, judgments 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.

[removed: As recent years have seen a substantial increase in the global enforcement of anti-corruption laws and adoption of new trade sanctions and human rights laws, any] [added: 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.

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 [removed: 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.

ITW is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or [removed: otherwise.][added: otherwise, except as required by law.]

Any of such risks and matters, individually or in combination, could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as on the attractiveness and value of an investment in the Company’s securities.

In addition, cybersecurity laws and regulations continue to evolve, and are increasingly demanding, both in the U.S. and globally, which adds compliance complexity and may increase costs of compliance and expose the Company to reputational damage or litigation, monetary damages, regulatory enforcement actions or fines in one or more jurisdictions.

The Company is subject to complex U.S., foreign and other local laws and regulations that are applicable to its operations, such as anti-bribery and anti-corruption, competition, export and import, trade sanctions, data privacy, environmental and human rights laws.

Although the Company has implemented compliance programs which include internal controls, policies and procedures and employee training to deter prohibited practices, these measures may not be effective in preventing employees, agents or business partners from violating or circumventing such internal policies and violating applicable laws and regulations.

not limited to, those set forth below, which could cause actual results to vary materially from recent results or from anticipated future results.

The COVID-19 pandemic has adversely affected the Company's business, financial condition and results of operations and could affect the Company's liquidity.

The full and long-term extent of the effects of the COVID-19 pandemic 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 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 alter demand for our products and to disrupt our supply chain as a result of shifts in demand, illness, travel restrictions, transportation disruptions, increased border controls or closures, or financial hardship.

We have been able to procure the critical raw materials and components necessary to continue production, but prices for some raw materials have increased significantly and there is no guarantee that we will be able to procure critical raw materials in the future without materially adversely impacting our operating margins.

A prolonged extension of the conditions resulting from the pandemic could force both customer and supplier bankruptcies, which we expect would adversely impact our results; however, given the uncertainty around the continued duration and breadth of the COVID-19 pandemic, we cannot reasonably estimate the extent of these adverse effects on our operations.

The ultimate significance of the COVID-19 pandemic 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.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, financial condition or results of operations.

The Company and its customers have experienced supply chain disruptions related to the COVID-19 pandemic and 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.

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

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, trade sanctions, data privacy, environmental and human rights laws.

As of December 31, [removed: 2022,] [added: 2023,] the Company employed approximately [removed: 46,000] [added: 45,000] people.

Through the application of data driven insights generated by 80/20 practice, ITW focuses on its largest and best opportunities (the "80") and eliminates cost, complexity and distractions associated with the less [removed: profitable opportunities (the "20").]

These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately [removed: 19,200] [added: 19,600] granted and pending patents;

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

ENTERPRISE [removed: STRATEGY][added: STRATEGY: 2012 - 2023]

In late 2012, ITW began its strategic framework transitioning the Company [removed: on its current path] to fully leverage the [removed: compelling performance potential] [added: unique and powerful set] of [added: capabilities and operating practices of] the ITW Business Model.

[added: -] As part of the Portfolio Management initiative, ITW exited businesses that were operating in commoditized market spaces and prioritized sustainable differentiation as a must-have requirement for all ITW businesses.

- [removed: Step two,] Business Structure [removed: Simplification,] [added: Simplification] was implemented to simplify and scale up ITW's operating structure to support increased engineering, marketing, and sales resources, and improve global reach and competitiveness, all of which were critical to driving accelerated organic growth.

- 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 [removed: from] [added: since] 2013 [removed: through 2022] and continues to be a key contributor to the Company's ongoing enterprise strategy.

- With the initial portfolio realignment and scale-up work largely [removed: complete,] [added: completed,] the Company shifted its focus to preparing for and accelerating organic growth, reapplying the 80/20 Front-to-Back process to optimize its [removed: newly] scaled-up divisions for growth, first, to build a foundation of operational excellence, and second, to identify the best opportunities to drive organic growth.

[removed: ITW] [added: Since implementing the Company's enterprise strategy in 2012, the Company] has [removed: clearly] demonstrated [added: the compelling performance potential of the ITW Business Model and] superior 80/20 management, resulting in meaningful incremental improvement in margins and returns as evidenced by the Company's operating margin and after-tax return on invested capital.

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

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

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

[removed: The pandemic] [added: However, new epidemics] and [added: pandemics (including any] resurgence of [removed: outbreaks] [added: COVID-19)] could [removed: continue to] [added: similarly] adversely impact the operations of the Company and its customers and suppliers.

The Company has four immaterial Russian subsidiaries with total assets of approximately [removed: $25] [added: $22] million as of December 31, [removed: 2022.][added: 2023.]

The revenue for these four subsidiaries for the [removed: year] [added: twelve months] ended December 31, [removed: 2022] [added: 2023] was approximately [removed: $38] [added: $26] million.

Operating revenue [removed: for] [added: related to] this business [added: that] was [removed: approximately] [added: included in the Company's results of operations was $9 million,] $37 million [added: and $35 million] for the twelve months ended December 31, [removed: 2022.][added: 2023, 2022 and 2021, respectively.]

In a challenging and dynamic environment, the Company delivered strong financial results in [removed: 2022] [added: 2023] primarily due to the continued successful execution of enterprise [removed: initiatives, including the "Win the Recovery" actions initiated over the course of the past year,] [added: initiatives] and continued focus on the highly differentiated ITW Business Model.

The Company's consolidated results of operations for [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020] [added: 2021] were as follows:

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

Product line simplification activities reduced organic revenue by [removed: 40] [added: 70] basis points.

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

The 2021 effective tax rate benefited from discrete income tax benefits of $21 million in the third quarter of 2021 related to the utilization of capital loss carryforwards and $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 [removed: increases] [added: increased] the U.K. income tax rate from 19% to 25% effective April 1, 2023.

| | | | [removed: 2021] [added: 2023] | | | | | | [removed: 2020] [added: 2022] | | | | | | | | | | | | Inc (Dec) | | | | | | Organic | | | Acquisition/ Divestiture | | | Restructuring | | | | | | Foreign Currency | | | Total | | |

| Operating margin % | | | [removed: 24.1] [added: 31.8] | | % | | | | [removed: 22.9] [added: 30.8] | | % | | | | | | | | | | [removed: 120] [added: 100] bps | | | | | | 100 bps | | | — | | | [removed: 20 bps] [added: —] | | | | | | — | | | [removed: 120] [added: 100] bps | | |

- Operating revenue [removed: increased] [added: declined] due to [removed: higher] [added: lower] organic [removed: and acquisition] revenue and the [removed: favorable] [added: unfavorable] effect of foreign currency translation.

Product line simplification activities reduced organic revenue by [removed: 20] [added: 50] basis points.

◦North American organic revenue [removed: increased 13.5% due to growth] [added: decreased 0.3% as a decline] in [removed: all segments, primarily driven by] the [removed: Welding,] Test & Measurement and [removed: Electronics] [added: Electronics, Specialty Products, Automotive OEM, Welding] and [added: Construction Products segments was partially offset by growth in the] Food Equipment [added: and Polymers & Fluids] segments.

◦Europe, Middle East and Africa organic revenue increased [removed: 8.7% due to] [added: 3.9% as] growth in [removed: six segments, primarily driven] [added: three segments was partially offset] by [added: a decline in] the [removed: Food Equipment and] Construction [added: Products, Polymers & Fluids, Specialty] Products [added: and Welding] segments.

◦Asia Pacific organic revenue increased [removed: 13.5% due to growth in all segments.][added: 21.4%.]

[removed: China organic] [added: - Organic] revenue [removed: grew 15.1% with] [added: increased 2.0% as] growth in [removed: six segments,] [added: five segments was] partially offset by a decline in the [added: Specialty Products and] Construction Products [removed: segment.][added: segments.]

- Operating margin of [removed: 24.1%] [added: 27.2%] increased [removed: 120] [added: 190] basis points primarily [removed: due to] [added: driven by favorable price/cost of 220 basis points,] positive operating leverage of [removed: 250] [added: 150] basis points and benefits from the Company's enterprise [removed: initiatives of 110 basis points,] [added: initiatives,] partially offset by [removed: unfavorable price/cost of 150 basis points and] higher operating expenses, including employee-related expenses.

- The Company's effective tax rate [removed: was 19.0% in] [added: for 2023, 2022, and] 2021 [removed: compared to 22.0% in 2020.][added: was 22.6%, 21.0% and 19.0%, respectively.]

The 2021 effective tax rate benefited from [removed: a] discrete income tax [removed: benefit] [added: benefits] of $21 million in the third quarter [added: of 2021] related to the utilization of capital loss carryforwards and [removed: 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 [removed: increases] [added: increased] the U.K. income tax rate from 19% to 25% effective April 1, 2023.

Additionally, the effective tax [removed: rate] [added: rates for 2023, 2022 and 2021] included discrete income tax benefits [added: of $20 million, $12 million and $17 million, respectively,] related to excess tax benefits from stock-based [removed: compensation of $17 million and $27 million for 2021 and 2020, respectively.][added: compensation.]

- Diluted earnings per share (EPS) of [removed: $8.51 increased 28.4%.][added: $9.74 in 2023 decreased 0.3%.]

- The Company repurchased approximately [removed: 4.4] [added: 6.4] million shares of its common stock in [removed: 2021] [added: 2023] for approximately [removed: $1.0] [added: $1.5] billion.

- The Company increased the quarterly dividend on common stock from [removed: $1.14] [added: $1.31] to [removed: $1.22] [added: $1.40] per share in [removed: 2021,] [added: 2023,] or from [removed: $4.56] [added: $5.24] to [removed: $4.88] [added: $5.60] per share on an annualized basis.

Total cash dividends of approximately [removed: $1.5] [added: $1.6] billion were paid in [removed: 2021.][added: 2023.]

profitable opportunities (the "20").

Key initiatives in the Company's enterprise strategy included portfolio management, business structure simplification, strategic sourcing and the diligent re-application of ITW's proprietary 80/20 Front-to-Back process.

OUR NEXT PHASE: 2024-2030

In the Next Phase of the Company’s evolution, the ITW Business Model and the Enterprise Strategy framework will be as formidable of a competitive advantage and performance differentiator as it has been over the last decade, if not more so.

Volatility, risk and the pace of change in the global operating environment will continue to increase, and a decentralized

entrepreneurial culture allows the Company to be a fast adaptor – to read, react, respond and evolve.

The Company’s ability to consistently execute and invest through the ups and downs of the business cycle is now a defining competitive advantage.

Throughout the Next Phase, the Company's focus is to build organic growth into a core ITW strength on par with the Company’s world-class financial performance and operational capabilities.

Throughout this phase, the Company will sustain its foundational strengths built over the past decade, including the high-quality ITW Business Model practice.

Customer-back Innovation (CBI) is the most impactful driver to achieve high-quality organic growth through the cycle by establishing trusted problem solver relationships with key customers to effectively invent solutions that address customers' most critical pain points or tackle the biggest growth opportunities.

CBI successes, coupled with underlying market growth and share gains, are how the Company intends to achieve its high-quality organic growth.

This business was sold on April 3, 2023, with no significant gain or loss upon sale.

These subsidiaries were not material to the Company's results of operations or financial position.

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 and 2021 was $106 million and $115 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.

This business was sold on April 3, 2023, with no significant gain or loss upon sale.

Operating revenue related to this business that was included in the Company's results of operations was $9 million, $37 million and $35 million for the twelve months ended December 31, 2023, 2022 and 2021, respectively.

Operating Revenue

Refer to the "Results of Operations for Total Company" and the "Results of Operations by Segment" sections for discussion of changes in operating revenue for 2023 compared to 2022 and 2022 compared to 2021.

Operating Expenses

| Operating Revenue | | | $ | 16,107 | | | | | $ | 15,932 | | | | | $ | 14,455 | |

| Cost of revenue | | | $ | 9,316 | | | | | $ | 9,429 | | | | | $ | 8,489 | |

| Percent of operating revenue | | | 57.8 | | % | | | | 59.2 | | % | | | | 58.7 | | % |

| Selling, administrative, and research and development expenses | | | $ | 2,638 | | | | | $ | 2,579 | | | | | $ | 2,356 | |

| Percent of operating revenue | | | 16.4 | | % | | | | 16.2 | | % | | | | 16.3 | | % |

| Percent of operating revenue | | | 0.7 | | % | | | | 0.8 | | % | | | | 0.9 | | % |

Cost of revenue was $9.3 billion in 2023, $9.4 billion in 2022 and $8.5 billion in 2021.

Cost of revenue was 1.2% lower in 2023 compared to 2022 primarily due to the impact of divestiture activity in the second quarter of 2023 and the fourth quarter of 2022, which reduced cost of revenue by 1.0%.

Cost of revenue was 11.1% higher in 2022 compared to 2021 primarily due to a 12.8% increase resulting from higher organic revenue and a 3.0% increase due to the impact of the MTS Test & Simulation acquisition, which was completed on December 1, 2021, partially offset by the effect of foreign currency translation which reduced cost of revenue by 4.5%.

Cost of revenue as a percent of operating revenue increased in 2022 compared to 2021 primarily due to higher raw material costs and increased employee-related expenses, partially offset by positive operating leverage and benefits from the Company's enterprise initiatives.

Selling, administrative, and research and development expenses were $2.6 billion in 2023, $2.6 billion in 2022 and $2.4 billion in 2021.

Expenses in 2023 increased 2.3% compared to 2022 driven by a 3.0% increase resulting from higher organic revenue, partially offset by the impact of divestiture activity which reduced expenses by 0.7%.

Selling, administrative, and research and development expenses as a percent of operating revenue were slightly higher in 2023 compared to 2022 primarily due to higher employee-related expenses and research and development expenses, partially offset by positive operating leverage and benefits from the Company's enterprise initiatives.

Expenses in 2022 increased 9.5% compared to 2021 primarily due to a 9.2% increase resulting from higher organic revenue and a 4.3% increase due to the impact of the MTS Test & Simulation acquisition, partially offset by the effect of foreign currency translation which reduced expenses by 3.9%.

Selling, administrative, and research and development expenses as a percent of operating revenue improved in 2022 compared to 2021 primarily due to positive operating leverage and benefits from the Company's enterprise initiatives, partially offset by higher employee-related expenses and research and development expenses.

Amortization and impairment of intangible assets was lower in 2023 compared to 2022 primarily due to fully amortized intangible assets, but was essentially flat in 2022 compared to 2021 as additional amortization expense from the acquisition of the MTS Test & Simulation business was offset by fully amortized intangible assets.

Refer to the "Results of Operations for Total Company" and the "Results of Operation by Segment" sections for additional discussion of operating results for 2023 compared to 2022 and 2022 compared to 2021.

RESULTS OF OPERATIONS FOR TOTAL COMPANY

2023 compared to 2022

execute the Company's strategy and values.

To shift its primary growth engine to organic, the Company began executing a multi-step approach.

- The first step was to narrow the focus and improve the quality of ITW's business portfolio.

As a result of this work, ITW's business portfolio now has significantly higher organic growth potential.

ITW segments and divisions now possess attractive and differentiated product lines and end markets as they continue to improve operating margins and generate price/cost increases.

The Company achieved this through product line simplification, or eliminating the complexity and overhead costs associated with smaller product lines and customers, while supporting and growing the businesses' largest / most profitable customers and product lines.

PATH TO FULL POTENTIAL

Since the launch of the enterprise strategy, the Company has made considerable progress on our path to full potential.

The ITW Business Model and unique set of capabilities are a source of strong and enduring competitive advantage, 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 principles:

- Portfolio discipline

- 80/20 Front-to-Back practice excellence

- Full-potential organic growth

The 80/20 Front-to-Back process is a rigorous, iterative and highly data-driven approach to identify where the Company has true differentiation and the ability to drive sustainable, high-quality organic growth.

The Company simplifies and eliminates complexity and redesigns every aspect of its business to ensure focused execution on key opportunities, markets, customers, and products.

Pandemic Priorities and "Win the Recovery"

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 since 2012 through the execution of ITW's enterprise strategy that provided the Company with the options to respond.

This, coupled with the proprietary and powerful ITW Business Model, diversified high-quality business portfolio and diligent execution put the Company in a position of strength in dealing with the global pandemic.

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

"Win the Recovery" is an execution component of the Company's enterprise strategy, not a separate initiative, with every one of the Company's divisions identifying specific opportunities presented by the pandemic to capture sustainable share gains that are aligned with the ITW long-term enterprise strategy.

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

The Company continues to focus on delivering strong results in any environment while executing its long-term strategy to achieve and sustain ITW's full potential performance.

Full-Potential Organic Growth

Reaching full potential means that every division is positioned for sustainable, high-quality organic growth.

The Company has clearly defined action plans aimed at leveraging the performance power of the ITW Business Model to achieve full-potential organic growth in every division, with specific focus on:

- "80" focused Market Penetration - fully leveraging the considerable growth potential that resides in the Company's largest and most differentiated product offerings and customer relationships

- Customer-back Innovation - strengthening the Company's commitment to serial innovation and delivering a continuous flow of differentiated new products to its key customers

- Strategic Sales Excellence - deploying a high-performance sales function in every division

In early 2020, an outbreak of a novel strain of coronavirus (COVID-19) occurred in China and other jurisdictions.

The COVID-19 outbreak was subsequently declared a global pandemic by the World Health Organization on March 11, 2020.

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

Throughout the global pandemic, the Company has focused on the following priorities: (1) protecting the health and supporting the well-being of ITW's colleagues; (2) continuing to serve the Company's customers with excellence to the best of its ability; (3) maintaining financial strength, liquidity and strategic optionality; and (4) leveraging the Company's strengths to position it to fully participate in the recovery.

To support ITW's colleagues, 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 new workplace sanitation practices and a coordinated response to ensure access to personal protective equipment to minimize infection risk.

To support its customers, the Company worked diligently to keep its facilities open and operating safely.

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 areas around the world where governments issued stay-at-home or similar orders, the vast majority of ITW's businesses were designated as critical or essential businesses and, as such, they remained open and operational.

In some cases, this was because the Company's products directly impacted the COVID-19 response effort.

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

While the vast majority of the Company's facilities 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 regions, spikes in infections (including the spread of variants) continuing to be experienced and certain jurisdictions continuing to impose stay-at-home orders.

Additionally, rising interest rates would negatively impact the amount of interest expense related to new issuances of commercial [removed: paper.][added: paper and the outstanding Euro term loans borrowed under the Euro Credit Agreement.]

The Company designated the €1.0 billion of Euro notes issued in May 2014, the €1.0 billion of Euro notes issued in May [removed: 2015 and] [added: 2015,] the €1.6 billion of Euro notes issued in June 2019 [added: and the €1.3 billion of Euro term loans borrowed under the Euro Credit Agreement in May 2023] as hedges of a portion of its net investment in Euro-denominated foreign operations to reduce foreign currency risk associated with the investment in these operations.

On February 22, 2022, €500 million of the Euro notes issued in May 2014 were redeemed in [removed: full.][added: full and on May 22, 2023, €500 million of the Euro notes issued in May 2015 were repaid on the due date.]

The amount of pre-tax gain (loss) related to these notes [added: that was] recorded in Other comprehensive income (loss) for the twelve months ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020] [added: 2021] was [removed: $205] [added: $(109)] million, [removed: $303] [added: $205] million and [removed: $(359)] [added: $303] million, respectively.

As of December 31, [removed: 2022,] [added: 2023,] the Company employed approximately [removed: 46,000] [added: 45,000] people.

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

This segment primarily serves the food and beverage, consumer durables, general industrial, industrial capital [removed: goods] [added: goods, airlines] and printing and publishing markets.

These customer insights and learnings drive innovation at ITW and have contributed to a portfolio of approximately [removed: 19,200] [added: 19,600] granted and pending patents;

[removed: Enterprise Strategy][added: ENTERPRISE STRATEGY: 2012 - 2023]

In late 2012, ITW began its strategic framework transitioning the Company [removed: on its current path] to fully leverage the [removed: compelling performance potential] [added: unique and powerful set] of [added: capabilities and operating practices of] the ITW Business Model.

[added: -] As part of the Portfolio Management initiative, ITW exited businesses that were operating in commoditized market spaces and prioritized sustainable differentiation as a must-have requirement for all ITW businesses.

- [removed: Step two,] Business Structure [removed: Simplification,] [added: Simplification] was implemented to simplify and scale up ITW's operating structure to support increased engineering, marketing, and sales resources, and improve global reach and competitiveness, all of which were critical to driving accelerated organic growth.

- 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 [removed: from] [added: since] 2013 [removed: through 2022] and continues to be a key contributor to the Company's ongoing enterprise strategy.

- With the initial portfolio realignment and scale-up work largely [removed: complete,] [added: completed,] the Company shifted its focus to preparing for and accelerating organic growth, reapplying the 80/20 Front-to-Back process to optimize its [removed: newly] scaled-up divisions for growth, first, to build a foundation of operational excellence, and second, to identify the best opportunities to drive organic growth.

[removed: ITW] [added: Since implementing the Company's enterprise strategy in 2012, the Company] has [removed: clearly] demonstrated [added: the compelling performance potential of the ITW Business Model and] superior 80/20 management, resulting in meaningful incremental improvement in margins and returns as evidenced by the Company's operating margin and after-tax return on invested capital.

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

In addition to numerous smaller regional competitors, the Welding segment competes globally with Lincoln Electric [added: Holdings, Inc.] and [removed: ESAB.][added: ESAB Corporation.]

The Company owns approximately [removed: 3,900] [added: 4,000] unexpired U.S. patents and [removed: 9,600] [added: 9,900] foreign patents covering articles, methods and machines.

[removed: Any additional] measures to maintain compliance are not expected to materially affect the Company's capital expenditures (including expenditures for environmental control facilities), competitive position, financial position or results of operations.

As of December 31, [removed: 2022,] [added: 2023,] the Company employed approximately [removed: 46,000] [added: 45,000] people, with approximately [removed: 18,000] [added: 17,000] people located in the United States and the remainder in multiple other countries where the Company's businesses operate.

The Company strives to be a great employer through its demonstrated commitment to [removed: talent development,] employee safety, [added: its] workplace culture, [removed: compensation and benefits, and] [added: talent development,] diversity and [removed: inclusion.][added: inclusion, compensation and benefits.]

Because this expertise develops over time and through specific experiences, the Company focuses on developing and promoting its own talent to [removed: ensure] [added: support] the Company's sustained business success over the long term.

The safety and well-being of ITW's colleagues around the world [removed: has been, and always will be,] [added: is] its top [removed: priority.][added: priority, in addition to being an essential component of our commitment to be a great employer.]

ITW's Enterprise Safety Strategy [removed: is] [added: and Safety Policy are] based on the following core principles: (i) a goal of zero accidents; (ii) shared ownership for safety (business and individual); (iii) proactive approach focused on accident prevention; [removed: and] (iv) continuous improvement [removed: philosophy.][added: philosophy; and (v) compliance with applicable national, regional, and local health and safety laws and regulations.]

[removed: ITW believes its colleagues around the world thrive in this culture, as it allows them to experience significant autonomy, a sense of shared ownership with their colleagues, and a work atmosphere] [added: The Company's culture is] deeply rooted in [removed: the Company's] [added: its] core [removed: values of] [added: values:] Integrity, Respect, Trust, Shared Risk and Simplicity.

As a global employer, the Company is committed to providing market-competitive compensation and benefits [added: that support physical, mental, and financial well-being] to attract and retain great talent across its global divisions.

ITW believes it is at its best when it brings together unique perspectives, [removed: experiences] [added: experiences,] and ideas.

ITW [removed: remains] [added: is] committed to [removed: achieving its diversity and inclusion goals] [added: attracting the best talent] and enhancing the diversity of its global leadership teams.

ITW drives progress through a comprehensive enterprise Diversity and Inclusion Framework, which focuses [removed: on] [added: on;] (i) leadership commitment and accountability; (ii) attracting and retaining global, diverse talent; (iii) creating inclusive workplaces; and (iv) striving to be a great employer.

Executive Officers of the Company as of February [removed: 10, 2023] [added: 9, 2024] were as follows:

| Name | | | Age | | | Present Position | | | [removed: Year Elected to] [added: First Year in] Present Position | | | Other Positions Held During [removed: 2018-2022] [added: 2019-2023] | | |

| E. Scott [removed: Santi] [added: Santi(1)] | | | [removed: 61] [added: 62] | | | Chairman [removed: & Chief Executive Officer] | | | [removed: 2015] [added: 2024] | | | [removed: President] [added: Chairman] & Chief Executive [removed: Officer, 2012-2015.] [added: Officer 2015-2023.] | | |

| Axel Beck | | | [removed: 57] [added: 58] | | | Executive Vice President | | | 2020 | | | Group President, food equipment businesses, 2016-2020. | | |

| Kenneth Escoe | | | [removed: 47] [added: 48] | | | Executive Vice President | | | 2020 | | | Vice President/General Manager, specialty products businesses, 2016-2019; Group President, specialty products businesses, [removed: 2019-2020.] [added: 2019.] | | |

| Javier Gracia Carbonell | | | [removed: 50] [added: 51] | | | Executive Vice President | | | 2022 | | | Vice President/General Manager, construction businesses, 2017-2020; Group President, construction businesses, 2020-2021. | | |

| Patricia A. Hartzell | | | [removed: 46] [added: 47] | | | Executive Vice President | | | 2022 | | | Vice President/General Manager, test [removed: and measurement] & [added: measurement and] electronics businesses, 2017-2020; Group President, test [removed: and measurement] & [added: measurement and] electronics businesses, 2020-2021. | | |

| Michael M. Larsen | | | [removed: 54] [added: 55] | | | Senior Vice President & Chief Financial Officer | | | 2013 | | | | | |

| Mary K. Lawler | | | [removed: 57] [added: 58] | | | Senior Vice President & Chief Human Resources Officer | | | 2014 | | | | | |

| Christopher [added: A.] O'Herlihy | | | [removed: 59] [added: 60] | | | [removed: Vice Chairman] [added: President & Chief Executive Officer] | | | [removed: 2015] [added: 2024] | | | [added: Vice Chairman 2015-2023.] | | |

| Randall J. Scheuneman | | | [removed: 55] [added: 56] | | | Vice President & Chief Accounting Officer | | | 2009 | | | | | |

| Jennifer K. Schott | | | [removed: 49] [added: 50] | | | Senior Vice President, General Counsel & Secretary | | | 2021 | | | Vice President, Assistant General Counsel & Assistant Secretary, Discover Financial Services, 2016-2019; Deputy General Counsel & Assistant Secretary, Caterpillar, Inc., 2019-2021. | | |

| Sharon Szafranski | | | [removed: 56] [added: 57] | | | Executive Vice President | | | 2020 | | | Vice President/General Manager, test & measurement and electronics businesses, 2016-2019; Group President, test & measurement and electronics businesses, [removed: 2019-2020.] [added: 2019.] | | |

| Michael R. Zimmerman | | | [removed: 62] [added: 63] | | | Executive Vice President | | | 2015 | | | | | |

[removed: Copies of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934] are [removed: also] available free of charge through the Company's website (www.itw.com), as soon as reasonably practicable after electronically filing with or otherwise furnishing such information to the [removed: SEC.][added: Securities and Exchange Commission ("the SEC").]

Key initiatives in the Company's enterprise strategy included portfolio management, business structure simplification, strategic sourcing and the diligent re-application of ITW's proprietary 80/20 Front-to-Back process.

OUR NEXT PHASE: 2024-2030

In the Next Phase of the Company’s evolution, the ITW Business Model and the Enterprise Strategy framework will be as formidable of a competitive advantage and performance differentiator as it has been over the last decade, if not more so.

Volatility, risk and the pace of change in the global operating environment will continue to increase, and a decentralized entrepreneurial culture allows the Company to be a fast adaptor – to read, react, respond and evolve.

The Company’s ability to consistently execute and invest through the ups and downs of the business cycle is now a defining competitive advantage.

Throughout the Next Phase, the Company's focus is to build organic growth into a core ITW strength on par with the Company’s world-class financial performance and operational capabilities.

Throughout this phase, the Company will sustain its foundational strengths built over the past decade, including the high-quality ITW Business Model practice.

Customer-back Innovation (CBI) is the most impactful driver to achieve high-quality organic growth through the cycle by establishing trusted problem solver relationships with key customers to effectively invent solutions that address customers' most critical pain points or tackle the biggest growth opportunities.

CBI successes, coupled with underlying market growth and share gains, are how the Company intends to achieve its high-quality organic growth.

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.

This business was sold on April 3, 2023, with no significant gain or loss upon sale.

Operating revenue related to this business that was included in the Company's results of operations was $9 million, $37 million and $35 million for the twelve months ended December 31, 2023, 2022 and 2021, respectively.

Any additional

ITW colleagues are empowered to think and act like business owners within the Company's decentralized, entrepreneurial culture.

Our decentralized structure allows each division to operate with autonomy and enables our people to embrace the personal impact they can make.

The Company strives for all colleagues to "own" their careers and feel valued for the work they do.

ITW colleagues are encouraged to learn new skills and capabilities primarily through on-the-job experience, hands-on coaching and feedback, in addition to formal training.

The Great ITW Leader Framework defines leadership capabilities and attributes to help colleagues to reach their full potential as leaders.

| Guilherme Silva | | | 48 | | | Executive Vice President | | | 2024 | | | Vice President/General Manager, polymers & fluids businesses, 2016-2020; Group President, polymers & fluids businesses, 2020-2021; Group President, test & measurement and electronics businesses, 2021-2023. | | |

(1) Mr. Santi will remain Chairman through March 1, 2024, after which he will become Non-Executive Chairman and will no longer be an employee of the Company.

Copies of the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

To shift its primary growth engine to organic, the Company began executing a multi-step approach.

- The first step was to narrow the focus and improve the quality of ITW's business portfolio.

As a result of this work, ITW's business portfolio now has significantly higher organic growth potential.

ITW segments and divisions now possess attractive and differentiated product lines and end markets as they continue to improve operating margins and generate price/cost increases.

The Company achieved this through product line simplification, or eliminating the complexity and overhead costs associated with smaller product lines and customers, while supporting and growing the businesses' largest / most profitable customers and product lines.

Path to Full Potential

Since the launch of the enterprise strategy, the Company has made considerable progress on our path to full potential.

The ITW Business Model and unique set of capabilities are a source of strong and enduring competitive advantage, 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 principles:

- Portfolio discipline

- 80/20 Front-to-Back practice excellence

- Full-potential organic growth

The 80/20 Front-to-Back process is a rigorous, iterative and highly data-driven approach to identify where the Company has true differentiation and the ability to drive sustainable, high-quality organic growth.

The Company simplifies and eliminates complexity and redesigns every aspect of its business to ensure focused execution on key opportunities, markets, customers, and products.

Pandemic Priorities and "Win the Recovery"

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 since 2012 through the execution of ITW's enterprise strategy that provided the Company with the options to respond.

This, coupled with the proprietary and powerful ITW Business Model, diversified high-quality business portfolio and diligent execution put the Company in a position of strength in dealing with the global pandemic.

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

"Win the Recovery" is an execution component of the Company's enterprise strategy, not a separate initiative, with every one of the Company's divisions identifying specific opportunities presented by the pandemic to capture sustainable share gains that are aligned with the ITW long-term enterprise strategy.

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

The Company continues to focus on delivering strong results in any environment while executing its long-term strategy to achieve and sustain ITW's full potential performance.

Full-potential Organic Growth

Reaching full potential means that every division is positioned for sustainable, high-quality organic growth.

The Company has clearly defined action plans aimed at leveraging the performance power of the ITW Business Model to achieve full-potential organic growth in every division, with specific focus on:

- "80" focused Market Penetration - fully leveraging the considerable growth potential that resides in the Company's largest and most differentiated product offerings and customer relationships

- Customer-back Innovation - strengthening the Company's commitment to serial innovation and delivering a continuous flow of differentiated new products to its key customers

- Strategic Sales Excellence - deploying a high-performance sales function in every division

Total backlog was $2.7 billion and $2.9 billion as of December 31, 2022 and 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 2023 are not significant and represent approximately 10% of total backlog as of December 31, 2022.

The Company's Great ITW Leader Framework defines the leadership capabilities and attributes that guide all leadership talent assessment, development and selection decisions.

Consistent with these commitments, employee health and safety has been a top priority during the COVID-19 pandemic.

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 during the pandemic.

The Company operates under a decentralized, entrepreneurial culture that is crucial to the Company's performance and is one of the three unique elements of the ITW Business Model.

The Company's Sustainability 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.

Information in the Sustainability Report or on the Company's website is not incorporated herein by reference.

The Company electronically files reports with the Securities and Exchange Commission (the "SEC").

The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

For the fiscal year ended December 31, [removed: 2022][added: 2023]

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, [removed: 2022] [added: 2023] was approximately [removed: $56.3] [added: $75.1] billion based on the New York Stock Exchange closing sales price as of June 30, [removed: 2022.][added: 2023.]

Shares of common stock outstanding at January 31, [removed: 2023: 305,068,141.][added: 2024: 298.8 million.]

| Portions of the [removed: 2023] [added: 2024] Proxy Statement for Annual Meeting of Stockholders to be held on May [removed: 5, 2023.] [added: 3, 2024.] | | | | | | Part III | | |

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| [Item [removed: 14.](#i7fbe96023688499fa1dd5b825e658450_214)] [added: 14.](#ieeff07b05d2a47a597a934295c9dfff9_214)] | | | [Principal [removed: Accounting] [added: Accountant] Fees and [removed: Services](#i7fbe96023688499fa1dd5b825e658450_214)] [added: Services](#ieeff07b05d2a47a597a934295c9dfff9_214)] | | | [removed: [78](#i7fbe96023688499fa1dd5b825e658450_214)] [added: [78](#ieeff07b05d2a47a597a934295c9dfff9_214)] | | |

| | | | [PART [removed: IV](#i7fbe96023688499fa1dd5b825e658450_217)] [added: IV](#ieeff07b05d2a47a597a934295c9dfff9_217)] | | | | | |

| [Item [removed: 15.](#i7fbe96023688499fa1dd5b825e658450_220)] [added: 15.](#ieeff07b05d2a47a597a934295c9dfff9_220)] | | | [removed: [Exhibits] [added: [Exhibit] and Financial Statement [removed: Schedules](#i7fbe96023688499fa1dd5b825e658450_220)] [added: Schedules](#ieeff07b05d2a47a597a934295c9dfff9_220)] | | | [removed: [79](#i7fbe96023688499fa1dd5b825e658450_220)] [added: [79](#ieeff07b05d2a47a597a934295c9dfff9_220)] | | |

| [Item [removed: 16.](#i7fbe96023688499fa1dd5b825e658450_226)] [added: 16.](#ieeff07b05d2a47a597a934295c9dfff9_226)] | | | [Form 10-K [removed: Summary](#i7fbe96023688499fa1dd5b825e658450_226)] [added: Summary](#ieeff07b05d2a47a597a934295c9dfff9_226)] | | | [removed: [81](#i7fbe96023688499fa1dd5b825e658450_226)] [added: [82](#ieeff07b05d2a47a597a934295c9dfff9_226)] | | |

| | | | [removed: [Signatures](#i7fbe96023688499fa1dd5b825e658450_229)] [added: [Signatures](#ieeff07b05d2a47a597a934295c9dfff9_229)] | | | [removed: [82](#i7fbe96023688499fa1dd5b825e658450_229)] [added: [83](#ieeff07b05d2a47a597a934295c9dfff9_229)] | | |

| | | | [PART I](#ieeff07b05d2a47a597a934295c9dfff9_10) | | | | | |

| [Item 1C.](#ieeff07b05d2a47a597a934295c9dfff9_1928) | | | [Cybersecurity](#ieeff07b05d2a47a597a934295c9dfff9_1928) | | | [15](#ieeff07b05d2a47a597a934295c9dfff9_1928) | | |

| | | | [PART II](#ieeff07b05d2a47a597a934295c9dfff9_31) | | | | | |

| 1.25% Euro Notes due 2023 | | | ITW23 | | | New York Stock Exchange | | |

(Check one):

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

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

Risk Management and Strategy

The Company utilizes information systems to support a variety of business processes and activities in its decentralized operations.

These systems may be subject to cyber-based attacks or breaches.

For additional information related to the risks associated with cybersecurity threats, refer to the Business and Operational Risks section of Item 1A.

Risk Factors.

Cybersecurity risk management is part of the Company's global enterprise risk management program.

In order to manage the risks associated with cybersecurity threats, the Company has implemented a robust risk-based cybersecurity program consisting of processes, technologies, and controls to assess, identify and manage material risks from cybersecurity threats.

A key part of the Company’s cybersecurity program is the ITW Cybersecurity Framework, which is based on the National Institute of Standards and Technology’s Cybersecurity Framework ("CSF") and is designed to protect the Company’s data through rapid identification of and effective response to cybersecurity incidents.

The Company’s framework includes detailed processes and controls related to backup and recovery, response planning, awareness, vulnerability management and endpoint protection as well as cybersecurity requirements for third-party service providers.

The framework is regularly reviewed, assessed, and updated based on input from third party specialists, threat intelligence firms and CSF standard updates.

The ITW Cybersecurity Framework includes a number of activities designed to enhance the Company's resiliency related to cyber-related risks and ensure that the Company's information systems are secure from material cybersecurity threats.

These activities include the following, among others:

- Annual cybersecurity training;

- Quarterly phish simulation testing;

- Ongoing response planning and tabletop exercises;

- Network and endpoint monitoring;

- Vulnerability management and testing; and

- Backup and recovery testing.

While the Company's information systems are exposed to cybersecurity threats and risks, the Company has not experienced any material cybersecurity incidents during 2023, 2022 or 2021, and any costs or operational impacts related to cybersecurity incidents were immaterial during this period.

Governance

ITW's Board of Directors is responsible for providing oversight and strategic guidance to management to support the long-term interests of the Company's stakeholders.

As part of this responsibility, the Board of Directors annually reviews and evaluates the Company's cybersecurity policies and practices with respect to risk management as well as steps taken by management to monitor and control such exposures.

In addition to oversight by the Board of Directors, several cross-functional management teams focus on cybersecurity risk and report any identified cybersecurity incidents.

Each of the Company's divisions has a Division Cyber Incident Response Team and protocols in place to communicate cybersecurity incidents to a central Cyber Incident Response Team.

The Cyber Incident Response Team is led by the Chief Information Security Officer and is responsible for the initial assessment of cybersecurity incidents and oversight of any incident response.

On a quarterly basis, or sooner if appropriate, cybersecurity incidents are summarized and reported to the Cybersecurity Governance Committee comprised of senior executives.

Additionally, the Audit Committee of the Board of Directors

receives quarterly cybersecurity reports from senior management which cover any identified cybersecurity incidents, results of third party vulnerability testing, and key developments in policies and practices during the quarter.

As of December 31, [removed: 2022,] [added: 2023,] the Company operated approximately [removed: 440] [added: 410] plants and office facilities, excluding regional sales offices and warehouse facilities.

Approximately [removed: 290] [added: 270] of the facilities were located outside of the United States.

Principal foreign countries include [removed: Germany,] China, [added: Germany,] France, and the United Kingdom.

[removed: ][added: ]

*Assumes $100 invested on December 31, [removed: 2017,] [added: 2018,] including reinvestment of dividends.

Copyright© [removed: 2023] [added: 2024] Standard & Poor's, a division of S&P Global.

The [removed: 2022 Peer Group] [added: 2023 peer group] consists of the following 17 public [removed: companies:][added: companies, consistent with the peer group included in the Company's Proxy Statement:]

There were no changes in the Company's peer group in [removed: 2022.][added: 2023.]

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

On May 7, 2021, the [removed: Company's Board of Directors authorized] [added: Company announced] a [removed: new] stock repurchase program which [removed: provides] [added: provided] for the repurchase of up to an additional $3.0 billion of the Company's common stock over an open-ended period of time (the "2021 Program").

As of December 31, [removed: 2022,] [added: 2023,] there were approximately [removed: $1.5] [added: $5.0] billion of authorized repurchases remaining under the [removed: 2021] [added: 2023] Program.

Share repurchase activity under the Company's share repurchase programs for the fourth quarter of [removed: 2022] [added: 2023] was as follows:

Common Stock Data— The Company's common stock is listed on the New York Stock Exchange under the trading symbol "ITW." There were approximately 4,484 holders of record of common stock as of January 31, 2024.

Repurchases of Common Stock

The 2021 program was completed in the fourth quarter of 2023.

On August 4, 2023, the Company announced a new stock repurchase program which provides for the repurchase of up to an additional $5.0 billion of the Company's common stock over an open-ended period of time (the "2023 Program").

| October 2023 | | | 0.6 | | | | | | $ | 229.18 | | | | | 0.6 | | | | | | $ | 5,227 | |

| November 2023 | | | 0.6 | | | | | | $ | 235.76 | | | | | 0.6 | | | | | | $ | 5,096 | |

| December 2023 | | | 0.4 | | | | | | $ | 253.48 | | | | | 0.4 | | | | | | $ | 4,990 | |

| Total | | | 1.6 | | | | | | | | | | | | 1.6 | | | | | | | | |

Common Stock Data— The Company's common stock is listed on the New York Stock Exchange.

There were approximately 4,748 holders of record of common stock as of January 31, 2023.

| 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 | | | | | | | | |

ITW management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]

Based on our assessment we believe that, as of December 31, [removed: 2022,] [added: 2023,] 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: 2022] [added: 2023] has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their [added: attestation] report [added: included] herein.

| /s/ [removed: E. Scott Santi E. Scott Santi Chairman] [added: Christopher A. O'Herlihy Christopher A. O'Herlihy President] & Chief Executive Officer February [removed: 10, 2023] [added: 9, 2024] | | | | | | /s/ Michael M. Larsen Michael M. Larsen Senior Vice President & Chief Financial Officer February [removed: 10, 2023] [added: 9, 2024] | | |

We have audited the accompanying consolidated statements of financial position of Illinois Tool Works Inc. and subsidiaries (the "Company") as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] 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: 2022,] [added: 2023,] 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: 2022,] [added: 2023,] based on criteria established in *Internal Control — Integrated Framework (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: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] 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: 2022,] [added: 2023,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by COSO.

When calculating income tax expense management makes estimates and assumptions, including determination of the completeness of book income in each jurisdiction, calculation of taxable income through identification and classification of book to tax differences (either temporary or permanent items), consideration of applicable tax deductions or [removed: credits,] [added: credits] and the identification of uncertain tax positions.

These matters included the auditing of [added: certain elements of] income tax expense, identification of uncertain tax [removed: positions,] [added: positions and] measurement of unrecognized tax benefits, and certain planning transactions with income tax expense implications.

With the assistance of our income tax specialists, our principal audit procedures related to [added: the auditing of certain elements of] income tax [added: expense, identification of uncertain tax positions and measurement of unrecognized tax benefits and certain planning transactions with income tax] expense [added: implications] included the following, among others:

- We tested the effectiveness of [removed: management's] [added: management’s] controls over income [removed: taxes, including those over income] tax expense, unrecognized tax [removed: benefits,] [added: benefits] and certain planning transactions with income tax expense implications.

- We evaluated [removed: management's] [added: management’s] significant estimates and judgments incorporated into the calculation of [added: certain elements of] income tax expense by:

◦Testing the accuracy of the [added: relevant] income tax expense [removed: calculation.][added: calculations.]

| In millions except per share amounts | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Operating Revenue | | | $ | [removed: 15,932] [added: 16,107] | | | | | $ | [removed: 14,455] [added: 15,932] | | | | | $ | [removed: 12,574] [added: 14,455] | |

| Cost of revenue | | | [removed: 9,429] [added: 9,316] | | | | | | [removed: 8,489] [added: 9,429] | | | | | | [removed: 7,375] [added: 8,489] | | |

| Selling, administrative, and research and development expenses | | | [removed: 2,579] [added: 2,638] | | | | | | [removed: 2,356] [added: 2,579] | | | | | | [removed: 2,163] [added: 2,356] | | |

| Amortization and impairment of intangible assets | | | [removed: 134] [added: 113] | | | | | | [removed: 133] [added: 134] | | | | | | [removed: 154] [added: 133] | | |

| Operating Income | | | [removed: 3,790] [added: 4,040] | | | | | | [removed: 3,477] [added: 3,790] | | | | | | [removed: 2,882] [added: 3,477] | | |

| Interest expense | | | [removed: (203)] [added: (266)] | | | | | | [removed: (202)] [added: (203)] | | | | | | [removed: (206)] [added: (202)] | | |

| Other income (expense) | | | [removed: 255] [added: 49] | | | | | | [removed: 51] [added: 255] | | | | | | [removed: 28] [added: 51] | | |

| Income Before Taxes | | | [removed: 3,842] [added: 3,823] | | | | | | [removed: 3,326] [added: 3,842] | | | | | | [removed: 2,704] [added: 3,326] | | |

| Income taxes | | | [removed: 808] [added: 866] | | | | | | [removed: 632] [added: 808] | | | | | | [removed: 595] [added: 632] | | |

| Net Income | | | $ | [removed: 3,034] [added: 2,957] | | | | | $ | [removed: 2,694] [added: 3,034] | | | | | $ | [removed: 2,109] [added: 2,694] | |

| Basic | | | $ | [removed: 9.80] [added: 9.77] | | | | | $ | [removed: 8.55] [added: 9.80] | | | | | $ | [removed: 6.66] [added: 8.55] | |

| Diluted | | | $ | [removed: 9.77] [added: 9.74] | | | | | $ | [removed: 8.51] [added: 9.77] | | | | | $ | [removed: 6.63] [added: 8.51] | |

| In millions | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Foreign currency translation adjustments, net of tax | | | [removed: (242)] [added: 41] | | | | | | [removed: 5] [added: (242)] | | | | | | [removed: 4] [added: 5] | | |

| Pension and other postretirement benefit adjustments, net of tax | | | [removed: (97)] [added: (34)] | | | | | | [removed: 135] [added: (97)] | | | | | | [removed: 59] [added: 135] | | |

| Other comprehensive income (loss) | | | [removed: (339)] [added: 7] | | | | | | [removed: 140] [added: (339)] | | | | | | [removed: 63] [added: 140] | | |

| Comprehensive Income | | | $ | [removed: 2,695] [added: 2,964] | | | | | $ | [removed: 2,834] [added: 2,695] | | | | | $ | [removed: 2,172] [added: 2,834] | |

| In millions except per share amounts | | | [added: 2023 | | | | | |] 2022 | | | | | | 2021 | | |

| Cash and equivalents | | | $ | [removed: 708] [added: 1,065] | | | | | $ | [removed: 1,527] [added: 708] | |

| Trade receivables | | | [removed: 3,171] [added: 3,123] | | | | | | [removed: 2,840] [added: 3,171] | | |

| Inventories | | | [removed: 2,054] [added: 1,707] | | | | | | [removed: 1,694] [added: 2,054] | | |

| Prepaid expenses and other current assets | | | [removed: 329] [added: 340] | | | | | | [removed: 313] [added: 329] | | |

| Assets held for sale | | | [removed: 8] [added: —] | | | | | | [removed: —] [added: 8] | | |

| Total current assets | | | [removed: 6,270] [added: 6,235] | | | | | | [removed: 6,374] [added: 6,270] | | |

| Net plant and equipment | | | [removed: 1,848] [added: 1,976] | | | | | | [removed: 1,809] [added: 1,848] | | |

February 9, 2024

| Net Income | | | $ | 2,957 | | | | | $ | 3,034 | | | | | $ | 2,694 | |

| In millions except per share amounts | | | 2023 | | | | | | 2022 | | |

| | | | $ | 15,518 | | | | | $ | 15,422 | |

| | | | $ | 15,518 | | | | | $ | 15,422 | |

| Excise tax on repurchases of common stock | | | — | | | — | | | — | | | (13) | | | — | | | — | | | (13) | | |

| Balance as of December 31, 2023 | | | $ | 6 | | $ | 1,588 | | $ | 27,122 | | $ | (23,870) | | $ | (1,834) | | $ | 1 | | $ | 3,013 | |

| Net income | | | $ | 2,957 | | | | | $ | 3,034 | | | | | $ | 2,694 | |

| Amortization and impairment of intangible assets | | | 113 | | | | | | 134 | | | | | | 133 | | |

| In millions | | | 2023 | | | | | | 2022 | | |

| In millions | | | 2023 | | | | | | 2022 | | |

In November 2023, the FASB issued authoritative guidance which expands annual and interim disclosure requirements for reportable segments.

The more significant provisions include the requirement to disclose significant segment expenses and certain disclosures made annually under existing guidance will be required for interim periods.

The guidance is effective for the Company beginning with its annual reporting for the year ended December 31, 2024 and is required to be applied retrospectively to all periods presented.

The Company is currently assessing the impact the guidance will have on its disclosures.

In December 2023, the FASB issued authoritative guidance that expands the disclosure requirements for income taxes.

The new guidance will require consistent categories and greater disaggregation of information presented in the effective tax rate reconciliation as well as disaggregation of income taxes paid by jurisdiction.

The guidance is effective for the Company beginning with its annual reporting for the year ended December 31, 2025 and is required to be applied prospectively, with retrospective application to prior periods allowed.

The Company is currently assessing the impact the guidance will have on its disclosures.

This business was presented as held for sale beginning in the fourth quarter of 2022.

This business was sold on April 3, 2023, with no significant gain or loss upon sale.

In these arrangements, the

auto aftermarket maintenance and appearance.

| In millions | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| In millions | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

The 2023 effective tax rate benefited from a discrete income tax benefit of $20 million in the second quarter of 2023 related to amended 2021 U.S. taxes.

Additionally, the effective tax rates for 2023, 2022 and 2021 included discrete income tax

| Capitalized research and development | | | 88 | | | | | | — | | | | | | 44 | | | | | | — | | |

| 2028 | | | 2 | | |

| 2029-2049 | | | 664 | | |

| In millions | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| Germany | | | 2019-2023 | | |

assuming dilution for stock options and restricted stock units.

| Net Income | | | $ | 2,957 | | | | | $ | 3,034 | | | | | $ | 2,694 | |

| Weighted-average common shares | | | 302.6 | | | | | | 309.6 | | | | | | 315.1 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance, December 31, 2023 | | | $ | 466 | | | | | $ | 251 | | | | | $ | 1,735 | | | | | $ | 251 | | | | | $ | 834 | | | | | $ | 506 | | | | | $ | 866 | | | | | $ | 4,909 | |

| | | | 2023 | | | | | | | | | | | | | | | | | | 2022 | | | | | | | | | | | | | | |

| 2028 | | | 33 | | |

| 2028 | | | 17 | | |

The Company's income tax expense for 2022 was $808 million and the liability recorded for unrecognized tax benefits as of December 31, 2022, was $314 million.

February 10, 2023

| | | | | | | | | | | | |

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

| Balance as of December 31, 2019 | | | $ | 6 | | $ | 1,304 | | $ | 22,403 | | $ | (18,982) | | $ | (1,705) | | $ | 4 | | $ | 3,030 | |

| Noncontrolling interest | | | — | | | (1) | | | — | | | — | | | — | | | (3) | | | (4) | | |

| Transfer (to)/from assets held for sale | | | — | | | | | | — | | | | | | 2 | | |

Net cash paid for acquisitions during 2022 and 2021 was $2 million and $731 million, respectively, and related to the acquisition of the Test & Simulation business of MTS Systems Corporation ("MTS") from Amphenol Corporation ("Amphenol"), as discussed below.

The Company expects to sell this business within one year.

| 2028-2048 | | | 624 | | |

| Germany | | | 2015-2022 | | |

| Balance, December 31, 2020 | | | $ | 491 | | | | | $ | 271 | | | | | $ | 1,347 | | | | | $ | 267 | | | | | $ | 893 | | | | | $ | 531 | | | | | $ | 890 | | | | | $ | 4,690 | |

| Acquisitions / (divestitures) | | | — | | | | | | — | | | | | | 371 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 371 | | |

The intangible assets included $93 million related to indefinite-lived trademarks and brands and $166 million related to amortizable intangible assets.

| 2023 | | | $ | 113 | |

| 2023 | | | $ | 58 | |

As of December 31, 2021, short-term debt included $568 million related to the 1.75% Euro notes due May 20, 2022, which were redeemed in full at face value on February 22, 2022, and commercial paper of $210 million.

This agreement replaced the existing $2.5 billion, five-year revolving credit facility with a termination date of September 27, 2024.

| 1.75% Euro notes due May 20, 2022 | | | 1.86% | | | | | | $ | — | | | | | $ | — | | | | | $ | 568 | | | | | $ | 570 | |

In 2005, the Company issued $54 million of 4.88% notes due through December 31, 2020 at 100% of face value, which were fully repaid by the due date.

foreign operations to reduce foreign currency risk associated with the investment in these operations.

| 2023 | | | $ | 535 | |

| 2024 | | | 1,340 | | |

| 2026 | | | 996 | | |

| 2027 | | | 531 | | |

| Total | | | $ | 6,708 | |

| Acquisitions | | | — | | | | | | 40 | | | | | | — | | | | | | — | | |

| Acquisitions | | | — | | | | | | 28 | | | | | | — | | | | | | — | | |

| Discount rate | | | 2.33 | | % | | | | 1.89 | | % | | | | 2.61 | | % | | | | 2.92 | | % | | | | 2.59 | | % | | | | 3.29 | | % |

| | | | 2021 | | | | | | | | | | | | | | | | | | | | |

| Other | | | 5 | | | | | | — | | | | | | 5 | | | | | | — | | |

| 2023 | | | $ | 159 | | | | | $ | 37 | |

| 2024 | | | 161 | | | | | | 37 | | |

| 2025 | | | 163 | | | | | | 37 | | |

| 2027 | | | 164 | | | | | | 37 | | |

| Years 2028-2032 | | | 790 | | | | | | 182 | | |

| Under option, January 1, 2022 | | | 3.1 | | | | | | $144.93 | | | | | | | | | | | | | | |

| Granted | | | 0.4 | | | | | | 217.72 | | | | | | | | | | | | | | |

| Exercised | | | (0.3) | | | | | | 99.27 | | | | | | | | | | | | | | |

| Under option, December 31, 2022 | | | 3.2 | | | | | | 158.71 | | | | | | 5.9 | | | | | | $196 | | |

The Company's management, with the participation of the Company's [removed: Chairman] [added: President] & 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: 2022.][added: 2023.]

Based on such evaluation, the Company's [removed: Chairman] [added: President] & Chief Executive Officer and Senior Vice President & Chief Financial Officer have concluded that, as of December 31, [removed: 2022,] [added: 2023,] the Company's disclosure controls and procedures were effective.

In connection with the evaluation by management, including the Company's [removed: Chairman] [added: President] & 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: 2022] [added: 2023] were identified that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

On December 6, 2023, Michael R.

Zimmerman, Executive Vice President, adopted a plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) (a "Rule 10b5-1 trading arrangement").

The Rule 10b5-1 trading arrangement covers the exercise of 19,567 stock options and the related sale of such shares.

The 10b5-1 trading arrangement expires on March 7, 2025.

None.

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" [added: and "Delinquent Section 16(a) Reports"] in the Company's Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders.

Information regarding the Audit Committee and its Financial Experts is incorporated by reference from the information under the captions "Corporate Governance - Board of Directors and its Committees" and [removed: "Audit] [added: "Proposal 4 – Ratification of the Appointment of Independent Public Accounting Firm - Audit] Committee Report" in the Company's Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders.

Information regarding the Company's code of ethics that applies to the Company's [removed: Chairman] [added: President] & 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 "Corporate Governance Policies and Code of Conduct" in the Company's Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders.

Information regarding executive compensation is incorporated by reference from the information under the captions "Director Compensation," and "Executive Compensation" in the Company's Proxy Statement for the [removed: 2023] [added: 2024] 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 "Beneficial Ownership of Common Stock" and "NEO Compensation - Equity Compensation Plan Information" in the Company's Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders.

Information regarding certain relationships and related transactions as well as director independence is incorporated by reference from the information under the captions "Proposal 1 - Election of Directors - Board Independence," "Other Governance Matters - Certain Relationships and Related Party Transactions" and "Corporate Governance Policies and Code of Conduct" in the Company's Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders.

This information is incorporated by reference from the information under the caption "Proposal 4 - Ratification of the Appointment of Independent Registered Public Accounting Firm" in the Company's Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders.

| [2.1(a)](http://www.sec.gov/Archives/edgar/data/49826/000004982612000073/wimbledoninvtagmt.htm) | | | | | | [Investment Agreement, dated as of August 15, 2012, [added: by and] among CD&R Wimbledon Holdings III, L.P., a Cayman Islands limited partnership; Illinois Tool Works Inc.; ITW DS Investments Inc., a Delaware corporation; and Wilsonart International Holdings LLC, a Delaware limited liability company, filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on August 17, 2012 (Commission File No. 1-4797) and incorporated herein by reference. (Certain of the schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K, but the Company undertakes to furnish a copy of the schedules or similar attachments to the Securities and Exchange Committee upon request.)](http://www.sec.gov/Archives/edgar/data/49826/000004982612000073/wimbledoninvtagmt.htm) | | |

| [3(a)(ii)](http://www.sec.gov/Archives/edgar/data/49826/000119312516588819/d192476dex3aii.htm) | | | | | | [Certificate of Amendment [removed: to Amended and Restated] [added: of] Certificate of Incorporation of Illinois Tool Works Inc., filed as Exhibit 3(a)(ii) to the Company's Current Report on Form 8-K filed on May 12, 2016 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312516588819/d192476dex3aii.htm) | | |

| [3(b)](http://www.sec.gov/Archives/edgar/data/49826/000119312516588819/d192476dex3bi.htm) | | | | | | [By-laws of Illinois Tool Works Inc., [removed: as] amended and restated as of May 6, 2016, filed as Exhibit 3(b)(i) to the Company's Current Report on Form 8-K filed on May 12, 2016 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312516588819/d192476dex3bi.htm) | | |

| [4(a)](http://www.sec.gov/Archives/edgar/data/0000049826/000119312520213047/d95049dex44.htm) | | | | | | [Indenture between Illinois Tool Works Inc. and The First National Bank of Chicago, as Trustee, dated as of November 1, 1986, filed as Exhibit 4.4 to the Company's Registration Statement on Form S-3 filed on August [removed: 7, 2020] [added: 4, 2023] (Commission File No. 333-242331) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/0000049826/000119312520213047/d95049dex44.htm) | | |

| [4(d)](http://www.sec.gov/Archives/edgar/data/49826/000004982612000083/exhibit41.htm) | | | | | | [Officers' Certificate dated August 28, 2012, establishing the terms, and setting forth the forms, of the [removed: 3.9%] [added: 3.900%] Notes due 2042, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on August 28, 2012 (Commission File No. 001-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982612000083/exhibit41.htm) | | |

| [4(e)](http://www.sec.gov/Archives/edgar/data/49826/000004982614000055/exhibit41.htm) | | | | | | [Officers' Certificate dated February 25, 2014, establishing the terms, and setting forth the forms, of the [removed: 0.9%] [added: 0.900%] Notes due 2017, the [removed: 1.95%] [added: 1.950%] Notes due 2019, and the [removed: 3.5%] [added: 3.500%] Notes due 2024, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on February 26, 2014 (Commission File No. 001-04797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982614000055/exhibit41.htm) | | |

| [4(f)](http://www.sec.gov/Archives/edgar/data/49826/000004982614000099/itwexhibit41.htm) | | | | | | [Officers' Certificate dated May 20, 2014, establishing the terms, and setting forth the forms, of the [removed: 1.75%] [added: 1.750%] Euro Notes due 2022 and the [removed: 3.0%] [added: 3.000%] Euro Notes due 2034, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on May 22, 2014 (Commission File No. 001-04797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982614000099/itwexhibit41.htm) | | |

| [4(g)](http://www.sec.gov/Archives/edgar/data/49826/000119312515198771/d930210dex41.htm) | | | | | | [Officers' Certificate dated May 19, 2015, establishing the terms, and setting forth the forms, of the [removed: 1.25%] [added: 1.250%] Euro Notes due 2023 and the 2.125% Euro Notes due 2030, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on May 22, 2015 (Commission File No. 001-04797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312515198771/d930210dex41.htm) | | |

| [4(h)](http://www.sec.gov/Archives/edgar/data/49826/000004982616000277/exhibit41.htm) | | | | | | [Officers' Certificate dated November 7, 2016, establishing the terms, and setting forth the forms, of the [removed: 2.65%] [added: 2.650%] Notes due 2026, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on November 10, 2016 (Commission File No. 001-04797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982616000277/exhibit41.htm) | | |

| [4(i)](https://www.sec.gov/Archives/edgar/data/49826/000119312519165902/d753649dex41.htm) | | | | | | [Officers' Certificate dated June 5, 2019, establishing the terms, and setting forth the forms, of the [removed: 0.250%] [added: 0.25%] Notes due 2024, the 0.625% Notes due 2027 and the [removed: 1.000%] [added: 1.00%] Notes due 2031, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 5, 2019 (Commission File No. 001-04797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000119312519165902/d753649dex41.htm) | | |

| [4(m)](http://www.sec.gov/Archives/edgar/data/49826/000004982620000020/exhibit4mdescriptionof.htm) | | | | | | [Description of the 0.250% Euro Notes due 2024, 0.625% Euro Notes due 2027 and [removed: 1.00%] [added: 1.000%] Euro Notes due 2031, filed as Exhibit 4(m) to the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982620000020/exhibit4mdescriptionof.htm) | | |

| [10(a)(ii)](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm) | | | | | | [removed: [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] [added: [Euro] Credit Agreement dated as of [removed: September 27, 2019,] [added: May 5, 2023] among Illinois Tool Works Inc., as Borrower, [added: the lender(s) party thereto] and [removed: JPMorgan Chase] [added: ING] Bank, [removed: N.A.,] [added: N.V., London Branch,] as Agent, [removed: and the Lenders thereto (as amended or otherwise modified from time to time),] filed as Exhibit [removed: 10.1] [added: 10(a)] to the [removed: Company's Quarterly] [added: Company'](http://www.sec.gov/Archives/edgar/data/49826/000004982623000029/eurocreditagreement.htm)[s Current] Report on Form [removed: 10-Q for the quarterly period ended September 30, 2021] [added: 8-K filed on May 10, 2023] (Commission File No. 1-4797) and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982621000079/itw3q21-ex101xsuspensionof.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982623000029/eurocreditagreement.htm)] | | |

| [10(d)*](http://www.sec.gov/Archives/edgar/data/49826/000004982614000019/ex991universaloptiongrant.htm) | | | | | | [Form of [removed: stock option terms] [added: Terms of Option Grant Pursuant to the Illinois Tool Works Inc. 2011 Long-Term Incentive Plan,] filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on February 13, 2014 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982614000019/ex991universaloptiongrant.htm) | | |

| [10(e)*](http://www.sec.gov/Archives/edgar/data/49826/000004982616000135/exhibit991stockoptionterms.htm) | | | | | | [Form of [removed: stock option terms] [added: Terms of Option Grant Pursuant to the Illinois Tool Works Inc. 2015 Long-Term Incentive Plan,] filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on February 9, 2016 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982616000135/exhibit991stockoptionterms.htm) | | |

| [10(f)*](http://www.sec.gov/Archives/edgar/data/49826/000004982617000019/ex991awardsagrmnt4q2016.htm) | | | | | | [Form of [removed: stock option terms] [added: Terms of Option Grant Pursuant to the Illinois Tool Works Inc. 2015 Long-Term Incentive Plan,] filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on February 9, 2017 (Commission File No. 1-4797) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/49826/000004982617000019/ex991awardsagrmnt4q2016.htm) | | |

| [10(g)*](http://www.sec.gov/Archives/edgar/data/49826/000004982619000017/a9912019universaloptionagr.htm) | | | | | | [Form of [removed: stock option terms] [added: Terms of Option Grant Pursuant to the Illinois Tool Works Inc. 2015 Long-Term Incentive Plan,] 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) | | |

| [10(h)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex991.htm) | | | | | | [Form of [removed: stock option terms] [added: Terms of Option Grant Pursuant to the Illinois Tool Works Inc. 2015 Long-Term Incentive Plan,] filed as Exhibit 99.1 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/d840623dex991.htm) | | |

| [10(i)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex992.htm) | | | | | | [Form of [removed: performance share unit terms] [added: Terms of Performance Share Unit Grant Pursuant to the Illinois Tool Works Inc. 2015 Long-Term Incentive Plan,] filed as Exhibit 99.2 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/d840623dex992.htm) | | |

| [10(j)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex993.htm) | | | | | | [Form of [removed: performance cash terms] [added: Terms of Performance Cash Award Pursuant to the Illinois Tool Works Inc. 2015 Long-Term Incentive Plan,] filed as Exhibit 99.3 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/d840623dex993.htm) | | |

| [10(k)*](http://www.sec.gov/Archives/edgar/data/49826/000119312520025381/d840623dex994.htm) | | | | | | [Form of [removed: restricted stock unit terms] [added: Terms of Restricted Stock Unit Grant Pursuant to the Illinois Tool Works Inc. 2015 Long-Term Incentive Plan,] filed as Exhibit 99.4 to the [removed: Company's] [added: 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(l)*](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 [added: as of] 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(m)*](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 [removed: approved by the Board of Directors on December 22, 2008,] [added: restated,] 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) | | |

| [removed: [10(o)*](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/amendedandrestateddirector.htm)] [added: [10(o)*](http://www.sec.gov/Archives/edgar/data/49826/000004982623000008/amendedandrestateddirector.htm)] | | | | | | [Illinois Tool Works Inc. Amended and Restated Directors' Deferred Fee Plan effective May 2, 2014, as amended on May 8, 2015 and May 4, 2018, filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/amendedandrestateddirector.htm)] [added: herewith.](http://www.sec.gov/Archives/edgar/data/49826/000004982623000008/amendedandrestateddirector.htm)] | | |

| [10(p)*](http://www.sec.gov/Archives/edgar/data/49826/000004982613000024/itwexhibit102.htm) | | | | | | [First Amendment to the [removed: ITW] [added: Illinois Tool Works Inc.] 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) | | |

| [removed: [21](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex21.htm)] [added: [21](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex21.htm)] | | | | | | [Subsidiaries and Affiliates of the [removed: Company.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex21.htm)] [added: Company, filed herewith](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex21.htm)] | | |

| [removed: [23](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex23.htm)] [added: [23](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex23.htm)] | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex23.htm)] [added: Firm, filed herewith](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex23.htm)] | | |

| [removed: [24](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex24.htm)] [added: [24](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex24.htm)] | | | | | | [Powers of [removed: Attorney.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex24.htm)] [added: Attorney, filed herewith](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex24.htm)] | | |

| [removed: [31](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex31.htm)] [added: [31](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex31.htm)] | | | | | | [Rule 13a-14(a) [removed: Certifications.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex31.htm)] [added: Certifications, filed herewith](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex31.htm)] | | |

| [removed: [32](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex32.htm)] [added: [32](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex32.htm)] | | | | | | [Section 1350 [removed: Certification.](https://www.sec.gov/Archives/edgar/data/49826/000004982623000008/a20221231-ex32.htm)] [added: Certification, filed herewith](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-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: 2022,] [added: 2023,] 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. | | |

| [97](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex97.htm) | | | | | | [Policy Relating to Recovery of Erroneously Awarded Compensation, filed herewith](https://www.sec.gov/Archives/edgar/data/49826/000004982624000008/a20231231-ex97.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: 10th] [added: 9th] day of February [removed: 2023.][added: 2024.]

| [removed: By:] [added: E. Scott Santi] | | | | | | [removed: /s/ E. SCOTT SANTI] [added: Chairman of the Board] | | |

| | | | | | | [removed: *Chairman] [added: *President] & Chief Executive Officer* | | |

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: 10th] [added: 9th] day of February [removed: 2023.][added: 2024.]

| /s/ [removed: E. SCOTT SANTI] [added: Christopher A. O'Herlihy] | | | | | | [removed: Chairman] [added: President] & Chief Executive Officer, Director | | |

| [removed: E. Scott Santi] [added: Christopher A. O'Herlihy] | | | | | | (Principal Executive Officer) | | |

Original powers of attorney authorizing [removed: E.][added: Christopher A.]

[removed: Scott Santi] [added: O'Herlihy] to sign the Company's Annual Report on Form 10-K and amendments thereto on behalf of the above-named directors of the registrant have been filed with the Securities and Exchange Commission as part of this Annual Report on Form 10-K (Exhibit 24).

| By: | | | | | | /s/ CHRISTOPHER A. O'HERLIHY | | |

| | | | | | | Christopher A. O'Herlihy | | |

| Jaime Irick | | | | | | Director | | |

| | | | | | | | | |

| | | | | | | By: /s/ CHRISTOPHER A. O'HERLIHY | | |

| | | | | | | (Christopher A. O'Herlihy, *as Attorney-in-Fact)* | | |

| | | | | | | E. Scott Santi | | |

| ANRÉ D. WILLIAMS | | | | | | Director | | |

| | | | | | | By: /s/ E. SCOTT SANTI | | |

| | | | | | | (E. Scott Santi, *as Attorney-in-Fact)* | | |