10-Q 1 ful20210828_10q.htm FORM 10-Q ful20210828_10q.htm
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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 28, 2021

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                              to                                 .

 

Commission file number: 001-09225

 

H.B. FULLER COMPANY

(Exact name of registrant as specified in its charter)

 

Minnesota41-0268370
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)

                                                                             

1200 Willow Lake Boulevard, St. Paul, Minnesota55110-5101
(Address of principal executive offices)(Zip Code)

                                                                                                                           

Registrant’s telephone number, including area code: (651) 236-5900

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

 Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $1.00 per share

     FUL

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

                    

Large accelerated filerAccelerated filer ☐
Non-accelerated filer ☐Smaller reporting company

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b) of the Exchange Act. Yes No ☒

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PROCEEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

The number of shares outstanding of the Registrant’s Common Stock, par value $1.00 per share, was 52,554,053 as of September 17, 2021.

 

 

 

H.B. Fuller Company

Quarterly Report on Form 10-Q

Table of Contents

 

   

Page

PART 1. FINANCIAL INFORMATION

 
     

ITEM 1.

FINANCIAL STATEMENTS (Unaudited)

4

     
 

Consolidated Statements of Income for the three and nine months ended August 28, 2021 and August 29, 2020

4

     
 

Consolidated Statements of Comprehensive Income for the three and nine months ended August 28, 2021 and August 29, 2020

5

     
 

Consolidated Balance Sheets as of August 28, 2021 and November 28, 2020

6

     
 

Consolidated Statements of Total Equity for the three and nine months ended August 28, 2021 and August 29, 2020

7

     
 

Consolidated Statements of Cash Flows for the nine months ended August 28, 2021 and August 29, 2020

8

     
 

Notes to Consolidated Financial Statements

9

     

ITEM 2.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

23

     

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

34

     

ITEM 4.

CONTROLS AND PROCEDURES

34

     

PART II. OTHER INFORMATION

34

     

ITEM 1.

LEGAL PROCEEDINGS

34

     

ITEM 1A.

RISK FACTORS

35

     

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

36

     

ITEM 6.

EXHIBITS

37

     

SIGNATURES

38

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

  

Three Months Ended

  

Nine Months Ended

 
  

August 28,

  

August 29,

  

August 28,

  

August 29,

 
  

2021

  

2020

  

2021

  

2020

 

Net revenue

 $826,830  $691,463  $2,380,607  $2,012,629 

Cost of sales

  (632,880)  (503,619)  (1,776,744)  (1,469,622)

Gross profit

  193,950   187,844   603,863   543,007 

Selling, general and administrative expenses

  (134,497)  (129,113)  (426,921)  (398,620)

Other income, net

  6,150   3,722   25,899   11,740 

Interest expense

  (19,396)  (20,196)  (59,699)  (64,597)

Interest income

  2,520   2,945   7,709   8,761 

Income before income taxes and income from equity method investments

  48,727   45,202   150,851   100,291 

Income taxes

  (19,095)  (5,112)  (46,362)  (22,194)

Income from equity method investments

  1,998   1,541   6,071   5,068 

Net income including non-controlling interest

  31,630   41,631   110,560   83,165 

Net income attributable to non-controlling interest

  (14)  (24)  (51)  (50)

Net income attributable to H.B. Fuller

 $31,616  $41,607  $110,509  $83,115 
                 

Earnings per share attributable to H.B. Fuller common stockholders:

                

Basic

 $0.60  $0.80  $2.09  $1.60 

Diluted

 $0.58  $0.79  $2.04  $1.59 
                 

Weighted-average common shares outstanding:

                

Basic

  53,049   52,130   52,794   51,959 

Diluted

  54,646   52,591   54,093   52,400 
                 

Dividends declared per common share

 $0.168  $0.163  $0.498  $0.485 

 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

 

  

Three Months Ended

  

Nine Months Ended

 
  

August 28,

  

August 29,

  

August 28,

  

August 29,

 
  

2021

  

2020

  

2021

  

2020

 

Net income including non-controlling interest

 $31,630  $41,631  $110,560  $83,165 

Other comprehensive (loss) income

                

Foreign currency translation

  (32,006)  46,711   46,655   14,008 

Defined benefit pension plans adjustment, net of tax

  1,375   2,078   4,121   6,234 

Interest rate swaps, net of tax

  3,830   4,125   11,574   (14,757)

Cross-currency swaps, net of tax

  (1,289)  (2,314)  (3,576)  8,208 

Other comprehensive (loss) income

  (28,090)  50,600   58,774   13,693 

Comprehensive income

  3,540   92,231   169,334   96,858 

Less: Comprehensive (loss) income attributable to non-controlling interest

  (13)  46   26   75 

Comprehensive income attributable to H.B. Fuller

 $3,553  $92,185  $169,308  $96,783 

 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

  

August 28,

  

November 28,

 
  

2021

  

2020

 

Assets

        

Current assets:

        

Cash and cash equivalents

 $68,134  $100,534 

Trade receivables (net of allowances of $9,139 and $12,905, as of August 28, 2021 and November 28, 2020, respectively)

  572,855   514,916 

Inventories

  462,635   323,213 

Other current assets

  100,834   81,113 

Total current assets

  1,204,458   1,019,776 
         

Property, plant and equipment

  1,476,158   1,428,183 

Accumulated depreciation

  (800,266)  (757,439)

Property, plant and equipment, net

  675,892   670,744 
         

Goodwill

  1,313,824   1,312,003 

Other intangibles, net

  710,127   755,968 

Other assets

  353,971   278,213 

Total assets

 $4,258,272  $4,036,704 
         

Liabilities, non-controlling interest and total equity

        

Current liabilities:

        

Notes payable

 $27,313  $16,925 

Trade payables

  485,796   316,460 

Accrued compensation

  82,129   83,598 

Income taxes payable

  32,079   29,173 

Other accrued expenses

  82,417   83,976 

Total current liabilities

  709,734   530,132 
         

Long-term debt

  1,636,694   1,756,985 

Accrued pension liabilities

  86,954   88,806 

Other liabilities

  257,034   278,919 

Total liabilities

  2,690,416   2,654,842 
         

Commitments and contingencies (Note 12)

          
         

Equity:

        

H.B. Fuller stockholders' equity:

        

Preferred stock (no shares outstanding) shares authorized – 10,045,900

  -   - 

Common stock, par value $1.00 per share, shares authorized – 160,000,000, shares outstanding – 52,549,798 and 51,906,663, as of August 28, 2021 and November 28, 2020, respectively

  52,550   51,907 

Additional paid-in capital

  200,180   157,867 

Retained earnings

  1,558,619   1,474,406 

Accumulated other comprehensive loss

  (244,060)  (302,859)

Total H.B. Fuller stockholders' equity

  1,567,289   1,381,321 

Non-controlling interest

  567   541 

Total equity

  1,567,856   1,381,862 

Total liabilities, non-controlling interest and total equity

 $4,258,272  $4,036,704 

 

 See accompanying Notes to Unaudited Consolidated Financial Statements.

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Total Equity

(In thousands)

(Unaudited)

 

   

H.B. Fuller Company Shareholders

                 
                           

Accumulated

                 
           

Additional

           

Other

                 
   

Common

   

Paid-in

   

Retained

   

Comprehensive

   

Non-Controlling

         
   

Stock

   

Capital

   

Earnings

   

Income (Loss)

   

Interest

   

Total

 
                                                 

Balance at November 28, 2020

  $ 51,907     $ 157,867     $ 1,474,406     $ (302,859 )   $ 541     $ 1,381,862  

Comprehensive income

    -       -       29,791       27,656       5       57,452  

Dividends

    -       -       (8,542 )     -       -       (8,542 )

Stock option exercises

    147       6,251       -       -       -       6,398  

Share-based compensation plans and other, net

    150       7,423       -       -       -       7,573  

Repurchases of common stock

    (49 )     (2,531 )     -       -       -       (2,580 )

Balance at February 27, 2021

  $ 52,155     $ 169,010     $ 1,495,655     $ (275,203 )   $ 546     $ 1,442,163  

Comprehensive income

    -       -       49,102       59,206       34       108,342  

Dividends

    -       -       (8,870 )     -       -       (8,870 )

Stock option exercises

    318       13,887       -       -       -       14,205  

Share-based compensation plans other, net

    27       7,393       -       -       -       7,420  

Repurchases of common stock

    (1 )     (47 )     -       -       -       (48 )

Balance at May 29, 2021

  $ 52,499     $ 190,243     $ 1,535,887     $ (215,997 )   $ 580       1,563,212  

Comprehensive income

    -       -       31,616       (28,063 )     (13 )     3,540  

Dividends

    -       -       (8,884 )     -       -       (8,884 )

Stock option exercises

    49       1,401       -       -       -       1,450  

Share-based compensation plans other, net

    3       8,575       -       -       -       8,578  

Repurchases of common stock

    (1 )     (39 )     -       -       -       (40 )

Balance at August 28, 2021

  $ 52,550     $ 200,180     $ 1,558,619     $ (244,060 )   $ 567       1,567,856  

 

   

H.B. Fuller Company Shareholders

                 
                           

Accumulated

                 
           

Additional

           

Other

                 
   

Common

   

Paid-in

   

Retained

   

Comprehensive

   

Non-Controlling

         
   

Stock

   

Capital

   

Earnings

   

Income (Loss)

   

Interest

   

Total

 
                                                 

Balance at November 30, 2019

  $ 51,241     $ 130,295     $ 1,384,411     $ (343,600 )   $ 442     $ 1,222,789  

Comprehensive income (loss)

    -       -       9,895       (5,049 )     10       4,856  

Dividends

    -       -       (8,313 )     -       -       (8,313 )

Stock option exercises

    26       881       -       -       -       907  

Share-based compensation plans and other, net

    206       4,821       -       -       -       5,027  

Repurchases of common stock

    (66 )     (3,146 )     -       -       -       (3,212 )

Balance at February 29, 2020

  $ 51,407     $ 132,851     $ 1,385,993     $ (348,649 )   $ 452     $ 1,222,054  

Comprehensive income

    -       -       31,613       (31,861 )     19       (229 )

Dividends

    -       -       (8,448 )     -       -       (8,448 )

Stock option exercises

    24       626       -       -       -       650  

Share-based compensation plans other, net

    121       4,730       -       -       -       4,851  

Repurchases of common stock

    (1 )     (32 )     -       -       -       (33 )

Balance at May 30, 2020

  $ 51,551     $ 138,175     $ 1,409,158     $ (380,510 )   $ 471     $ 1,218,845  

Comprehensive income

    -       -       41,607       50,578       46       92,231  

Dividends

    -       -       (8,473 )     -       -       (8,473 )

Stock option exercises

    174       4,832       -       -       -       5,006  

Share-based compensation plans other, net

    3       6,391       -       -       -       6,394  

Repurchases of common stock

    (2 )     (93 )     -       -       -       (95 )

Balance at August 29, 2020

  $ 51,726     $ 149,305     $ 1,442,292     $ (329,932 )   $ 517     $ 1,313,908  

 

See accompanying Notes to Unaudited Consolidated Financial Statements. 

 

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

   

Nine Months Ended

 
   

August 28, 2021

   

August 29, 2020

 

Cash flows from operating activities:

               

Net income including non-controlling interest

  $ 110,560     $ 83,165  

Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:

               

Depreciation

    54,158       50,558  

Amortization

    53,464       52,943  

Deferred income taxes

    (1,547 )     (10,952 )

Income from equity method investments, net of dividends received

    4,363       2,660  

Loss on sale or disposal of assets

    641       118  

Share-based compensation

    19,400       14,087  

Pension and other post-retirement benefit plan activity

    (23,192 )     (5,954 )

Change in assets and liabilities, net of effects of acquisitions:

               

Trade receivables, net

    (61,900 )     17,307  

Inventories

    (141,112 )     (17,195 )

Other assets

    (26,060 )     31,372  

Trade payables

    176,210       (9,449 )

Accrued compensation

    (1,283 )     (12,345 )

Other accrued expenses

    (2,292 )     8,776  

Income taxes payable

    1,001       330  

Other liabilities

    (53,498 )     20,481  

Other

    52,221       (32,872 )

Net cash provided by operating activities

    161,134       193,030  
                 

Cash flows from investing activities:

               

Purchased property, plant and equipment

    (77,237 )     (71,939 )

Purchased businesses, net of cash acquired

    (5,445 )     (9,500 )

Purchase of assets

    -       (5,623 )

Proceeds from sale of property, plant and equipment

    2,751       1,407  

       Cash received from government grant

    5,800       -  

Cash payments related to government grant

    (1,526 )     (5,326 )

Net cash used in investing activities

    (75,657 )     (90,981 )
                 

Cash flows from financing activities:

               

Repayment of long-term debt

    (118,000 )     (128,000 )

Net proceeds of notes payable

    9,846       8,422  

Dividends paid

    (26,045 )     (24,970 )

       Contingent consideration payment

    -       (767 )

Proceeds from stock options exercised

    22,053       6,567  

Repurchases of common stock

    (2,668 )     (3,342 )

Net cash used in financing activities

    (114,814 )     (142,090 )
                 

Effect of exchange rate changes on cash and cash equivalents

    (3,063 )     2,772  

Net change in cash and cash equivalents

    (32,400 )     (37,269 )

Cash and cash equivalents at beginning of period

    100,534       112,191  

Cash and cash equivalents at end of period

  $ 68,134     $ 74,922  

 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 

 

H.B. FULLER COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands, except per share amounts)

(Unaudited)

 

 

Note 1: Basis of Presentation

 

Overview

 

The accompanying unaudited interim Consolidated Financial Statements of H.B. Fuller Company and Subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a fair presentation of results of operations, comprehensive income, financial position and cash flows in conformity with U.S. generally accepted accounting principles. In our opinion, the unaudited interim Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary for the fair presentation of the results for the periods presented. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole.

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from these estimates. These unaudited interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended  November 28, 2020 as filed with the Securities and Exchange Commission.

 

Change in Accounting Principle - Credit Losses

 

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. This ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The FASB also issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, in November 2018, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments, in April 2019 and ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments, in November 2019. ASU No. 2018-19 clarifies that receivables arising from operating leases are within the scope of Topic 842, Leases. ASU No. 2019-04 and ASU No. 2019-11 clarify various scoping and other issues arising from ASU No. 2016-13. The amendments in these ASUs affect the guidance in ASU No. 2016-13 and are effective in the same timeframe as ASU No. 2016-13. We adopted these ASUs and related standards during the first quarter ended February 27, 2021. Based on the conducted analyses on the change in accounting principle, the ASU did not have a material impact on the Consolidated Statements of Income or the Consolidated Balance Sheets. Therefore, a modified retrospective adjustment was not required. The trade receivables and allowances significant accounting policy has been changed in accordance with these ASUs as follows.

 

Trade Receivables and Allowances

 

Trade receivables are recorded at the invoiced amount and do not bear interest. Allowances are maintained for doubtful accounts, credits related to pricing or quantities shipped and early payment discounts. The allowance for doubtful accounts includes an estimate of future uncollectible receivables based on the aging of the receivable balance and our collection experience. The allowance also includes specific customer accounts when it is probable that the full amount of the receivable will not be collected. Current expectations of future credit losses using market and industry data are considered in the specific customer accounts.

 

New Accounting Pronouncements

 

Recently issued accounting standards or pronouncements have been excluded as they are not relevant to us.

 

9

 
 

Note 2: Acquisitions

 

STR Holdings, Inc.

 

On January 13, 2021, we acquired certain assets of STR Holding, Inc. ("STR") for a base purchase price of $5,445 which was funded through existing cash. The agreement requires us to pay an additional $800 on the first anniversary of the acquisition and contingent consideration of up to $1,700 based on certain agreement provisions. STR, headquartered in Enfield, Connecticut, is a manufacturer of encapsulant products used in the solar industry. The acquisition fair value measurement, which includes intangible assets of $6,700 and other net assets of $1,245, was preliminary as of August 28, 2021. The fair value of the contingent consideration as of the date of acquisition was $1,700. See Note 11 for further discussion of the fair value of the contingent consideration. We recorded no goodwill in our accounting for this acquisition. STR is reported in our Engineering Adhesives ("EA") operating segment. The STR acquisition does not represent a material business combination, and therefore pro forma financial information is not provided. 

 

D.H.M. Adhesives, Inc.

 

On February 3, 2020, we acquired certain assets of D.H.M. Adhesives, Inc. (“D.H.M.”) for approximately $9,500 which was funded through existing cash. In addition, the agreement requires us to pay contingent consideration of up to approximately $8,100 based upon a formula related to revenue during the fiscal years ended November 27, 2021 and December 3, 2022. D.H.M., headquartered in Calhoun, Georgia, is a provider of hotmelt adhesives. The acquisition fair value measurement was final as of May 30, 2020 and includes goodwill of $1,063 and customer relationship intangible of $11,900. The fair value of the contingent consideration as of the date of acquisition was $5,000 resulting in a final purchase price of $14,500. See Note 11 for further discussion of the fair value of the contingent consideration liability. Goodwill is deductible for tax purposes. D.H.M. and the related goodwill are reported in our Hygiene, Health and Consumable Adhesives operating segment. The D.H.M acquisition does not represent a material business combination, and therefore pro forma financial information is not provided.

 

 

Note 3: Restructuring Actions

 

The Company has approved restructuring plans consisting of consolidation plans, organizational changes and other actions related to the reorganization of our business into three segments, the integration of the operations of Royal Adhesives with the operations of the Company, and other actions to optimize operations. The following table summarizes the pre-tax charges under these restructuring plans by income statement classification:

 

   

Three Months Ended

   

Nine Months Ended

 
   

August 28, 2021

   

August 29, 2020

   

August 28, 2021

   

August 29, 2020

 

Cost of sales

  $ (5 )   $ 371     $ 288     $ 438  

Selling, general and administrative

    (187 )     618       1,159       984  
    $ (192 )   $ 989     $ 1,447     $ 1,422  

 

The restructuring charges are all recorded in Corporate Unallocated for segment reporting.

 

A summary of the restructuring liability is presented below:

 

   

Employee-Related

   

Other

   

Total

 

Balance at November 30, 2019

  $ 9,830     $ 924     $ 10,754  

Expenses incurred

    2,898       1,681       4,579  

Cash payments

    (7,051 )     (2,357 )     (9,408 )

Foreign currency translation

    157       -       157  

Balance at November 28, 2020

    5,834       248       6,082  

Expenses incurred

    (147 )     1,594       1,447  

       Non-cash charges

    -       (135 )     (135 )

Cash payments

    (3,767 )     (1,707 )     (5,474 )

Foreign currency translation

    (63 )     -       (63 )

Balance at August 28, 2021

  $ 1,857     $ -     $ 1,857  

 

10

 

Restructuring liabilities have been classified as a component of other accrued expenses in the Consolidated Balance Sheets.

 

 

Note 4: Inventories

 

The composition of inventories is as follows:

 

   

August 28,

   

November 28,

 
   

2021

   

2020

 

Raw materials

  $ 236,907     $ 151,026  

Finished goods

    225,728       172,187  

Total inventories

  $ 462,635     $ 323,213  

 

 

Note 5: Goodwill and Other Intangible Assets

 

The goodwill activity for the nine months ended August 28, 2021 is presented below:

 

   

Hygiene, Health

                         
   

and Consumable

   

Engineering

   

Construction

         
   

Adhesives

   

Adhesives

   

Adhesives

   

Total

 

Balance at November 28, 2020

  $ 332,909     $ 667,863     $ 311,231     $ 1,312,003  

Currency impact

    (753 )     2,296       278       1,821  

Balance at August 28, 2021

  $ 332,156     $ 670,159     $ 311,509     $ 1,313,824  

 

Balances of amortizable identifiable intangible assets, excluding goodwill and other non-amortizable intangible assets, are as follows:

 

   

August 28, 2021

 
   

Purchased

                                 
   

Technology

   

Customer

                         

Amortizable Intangible Assets

 

and Patents

   

Relationships

   

Trade Names

   

Other

   

Total

 

Original cost

  $ 123,410     $ 939,671     $ 63,855     $ 11,388     $ 1,138,324  

Accumulated amortization

    (60,404 )     (329,918 )     (32,938 )     (5,451 )     (428,711 )

Net identifiable intangibles

  $ 63,006     $ 609,753     $ 30,917     $ 5,937     $ 709,613  

 

   

November 28, 2020

 
   

Purchased

                                 
   

Technology

   

Customer

                         

Amortizable Intangible Assets

 

and Patents

   

Relationships

   

Trade Names

   

Other

   

Total

 

Original cost

  $ 113,775     $ 933,943     $ 63,266     $ 11,410     $ 1,122,394  

Accumulated amortization

    (53,216 )     (279,586 )     (29,368 )     (4,775 )     (366,945 )

Net identifiable intangibles

  $ 60,559     $ 654,357     $ 33,898     $ 6,635     $ 755,449  

 

Amortization expense with respect to amortizable intangible assets was $17,815 and $17,485 for the three months ended August 28, 2021 and August 29, 2020, respectively, and $53,464 and $52,943 for the nine months ended August 28, 2021 and August 29, 2020, respectively.

 

11

 

Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets for the next five fiscal years is as follows:

 

   

Remainder

                                         

Fiscal Year

 

2021

   

2022

   

2023

   

2024

   

2025

   

Thereafter

 

Amortization expense

  $ 17,504     $ 69,534     $ 66,605     $ 61,578     $ 58,952     $ 435,440  

 

Non-amortizable intangible assets as of  August 28, 2021 and November 28, 2020 are $514 and $519, respectively, and are related to trademarks and trade names. The change in non-amortizable assets as of August 28, 2021 compared to November 28, 2020 was due to changes in foreign currency exchange rates.

 

 

Note 6: Components of Net Periodic Benefit related to Pension and Other Postretirement Benefit Plans

 

   

Three Months Ended August 28, 2021 and August 29, 2020

 
                                   

Other

 
   

Pension Benefits

   

Postretirement

 
   

U.S. Plans

   

Non-U.S. Plans

   

Benefits

 

Net periodic cost (benefit):

 

2021

   

2020

   

2021

   

2020

   

2021

   

2020

 

Service cost

  $ -     $ -     $ 824     $ 743     $ 5     $ 18  

Interest cost

    2,325       2,935       743       785       206       284  

Expected return on assets

    (7,781 )     (6,439 )     (3,120 )     (2,812 )     (2,236 )     (1,994 )

Amortization:

                                               

Prior service cost (benefit)

    (1 )     (1 )     17       16       -       -  

Actuarial loss

    799       1,799       1,020       959       18       15  

Net periodic benefit

  $ (4,658 )   $ (1,706 )   $ (516 )   $ (309 )   $ (2,007 )   $ (1,677 )

 

   

Nine Months Ended August 28, 2021 and August 29, 2020

 
                                   

Other

 
   

Pension Benefits

   

Postretirement

 
   

U.S. Plans

   

Non-U.S. Plans

   

Benefits

 

Net periodic cost (benefit):

 

2021

   

2020

   

2021

   

2020

   

2021

   

2020

 

Service cost

  $ -     $ -     $ 2,478     $ 2,184     $ 16     $ 55  

Interest cost

    6,974       8,803       2,215       2,348       616       851  

Expected return on assets

    (23,342 )     (19,318 )     (9,301 )     (8,408 )     (6,708 )     (5,982 )

Amortization:

                                               

Prior service cost (benefit)

    (2 )     (2 )     51       48       -       -  

Actuarial loss

    2,398       5,397       3,059       2,839       55       46  

Net periodic benefit

  $ (13,972 )   $ (5,120 )   $ (1,498 )   $ (989 )   $ (6,021 )   $ (5,030 )

 

Service cost is included with employee compensation cost in cost of sales and selling, general and administrative expenses in the Consolidated Statements of Income. The components of our net periodic defined benefit pension and postretirement benefit costs other than service cost are presented in other income, net in the Consolidated Statements of Income.

 

12

 
 

Note 7: Accumulated Other Comprehensive Income (Loss)

 

The following table provides details of total comprehensive income (loss): 

 

   

Three Months Ended August 28, 2021

   

Three Months Ended August 29, 2020

 
                           

Non-

                           

Non-

 
                           

controlling

                           

controlling

 
   

H.B. Fuller Stockholders

   

Interest

   

H.B. Fuller Stockholders

   

Interest

 
   

Pre-tax

   

Tax

   

Net

   

Net

   

Pre-tax

   

Tax

   

Net

   

Net

 

Net income attributable to H.B. Fuller and non-controlling interest

                  $ 31,616     $ 14                     $ 41,607     $ 24  

Foreign currency translation adjustment¹

  $ (31,979 )   $ -       (31,979 )     (27 )   $ 46,689     $ -       46,689       22  

Defined benefit pension plans adjustment²

    1,855       (480 )     1,375       -       2,769       (691 )     2,078       -  

Interest rate swap³

    5,074       (1,244 )     3,830       -       5,455       (1,330 )     4,125       -  

Cross currency swaps³

    (1,309 )     20       (1,289 )     -       (2,387 )     73       (2,314 )     -  

Other comprehensive income (loss)

  $ (26,359 )   $ (1,704 )   $ (28,063 )   $ (27 )   $ 52,526     $ (1,948 )   $ 50,578     $ 22  

Comprehensive income (loss)

                  $ 3,553     $ (13 )                   $ 92,185     $ 46  

 

   

Nine Months Ended August 28, 2021

   

Nine Months Ended August 29, 2020

 
                           

Non-

                           

Non-

 
                           

controlling

                           

controlling

 
   

H.B. Fuller Stockholders

   

Interest

   

H.B. Fuller Stockholders

   

Interest

 
   

Pretax

   

Tax

   

Net

   

Net

   

Pretax

   

Tax

   

Net

   

Net

 

Net income attributable to H.B. Fuller and non-controlling interest

                  $ 110,509     $ 51                     $ 83,115     $ 50  

Foreign currency translation adjustment¹

  $ 46,680     $ -       46,680       (25 )   $ 13,983     $ -       13,983       25  

Defined benefit pension plans adjustment²

    5,561       (1,440 )     4,121       -       8,306       (2,072 )     6,234       -  

Interest rate swap³

    15,332       (3,758 )     11,574       -       (19,515 )     4,758       (14,757 )     -  

Cross currency swaps³

    (3,629 )     53       (3,576 )