What changed in this filing

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Item 1. Financial Statements

2021-09-23 compared with 2021-06-29 · 121 added, 250 removed, 609 unchanged (38% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

$ 826,830  

6 unchanged sentences

( 1,776,744 )  

( 1,469,622 )

193,950  

66 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net income including non-controlling interest

Other comprehensive income (loss)

$ 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

Interest rate swaps, net of tax

11,574  

Cross-currency swaps, net of tax

Other comprehensive income (loss)

Comprehensive income (loss)

Comprehensive income attributable to non-controlling interest

Comprehensive income (loss) attributable to H.B.

( 1,289 )  

( 2,314 )  

( 3,576 )  

Other comprehensive (loss) income

( 28,090 )  

50,600  

58,774  

13,693  

Comprehensive income

92,231  

169,334  

96,858  

Comprehensive (loss) income attributable to non-controlling interest

( 13 )  

Comprehensive income attributable to H.B.

$ 3,553  

$ 92,185  

$ 169,308  

$ 96,783  

See accompanying Notes to Unaudited Consolidated Financial Statements.

6 unchanged sentences

$ 100,534  

Trade receivables (net of allowances of $ 11,486 and $ 12,905 , as of May 29, 2021 and November 28, 2020, respectively)

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

572,855  

62 unchanged sentences

160,000,000 , shares outstanding –

52,499,414 and 51,906,663 , as of May 29, 2021 and November 28, 2020, respectively

52,549,798 and 51,906,663 , as of August 28, 2021 and November 28, 2020, respectively

52,550  

36 unchanged sentences

Balance at May 29, 2021

Comprehensive income

Stock option exercises

Share-based compensation plans other, net

Repurchases of common stock

Balance at August 28, 2021

Fuller Company Shareholders

13 unchanged sentences

Balance at May 30, 2020

Comprehensive income

Stock option exercises

Share-based compensation plans other, net

Repurchases of common stock

Balance at August 29, 2020

See accompanying Notes to Unaudited Consolidated Financial Statements. 

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

August 28, 2021

August 29, 2020

Cash flows from operating activities:

3 unchanged sentences

Income from equity method investments, net of dividends received

Loss on sale or disposal of assets

Share-based compensation

13 unchanged sentences

Proceeds from sale of property, plant and equipment

 Cash received from government grant

Cash payments related to government grant

4 unchanged sentences

Dividends paid

 Contingent consideration payment

Proceeds from stock options exercised

52 unchanged sentences

STR, headquartered in Enfield, Connecticut, is a manufacturer of encapsulant products used in the solar industry.

The acquisition fair value measurement, which includes goodwill of $ 849 , intangible assets of $ 5,900  and other net assets of $ 1,196 , was preliminary as of May 29, 2021.

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.

Goodwill is deductible for tax purposes.

STR and the related goodwill are reported in our Engineering Adhesives ("EA") operating segment.

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. 

15 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

August 28, 2021

August 29, 2020

August 28, 2021

August 29, 2020

Cost of sales

12 unchanged sentences

Foreign currency translation

Balance at May 29, 2021

Balance at August 28, 2021

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

5 unchanged sentences

The goodwill activity for the 

six months ended May 29, 2021 is presented below:

nine months ended August 28, 2021 is presented below:

Hygiene, Health

1 unchanged sentence

Balance at November 28, 2020

$ 332,909  

$ 667,863  

$ 311,231  

$ 1,312,003  

Currency impact

12,384  

17,683  

Balance at May 29, 2021

$ 337,412  

$ 681,096  

$ 312,027  

$ 1,330,535  

Balance at August 28, 2021

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

August 28, 2021

Amortizable Intangible Assets

1 unchanged sentence

Original cost

$ 118,086  

$ 946,526  

$ 64,380  

$ 11,422  

$ 1,140,414  

Accumulated amortization

( 58,867 )  

( 311,899 )  

( 32,167 )  

( 5,252 )  

Net identifiable intangibles

$ 59,219  

$ 634,627  

$ 32,213  

$ 6,170  

$ 732,229  

November 28, 2020

2 unchanged sentences

Original cost

$ 113,775  

$ 933,943  

$ 63,266  

$ 11,410  

$ 1,122,394  

Accumulated amortization

( 53,216 )  

( 279,586 )  

( 29,368 )  

( 4,775 )  

Net identifiable intangibles

$ 60,559  

$ 654,357  

$ 33,898  

$ 6,635  

$ 755,449  

Amortization expense with respect to amortizable intangible assets was $ 17,753  and $ 17,468  for the three months ended May 29, 2021 and May 30, 2020, respectively, and $ 35,649  and $ 35,458  for the six months ended May 29, 2021 and May 30, 2020 , respectively.

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.

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

Amortization expense

$ 35,581  

$ 70,049  

$ 67,118  

$ 61,985  

$ 59,316  

$ 438,180  

Non-amortizable intangible assets as of 

May 29, 2021 and November 28, 2020 are $ 531  and $ 519 , respectively, and are related to trademarks and trade names.

The change in non-amortizable assets as of May 29, 2021 compared to November 28, 2020 was due to changes in foreign currency exchange rates.

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.

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

Three Months Ended May 29, 2021 and May 30, 2020

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

Pension Benefits

3 unchanged sentences

Expected return on assets

( 7,781 )  

( 6,439 )  

( 3,104 )  

( 2,798 )  

( 2,236 )  

Amortization:

2 unchanged sentences

Net periodic benefit

$ ( 4,658 )  

$ ( 1,706 )  

$ ( 511 )  

$ ( 340 )  

$ ( 2,007 )  

Six Months Ended May 29, 2021 and May 30, 2020

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

Pension Benefits

1 unchanged sentence

Net periodic cost (benefit):

$ 1,654  

$ 1,441  

Interest cost

Expected return on assets

( 15,561 )  

( 12,879 )  

( 6,181 )  

( 5,596 )  

( 4,472 )  

Amortization:

2 unchanged sentences

Net periodic benefit

$ ( 9,314 )  

$ ( 3,414 )  

$ ( 983 )  

$ ( 680 )  

$ ( 4,014 )  

Service cost is included with employee compensation cost in cost of sales and selling, general and administrative expenses in the Consolidated Statements of Income.

2 unchanged sentences

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

Three Months Ended May 29, 2021

Three Months Ended May 30, 2020

Three Months Ended August 28, 2021

Three Months Ended August 29, 2020

Fuller Stockholders

8 unchanged sentences

Comprehensive income (loss)

Six Months Ended May 29, 2021

Six Months Ended May 30, 2020

Nine Months Ended August 28, 2021

Nine Months Ended August 29, 2020

Fuller Stockholders

12 unchanged sentences

The components of accumulated other comprehensive loss are as follows:

August 28, 2021

Foreign currency translation adjustment

31 unchanged sentences

$ ( 302,859 )  

May 29, 2021 , we had a liability of $ 14,962  recorded for gross unrecognized tax benefits (excluding interest) compared to $ 14,569  as of November 28, 2020 .

As of May 29, 2021 and November 28, 2020 , we had accrued $ 3,575  and $ 2,881  of gross interest relating to unrecognized tax benefits, respectively.

Income tax expense for the 

three and six months ended May 29, 2021  includes $ 600 and $ 558  of discrete tax benefit.

Excluding the discrete tax benefit, the overall effective tax rate was 27.1  percent and 27.2  percent for the three and six months ended May 29, 2021 , respectively.  

Income tax expense for the three and six months ended May 30, 2020 includes $ 45  of discrete tax benefit and $ 1,959  of discrete tax expense, respectively.

Excluding the discrete tax benefit and expense, the overall effective tax rate was 28.0  percent and 27.5  percent for the three and six months ended May 30, 2020 , respectively.

three and nine months ended August 28, 2021  includes $ 5,626 and $ 5,068  of discrete tax expense, respectively, relating to the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S.

dollar and various foreign tax matters.

Excluding the discrete tax expense, the overall effective tax rate was 

27.6 percent and 

27.4 percent for the three and nine months ended August 28, 2021 , respectively.  

Income tax expense for the three and nine months ended August 29, 2020 includes $ 7,183  and $ 5,223  of discrete tax benefit, respectively, relating to the revaluation of cross-currency swap agreements due to appreciation of the Euro versus the U.S.

Dollar and various foreign tax matters. Excluding the discrete tax benefit, the overall effective tax rate was 27.1  percent and 

27.3 percent for the three and nine months ended August 29, 2020 , respectively.

August 28, 2021 , we had a liability of $ 14,463  recorded for gross unrecognized tax benefits (excluding interest) compared to $ 14,569 as of November 28, 2020 .

As of August 28, 2021 and November 28, 2020 , we had accrued $ 2,283 and $ 2,881 of gross interest relating to unrecognized tax benefits, respectively.

Earnings Per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

(Shares in thousands)

9 unchanged sentences

Share-based compensation awards for 

208,888 and 5,102,912  shares for the three months ended May 29, 2021 and May 30, 2020 , respectively, and 2,107,062  and 4,461,452  for the six months ended May 29, 2021 and May 30, 2020 , respectively, were excluded from diluted earnings per share calculations because they were antidilutive.

93,876 and 3,672,150  shares for the three months ended August 28, 2021 and August 29, 2020 , respectively, and 1,655,852  and 4,034,001  for the nine  months ended August 28, 2021 and August 29, 2020 , respectively, were excluded from diluted earnings per share calculations because they were antidilutive.

Financial Instruments

12 unchanged sentences

Cash Flow Hedges

As of May 29, 2021 , we had six cross-currency swap agreements effective October 20, 2017 to convert a notional amount of $ 401,200 of foreign currency denominated intercompany loans into U.S.

As of August 28, 2021 , we had six cross-currency swap agreements effective October 20, 2017 to convert a notional amount of $ 401,200 of foreign currency denominated intercompany loans into U.S.

dollars, which mature in 2021  and 2022.

As of May 29, 2021 , the combined fair value of the swaps was a liability of $ 7,464  and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated as cash flow hedges for accounting treatment. The lesser amount between the cumulative change in the fair value of the actual swaps and the cumulative change in the fair value of hypothetical swaps is recorded in accumulated other comprehensive income (loss) in the Consolidated Balance Sheets and in other net cash provided by operating activities in the Consolidated Statement of Cash Flows.

 As of August 28, 2021 , the combined fair value of the swaps was an asset of $ 4,716 and was included in other assets in the Consolidated Balance Sheets. The swaps were designated as cash flow hedges for accounting treatment. The lesser amount between the cumulative change in the fair value of the actual swaps and the cumulative change in the fair value of hypothetical swaps is recorded in accumulated other comprehensive income (loss) in the Consolidated Balance Sheets and in other net cash provided by operating activities in the Consolidated Statement of Cash Flows.

The differences between the cumulative change in the fair value of the actual swaps and the cumulative change in the fair value of hypothetical swaps are recorded as other income, net in the Consolidated Statements of Income.

In a perfectly effective hedge relationship, the two fair value calculations would exactly offset each other. Any difference in the calculation represents hedge ineffectiveness.

The amount in accumulated other comprehensive income (loss) related to cross-currency swaps was a gain of $ 5,682 as of May 29, 2021 . The estimated net amount of the existing gain that is reported in accumulated other comprehensive income (loss) as of May 29, 2021 that is expected to be reclassified into earnings within the next twelve months is $ 3,823 . As of May 29, 2021 , we do not believe any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will not occur.

The following table summarizes the cross-currency swaps outstanding as of May 29, 2021 :

The amount in accumulated other comprehensive income (loss) related to cross-currency swaps was a gain of $ 4,393 as of August 28, 2021 . The estimated net amount of the existing gain that is reported in accumulated other comprehensive income (loss) as of August 28, 2021 that is expected to be reclassified into earnings within the next twelve months is $( 3,176 ). As of August 28, 2021 , we do not believe any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will not occur.

The following table summarizes the cross-currency swaps outstanding as of August 28, 2021 :

Fiscal Year of

1 unchanged sentence

On February 27, 2018, we entered into an interest rate swap agreement to convert $ 200,000 of our $ 2,150,000 Term Loan B to a fixed interest rate of 4.589 percent.

During the second quarter of 2021, we settled a portion of this interest rate swap as the debt underlying this swap was less than the swap value due to debt paydown.

We settled the ineffective portion of the interest rate swap by making a cash payment of $ 378 and recorded that payment to interest expense in our Consolidated Statements of Income for the three months ended May 29, 2021 .

During the second  quarter of 2021, we settled a portion of this interest rate swap as the debt underlying this swap was less than the swap value due to debt paydown.

On October 20, 2017, we entered into interest rate swap agreements to convert $ 1,050,000 , which was amortized down to $ 925,000 on October 20, 2020, 

of our $ 2,150,000 Term Loan B to a fixed interest rate of 4.0275 percent.

The combined fair value of the interest rate swaps was a liability of $ 22,997  at May 29, 2021 and was included in other liabilities in the Consolidated Balance Sheets.

The combined fair value of the interest rate swaps was a liability of $ 17,924 at August 28, 2021 and was included in other liabilities in the Consolidated Balance Sheets.

The swaps were designated for hedge accounting treatment as cash flow hedges.

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

August 28, 2021

August 29, 2020

August 28, 2021

August 29, 2020

Cross-currency swap contracts

3 unchanged sentences

20, 2020 to a variable interest rate of 1 -month LIBOR plus 3.28 percent.

The combined fair value of the interest rate swaps was a liability of $ 4,242  at 

May 29, 2021 , and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges.

The combined fair value of the interest rate swaps was a liability of $ 3,478 at 

August 28, 2021 , and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges.

We apply the short cut method and assume hedge effectiveness.

6 unchanged sentences

See Note 11  for fair value amounts of these derivative instruments.

As of May 29, 2021 , we had forward foreign currency contracts maturing between June 1, 2021 and February 16, 2022.

As of August 28, 2021 , we had forward foreign currency contracts maturing between August 30, 2021 and February 16, 2022.

The mark-to-market effect associated with these contracts was largely offset by the underlying transaction gains and losses resulting from the foreign currency exposures for which these contracts relate. 

The amounts of pretax gains (losses) recognized in other income, net related to derivative instruments not designated as hedging instruments for the 

six months ended May 29, 2021 and May 30, 2020 were $ 404  and $( 3,003 ), respectively.

nine months ended August 28, 2021 and August 29, 2020 were $ 1,428 and $ ( 4,859 ), respectively.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities in the customer base and their dispersion across many different industries and countries.

As of May 29, 2021 , there were no significant concentrations of credit risk.

As of August 28, 2021 , there were no significant concentrations of credit risk.

Fair Value Measurements

9 unchanged sentences

Balances Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of May 29, 2021 and November 28, 2020 , and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of August 28, 2021 and November 28, 2020 , and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

Fair Value Measurements Using:

Marketable securities

$ 2,770  

Foreign exchange contract assets

Cross-currency cash flow hedge assets

Foreign exchange contract liabilities

$ 2,889  

Cross-currency cash flow hedge liabilities

Interest rate swaps, cash flow hedge liabilities

22,997  

Interest rate swaps, fair value hedge liabilities

2 unchanged sentences

Marketable securities

$ 22,560  

Foreign exchange contract assets

1 unchanged sentence

Foreign exchange contract liabilities

$ 5,251  

Cross-currency cash flow hedge liabilities

Interest rate swaps, cash flow hedge liabilities

33,256  

Contingent consideration liability

Contingent consideration liabilities

We use the income approach in calculating the fair value of our contingent consideration liability related to the D.H.M.

4 unchanged sentences

The valuation of our contingent consideration liabilities related to the acquisitions of D.H.M.

and STR resulted in a fair value of $ 7,000 and $ 1,700 , respectively, as of May 29, 2021 .

and STR resulted in a fair value of $ 7,000 and $ 1,700 , respectively, as of August 28, 2021 .

See Note 2 for further discussion regarding our acquisitions.

1 unchanged sentence

Mark to market adjustment

Balance at May 29, 2021

Long-term debt had an estimated fair value of $ 1,715,934 and $ 1,811,562  as of May 29, 2021 and November 28, 2020 , respectively.

Balance at August 28, 2021

Long-term debt had an estimated fair value of 

$1,675,314.0  and $ 1,811,562 as of August 28, 2021 and November 28, 2020 , respectively.

The fair value of long-term debt is based on quoted market prices for the same or similar issues or on the current rates offered for debt of similar maturities.

7 unchanged sentences

Our environmental, health and safety department monitors compliance with applicable laws on a global basis.

To the extent we can reasonably estimate the amount of our probable liabilities for environmental matters, we establish an undiscounted financial provision. We recorded liabilities of $ 7,965  and $ 8,099  as of May 29, 2021 and November 28, 2020 , respectively, for probable and reasonably estimable environmental remediation costs. Of the amount reserved, $ 3,585  and $ 3,703  as of May 29, 2021 and November 28, 2020 , respectively, is attributable to a facility we own in Simpsonville, South Carolina as a result of our Royal Adhesives acquisition that is a designated site under CERCLA.

To the extent we can reasonably estimate the amount of our probable liabilities for environmental matters, we establish an undiscounted financial provision. We recorded liabilities of $ 7,462 and $ 8,099  as of August 28, 2021 and November 28, 2020 , respectively, for probable and reasonably estimable environmental remediation costs. Of the amount reserved, $ 3,404 and $ 3,703  as of August 28, 2021 and November 28, 2020 , respectively, is attributable to a facility we own in Simpsonville, South Carolina as a result of our Royal Adhesives acquisition that is a designated site under CERCLA.

Currently, we are involved in various environmental investigations, clean up activities and administrative proceedings and lawsuits.

16 unchanged sentences

A summary of the number of and settlement amounts for asbestos-related lawsuits and claims is as follows:

Six Months Ended

Nine Months Ended

3 Years Ended

August 28, 2021

August 29, 2020

November 28, 2020

20 unchanged sentences

Three Months Ended

August 28, 2021

August 29, 2020

Income (Loss)

1 unchanged sentence

Hygiene, Health and Consumable Adhesives

$ 364,814  

$ 38,929  

$ 344,673  

$ 35,009  

Engineering Adhesives

345,373  

32,075  

236,063  

20,149  

Construction Adhesives

117,686  

93,866  

Total segment

$ 827,873  

$ 77,342  

$ 674,602  

$ 61,685  

Corporate Unallocated

( 8,201 )  

$ 827,873  

$ 69,141  

$ 674,602  

$ 56,903  

Six Months Ended

Nine Months Ended

August 28, 2021

August 29, 2020

Income (Loss)

1 unchanged sentence

Hygiene, Health and Consumable Adhesives

$ 700,482  

$ 68,840  

$ 657,185  

$ 57,673  

Engineering Adhesives

658,037  

62,493  

484,958  

35,514  

Construction Adhesives

195,258  

179,023  

Total segment

$ 1,553,777  

$ 132,968  

$ 1,321,166  

$ 98,339  

Corporate Unallocated

( 15,477 )  

$ 1,553,777  

$ 117,491  

$ 1,321,166  

$ 85,656  

Consistent with our internal management reporting, Corporate Unallocated amounts in the tables above include charges that are not allocated to the Company’s reportable segments. 

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

Operating income

$ 69,141  

$ 56,903  

$ 117,491  

$ 85,656  

Other income, net

11,879  

19,748  

Interest expense

( 19,942 )  

( 21,644 )  

( 40,303 )  

Interest income

Income before income taxes and income from equity method investments

$ 63,608  

$ 41,206  

$ 102,125  

$ 55,089  

We view the following disaggregation of net revenue by geographic region as useful to understanding the composition of revenue recognized during the respective reporting periods:

Three Months Ended May 29, 2021

Three Months Ended August 28, 2021

Hygiene, Health

and Consumable

$ 201,458  

$ 126,450  

$ 103,996  

$ 431,904  

108,310  

121,585  

236,401  

55,046  

97,338  

159,568  

$ 364,814  

$ 345,373  

$ 117,686  

$ 827,873  

Three Months Ended May 30, 2020

Three Months Ended August 29, 2020

Hygiene, Health

and Consumable

$ 190,581  

$ 90,012  

$ 84,047  

$ 364,640  

98,222  

71,643  

174,371  

55,870  

74,408  

135,591  

$ 344,673  

$ 236,063  

$ 93,866  

$ 674,602  

Six Months Ended May 29, 2021

Nine Months Ended August 28, 2021

Hygiene, Health

and Consumable

$ 383,479  

$ 239,577  

$ 171,028  

$ 794,084  

204,283  

223,344  

11,233  

438,860  

112,720  

195,116  

12,997  

320,833  

$ 700,482  

$ 658,037  

$ 195,258  

$ 1,553,777  

Six Months Ended May 30, 2020

Nine Months Ended August 29, 2020

Hygiene, Health

and Consumable

$ 363,855  

$ 195,385  

$ 158,306  

$ 717,546  

190,606  

155,318  

10,631  

356,555  

102,724  

134,255  

10,086  

247,065  

$ 657,185  

$ 484,958  

$ 179,023  

$ 1,321,166  

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements