FULLER H B CO 10-K

Item 8. Financial Statements and Supplementary Data   Report of Independent Registered Public Accounting Firm   To the Stockholders and the Board of Directors of H.B. Fuller Company   Opinion on the Financial Statements   We have audited the accompanying consolidated balance sheets of H.B. Fuller Company and subsidiaries (the Company) as of November 27, 2021 and November 28, 2020, the related consolidated statements of income, comprehensive income, total equity and cash flows for each of the two years ended November 27, 2021 and November 28, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at November 27, 2021 and November 28, 2020, and the results of its operations and its cash flows for each of the two years ended November 27, 2021 and November 28, 2020, in conformity with U.S. generally accepted accounting principles.   We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of November 27, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated January 25, 2022 expressed an unqualified opinion thereon.   Basis for Opinion   These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.   Critical Audit Matter     The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.   Valuation of Goodwill for the Construction Adhesives reporting unit   Description of the Matter   At November 27, 2021, the Company had goodwill of approximately $311 million related to the Construction Adhesive reporting unit. As discussed in Notes 1 and 5 of the consolidated financial statements, the Company performs goodwill impairment testing on an annual basis as of the beginning of the fourth quarter, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.   Auditing management’s goodwill impairment test for the Construction Adhesives reporting unit was complex and judgmental due to the significant estimation required in determining the fair value of the reporting unit. In particular, the Company estimates fair value using the income approach which is sensitive to certain assumptions, such as forecasted revenue and related revenue growth rate, the earnings before interest, taxes, depreciation and amortization (EBITDA) margins rate, the weighted average cost of capital and the tax rate which are affected by management’s business plans and expectations about future market or economic conditions.   How We Addressed the Matter in Our Audit   We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's goodwill impairment review process, including controls over management’s review of the significant assumptions described above.   To test the estimated fair value of the Construction Adhesive reporting unit, we performed audit procedures that included, among others, assessing the valuation methodology used by management and testing the significant assumptions discussed above, as well as the underlying data used by the Company in its analysis. For example, we compared the significant assumptions used by management in the prospective financial information to current industry, market and economic trends as well as other relevant factors. We assessed the reasonableness of the forecasted future revenue growth rate and EBITDA margins rate by comparing the forecasts to historical results. We involved our valuation specialists to assist in our evaluation of the valuation models, methodologies and significant assumptions used by the Company, specifically the weighted average cost of capital. We compared the projected tax rates with current enacted rates and assessed the reasonableness of the forecasted profits and losses by jurisdiction by comparing to historical results.   /s/ Ernst & Young LLP   We have served as the Company’s auditor since 2019.   Minneapolis, Minnesota January 25, 2022   25 Table of Contents   Report of Independent Registered Public Accounting Firm   To the Stockholders and the Board of Directors of H.B. Fuller Company   Opinion on Internal Control Over Financial Reporting   We have audited H.B. Fuller Company and subsidiaries’ internal control over financial reporting as of November 27, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, H.B. Fuller Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of November 27, 2021, based on the COSO criteria.   We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of November 27, 2021 and November 28, 2020, the related consolidated statements of income, comprehensive income, total equity and cash flows for each of the two years ended November 27, 2021 and November 28, 2020, and the related notes and our report dated January 25, 2022 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.   Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.   Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.   /s/ Ernst & Young LLP   Minneapolis, Minnesota January 25, 2022   26 Table of Contents   Report of Independent Registered Public Accounting Firm   To the Stockholders and Board of Directors H.B. Fuller Company   Opinion on the Consolidated Financial Statements   We have audited the accompanying consolidated statements of income, comprehensive income, total equity, and cash flows of H.B. Fuller Company and subsidiaries (the Company), for the fiscal year ended November 30, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the fiscal year ended November 30, 2019, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.    We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.   /s/ KPMG LLP   We served as the Company’s auditor from 2003 to 2020.   Minneapolis, Minnesota January 24, 2020, except for Note 15, as to which the date is June 29, 2021   27 Table of Contents     CONSOLIDATED STATEMENTS OF INCOME H.B. Fuller Company and Subsidiaries (In thousands, except per share amounts)       Fiscal Years       November 27,     November 28,     November 30,       2021     2020     2019   Net revenue   $ 3,278,031     $ 2,790,269     $ 2,897,000   Cost of sales     ( 2,432,709 )     ( 2,033,620 )     ( 2,090,078 ) Gross profit     845,322       756,649       806,922   Selling, general and administrative expenses     ( 592,710 )     ( 538,332 )     ( 580,928 ) Other income, net     32,855       15,398       37,943   Interest expense     ( 78,092 )     ( 86,776 )     ( 103,287 ) Interest income     9,476       11,417       12,178   Income before income taxes and income from equity method investments     216,851       158,356       172,828   Income tax expense     ( 63,033 )     ( 41,921 )     ( 49,408 ) Income from equity method investments     7,657       7,353       7,424   Net income including non-controlling interest     161,475       123,788       130,844   Net income attributable to non-controlling interest     ( 82 )     ( 69 )     ( 27 ) Net income attributable to H.B. Fuller   $ 161,393     $ 123,719     $ 130,817                             Earnings per share attributable to H.B. Fuller common stockholders:                         Basic   $ 3.05     $ 2.38     $ 2.57   Diluted   $ 2.97     $ 2.36     $ 2.52                             Weighted-average common shares outstanding:                         Basic     52,887       52,039       50,920   Diluted     54,315       52,520       51,983                             Dividends declared per common share   $ 0.665     $ 0.648     $ 0.635     See accompanying Notes to Consolidated Financial Statements.   28 Table of Contents     CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME H.B. Fuller Company and Subsidiaries (In thousands)       Fiscal Years       November 27,     November 28,     November 30,       2021     2020     2019   Net income including non-controlling interest   $ 161,475     $ 123,788     $ 130,844   Other comprehensive income (loss)                         Foreign currency translation     ( 26,294 )     41,742       ( 20,395 ) Defined benefit pension plans adjustment, net of tax     48,181       4,588       ( 21,828 ) Interest rate swaps, net of tax     15,179       ( 11,765 )     ( 35,031 ) Cash-flow hedges, net of tax     ( 4,486 )     6,206       13,820   Other comprehensive income (loss)     32,580       40,771       ( 63,434 ) Comprehensive income     194,055       164,559       67,410   Less: Comprehensive income attributable to non-controlling interest     50       99       41   Comprehensive income attributable to H.B. Fuller   $ 194,005     $ 164,460     $ 67,369     See accompanying Notes to Consolidated Financial Statements.   29 Table of Contents     CONSOLIDATED BALANCE SHEETS H.B. Fuller Company and Subsidiaries (In thousands, except share and per share amounts)       November 27,     November 28,       2021     2020   Assets                 Current assets:                 Cash and cash equivalents   $ 61,786     $ 100,534   Trade receivables, net     614,645       514,916   Inventories     448,404       323,213   Other current assets     96,335       81,113   Total current assets     1,221,170       1,019,776                     Property, plant and equipment, net     695,367       670,744   Goodwill     1,298,845       1,312,003   Other intangibles, net     687,075       755,968   Other assets     372,073       278,213   Total assets   $ 4,274,530     $ 4,036,704                     Liabilities, non-controlling interest and total equity                 Current liabilities:                 Notes payable   $ 24,983     $ 16,925   Current maturities of long-term debt     -       -   Trade payables     500,321       316,460   Accrued compensation     109,542       83,598   Income taxes payable     15,943       29,173   Other accrued expenses     86,061       83,976   Total current liabilities     736,850       530,132                     Long-term debt, net of current maturities     1,591,479       1,756,985   Accrued pension liabilities     71,651       88,806   Other liabilities     277,190       278,919   Total liabilities     2,677,170       2,654,842                     Commitments and contingencies (Note 14)                                       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 – 52,777,753 and 51,906,663 for 2021 and 2020, respectively     52,778       51,907   Additional paid-in capital     213,637       157,867   Retained earnings     1,600,601       1,474,406   Accumulated other comprehensive loss     ( 270,247 )     ( 302,859 ) Total H.B. Fuller stockholders' equity     1,596,769       1,381,321   Non-controlling interest     591       541   Total equity     1,597,360       1,381,862   Total liabilities, non-controlling interest and total equity   $ 4,274,530     $ 4,036,704     See accompanying Notes to Consolidated Financial Statements.   30 Table of Contents     CONSOLIDATED STATEMENTS OF TOTAL EQUITY H.B. Fuller Company and Subsidiaries (In thousands)       H.B. Fuller Company Shareholders                                               Accumulated                               Additional             Other     Non-               Common     Paid-in     Retained     Comprehensive     Controlling               Stock     Capital     Earnings     Income (Loss)     Interest     Total   Balance at December 1, 2018, as previously reported   $ 50,733     $ 95,940     $ 1,285,246     $ ( 280,152 )   $ 401     $ 1,152,168   Change in accounting principles     -       -       1,043       -       -       1,043   Balance at December 1, 2018, as adjusted   $ 50,733     $ 95,940     $ 1,286,289     $ ( 280,152 )   $ 401     $ 1,153,211   Comprehensive income (loss)     -       -       130,817       ( 63,448 )     41       67,410   Dividends     -       -       ( 32,695 )     -       -       ( 32,695 ) Stock option exercises     373       10,506       -       -       -       10,879   Share-based compensation plans other, net     200       26,810       -       -       -       27,010   Repurchases of common stock     ( 65 )     ( 2,961 )     -       -       -       ( 3,026 ) Balance at November 30, 2019   $ 51,241     $ 130,295     $ 1,384,411     $ ( 343,600 )   $ 442     $ 1,222,789   Comprehensive income (loss)     -       -       123,719       40,741       99       164,559   Dividends     -       -       ( 33,724 )     -       -       ( 33,724 ) Stock option exercises     397       11,924       -       -       -       12,321   Share-based compensation plans other, net     341       19,008       -       -       -       19,349   Repurchases of common stock     ( 72 )     ( 3,360 )     -       -       -       ( 3,432 ) Balance at November 28, 2020   $ 51,907     $ 157,867     $ 1,474,406     $ ( 302,859 )   $ 541     $ 1,381,862   Comprehensive income     -       -       161,393       32,612       50       194,055   Dividends     -       -       ( 35,198 )     -       -       ( 35,198 ) Stock option exercises     741       31,584       -       -       -       32,325   Share-based compensation plans other, net     181       26,817       -       -       -       26,998   Repurchases of common stock     ( 51 )     ( 2,631 )     -       -       -       ( 2,682 ) Balance at November 27, 2021   $ 52,778     $ 213,637     $ 1,600,601     $ ( 270,247 )   $ 591     $ 1,597,360     31 Table of Contents     CONSOLIDATED STATEMENTS of CASH FLOWS H.B. Fuller Company and Subsidiaries (In thousands)       Fiscal Years       November 27,     November 28,     November 30,       2021     2020     2019   Cash flows from operating activities:                         Net income including non-controlling interest   $ 161,475     $ 123,788     $ 130,844   Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:                         Depreciation     72,106       68,226       67,115   Amortization     71,068       70,591       74,091   Deferred income taxes     16,192       ( 24,730 )     ( 29,028 ) Income from equity method investments, net of dividends received     2,776       375       ( 39 ) Loss (gain) on sale of assets     648       86       ( 24,104 ) Share-based compensation     22,366       16,914       24,003   Pension and other postretirement benefit plan contributions     ( 3,840 )     ( 5,479 )     ( 8,063 ) Pension and other postretirement benefit plan income     ( 28,662 )     ( 14,763 )     ( 11,300 ) Mark to market adjustment related to contingent consideration liabilities     2,300       800       -   Change in assets and liabilities, net of effects of acquisitions:                         Trade receivables, net     ( 124,849 )     ( 14,842 )     ( 25,632 ) Inventories     ( 135,351 )     15,708       19,584   Other assets     ( 79,097 )     38,412       ( 18,316 ) Trade payables     176,337       23,130       11,553   Accrued compensation     27,741       2,588       1,342   Other accrued expenses     1,186       16,361       ( 1,882 ) Income taxes payable     ( 4,137 )     5,511       21,043   Other liabilities     ( 73,508 )     24,566       448   Other     108,566       ( 15,683 )     37,518   Net cash provided by operating activities     213,317       331,559       269,177   Cash flows from investing activities:                         Purchased property, plant and equipment     ( 96,089 )     ( 87,288 )     ( 61,982 ) Purchased businesses, net of cash acquired     ( 5,445 )     ( 9,500 )     ( 8,292 ) Purchased business assets     -       ( 5,623 )     -   Purchased business remaining equity     -       -       ( 9,870 ) Proceeds from sale of property, plant and equipment     2,896       1,506       11,133   Proceeds from sale of business     -       -       70,293   Cash received from government grant     5,800       -       8,881   Cash outflow related to government grant     ( 1,822 )     ( 8,555 )     ( 2,758 ) Net cash (used in) provided by investing activities     ( 94,660 )     ( 109,460 )     7,405   Cash flows from financing activities:                         Proceeds from issuance of long-term debt     -       300,000       -   Repayment of long-term debt     ( 156,500 )     ( 518,000 )     ( 288,600 ) Net proceeds from notes payable     9,346       4,128       1,662   Dividends paid     ( 34,859 )     ( 33,461 )     ( 32,357 ) Contingent consideration payment     ( 1,700 )     ( 767 )     ( 3,610 ) Proceeds from stock options exercised     32,325       12,321       10,885   Repurchases of common stock     ( 2,682 )     ( 3,432 )     ( 3,026 ) Net cash used in financing activities     ( 154,070 )     ( 239,211 )     ( 315,046 ) Effect of exchange rate changes on cash and cash equivalents     ( 3,335 )     5,455       ( 138 ) Net change in cash and cash equivalents     ( 38,748 )     ( 11,657 )     ( 38,602 ) Cash and cash equivalents at beginning of year     100,534       112,191       150,793   Cash and cash equivalents at end of year   $ 61,786     $ 100,534     $ 112,191                             Supplemental disclosure of cash flow information:                         Dividends paid with company stock   $ 339     $ 263     $ 338   Cash paid for interest, net of amount capitalized of $ 905 , $ 565 , and $ 416 for the years ended November 27, 2021, November 28, 2020 and November 30, 2019, respectively   $ 62,753     $ 69,452     $ 107,088   Cash paid for income taxes, net of refunds   $ 72,955     $ 49,986     $ 37,232     See accompanying Notes to Consolidated Financial Statements.   32 Table of Contents   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS H.B. Fuller Company and Subsidiaries (In thousands, except share and per share amounts)     Note 1: Nature of Business and Summary of Significant Accounting Policies   Nature of Business   H.B. Fuller Company and our subsidiaries formulate, manufacture and market specialty adhesives, sealants, coatings, polymers, tapes, encapsulants, additives and other specialty chemical products globally, with sales operations in 35 countries in North America, Europe, Latin America, the Asia Pacific region, India, the Middle East and Africa.   We have  three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.  In 2021 , as a percentage of total net revenue by operating segment, Hygiene, Health and Consumable Adhesives accounted for 45  percent, Engineering Adhesives 42  percent and Construction Adhesives 13  percent.   Our Hygiene, Health and Consumable Adhesives operating segment produces and supplies a full range of specialty industrial adhesives such as thermoplastic, thermoset, reactive, water-based and solvent-based products for applications in various markets, including packaging (food and beverage containers, flexible packaging, consumer goods, package integrity and re-enforcement, and non-durable goods), converting (corrugation, folding carton, tape and label, paper converting, envelopes, books, multi-wall bags, sacks, and tissue and towel), nonwoven and hygiene (disposable diapers, feminine care and medical garments) and health and beauty.   Our Engineering Adhesives operating segment produces and supplies high performance industrial adhesives such as reactive, light cure, two -part liquids, polyurethane, silicone, film and fast cure products to the durable assembly (appliances and filters), performance wood (windows, doors and wood flooring) and textile (footwear and sportswear), transportation, electronics, medical, clean energy, aerospace and defense, appliance, heavy machinery and insulating glass markets.   Our Construction Adhesives operating segment includes products used for tile setting (adhesives, grouts, mortars, sealers and levelers), the commercial roofing industry (pressure-sensitive adhesives, tapes and sealants) and heating, ventilation and air conditioning and insulation applications (duct sealants, weather barriers and fungicidal coatings and block fillers). This operating segment also includes caulks and sealants for the consumer market and professional trade, sold through retailers, primarily in Australia.   Principles of Consolidation   The Consolidated Financial Statements include the accounts of H.B. Fuller Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated. Investments in affiliated companies in which we exercise significant influence, but which we do not control, are accounted for in the Consolidated Financial Statements under the equity method of accounting. As such, consolidated net income includes our equity portion in current earnings of such companies, after elimination of intercompany profits. Investments in which we do not exercise significant influence (generally less than a 20 percent ownership interest) are accounted for using the measurement alternative.   Our 50 percent ownership in Sekisui-Fuller Company, Ltd., our Japan joint venture, is accounted for under the equity method of accounting as we do not exercise control over the investee. In fiscal years 2021, 2020 and 2019 , this equity method investment was not significant as defined in Regulation S- X under the Securities Exchange Act of 1934. As such, financial information as of  November 27, 2021, November 28, 2020, and November 30, 2019 for Sekisui-Fuller Company, Ltd. is not required.   Our fiscal year ends on the Saturday closest to November 30. Fiscal year-end dates were  November 27, 2021, November 28, 2020, and November 30, 2019 for 2021, 2020 and 2019 , respectively.   Use of Estimates   Preparation of the Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.   Revenue Recognition   We sell a variety of adhesives, sealants and other specialty chemical products to a diverse customer base. The vast majority of our arrangements contain a single performance obligation to transfer manufactured goods to the customer as governed by an individual purchase order.   We recognize revenue at the amount of consideration to which we expect to be entitled in exchange for transferring the promised goods to the customer. The transaction price includes an estimation of any variable amounts of consideration to which we will be entitled. The most common forms of variable consideration within our arrangements are customer rebates, which are recorded as a reduction to revenue at the time of the initial sale using the expected value method. The expected value method is the sum of probability-weighted amounts in a range of possible consideration amounts and is based on a consideration of historical, current and forecast information. Changes in estimates are updated each reporting period. There are no material instances where variable consideration is constrained and not recorded at the initial time of sale. Product returns are recorded as a reduction to revenue based on historical experience and anticipated sales returns that occur in the normal course of business. We primarily have assurance-type warranties that do not result in separate performance obligations. We have elected to present revenue net of sales and other similar taxes.   We recognize revenue when control of goods is transferred to the customer. For the vast majority of our arrangements, control transfers at a point in time either upon shipment or upon delivery of the goods to the customer. The timing of transfer of control is determined considering the timing of the transfer of legal title, physical possession, and risks and rewards of goods to the customer.   33 Table of Contents   We record shipping and handling revenue in net revenue and outbound shipping and handling costs in cost of goods sold. The majority of our shipping and handling activities are performed prior to transfer of control of the goods to the customer. For those arrangements where we provide shipping and handling services after control of the goods has transferred to the customer, we have elected the practical expedient allowed under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 606 to account for these activities as a fulfillment cost rather than as a separate performance obligation.   Provisions for sales returns are estimated based on historical experience and are adjusted for known returns, if material. Customer incentive programs (primarily volume purchase rebates) and arrangements such as cooperative advertising, slotting fees and buy-downs are recorded as a reduction of net revenue in accordance with ASC 606. Customer incentives recorded in the Consolidated Statements of Income as a reduction of net revenue were $ 33,441 , $ 34,860  and $ 22,795  in 2021, 2020 and 2019 , respectively.   For certain products, consigned inventory is maintained at customer locations. For this inventory, revenue is recognized in the period that the inventory is consumed. Sales to distributors require a distribution agreement or purchase order. As a normal practice, distributors do not have a right of return.   Cost of Sales   Cost of sales includes raw materials, container costs, direct labor, manufacturing overhead, freight costs and other less significant indirect costs related to the production of our products.   Selling, General and Administrative Expenses   Selling, general and administrative (“SG&A”) expenses include sales and marketing, research and development, technical and customer service, finance, legal, human resources, general management and similar expenses.   Income Taxes   The income tax provision is computed based on income before income from equity method investments included in the Consolidated Statement of Income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Enacted statutory tax rates applicable to future years are applied to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances reduce deferred tax assets when it is not more-likely-than- not that a tax benefit will be realized. See Note 11 for further information.   Acquisition Accounting   As we enter into business combinations, we perform acquisition accounting requirements including the following:     ● Identifying the acquirer,   ● Determining the acquisition date,   ● Recognizing and measuring the identifiable assets acquired and the liabilities assumed, and   ● Recognizing and measuring goodwill or a gain from a bargain purchase   We complete valuation procedures and record the resulting fair value of the acquired assets and assumed liabilities based upon the valuation of the business enterprise and the tangible and intangible assets acquired. Enterprise value allocation methodology requires management to make assumptions and apply judgment to estimate the fair value of assets acquired and liabilities assumed. If estimates or assumptions used to complete the enterprise valuation and estimates of the fair value of the acquired assets and assumed liabilities significantly differed from assumptions made, the resulting difference could materially affect the fair value of net assets.   The calculation of the fair value of the tangible assets, including property, plant and equipment, utilizes the cost approach, which computes the cost to replace the asset, less accrued depreciation resulting from physical deterioration, functional obsolescence and external obsolescence. The calculation of the fair value of the identified intangible assets is determined using cash flow models following the income approach or a discounted market-based methodology approach. Significant inputs include estimated revenue growth rates, gross margins, operating expenses and estimated attrition, royalty and discount rates. Goodwill is recorded as the difference in the fair value of the acquired assets and assumed liabilities and the purchase price.   Cash Equivalents   Cash equivalents are highly liquid instruments with an original maturity of three months or less. We review cash and cash equivalent balances on a bank by bank basis to identify book overdrafts. Book overdrafts occur when the amount of outstanding checks exceed the cash deposited at a given bank. Book overdrafts, if any, are included in trade payables in our Consolidated Balance Sheets and in operating activities in our Consolidated Statements of Cash Flows.   Restrictions on Cash   There were no restrictions on cash as of November 27, 2021  or November 28, 2020. There are no contractual or regulatory restrictions on the ability of consolidated and unconsolidated subsidiaries to transfer funds to us, except for typical statutory restrictions which prohibit distributions in excess of net capital or similar tests. The majority of our cash in non-U.S. locations is considered indefinitely reinvested.   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. See Note 4 for further information.   34 Table of Contents   Inventories   Inventories are recorded at cost ( not in excess of net realizable value) as determined by the weighted-average cost method and are valued at the lower of cost or net realizable value.   Investments   Investments with a value of $ 9,584  and $ 9,006  represent the cash surrender value of life insurance contracts as of November 27, 2021 and November 28, 2020 , respectively. These assets are held to primarily support supplemental pension plans and are recorded in other assets in the Consolidated Balance Sheets. The corresponding gain or loss associated with these contracts is reported in earnings each period as a component of selling, general and administrative expenses.   Equity Investments   Investments in an entity where we own less than 20% of the voting stock of the entity and do not exercise significant influence over operating and financial policies of the entity are accounted for using the measurement alternative at cost less impairment plus or minus observable price changes in orderly transactions. We have a policy in place to review our investments at least annually, to evaluate the accounting method and identify observable price changes that could indicate impairment. If we believe that an impairment exists, it is our policy to calculate the fair value of the investment and recognize as impairment any amount by which the carrying value exceeds the fair value of the investment. We did not have any impairment of our equity investments for the years ended November 27, 2021, November 28, 2020, and November 30, 2019 . The book value of the equity investments was $ 1,667 as of  November 27, 2021 and $ 1,669  as of November 28, 2020 .   Property, Plant and Equipment   Property, plant and equipment are carried at cost and depreciated over the useful lives of the assets using the straight-line method. Estimated useful lives range from 20 to 40 years for buildings and improvements, 3 to 20 years for machinery and equipment, and the shorter of the lease or expected life for leasehold improvements. Fully depreciated assets are retained in property and accumulated depreciation accounts until removed from service. Upon disposal, assets and related accumulated depreciation are removed. Upon sale of an asset, the difference between the proceeds and remaining net book value is charged or credited to other income, net on the Consolidated Statements of Income. Expenditures that add value or extend the life of the respective assets are capitalized, while expenditures that are typical recurring repairs and maintenance are expensed as incurred. Interest costs associated with construction and implementation of property, plant and equipment of $ 905 , $ 565  and $ 416  were capitalized in 2021, 2020 and 2019 , respectively.   Goodwill   We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows or ongoing declines in market capitalization. The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit. The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill. In performing the impairment test, we determined the fair value of our reporting units through the income approach by using discounted cash flow (“DCF”) analyses. Determining fair value requires the company to make judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the DCF analysis for each reporting unit are based on the reporting unit's budget, long-term business plan and recent operating performance. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, an impairment charge is recorded for any excess of the carrying value over the estimated fair value. Based on the analysis performed for our fiscal  2021 annual impairment test, there were no indications of impairment for any of our reporting units. See Note 5 for further information.   Intangible Assets   Intangible assets include patents, customer lists, technology, trademarks and other intangible assets acquired from independent parties and are amortized on a straight-line basis with estimated useful lives ranging from 3 to 20 years. The straight-line method of amortization of these assets reflects an appropriate allocation of the costs of the intangible assets to earnings in proportion to the amount of economic benefits obtained in each reporting period.   Impairment of Long-Lived Assets   Our long-lived assets are tested for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. An impairment loss would be measured and recognized when the carrying amount of an asset (asset group) exceeds the estimated undiscounted future cash flows expected to result from the use of the asset (asset group) and its eventual disposition. The impairment loss to be recorded would be the excess of the asset's carrying value over its fair value. Fair value is generally determined using a DCF analysis or other valuation technique. Costs related to internally developed intangible assets are expensed as incurred.   Foreign Currency Translation   Assets and liabilities of non-U.S. functional currency entities are translated to U.S. dollars at period-end exchange rates, and the resulting gains and losses arising from the translation of those net assets are recorded as a cumulative translation adjustment, a component of accumulated other comprehensive income (loss) in stockholders' equity. Revenues and expenses are translated using average exchange rates during the year. Foreign currency transaction gains and losses are included in other income, net in the Consolidated Statements of Income.   We consider a subsidiary’s sales price drivers, currency denomination of sales transactions and inventory purchases to be the primary indicators in determining a foreign subsidiary’s functional currency. Our subsidiaries in certain European countries have a functional currency different than their local currency. All other foreign subsidiaries, which are located in North America, Latin America, Europe and the Asia Pacific region, have the same local and functional currency.   35 Table of Contents   Pension and Other Postretirement Benefits   We sponsor defined-benefit pension plans in both the U.S. and non-U.S. entities. Also in the U.S., we sponsor other postretirement plans for health care and life insurance benefits. Expenses and liabilities for the pension plans and other postretirement plans are actuarially calculated. These calculations are based on our assumptions related to the discount rate, expected return on assets, projected salary increases, health care cost trend rates and mortality rates. The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan. The approach identifies a broad population of corporate bonds that meet the quality and size criteria for the particular plan. We use this approach rather than a specific index that has a certain set of bonds that may or may not be representative of the characteristics of our particular plan. Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 60 percent equities and 40 percent fixed income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward-looking observations. The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the impact of active management of the plan’s assets. Note 10 includes disclosure of assumptions employed in these measurements for both the non-U.S. and U.S. plans.   Asset Retirement Obligations   We recognize asset retirement obligations ("ARO") in the period in which we have an existing legal obligation associated with the retirement of a tangible long-lived asset, and the amount can be reasonably estimated. The ARO is recognized at fair value when the liability is incurred. Upon initial recognition of a liability, that cost is capitalized as part of the related long-lived asset and depreciated on a straight-line basis over the remaining estimated useful life of the related asset. We have recognized a liability related to special handling of asbestos related materials in certain facilities for which we have plans or expectation of plans to undertake a major renovation or demolition project that would require the removal of asbestos or have plans or expectation of plans to exit a facility. In addition, we have determined that we have facilities with some level of asbestos that will require abatement action in the future. Once the probability and timeframe of an action are determined, we apply certain assumptions to determine the related liability and asset. These assumptions include the use of inflation rates, the use of credit adjusted risk-free discount rates and the estimation of costs to handle asbestos related materials. The recorded liability is required to be adjusted for changes resulting from the passage of time and/or revisions to the timing or the amount of the original estimate. The asset retirement obligation liability was $ 2,917  and $ 2,948  at November 27, 2021 and November 28, 2020 , respectively.   Environmental Costs   Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments are made, or remedial efforts are probable, and the costs can be reasonably estimated. The timing of these accruals is generally no later than the completion of feasibility studies.   Contingent Consideration Liability   Concurrent with business acquisitions, we enter into agreements that require us to pay the sellers a certain amount based upon a formula related to the entity’s financial results. The change in fair value of the contingent consideration liability is recorded in SG&A expenses in the Consolidated Statements of Income.   Share-based Compensation   We have various share-based compensation programs which provide for equity awards, including non-qualified stock options, incentive stock options, restricted stock units, performance awards and deferred compensation. We use the straight-line attribution method to recognize compensation expense associated with share-based awards based on the fair value on the date of grant, net of the estimated forfeiture rate. Expense is recognized over the requisite service period related to each award, which is the period between the grant date and the earlier of the award’s stated vesting term or the date the employee is eligible for early retirement based on the terms of the plan. The fair value of stock options is estimated using the Black-Scholes option pricing model. All of our stock compensation expense is recorded in SG&A expenses in the Consolidated Statements of Income. See Note 9 for additional information.   Earnings per Share   Basic earnings per share is calculated by dividing net income attributable to H.B. Fuller by the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per share is based upon the weighted-average number of common and common equivalent shares outstanding during the applicable period. The difference between basic and diluted earnings per share is attributable to share-based compensation awards. We use the treasury stock method to calculate the effect of outstanding awards, which computes total employee proceeds as the sum of (a) the amount the employee must pay upon exercise of the award and (b) the amount of unearned share-based compensation costs attributed to future services. Share-based compensation awards for which total employee proceeds exceed the average market price over the applicable period have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share. The computations for basic and diluted earnings per share are as follows:   (in thousands, except per share data)   2021     2020     2019   Net income attributable to H.B. Fuller   $ 161,393     $ 123,719     $ 130,817                             Weighted-average common shares – basic     52,887       52,039       50,920   Equivalent shares from share-based compensation plans     1,428       481       1,063   Weighted-average common and common equivalent shares – diluted     54,315       52,520       51,983                             Basic earnings per share   $ 3.05     $ 2.38     $ 2.57   Diluted earnings per share   $ 2.97     $ 2.36     $ 2.52     Share-based compensation awards for 1,535,503 ,  3,982,275  and 2,951,697  shares for 2021, 2020 and 2019 , respectively, were excluded from the diluted earnings per share calculation because they were antidilutive.   36 Table of Contents   Financial Instruments and Derivatives   As a part of our ongoing operations, we are exposed to market risks such as changes in foreign currency exchange rates and interest rates. To manage these risks, we may enter into derivative transactions pursuant to our established policies.   Our objective is to balance, where possible, non-functional currency denominated assets to non-functional currency denominated liabilities to have a natural hedge and minimize foreign exchange impacts. We minimize risks from foreign currency exchange rate fluctuations through normal operating and financing activities and, when deemed appropriate, through the use of derivative instruments. Derivatives consisted primarily of forward currency contracts used to manage foreign currency denominated assets and liabilities. For derivative instruments outstanding that were not designated as hedges for accounting purposes, the gains and losses related to mark-to-market adjustments were recognized as other income or expense in the income statement during the periods the derivative instruments were outstanding. To manage exposure to currency rate movements on expected cash flows, the company may enter into cross-currency swap agreements.    The company manages interest expense using a mix of fixed and floating rate debt.  To manage exposure to interest rate movements and to reduce borrowing costs, the company may enter into interest rate swap agreements.   Changes in the fair values of derivatives are recorded in net earnings or other comprehensive income, based on the type of derivative, and whether the instrument is designated and effective as a hedge transaction. Gains or losses on derivative instruments reported in accumulated other comprehensive income (loss) are reclassified to earnings in the period the hedged item affects earnings. Any ineffectiveness is recognized in earnings in the current period. We maintain master netting arrangements that allow us to net settle contracts with the same counterparties; we do not elect to offset amounts in our Consolidated Balance Sheet.  These arrangements generally do not call for collateral. We do not enter into any speculative positions with regard to derivative instruments. See Note 12 for further information regarding our financial instruments.   Purchase of Company Common Stock   Under the Minnesota Business Corporation Act, repurchased stock is included in authorized shares, but is not included in shares outstanding. The excess of the repurchase cost over par value is charged to additional paid-in capital. When additional paid-in capital is exhausted, the excess reduces retained earnings. We repurchased 47,481 , 72,000  and 73,043  shares of common stock in 2021, 2020 and 2019 , respectively, in connection with the statutory minimum tax withholding related to vesting of restricted stock.   Change in Accounting Principle - Credit Losses   In June 2016, the FASB issued 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 ASUs 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.   Change in Accounting Principle – Revenue Recognition   In May 2014, FASB issued ASU  No. 2014 - 09, Revenue from Contracts with Customers (Topic 606 ) , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. We adopted this ASU during the quarter ended March 2, 2019 using the modified retrospective method of adoption. As a result of the adoption of this ASU, we recorded an increase to opening retained earnings of $ 1,776 as of December 1, 2018 related to accelerated recognition for arrangements where we provide shipping and handling services after control of the goods has transferred to the customer. Prior periods were not restated. We have included the disclosures required by this ASU in Note 15.   In March 2016, the FASB issued ASU No. 2016 - 08, Revenue from Contracts with Customers (Topic 606 ), Principal versus Agent Considerations (Reporting Revenue Gross versus Net) . This ASU provides guidance on recording revenue on a gross basis versus a net basis based on the determination of whether an entity is a principal or an agent when another party is involved in providing goods or services to a customer. The amendments in this ASU affect the guidance in ASU No. 2014 - 09 and were adopted during the quarter ended March 2, 2019 with ASU No. 2014 - 09 as discussed above.   37 Table of Contents   Change in Accounting Principle – Income Tax Impact of   Intra-Entity Transfers of Assets Other Than Inventory   In  October 2016,  the FASB issued ASU  No.   2016 - 16,   Income Taxes (Topic   740 ): Intra-Entity Transfers of Assets Other Than Inventory.  This ASU changes the timing of income tax recognition for an intercompany sale of assets. The ASU requires the seller’s tax effects and the buyer’s deferred taxes to be recognized immediately upon the sale instead of deferring accounting for the income tax implications until the assets are sold to a  third  party or recovered through use. We adopted this ASU during the quarter ended  March 2, 2019.  We recorded a decrease to opening retained earnings of $ 733  as of  December 1, 2018  as a result of the adoption of this ASU.   New Accounting Pronouncements   In November 2021, the FASB issued ASU No. 2021 - 10, Government Assistance (Topic 832 ): Disclosures by Business Entities about Government Assistance . This ASU requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958 - 605. Our effective date for adoption of this ASU is our fiscal year beginning December 4, 2022 with early adoption permitted. We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and determined it will not have a material impact.   Recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the company.     Note 2: Acquisitions   STR Holdings, Inc.   On January 13, 2021, we acquired certain assets of STR Holdings, 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 final as of November 27, 2021. As of November 27, 2021, the agreement provisions for the contingent consideration were met, and as a result, the $ 1,700 was paid. See Note 13 for the fair value and payment of this 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 liability as of the date of acquisition was $ 5,000 resulting in a final purchase price of $ 14,500 . See Note 13 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.   Ramapo Sales and Marketing, Inc.   On May 17, 2019, we acquired certain assets from a window and insulating glass sealants sales and distribution company, Ramapo Sales and Marketing, Inc. (“Ramapo”), headquartered in Charleston, South Carolina. This acquisition supports the integration of the insulating glass business that we acquired as part of the Royal Adhesives acquisition. The purchase price of $ 8,292 was funded through existing cash. In addition, we were required to pay up to $ 3,400 in contingent consideration based upon financial results for the twelve months ended December 31, 2019. Existing receivables of $ 2,166 from Ramapo were effectively settled as a result of the acquisition. The acquisition fair value measurement was final as of May 30, 2020 and includes goodwill of $ 165 , customer relationship intangible of $ 8,800 , and additional acquired assets of $ 4,148 . The fair value of the contingent consideration liability as of the date of the acquisition was $ 2,654 , resulting in a final purchase price of $10,947. During the second quarter of 2020, the contingent consideration liability was finalized and adjusted to a final balance of $ 767 . Ramapo and the related goodwill are reported in our Engineering Adhesives operating segment.   Dalton Holdings, LLC   On July 1, 2019, we completed the sale of Dalton Holdings, LLC (“Dalton Holdings”), which primarily manufactures surfactants and thickeners, within the Americas Adhesives segment. The sale resulted in a pre-tax gain on sale of $ 18,764 , which is recorded in other income, net in the Consolidated Statements of Income for the year ended November 30, 2019.     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 distribution of charges under these restructuring plans by income statement classification:       November 27, 2021     November 28, 2020     November 30, 2019   Cost of sales   $ ( 188 )   $ 1,013     $ 2,082   Selling, general and administrative     975       3,567       12,453       $ 787     $ 4,580     $ 14,535     The restructuring charges are all recorded in Corporate Unallocated for segment reporting purposes.   38 Table of Contents   A summary of the restructuring liability is presented below:       Employee-                       Related     Other     Total   Balance at end November 30, 2019   $ 9,830     $ 924     $ 10,754   Expense incurred     2,898       1,681       4,579   Cash payments     ( 7,051 )     ( 2,357 )     ( 9,408 ) Foreign currency translation     157       -       157   Balance at end November 28, 2020   $ 5,834     $ 248     $ 6,082   Expense incurred     ( 807 )     1,594       787   Non-cash charges     -       ( 135 )     ( 135 ) Cash payments     ( 3,917 )     ( 1,707 )     ( 5,624 ) Foreign currency translation     ( 15 )     -       ( 15 ) Balance at end November 27, 2021   $ 1,095     $ -     $ 1,095     Non-cash charges include accelerated depreciation resulting from the cessation of use of certain long-lived assets. Restructuring liabilities have been classified as a component of other accrued expenses on the Consolidated Balance Sheets.     Note 4: Supplemental Financial Statement Information   Statement of Income Information   Additional details of income statement amounts for  2021, 2020 and 2019 are as follows:       2021     2020     2019   Foreign currency transaction losses, net   $ ( 5,962 )   $ ( 3,078 )   $ ( 1,156 ) (Loss) gain on disposal of assets     ( 648 )     ( 86 )     24,304   Net periodic pension benefit     32,070       17,902       13,661   Other, net     7,395       660       1,134   Total other income, net   $ 32,855     $ 15,398     $ 37,943                             Research and development expenses (included in SG&A expenses)   $ 39,344     $ 36,969     $ 36,624     39 Table of Contents   Balance Sheet Information   Additional details of balance sheet amounts as of  November 27, 2021 and November 28, 2020 are as follows:       2021     2020   Inventories                 Raw materials   $ 226,723     $ 151,026   Finished goods     221,681       172,187   Total inventories   $ 448,404     $ 323,213                     Other current assets                 Other receivables   $ 28,874     $ 18,666   Prepaid income taxes     13,359       22,137   Prepaid taxes other than income taxes     26,929       20,270   Prepaid expenses     25,889       19,212   Assets held for sale     1,284       828   Total other current assets   $ 96,335     $ 81,113                     Property, plant and equipment                 Land   $ 84,492     $ 87,403   Buildings and improvements     395,849       393,175   Machinery and equipment     915,914       876,858   Construction in progress     104,734       70,747   Total, at cost     1,500,989       1,428,183   Accumulated depreciation     ( 805,622 )     ( 757,439 ) Net property, plant and equipment   $ 695,367     $ 670,744                     Other assets                 Investments and company owned life insurance   $ 9,584     $ 9,006   Equity method investments     49,333       53,863   Equity investments     1,667       1,669   Long-term deferred income taxes     37,116       37,376   Prepaid pension costs     90,946       43,206   Postretirement other than pension asset     107,323       73,137   Operating lease right-of-use assets     32,744       28,445   Other long-term receivables     23,661       16,760   Other long-term assets     19,699       14,751   Total other assets   $ 372,073     $ 278,213                     Other accrued expenses                 Taxes other than income taxes   $ 14,280     $ 16,893   Miscellaneous services     5,626       5,691   Customer rebates     20,743       15,008   Interest     2,964       4,901   Insurance     329       184   Product liability     432       501   Contingent consideration liability     8,100       5,800   Current operating lease liabilities     8,921       8,706   Accrued expenses     24,666       26,292   Total other accrued expenses   $ 86,061     $ 83,976                     Other liabilities                 Asset retirement obligations   $ 2,917     $ 2,948   Long-term deferred income taxes     179,401       165,877   Long-term income tax liability     14,364       18,089   Long-term deferred compensation     9,665       8,510   Postretirement other than pension     2,657       2,930   Noncurrent operating lease liabilities     24,061       19,498   Long-term accrued payroll tax     4,215       7,216   Environmental liabilities     3,521       3,639   Other long-term liabilities     36,389       50,212   Total other liabilities   $ 277,190     $ 278,919     40 Table of Contents   Additional details on the trade receivables allowance for doubtful accounts, credits related to pricing or quantities shipped and early payment discounts for  2021, 2020 and 2019 are as follows:       2021     2020     2019   Balance at beginning of year   $ 12,905     $ 10,682     $ 14,017   Charged to expenses and other adjustments     ( 546 )     8,313       2,678   Write-offs     ( 2,278 )     ( 6,158 )     ( 5,947 ) Foreign currency translation effect     ( 146 )     68       ( 66 ) Balance at end of year   $ 9,935     $ 12,905     $ 10,682     Statement of Comprehensive Income Information   The following tables provides details of total comprehensive income (loss):       November 27, 2021                               Non-controlling       H.B. Fuller Stockholders     Interest       Pretax     Tax     Net     Net   Net income attributable to H.B. Fuller and non-controlling interests     -       -     $ 161,393     $ 82   Other comprehensive income (loss)                                 Foreign currency translation adjustment 1   $ ( 26,262 )     -       ( 26,262 )     ( 32 ) Defined benefit pension plans adjustment 2     64,912       ( 16,731 )     48,181       -   Interest rate swap 3     20,109       ( 4,930 )     15,179       -   Other cash flow hedges 3     ( 4,554 )     68       ( 4,486 )     -   Other comprehensive income (loss)   $ 54,205     $ ( 21,593 )     32,612       ( 32 ) Comprehensive income                   $ 194,005     $ 50         November 28, 2020                               Non-controlling       H.B. Fuller Stockholders     Interest       Pretax     Tax     Net     Net   Net income attributable to H.B. Fuller and non-controlling interests     -       -     $ 123,719     $ 69   Other comprehensive income (loss)                                 Foreign currency translation adjustment 1   $ 41,712       -       41,712       30   Defined benefit pension plans adjustment 2     5,823       ( 1,235 )     4,588       -   Interest rate swap 3     ( 15,618 )     3,853       ( 11,765 )     -   Other cash flow hedges 3     6,307       ( 101 )     6,206       -   Other comprehensive income   $ 38,224     $ 2,517       40,741       30   Comprehensive income                   $ 164,460     $ 99         November 30, 2019                               Non-controlling       H.B. Fuller Stockholders     Interest       Pretax     Tax     Net     Net   Net income attributable to H.B. Fuller and non-controlling interests     -       -     $ 130,817     $ 27   Other comprehensive income (loss)                                 Foreign currency translation adjustment 1   $ ( 20,409 )     -       ( 20,409 )     14   Defined benefit pension plans adjustment 2     ( 28,635 )     6,807       ( 21,828 )     -   Interest rate swap 3     ( 46,254 )     11,223       ( 35,031 )     -   Other cash flow hedges 3     14,429       ( 609 )     13,820       -   Other comprehensive (loss) income   $ ( 80,869 )   $ 17,421       ( 63,448 )     14   Comprehensive income                   $ 67,369     $ 41     1 Income taxes are not provided for foreign currency translation relating to indefinite investments in international subsidiaries.   2 Loss reclassified from accumulated other comprehensive income (loss) into earnings as part of net periodic cost related to pension and other postretirement benefit plans is reported in cost of sales and SG&A expenses.   3 Loss reclassified from accumulated other comprehensive income (loss) into earnings is reported in other income, net.   41 Table of Contents   Statement of Total Equity Information   Components of accumulated other comprehensive income (loss) are as follows:       November 27, 2021                       Non-               H.B. Fuller     controlling       Total     Stockholders     Interests   Foreign currency translation adjustment   $ ( 132,370 )   $ ( 132,267 )   $ ( 103 ) Interest rate swap, net of taxes of $ 3,224     ( 9,924 )     ( 9,924 )     -   Cash flow hedges, net of taxes of ($ 53 )     3,483       3,483       -   Defined benefit pension plans adjustment, net of taxes of $ 63,925     ( 113,198 )     ( 113,198 )     -   Reclassification of AOCI tax effects     ( 18,341 )     ( 18,341 )     -   Total accumulated other comprehensive loss   $ ( 270,350 )   $ ( 270,247 )   $ ( 103 )       November 28, 2020                       Non-               H.B. Fuller     controlling       Total     Stockholders     Interests   Foreign currency translation adjustment   $ ( 106,140 )   $ ( 106,005 )   $ ( 135 ) Interest rate swap, net of taxes of $ 8,153     ( 25,103 )     ( 25,103 )     -   Cash flow hedges, net of taxes of ($ 121 )     7,969       7,969       -   Defined benefit pension plans adjustment, net of taxes of $ 80,656     ( 161,379 )     ( 161,379 )     -   Reclassification of AOCI tax effects     ( 18,341 )     ( 18,341 )     -   Total accumulated other comprehensive loss   $ ( 302,994 )   $ ( 302,859 )   $ ( 135 )       November 30, 2019                       Non-               H.B. Fuller     controlling       Total     Stockholders     Interests   Foreign currency translation adjustment   $ ( 147,821 )   $ ( 147,716 )   $ ( 105 ) Interest rate swap, net of taxes of ($ 4,300 )     ( 13,338 )     ( 13,338 )     -   Cash flow hedges, net of taxes of $ 21     1,763       1,763       -   Defined benefit pension plans adjustment, net of taxes of $ 81,891     ( 165,968 )     ( 165,968 )     -   Reclassification of AOCI tax effects     ( 18,341 )     ( 18,341 )     -   Total accumulated other comprehensive loss   $ ( 343,705 )   $ ( 343,600 )   $ ( 105 )     Note 5: Goodwill and Other Intangible Assets   Goodwill balances by reportable segment as of  November 27, 2021 and November 28, 2020 consisted of the following:       2021     2020   Hygiene, Health and Consumable Adhesives   $ 325,470     $ 332,909   Engineering Adhesives     662,021       667,863   Construction Adhesives     311,354       311,231   Total   $ 1,298,845     $ 1,312,003     Additional details related to goodwill for  2021 and  2020 are as follows:       2021     2020   Balance at beginning of year   $ 1,312,003     $ 1,281,808   Ramapo acquisition     -       ( 746 ) D.H.M acquisition     -       1,063   Foreign currency translation effect     ( 13,158 )     29,878   Balance at end of year   $ 1,298,845     $ 1,312,003     We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization. The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit. The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill. In performing the impairment test, we determined the fair value of our reporting units through the income approach by using DCF analyses. Determining fair value requires the company to make judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the DCF analysis for each reporting unit are based on the reporting unit's budget, long-term business plan, and recent operating performance. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. Based on the analysis performed during the fourth quarter of 2021 , there were no indications of impairment for any of our reporting units.   42 Table of Contents   Balances of amortizable identifiable intangible assets, excluding goodwill and other non-amortizable intangible assets, are as follows:       Purchased                                       Technology     Customer                           Amortizable Intangible Assets   and Patents     Relationships     Tradename     All Other     Total   As of November 27, 2021                                         Original cost   $ 115,980     $ 932,644     $ 63,543     $ 11,343     $ 1,123,510   Accumulated amortization     ( 62,364 )     ( 335,143 )     ( 33,786 )     ( 5,635 )     ( 436,928 ) Net identifiable intangibles   $ 53,616     $ 597,501     $ 29,757     $ 5,708     $ 686,582   Weighted-average useful lives (in years)     13       17       14       12       17   As of November 28, 2020                                         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   Weighted-average useful lives (in years)     13       17       14       12       17     Amortization expense with respect to amortizable intangible assets was $ 71,068 , $ 70,591 and $ 74,091  in 2021, 2020 and 2019 , respectively.   Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets for the next five fiscal years are as follows:   Fiscal Year   2022     2023     2024     2025     2026     Thereafter   Amortization Expense   $ 68,879     $ 66,056     $ 61,146     $ 58,578     $ 51,773     $ 380,150     The above amortization expense forecast is an estimate. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, potential impairment, accelerated amortization or other events.   Non-amortizable intangible assets as of  November 27, 2021 and November 28, 2020 were $ 493  and $ 519 , respectively, and relate to trademarks and trade names. The change in non-amortizable assets in  2021 compared to  2020 was due to changes in foreign currency exchange rates.     Note 6: Leases   We adopted ASU No. 2016 - 02 and related standards (collectively, “ASC 842” ), which replaced previous lease accounting guidance, during the first quarter ended February 29, 2020 using the modified retrospective method of adoption. As a result of electing this transition method, prior periods have not been restated. The adoption of ASC 842 resulted in the recording of right-of-use assets and associated lease liabilities of approximately $ 28,254 each as of the first day of the quarter ended February 29, 2020. ASC 842 did not have a material impact on our Consolidated Statement of Income. We elected the package of practical expedients permitted under the transition guidance within ASC 842, which includes not reassessing lease classification of existing leases. We did not elect the hindsight practical expedient.   As a lessee, the company leases office, manufacturing and warehouse space, and equipment. Certain lease agreements include rental payments adjusted annually based on changes in an inflation index. Our leases do not contain material residual value guarantees or material restrictive covenants. Lease expense is recognized on a straight-line basis over the lease term. We determine if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used.   Operating lease and finance lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the company’s incremental borrowing rate. We determine the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region.   Certain leases include one or more options to renew, with terms that can extend the lease term up to five years. We include options to renew the lease as part of the right-of-use lease asset and liability when it is reasonably certain we will exercise the option. In addition, certain leases contain termination options with an associated penalty. In general, the company is not reasonably certain to exercise such options.   For the measurement and classification of lease agreements, we group lease and non-lease components into a single lease component for all underlying asset classes. Variable lease payments primarily include payments for non-lease components, such as maintenance costs, payments for leased assets used beyond their non-cancelable lease term as adjusted for contractual options to terminate or renew, and payments for non-components such as sales tax. Certain leases contain immaterial variable lease payments based on usage.   43 Table of Contents   The components of lease expense are as follows:       November 27, 2021     November 28, 2020   Operating lease cost   $ 11,958     $ 12,581   Finance lease cost:                 Amortization of assets 1     673         Interest on lease liabilities 1     110         Variable lease cost     5,990       4,024   Total net lease cost   $ 18,731     $ 16,605     1 In 2020, finance leases were not material for disclosure.   Supplemental balance sheet information related to leases is as follows:     Location on                   Balance Sheet   November 27, 2021     November 28, 2020   Operating leases:                   Operating lease right-of-use assets Other assets   $ 32,744     $ 28,445   Current operating lease liabilities Other accrued expenses     8,921       8,706   Noncurrent operating lease liabilities Other liabilities     24,061       19,498   Total operating lease liabilities   $ 32,982     $ 28,204                     Finance leases:                   Equipment right-of-use assets 1 Property, plant and equipment   $ 9,455                           Current obligations of finance leases 1 Other accrued expenses   $ 1,109         Finance leases, net of current obligations 1 Other liabilities     7,548         Total finance lease liabilities   $ 8,657           1 In 2020, finance leases were not material for disclosure.   As of November 27, 2021 , the weighted average remaining lease term is  7.2 years and the weighted average discount rate is  3.3 % for the company's operating lease agreements. The weighted average remaining lease term is 10.1 years and the weighted average discount rate is 2.9 % for the company's finance lease agreements.   Supplemental information related to leases is as follows:       November 27, 2021     November 28, 2020   Cash paid amounts included in the measurement of lease liabilities:                 Operating cash flows from operating leases   $ 15,251     $ 13,216   Operating cash flows from finance leases 1     110         Financing cash flows from finance leases 1     546                           Right-of-use assets obtained in exchange for lease liabilities:                 Operating leases   $ 20,030     $ 13,166   Finance leases 1     7,630           1 In 2020, finance leases were not material for disclosure.   Maturities of lease liabilities are as follows:       November 27, 2021   Fiscal Year   Finance Leases     Operating Leases   2022   $ 1,352     $ 9,292   2023     1,254       7,500   2024     1,174       5,313   2025     1,171       4,009   2026     1,165       2,360   2027 and beyond     3,841       7,888   Total     9,957       36,362   Less: amounts representing interest     ( 1,300 )     ( 3,380 ) Present value of future minimum payments     8,657       32,982   Less: current obligations     ( 1,109 )     ( 8,921 ) Noncurrent lease liabilities   $ 7,548     $ 24,061     44 Table of Contents   Rent expense for all operating leases, which includes minimum lease payments and other charges such as common area maintenance fees, was $ 19,618 in 2019 .     Note 7: Notes Payable, Long-Term Debt and Lines of Credit   Notes Payable   Notes payable were $ 24,983  and $ 16,925  at November 27, 2021 and November 28, 2020 , respectively. This amount primarily represents various foreign subsidiaries’ other short-term borrowings that were not part of committed lines. The weighted-average interest rates on short-term borrowings were 8.1  percent in 2021 and 2020  and 8.9  percent in 2019. Fair values of these short-term obligations approximate their carrying values due to their short maturity. There were no funds drawn from the short-term committed lines at November 27, 2021 .   Long-Term Debt       Weighted-Average     Fiscal Year     Balance at     Balance at       Interest Rate at     Maturity     November 27,     November 28,   Long-Term Debt   November 27, 2021     Date     2021     2020   Revolving credit facility     1.59 %     2024     $ -     $ -   Term Loan B 1     3.64 %     2024       1,001,150       1,157,650   Public Notes 2     4.00 %     2027       300,000       300,000   Public Notes 3     4.25 %     2028       300,000       300,000   Other, including debt issuance cost and discount                     ( 9,671 )     ( 665 ) Total debt                   $ 1,591,479     $ 1,756,985                                     Less: current maturities                     -       -   Total long-term debt, excluding current maturities                   $ 1,591,479     $ 1,756,985     1 Term Loan B, due on October 20, 2024, $ 2,150,000 variable rate at the London Interbank Offered Rate (LIBOR) plus 2.00  percent ( 2.09  percent at November 27, 2021 ); $ 800,000 swapped to various fixed rates as detailed below.   2 Public Notes, due February 15, 2027, $ 300,000 4.00 percent fixed.   3 Public Notes, due October 15, 2028, $ 300,000 4.25 percent fixed; swapped to a floating rate as detailed below.   Term Loans   On October 20, 2017, we entered into a secured term loan credit agreement (“Term Loan B Credit Agreement”) with a consortium of financial institutions under which we established a $ 2,150,000 term loan (“Term Loan B”) that we used to repay existing indebtedness, finance working capital needs, finance acquisitions and for general corporate purposes. The Term Loan B Credit Agreement is secured by a security interest in substantially all of the personal property assets of the company and each Guarantor, including 100 % of the equity interests in certain domestic subsidiaries and 65 % of the equity interests of first -tier foreign subsidiaries together with certain domestic material real property. At November 27, 2021 , a balance of $ 1,001,150 was drawn on the Term Loan B. The interest rate on the Term Loan B is payable at the LIBOR rate plus 2.00  percent ( 2.09  percent at November 27, 2021 ). The interest rate is based on a leverage grid. The Term Loan B Credit Agreement expires on October 20, 2024.    On February 27, 2018, we entered into an interest rate swap agreement to convert $ 200,000 of our Term Loan B to a fixed 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 during the second quarter of 2021.  On October 20, 2017, we entered into interest rate swap agreements to convert $ 1,050,000 , which was amortized down to $ 800,000 on October 20, 2021,  of our Term Loan B to a fixed interest rate of 4.0275 %. See Note 12 for further discussion of these interest rate swaps.   We are subject to mandatory prepayments in the first quarter of each fiscal year equal to 50 % of Excess Cash Flow, as defined in the Term Loan B Credit Agreement, of the prior fiscal year less any voluntary prepayments made during that fiscal year. The Excess Cash Flow Percentage shall be reduced to 25 % when our Secured Leverage Ratio is below 4.25:1.00 and to 0% when our Secured Leverage Ratio is below 3.75:1.00. The prepayment for the  2021 measurement period was satisfied through amounts prepaid during 2021 . We have estimated the 2022 prepayment to be zero .   Public Notes   On February 14, 2017, we issued $ 300,000 aggregate principal of 10 -year unsecured public notes ( “10 -year Public Notes”) due February 15, 2027 with a fixed coupon of 4.00 percent. Proceeds from this debt issuance were used to repay $ 138,000 outstanding under the revolving credit facility at that time and prepay $ 158,750 of our Term Loan A. On February 14, 2017, we entered into an interest rate swap agreement to convert $ 150,000 of the 10 -year Public Notes to a variable interest rate of 1 -month LIBOR plus 1.86 percent and on May 1, 2020, we terminated the swap. See Note 12 for further discussion of this interest rate swap.   45 Table of Contents   On October 20, 2020, we issued $ 300,000 aggregate principal of 8 -year unsecured public notes ( “8 -year Public Notes”) due October 15, 2028 with a fixed coupon of 4.25 percent. Proceeds from this debt issuance were used to prepay $ 300,000 of our Term Loan B. On February 12, 2021, we entered into interest rate swap agreements to convert our 8 -year Public Notes to a variable interest rate of 1 -month LIBOR plus 3.28 percent.   The Public Notes are senior unsecured obligations of the company and will rank equally with the company’s other unsecured and unsubordinated debt from time to time outstanding.   Fair Value of Long-Term Debt   Long-term debt had an estimated fair value of $ 1,618,291  and $ 1,811,562  as of November 27, 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. The estimated fair value of these long-term obligations is not necessarily indicative of the amount that would be realized in a current market exchange.   Long-term Debt Maturities   Maturities of long-term debt for the next five fiscal years are as follows:   Fiscal Year   2022     2023     2024     2025     2026     Thereafter   Long-term debt obligations   $ -     $ -     $ 1,001,150     $ -     $ -     $ 600,000     Revolving Credit Facility   On October 20, 2020, we amended and restated our revolving credit facility. The revolving credit facility is secured along with the Term Loan B Credit Agreement, by a first -priority security interest in substantially all of the personal property assets of the company and each Guarantor, including 100 % of the equity interests in certain domestic subsidiaries and 65 % of the equity interests of first -tier foreign subsidiaries. Interest on the revolving credit facility is payable at the LIBOR plus 1.50 percent ( 1.59  percent at November 27, 2021 ). A facility fee of 0.25 percent of the unused commitment under the revolving credit facility is payable quarterly. The interest rates and the facility fee are based on a leverage grid. The revolving credit facility matures on July 22, 2024.   As of November 27, 2021 , amounts related to our revolving credit facility was as follows:       Committed     Drawn     Unused   Revolving credit facility   $ 400,000     $ -     $ 391,286     The secured, multi-currency revolving credit facility can be drawn upon for general corporate purposes up to a maximum of $ 400,000 , less issued letters of credit. At November 27, 2021 , letters of credit reduced the available amount under the revolving credit facility by $ 8,714 .   Covenants   The secured Term Loan B Credit Agreement and secured revolving credit facility are subject to certain covenants and restrictions. Restrictive covenants include, but are not limited to, limitations on secured and unsecured borrowings, interest coverage, intercompany transfers and investments, third party investments, dispositions of assets, leases, liens, dividends and distributions, and contains a maximum secured debt to trailing twelve months EBITDA requirement.  Certain covenants become less restrictive after meeting leverage or other financial ratios. In addition, we cannot be a member of any consolidated group as defined for income tax purposes other than with our subsidiaries. At November 27, 2021 and November 28, 2020 , all financial covenants were met.   The Indenture under which the Public Notes have been issued contains covenants imposing certain limitations on the ability of the company to incur liens or enter into sales and leaseback transactions. It also provides for customary events of default (subject in certain cases to customary grace and cure periods), which include among other things nonpayment, breach of covenants in the Indenture and certain events of bankruptcy and insolvency. If an event of default occurs and is continuing with respect to the Public Notes, the Trustee or holders of at least 25% in principal amount outstanding of the Public Notes may declare the principal and the accrued and unpaid interest, if any, on all of the outstanding Public Notes to be due and payable. These covenants and events of default are subject to a number of important qualifications, limitations and exceptions that are described in the Indenture.     Note 8: Stockholders' Equity   Preferred Stock   The Board of Directors is authorized to issue up to 10,045,900  shares of preferred stock that may be issued in one or more series and with such stated value and terms as the Board of Directors may determine.   Common Stock   There were 160,000,000  shares of common stock with a par value of $ 1.00 authorized and 52,777,753  and 51,906,663  shares issued and outstanding at November 27, 2021 and November 28, 2020 , respectively.   On April 6, 2017, the Board of Directors authorized a share repurchase program of up to $ 200,000  of our outstanding common shares for a period of up to five years. Under the program, we are authorized to repurchase shares for cash on the open market, from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. The timing of such repurchases is dependent on price, market conditions and applicable regulatory requirements. Upon repurchase of the shares, we reduce our common stock for the par value of the shares with the excess being applied against additional paid-in capital. This authorization replaces the September 30, 2010 authorization to repurchase shares. We did not repurchase any shares during  2021, 2020 and 2019 under our share repurchase program. Up to $ 187,170  of our outstanding common shares may still be repurchased under the current share repurchase program.   46 Table of Contents   Common Shares Outstanding   2021     2020     2019   Beginning balance     51,906,663       51,241,190       50,732,796   Stock options exercised     740,731       397,456       378,734   Deferred compensation paid     19,895       118,742       5,354   Restricted units vested     157,945       221,275       197,349   Shares withheld for taxes     ( 47,481 )     ( 72,000 )     ( 73,043 ) Ending balance     52,777,753       51,906,663       51,241,190       Note 9: Accounting for Share-Based Compensation   Overview   We have various share-based compensation programs, which provide for equity awards including non-qualified stock options, incentive stock options, restricted stock units, performance awards and deferred compensation. These equity awards fall under several plans and are described below.   Share-based Compensation Plans   We currently grant stock options and restricted stock units under equity compensation and deferred compensation plans.   Stock options are granted to officers and key employees at prices not less than the fair market value at the date of grant. Non-qualified stock options are generally exercisable beginning one year from the date of grant in cumulative yearly amounts of 33.3 percent. Incentive stock options are based on certain performance-based criteria and are generally exercisable at a stated date when the performance criteria is measured. Stock options generally have a contractual term of 10 years. Options exercised represent newly issued shares.   Restricted stock awards are nonvested stock-based awards that include grants of restricted stock units. Restricted stock awards are independent of option grants and are subject to forfeiture if employment terminates prior to the release of the restrictions. Such awards generally vest beginning one year from the date of grant or 33.3 percent per year for three years, depending on the grant. During the vesting period, ownership of the shares cannot be transferred.   Restricted stock units have dividend equivalent rights equal to the cash dividend paid on restricted stock shares. However, restricted stock units do not have voting rights of common stock and are not considered issued and outstanding upon grant. Restricted stock units become newly issued shares when vested. The dividend equivalent rights for restricted stock units are forfeitable.   We expense the cost, which is the grant date fair market value, of the restricted stock units ratably over the period during which the restrictions lapse. The grant date fair value is our closing stock price on the date of grant.   We are required to recognize compensation expense when an employee is eligible to retire. We consider employees eligible to retire at age 55 and after 10 years of service. Awards granted to retirement-eligible employees are forfeited if the retirement-eligible employees retire prior to 180 days after the grant. Accordingly, the related compensation expense is recognized during the 180 day period for awards granted to retirement-eligible employees or over the period from the grant date to the date retirement eligibility is achieved, if less than the stated vesting period.   2020 Master Incentive Plan   This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock and restricted stock units; (d) performance awards; (e) dividend equivalents; (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan. There were 2,253,157  common shares available for grant as of November 27, 2021 .   2018 Master Incentive Plan   This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock and restricted stock units; (d) performance awards; (e) dividend equivalents; (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan.   Year 2016 Master Incentive Plan   This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock awards; (d) performance awards; (e) dividend equivalents; and (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan.   2009 Directors’ Stock Incentive Plan   This plan permits granting of (a) shares for amounts non-employee directors defer under the Directors’ Deferred Compensation Plan and (b) discretionary grants of restricted stock, stock options, stock appreciation rights, performance awards and other stock awards.         Directors' Deferred Compensation Plan   This plan allows non-employee directors to defer all or a portion of their retainer and meeting fees in a number of investment choices, including units representing shares of our common stock. We provide a 10 percent match on deferred compensation invested in these units. These units are required to be paid out in our common stock.   47 Table of Contents   Key Employee Deferred Compensation Plan   This plan allows key employees to defer a portion of their eligible compensation in a number of investment choices, including units representing shares of company common stock. We provide a 10 percent match on deferred compensation invested in these units.   Grant-Date Fair Value   We use the Black-Scholes option-pricing model to calculate the grant-date fair value of stock option awards. The fair value of options granted during  2021, 2020 and 2019 were calculated using the following assumptions:       2021     2020     2019   Expected life (in years)     5.00       5.00       4.75   Weighted-average expected volatility     32.50 %     24.32 %     24.26 % Expected volatility range     32.48 % - 32.94 %       24.18 % - 30.99 %       23.88 % - 24.76 %   Risk-free interest rate     0.39 % - 1.20 %       0.21 % - 1.51 %       1.34 % - 2.55 %   Weighted-average expected dividend     1.26 %     1.38 %     1.40 % Expected dividend yield range     0.92 % - 1.27 %       1.35 % - 2.53 %       1.25 % - 1.45 %   Weighted-average fair value of grants   $ 13.29     $ 9.63     $ 9.76     Expected life – We use historical employee exercise and option expiration data to estimate the expected life assumption for the Black-Scholes grant-date valuation. We believe that this historical data is currently the best estimate of the expected term of a new option. We use a weighted-average expected life for all awards.   Expected volatility – Volatility is calculated using our stock’s historical volatility for the same period of time as the expected life. We have no reason to believe that its future volatility will differ from the past.   Risk-free interest rate – The rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the same period of time as the expected life.   Expected dividend yield – The calculation is based on the total expected annual dividend payout divided by the average stock price.   Expense   We use the straight-line attribution method to recognize share-based compensation expense for option awards and restricted stock units with graded and cliff vesting. Incentive stock options and performance awards are based on certain performance-based metrics and the expense is adjusted quarterly, based on our projections of the achievement of those metrics. The amount of share-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The expense is recognized over the requisite service period, which for us is the period between the grant date and the earlier of the award’s stated vesting term or the date the employee is eligible for early vesting based on the terms of the plans.   Total share-based compensation expense was $ 22,366 , $ 16,914 and $ 24,003 for 2021, 2020 and 2019 , respectively. All share-based compensation was recorded as SG&A expense.   As of November 27, 2021 , $ 7,510  of unrecognized compensation costs related to unvested stock option awards is expected to be recognized over a weighted-average period of 0.9  years. Unrecognized compensation costs related to unvested restricted stock units was $ 10,205  which is expected to be recognized over a weighted-average period of 0.9  years.   Stock Option Activity   The stock option activity for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 is summarized below:               Weighted-               Average       Options     Exercise Price   Outstanding at December 1, 2018     4,466,106     $ 44.72   Granted     1,020,246       45.53   Exercised     ( 378,734 )     28.74   Forfeited or cancelled     ( 47,308 )     48.90   Outstanding at November 30, 2019     5,060,310     $ 46.04   Granted     1,052,968       47.70   Exercised     ( 397,456 )     31.00   Forfeited or cancelled     ( 169,907 )     49.11   Outstanding at November 28, 2020     5,545,915     $ 47.34   Granted     1,237,094       53.33   Exercised     ( 740,731 )     43.64   Forfeited or cancelled     ( 1,069,886 )     56.33   Outstanding at November 27, 2021     4,972,392     $ 47.45     The fair value of options granted during  2021, 2020 and 2019 was $ 17,250 , $ 10,132 and $ 9,956 , respectively. Total intrinsic value of options exercised during  2021, 2020 and 2019 was $ 15,261 , $ 6,563 and $ 7,590 , respectively. For options outstanding at November 27, 2021 , the weighted-average remaining contractual life was 6.5 years and the aggregate intrinsic value was $ 131,515 . There were 3,072,786 options exercisable at November 27, 2021 , with a weighted-average remaining contractual life of 5.2 years and an aggregate intrinsic value of $ 85,685 . Intrinsic value is the difference between our closing stock price on the respective trading day and the exercise price, multiplied by the number of options exercised. Proceeds received from option exercises during the year ended  November 27, 2021, November 28, 2020, and November 30, 2019 were $ 32,325 , $ 12,321 and $ 10,885 , respectively. The company’s actual tax benefits realized for the tax deductions related to the exercise of stock options for  2021, 2020 and 2019 was $ 3,874 , $ 1,278 and $ 1,298 , respectively.   48 Table of Contents   Restricted Stock Activity   The nonvested restricted stock activity for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 is summarized below:                       Weighted-               Weighted-     Average               Average     Remaining               Grant     Contractual               Date Fair     Life       Units     Value     (in Years)   Nonvested at December 1, 2018     414,353     $ 47.45       1.0   Granted     302,132       44.29       2.2   Vested     ( 197,349 )     45.45       -   Forfeited     ( 31,139 )     43.37       0.4   Nonvested at November 30, 2019     487,997     $ 46.56       0.8   Granted     216,293       46.39       3.4   Vested     ( 221,275 )     46.83       -   Forfeited     ( 50,666 )     47.55       0.1   Nonvested at November 28, 2020     432,349     $ 46.22       0.8   Granted     356,779       54.49       3.2   Vested     ( 157,945 )     48.69       -   Forfeited     ( 78,818 )     47.79       0.8   Nonvested at November 27, 2021     552,365     $ 50.63       1.9     Total fair value of restricted stock vested during 2021 , 2020 , and  2019 was $ 7,691 , $ 10,362 and $ 8,970 , respectively. The total fair value of nonvested restricted stock at  November 27, 2021 was $ 27,966 .   We repurchased 50,799 , 70,380 and 73,043 shares during 2021, 2020 and 2019 , respectively, in connection with the statutory minimum tax withholding related to vesting of restricted stock. The company’s actual tax benefits realized for the tax deductions related to the restricted stock vested for  2021, 2020 and 2019 was $ 1,439 , $ 2,136  and $ 1,574 , respectively.   Deferred Compensation Activity   Deferred compensation units are fully vested at the date of contribution. The deferred compensation units outstanding for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 is summarized below:       Non-employee                       Directors     Employees     Total   Units outstanding December 1, 2018     479,787       29,735       509,522   Participant contributions     22,153       11,166       33,319   Company match contributions 1     23,720       1,117       24,837   Payouts     -       ( 5,354 )     ( 5,354 ) Units outstanding November 30, 2019     525,660       36,664       562,324   Participant contributions     18,008       13,814       31,822   Company match contributions 1     23,033       1,381       24,414   Payouts     ( 111,436 )     ( 7,306 )     ( 118,742 ) Units outstanding November 28, 2020     455,265       44,553       499,818   Participant contributions     13,036       10,487       23,523   Company match contributions 1     20,118       1,049       21,167   Payouts     ( 19,895 )     ( 7,728 )     ( 27,623 ) Units outstanding November 27, 2021     468,524       48,361       516,885     1 The non-employee directors’ company match includes 18,814 , 21,323 and 21,504 deferred compensation units paid as discretionary awards to all non-employee directors in 2021, 2020 and 2019 , respectively.   The fair value of non-employee directors’ company matches for  2021, 2020 and 2019 was $ 163 , $ 128 and $ 167 , respectively. The fair value of the non-employee directors’ discretionary award was $ 1,215 , $ 920 , $ 1,035 for  2021 ,  2020 and 2019 , respectively. The fair value of employee company matches was $ 61 , $ 56 and $ 41 for 2021, 2020 and 2019 , respectively.     Note 10: Pension and Postretirement Benefits   Defined Contribution Plan   All U.S. employees have the option of contributing up to 75 percent of their pre-tax earnings to a 401 (k) plan, subject to IRS limitations. We match up to the first 4 percent of each employee's pre-tax earnings, based on the employee’s contributions. All U.S. employees are eligible for a separate annual non-discretionary retirement contribution to the 401 (k) plan of 1 percent of pay, that is invested based on the election of the individual participant. The 1 percent contribution is in addition to our 4 percent matching contribution described above and is in lieu of participation in our defined benefit pension plan. The total contribution to the 401 (k) plan for  2021 was $ 12,488  which included the cost of the 4 percent company match of $ 8,698 and the additional 1 percent contribution of $ 3,790 . T he total contributions to the 401 (k) plan were $ 10,764  and $ 10,784  in  2020 and 2019 , respectively.   49 Table of Contents   All U.S. employees are eligible to receive an annual discretionary non-elective contribution to the 401 (k) plan of up to 3 percent based on achieving the company’s earnings per share target. This discretionary contribution is in addition to the contributions described above. A discretionary non-elective contribution of $ 5,205 was made for  2021 and no such contribution was made for  2020 .   The defined contribution plan liability recorded in the Consolidated Balance Sheets was $ 10,494   and $ 9,819  in  2021 and 2020 , respectively, for the U.S. Plan and several statutorily required non-U.S. Plans.   Defined Benefit Plans   Noncontributory defined benefit pension plans cover all U.S. employees employed prior to January 1, 2007. Benefits for these plans are based primarily on each employee’s years of service and average compensation. During 2011, we made significant changes to our U.S. pension plan. The changes included: benefits under the plan were locked-in using service and salary as of May 31, 2011, participants no longer earn benefits for future service and salary as they had in the past, affected participants receive a three percent increase to the locked-in benefit for every year they continue to work for us and we are making a retirement contribution of three percent of eligible compensation to the 401 (k) Plan for those participants.  The funding policy is consistent with the funding requirements of federal law and regulations. Plan assets consist principally of listed equity securities and bonds. During 2020, we amended the U.S. pension plan to add a program for eligible employees to take a lump sum distribution. A total of $ 6,673 and $ 10,939  was paid during 2021 and 2020, respectively, as distributions under this program. Other U.S. postretirement benefits are funded through a Voluntary Employees' Beneficiaries Association Trust.   Health care and life insurance benefits are provided for eligible retired employees and their eligible dependents. These benefits are provided through various insurance companies and health care providers. Costs are accrued during the years the employee renders the necessary service.   Certain non-U.S. subsidiaries provide pension benefits for their employees consistent with local practices and regulations. These plans are primarily defined benefit plans covering substantially all employees upon completion of a specified period of service. Benefits for these plans are generally based on years of service and annual compensation.   Following is a reconciliation of the beginning and ending balances of the benefit obligation and fair value of plan assets as of November 27, 2021 and November 28, 2020 :       Pension Benefits     Other Postretirement       U.S. Plans     Non-U.S. Plans     Benefits       2021     2020     2021     2020     2021     2020   Change in projected benefit obligation                                                 Benefit obligation at beginning of year   $ 388,530     $ 380,388     $ 250,561     $ 234,542     $ 39,075     $ 39,256   Service cost     -       -       3,280       2,950       21       73   Interest cost     9,299       11,738       2,941       3,158       822       1,135   Participant contributions     -       -       -       -       365       226   Actuarial (gain)/loss 1     ( 9,177 )     27,377       ( 3,630 )     4,350       ( 6,115 )     1,327   Other     -       -       -       -       -       -   Curtailments     -       -       -       14       -       -   Settlement payments     ( 6,673 )     ( 10,939 )     996       ( 273 )     -       -   Benefits paid     ( 20,767 )     ( 20,034 )     ( 8,578 )     ( 8,628 )     ( 2,906 )     ( 2,942 ) Foreign currency translation effect     -       -       ( 7,170 )     14,448       -       -   Benefit obligation at end of year     361,212       388,530       238,400       250,561       31,262       39,075                                                     Change in plan assets                                                 Fair value of plan assets at beginning of year     398,403       383,527       202,242       185,331       109,056       94,474   Actual return on plan assets     37,466       44,365       25,204       13,155       28,716       15,673   Employer contributions     1,382       1,677       1,989       2,177       470       1,625   Participant contributions     -       -       -       -       365       226   Other     -       -       996       -       -       -   Settlement payments     ( 6,673 )     ( 10,939 )     -       -       -       -   Benefits paid 2     ( 20,767 )     ( 20,227 )     ( 8,578 )     ( 8,628 )     ( 2,906 )     ( 2,942 ) Foreign currency translation effect     -       -       ( 5,230 )     10,207       -       -   Fair value of plan assets at end of year     409,811       398,403       216,623       202,242       135,701       109,056   Plan assets in excess of (less than) benefit obligation as of year end   $ 48,599     $ 9,873     $ ( 21,776 )   $ ( 48,688 )   $ 104,439     $ 69,981     1 Actuarial loss in  2021 and actuarial loss in  2020 for the U.S. Plans is primarily due to assumption changes. Actuarial loss in  2021 and actuarial loss in  2020 for the Non-U.S. Plans are due to both assumption changes and plan experience. 2 Amount excludes benefit payments made from sources other than plan assets.   Amounts in accumulated other comprehensive income (loss) that have not been recognized as components of net periodic benefit cost   Pension Benefits     Other Postretirement       U.S. Plans     Non-U.S. Plans     Benefits       2021     2020     2021     2020     2021     2020   Unrecognized actuarial loss   $ 129,198     $ 147,917     $ 64,782     $ 87,368     $ ( 30,278 )   $ ( 4,318 ) Unrecognized prior service (benefit) cost     ( 3 )     ( 6 )     1,390       1,453       -       -   Ending balance   $ 129,195     $ 147,911     $ 66,172     $ 88,821     $ ( 30,278 )   $ ( 4,318 )   50 Table of Contents       Pension Benefits     Other Postretirement       U.S. Plans     Non-U.S. Plans     Benefits       2021     2020     2021     2020     2021     2020   Statement of financial position as of fiscal year-end                                                 Non-current assets   $ 66,157     $ 30,672     $ 24,772     $ 12,534     $ 107,323     $ 73,137   Accrued benefit cost                                                 Current liabilities     ( 1,342 )     ( 1,467 )     ( 1,795 )     ( 1,701 )     ( 227 )     ( 226 ) Non-current liabilities     ( 16,216 )     ( 19,332 )     ( 44,753 )     ( 59,521 )     ( 2,657 )     ( 2,930 ) Ending balance   $ 48,599     $ 9,873     $ ( 21,776 )   $ ( 48,688 )   $ 104,439     $ 69,981     The accumulated benefit obligation of the U.S. pension and other postretirement plans was $ 384,124  at  November 27, 2021 and $ 418,019 at November 28, 2020 . The accumulated benefit obligation of the non-U.S. pension plans was $ 228,713 at  November 27, 2021 and $ 239,572 at November 28, 2020 .   The following amounts relate to pension plans with accumulated benefit obligations in excess of plan assets as of November 27, 2021 and November 28, 2020 :       Pension Benefits and Other Postretirement Benefits       U.S. Plans     Non-U.S. Plans       2021     2020     2021     2020   Accumulated benefit obligation   $ 17,558     $ 26,241     $ 48,912     $ 134,472   Fair value of plan assets     -       5,441       11,350       84,239     The following amounts relate to pension plans with projected benefit obligations in excess of plan assets as of November 27, 2021 and November 28, 2020 :       Pension Benefits and Other Postretirement Benefits       U.S. Plans     Non-U.S. Plans       2021     2020     2021     2020   Projected benefit obligation   $ 17,558     $ 26,241     $ 131,174     $ 145,461   Fair value of plan assets     -       5,441     $ 84,626       84,239     Information about the expected cash flows is as follows:         Pension Benefits     Other                 Non-U.S.     Postretirement         U.S. Plans     Plans     Benefits   Employer contributions                           2022     $ -     $ 34     $ -   Expected benefit payments                           2022       21,131       8,704       2,982   2023       21,280       7,933       2,851   2024       21,283       8,285       2,730   2025       21,391       8,457       2,607   2026-2031       125,388       54,038       12,948     The components of our net period defined benefit pension and postretirement benefit costs other than service cost are presented as non-operating expenses and service cost is presented in operating expenses.   Components of net periodic benefit cost and other supplemental information for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 are as follows:       Pension Benefits     Other       U.S. Plans     Non-U.S. Plans     Postretirement Benefits   Net periodic cost (benefit)   2021     2020     2019     2021     2020     2019     2021     2020     2019   Service cost   $ -     $ -     $ 4     $ 3,280     $ 2,950     $ 2,237     $ 21     $ 73     $ 98   Interest cost     9,299       11,738       14,691       2,941       3,158       4,678       822       1,135       1,550   Expected return on assets     ( 31,123 )     ( 25,758 )     ( 25,305 )     ( 12,348 )     ( 11,312 )     ( 10,224 )     ( 8,945 )     ( 7,976 )     ( 7,013 ) Amortization:                                                                         Prior service cost (benefit)     ( 3 )     ( 3 )     13       69       64       64       -       -       -   Actuarial loss     3,198       7,195       4,677       4,053       3,829       3,114       73       62       33   Curtailment loss     -       -       -       -       14       83       -       -       -   Settlement charge     -       -       -       -       67       -       -       -       -   Net periodic (benefit) cost   $ ( 18,629 )   $ ( 6,828 )   $ ( 5,920 )   $ ( 2,005 )   $ ( 1,230 )   $ ( 48 )   $ ( 8,029 )   $ ( 6,706 )   $ ( 5,332 )   51 Table of Contents       Pension Benefits     Other       U.S. Plans     Non-U.S. Plans     Postretirement Benefits   Weighted-average assumptions used to determine benefit obligations   2021     2020     2019     2021     2020     2019     2021     2020     2019   Discount rate     2.75 %     2.50 %     3.17 %     1.27 %     1.16 %     1.35 %     2.51 %     2.19 %     3.00 % Rate of compensation increase 1     0.00 %     4.50 %     4.50 %     1.48 %     1.74 %     1.71 %     N/A       N/A       N/A     Weighted-average assumptions used to determine net costs for years ended   2021     2020     2019     2021     2020     2019     2021     2020     2019   Discount rate     2.50 %     3.17 %     4.50 %     1.19 %     1.34 %     2.30 %     2.19 %     3.00 %     4.37 % Expected return on plan assets     7.24 %     7.49 %     7.49 %     6.15 %     6.23 %     6.21 %     8.25 %     8.50 %     8.50 % Rate of compensation increase 1     0.00 %     4.50 %     4.50 %     1.67 %     1.74 %     1.71 %     0.00 %     N/A       N/A     1  Under the U.S. pension plan, the compensation amount was locked-in as of May 31, 2011 and thus the benefit no longer includes compensation increases. The 4.50 percent rate for 2020 and 2019 is for the supplemental executive retirement plan only; for 2021, there is no compensation increase as subsequent to November 27, 2021, there were no active employees in the supplemental executive retirement plan.   The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan. The approach identifies a broad population of corporate bonds that meet the quality and size criteria for the particular plan. We use this approach rather than a specific index that has a certain set of bonds that may or may not be representative of the characteristics of our particular plan. A higher discount rate reduces the present value of the pension obligations. The discount rate for the U.S. pension plan was 2.76 percent at November 27, 2021 , 2.53 percent at  November 28, 2020 and 3.19 percent at November 30, 2019 . Net periodic pension cost for a given fiscal year is based on assumptions developed at the end of the previous fiscal year. A discount rate change of 0.5 percentage points at  November 27, 2021 would impact U.S. pension and other postretirement plan (income) expense by approximately $ 63 (pre-tax) in fiscal 2021. Discount rates for non-U.S. plans are determined in a manner consistent with the U.S. plans.   For the U.S. pension plan, we adopte d the Adjusted Pri- 2012 base mortality table projected generationally using scale MP- 2021.   The expected long-term rate of return on plan assets assumption for the U.S. pension plan was 7.25  percent in 2021  and 7.50 percent in  2020 and 2019 . Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 60 percent equities and 40 percent fixed-income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward-looking observations. For 2021 , the expected long-term rate of return on the target equities allocation was 8.00  p ercent and the expected long-term rate of return on the target fixed-income allocation was 3.90  percent. The total plan rate of return assumption included an estimate of the effect of diversification and the plan expense. A change of 0.5 percentage points for the expected return on assets assumption would impact U.S. net pension and other postretirement plan expense by approxi mately $ 2,728   (pre-tax).   Management, in conjunction with our external financial advisors, uses the actual historical rates of return of the asset categories to assess the reasonableness of the expected long-term rate of return on plan assets.   The expected long-term rate of return on plan assets assumption for non-U.S. pension plans was a weighted-average of 6.15  percent in  2021 compared to 6.23  percent in  2020 and 6.21  percent in 2019 . The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the effect of active management of the plan’s assets. Our largest non-U.S. pension plans are in the United Kingdom and Germany. The expected long-term rate of return on plan assets for the United Kingdom was 6.75  percent and the expected long-term rate of return on plan assets for Germany was 5.50  percent. Management, in conjunction with our external financial advisors, uses actual historical returns of the asset portfolio to assess the reasonableness of the expected rate of return for each plan.   Assumed health care trend rates 2021   2020   2019   Health care cost trend rate assumed for next year   6.50 %   6.75 %   7.00 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)   5.00 %   5.00 %   0.25 % Fiscal year that the rate reaches the ultimate trend rate 2028   2028   2028     The asset allocation for the company’s U.S. and non-U.S. pension plans at the end of  2021 and  2020 follows.       U.S. Pension Plans     Non-U.S. Pension Plans     Other Postretirement Plans               Percentage of             Percentage of             Percentage of               Plan Assets at             Plan Assets at             Plan Assets at       Target     Year-End     Target     Year-End     Target     Year-End   Asset Category   2021     2021     2020     2021     2021     2020     2021     2021     2020   Equities     60.0 %     57.7 %     55.4 %     21.2 %     21.3 %     48.8 %     0.0 %     0.0 %     0.0 % Fixed income     40.0 %     40.1 %     36.2 %     77.3 %     67.0 %     51.0 %     0.0 %     0.0 %     0.0 % Insurance     0.0 %     0.0 %     0.0 %     0.0 %     0.0 %     0.0 %     100.0 %     99.8 %     99.4 % Cash 1     0.0 %     2.2 %     8.4 %     1.5 %     11.7 %     0.2 %     0.0 %     0.2 %     0.6 % Total     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %   1 Negative cash for  2020 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.   52 Table of Contents   Plan Asset Management   Plan assets are held in trust and invested in mutual funds, separately managed accounts and other commingled investment vehicles holding U.S. and non-U.S. equity securities, fixed income securities and other investment classes. We employ a total return approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Futures and options may also be used to enhance risk-adjusted long-term returns while improving portfolio diversification and duration. Risk management is accomplished through diversification across asset classes, utilization of multiple investment managers and general plan-specific investment policies. Risk tolerance is established through careful consideration of the plan liabilities, plan funded status and our assessment of our overall liquidity position. This asset allocation policy mix is reviewed annually and actual versus target allocations are monitored regularly and rebalanced on an as-needed basis. Plan assets are invested using a combination of active and passive investment strategies. Passive, or “indexed” strategies, attempt to mimic rather than exceed the investment performance of a market benchmark. The plans’ active investment strategies employ multiple investment management firms which in aggregate cover a range of investment styles and approaches. Performance is monitored and compared to relevant benchmarks on a regular basis.   The U.S. pension plans consist of two plans: a pension plan and a supplemental executive retirement plan (“SERP”). There were no assets in the SERP in  2021 and 2020 . Consequently, all of the data disclosed in the asset allocation table for the U.S. pension plans pertain to our U.S. pension plan.   During 2021 , we maintained our assets within the allowed ranges of the target asset alloca tion mix of 60 percent equities and 40 pe rcent fixed income plus or minus 5 percent and continued our focus to reduce volatility of plan assets in future periods and to more closely match the duration of the assets with the duration of the liabilities of the plan.   The non-U.S. pension plans consist of all the pension plans administered by us outside the U.S., principally consisting of plans in Germany, the United Kingdom, France and Canada. During  2021 , we maintained our assets for the non-U.S. pension plans at the specific target asset allocation mix determined for each plan plus or minus the allowed rate and continued our focus to reduce volatility of plan assets in future periods and to more closely match the duration of the assets with the duration of the liabilities of the individual plans. We plan to maintain the portfolios at their respective target asset allocations in 2021.   Other postretirement benefits plans consist of two U.S. plans: a retiree medical health care plan and a group term life insurance plan. There were no assets in the group term life insurance plan for  2021 and 2020 . Consequently, all of the data disclosed in the asset allocation table for other postretirement plans pertain to our retiree medical health care plan. Our investment strategy for other postretirement benefit plans is to own insurance policies that maintain an asset allocation nearly completely in equities. These equities are invested in a passive portfolio indexed to the S&P 500.   Fair Value of Plan Assets   The following table presents plan assets categorized within a three -level fair value hierarchy as described in Note 13.       November 27, 2021   U.S. Pension Plans   Level 1     Level 2     Level 3     Total Assets   Equities   $ -     $ 236,557     $ -     $ 236,557   Fixed income     -       164,133       186       164,319   Cash     8,935       -       -       8,935   Total categorized in the fair value hierarchy   $ 8,935     $ 400,690     $ 186     $ 409,811     Non-U.S. Pension Plans   Level 1     Level 2     Level 3     Total Assets   Equities   $ 35,117     $ -     $ -     $ 35,117   Fixed income     48,243       5,285       749       54,277   Cash     4,399       -       -       4,399   Total categorized in the fair value hierarchy     87,759       5,285       749       93,793   Other investments measured at NAV 1                             122,830   Total   $ 87,759     $ 5,285     $ 749     $ 216,623     Other Postretirement Benefits   Level 1     Level 2     Level 3     Total Assets   Insurance   $ -     $ -     $ 135,484     $ 135,484   Cash     217       -       -       217   Total   $ 217     $ -     $ 135,484     $ 135,701         November 28, 2020   U.S. Pension Plans   Level 1     Level 2     Level 3     Total Assets   Equities   $ 3,421     $ 217,151     $ -     $ 220,572   Fixed income     1,524       142,317       205       144,046   Cash     33,391       -       -       33,391   Total categorized in the fair value hierarchy     38,336       359,468       205       398,009   Other investments measured at NAV 1                             394   Total   $ 38,336     $ 359,468     $ 205     $ 398,403     53 Table of Contents   Non-U.S. Pension Plans   Level 1     Level 2     Level 3     Total Assets   Equities   $ 33,478     $ 1,368     $ -     $ 34,846   Fixed income     49,813       7,182       770       57,765   Cash     352       -       -       352   Total categorized in the fair value hierarchy     83,643       8,550       770       92,963   Other investments measured at NAV 1                             109,279   Total   $ 83,643     $ 8,550     $ 770     $ 202,242     Other Postretirement Benefits   Level 1     Level 2     Level 3     Total Assets   Insurance   $ -     $ -     $ 108,406     $ 108,406   Cash     650       -       -       650   Total   $ 650     $ -     $ 108,406     $ 109,056     1 In accordance with ASC Topic 820 - 10, Fair Value Measurement , certain investments that are measured at NAV (Net Asset Value per share) (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts represented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.   2 Negative cash for  2020 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.   The definitions of fair values of our pension and other postretirement benefit plan assets at  November 27, 2021 and November 28, 2020 by asset category are as follows:   Equities —Primarily publicly traded common stock for purposes of total return and to maintain equity exposure consistent with policy allocations. Investments include: (i) U.S. and non-U.S. equity securities and mutual funds valued at closing prices from national exchanges; and (ii) commingled funds valued at unit values or net asset values provided by the investment managers, which are based on the fair value of the underlying investments. Funds valued at net asset value have various investment strategies including seeking maximum total returns consistent with prudent investment management, seeking current income consistent with preservation of capital and daily liquidity and seeking to approximate the risk and return characterized by a specific index fund. There are no restrictions for redeeming holdings out of these funds and the funds have no unfunded commitments.   Fixed income —Primarily corporate and government debt securities for purposes of total return and managing fixed income exposure to policy allocations. Investments include (i) mutual funds valued at closing prices from national exchanges, (ii) corporate and government debt securities valued at closing prices from national exchanges, (iii) commingled funds valued at unit values or net asset value provided by the investment managers, which are based on the fair value of the underlying investments, and (iv) an annuity contract, the value of which is determined by the provider and represents the amount the plan would receive if the contract were cashed out at year-end.   Insurance —Insurance contracts for purposes of funding postretirement medical benefits. Fair values are the cash surrender values as determined by the providers which are the amounts the plans would receive if the contracts were cashed out at year end.   Cash – Cash balances on hand, accrued income and pending settlements of transactions for purposes of handling plan payments. Fair values are the cash balances as reported by the Trustees of the plans.   The following is a roll forward of the Level 3 investments of our pension and postretirement benefit plan assets during the years ended November 27, 2021 and November 28, 2020 :       Fixed Income   U.S. Pension Plans   2021     2020   Level 3 balance at beginning of year   $ 205     $ 219   Purchases, sales, issuances and settlements, net     ( 19 )     ( 14 ) Level 3 balance at end of year   $ 186     $ 205         Fixed Income   Non-U.S. Pension Plans   2021     2020   Level 3 balance at beginning of year   $ 770     $ 675   Net transfers into / (out of) level 3     64       43   Net gains     ( 43 )     ( 8 ) Currency change effect     ( 42 )     60   Level 3 balance at end of year   $ 749     $ 770         Insurance   Other Postretirement Benefits   2021     2020   Level 3 balance at beginning of year   $ 108,406     $ 94,082   Net transfers into / (out of) level 3     ( 1,658 )     ( 831 ) Purchases, sales, issuances and settlements, net     ( 1,093 )     ( 822 ) Net gains     29,829       15,977   Level 3 balance at end of year   $ 135,484     $ 108,406       54 Table of Contents   Note 11: Income Taxes   Income before income taxes and income from equity method investments   2021     2020     2019   United States   $ 14,989     $ 20,328     $ 31,796   Non-U.S.     201,861       138,028       141,032   Total   $ 216,850     $ 158,356     $ 172,828     Components of the provision for income tax expense (benefit)   2021     2020     2019   Current:                         U.S. federal   $ 10,310     $ 5,243     $ 9,122   State     2,265       1,320       3,294   Non-U.S.     57,801       56,542       47,848         70,376       63,105       60,264   Deferred:                         U.S. federal     ( 6,891 )     ( 4,709 )     ( 432 ) State     ( 350 )     ( 4,111 )     125   Non-U.S.     ( 102 )     ( 12,364 )     ( 10,549 )       ( 7,343 )     ( 21,184 )     ( 10,856 ) Total   $ 63,033     $ 41,921     $ 49,408     Reconciliation of effective income tax   2021     2020     2019   Tax at statutory U.S. federal income tax rate   $ 45,539     $ 33,255     $ 36,294   State income taxes, net of federal benefit     1,444       ( 2,104 )     2,785   Foreign dividend repatriation     1,104       900       825   Foreign operations     19,673       ( 563 )     8,712   Executive compensation over $1.0 million     2,507       1,420       1,661   Non-U.S. stock option expense     575       358       425   Change in valuation allowance     ( 9,572 )     5,925       1,097   Research and development tax credit     ( 993 )     ( 906 )     ( 802 ) Foreign-derived intangible income     ( 2,617 )     ( 1,396 )     ( 2,240 ) Global intangible low-taxed income     2,334       1,932       2,029   Provision to return     1,122       1,704       ( 3,271 ) Cross currency swap     3,931       ( 6,748 )     2,677   Contingency reserve     ( 2,139 )     8,287       ( 957 ) Other     125       ( 143 )     173   Total income tax expense   $ 63,033     $ 41,921     $ 49,408     Deferred income tax balances at each year-end related to:   2021     2020   Deferred tax assets:                 Pension and other post-retirement benefit plans   $ 12,118     $ 16,385   Employee benefit costs     26,799       24,538   Foreign tax credit carryforward     7,309       6,905   Tax loss carryforwards     24,071       31,495   Leases     8,590       7,133   Hedging activity     2,623       12,906   Interest deduction limitation     12,428       6,343   Other     27,410       30,178   Gross deferred tax assets     121,348       135,883   Less: valuation allowance     ( 11,341 )     ( 21,843 ) Total net deferred tax assets     110,007       114,040   Deferred tax liability:                 Depreciation and amortization     ( 207,726 )     ( 220,379 ) Pension and other post-retirement benefit plans     ( 36,042 )     ( 14,968 ) Leases     ( 8,524 )     ( 7,194 ) Total deferred tax liability     ( 252,292 )     ( 242,541 ) Net deferred tax liability   $ ( 142,285 )   $ ( 128,501 )   The difference between the change in the deferred tax assets in the balance sheet and the deferred tax provision is primarily due to the defined benefit pension plan adjustment and floating-to-fixed hedges recorded in accumulated other comprehensive income (loss).   Valuation allowances primarily relate to foreign net operating loss carryforwards and branch foreign tax credit carryforwards where the future potential benefits do not meet the more-likely-than- not realization test. The decrease in the valuation allowance is primarily related to a decrease in foreign net operating losses for which the Company does not expect to receive a full tax benefit.   55 Table of Contents   Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those deferred tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more-likely-than- not to be realized. We believe it is more-likely-than- not that reversal of deferred tax liabilities and forecasted income will be sufficient to fully recover the net deferred tax assets not already offset by a valuation allowance. In the event that all or part of the gross deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made.   U.S. income taxes have not been provided on approximately $ 1,044,206  of undistributed earnings of non-U.S. subsidiaries. We intend to indefinitely reinvest these undistributed earnings. Cash available in the United States has historically been sufficient and we expect it will continue to be sufficient to fund U.S. cash flow requirements. In the event these earnings are later distributed to the U.S., such distributions would likely result in additional U.S. tax.   While non-U.S. operations have been profitable overall, there are cumulative tax losses of $ 85,273 in various countries. These tax losses can be carried forward to offset the income tax liabilities on future income in these countries. Cumulative tax losses of $ 63,592 can be carried forward indefinitely, while the remaining $ 21,680 of tax losses must be utilized during 2022 to 2039.   The U.S. has a branch foreign tax credit carryforward of $ 3,994 . A valuation allowance has been recorded against this foreign tax credit carryforward to reflect that this amount is not more-likely-than- not to be realized.   The table below sets forth the changes to our gross unrecognized tax benefit as a result of uncertain tax positions, excluding accrued interest.  We do not anticipate that the total unrecognized tax benefits will change significantly within the next twelve months.       2021     2020   Balance at beginning of year   $ 14,569     $ 8,946   Tax positions related to the current year:                 Additions     401       579                     Tax positions related to prior years:                 Additions     1,323       7,400   Reductions     ( 950 )     ( 283 ) Settlements     ( 161 )     ( 747 ) Lapses in applicable statutes of limitation     ( 1,901 )     ( 1,326 ) Balance at end of year   $ 13,281     $ 14,569     Included in the balance of unrecognized tax benefits as of  November 27, 2021 and November 28, 2020 are potential benefits of $ 8,888  and $ 9,125  respectively, that, if recognized, would affect the effective tax rate.   We report accrued interest and penalties related to unrecognized tax benefits in income tax expense. For the year ended November 27, 2021 , we recognized a net benefit for interest and penalties of $ 703  relating to unrecognized tax benefits and had net accumulated accrued interest and penalties of $ 2,817 as of November 27, 2021 . For the year ended November 28, 2020 , we recognized a net benefit for interest and penalties of $ 2,378  relating to unrecognized tax benefits and had net accumulated accrued interest and penalties of $ 3,520  as of November 28, 2020 .   We are subject to U.S. federal income tax as well as income tax in numerous state and foreign jurisdictions. We are no longer subject to U.S. federal tax examination for years prior to 2018 or Swiss income tax examination for years prior to 2018. During the second quarter of 2016, H.B. Fuller (China) Adhesives, Ltd. was notified of a transfer pricing audit covering the calendar years 2005 through 2014. We are in various stages of examination and appeal in other foreign jurisdictions. Although the final outcomes of these examinations cannot currently be determined, we believe that we have recorded adequate liabilities with respect to these examinations.     Note 12: Financial Instruments   Overview   As a result of being a global enterprise, our earnings, cash flows and financial position are exposed to foreign currency risk from foreign currency denominated receivables and payables.   We use foreign currency forward contracts, cross-currency swaps and interest rate swaps to manage risks associated with foreign currency exchange rates and interest rates. We do not hold derivative financial instruments of a speculative nature or for trading purposes. We record derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the Consolidated Statement of Cash Flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings.   We are exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. We select investment-grade multinational banks and financial institutions as counterparties for derivative transactions and monitor the credit quality of each of these banks on a periodic basis as warranted. We do not anticipate nonperformance by any of these counterparties, and valuation allowances, if any, are de minimis .   56 Table of Contents   Cash Flow Hedges   As of November 27, 2021 , we had cash flow hedges of four cross-currency swap agreements effective October 20, 2017 to convert a notional amount of $ 267,860 of foreign currency denominated intercompany loans into U.S. dollars, which mature in 2022.  As of November 27, 2021 , the combined fair value of the swaps was an asset of $ 14,496  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 $ 3,483  as of November 27, 2021 . The estimated net amount of the existing gain that is reported in accumulated other comprehensive income (loss) as of  November 27, 2021 that is expected to be reclassified into earnings within the next twelve months is $ 3,843 . As of November 27, 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 November 27, 2021 :     Fiscal Year of                           Expiration   Interest Rate     Notional Value     Fair Value   Pay EUR 2022     3.00 %   $ 267,860     $ 14,496   Receive USD     5.1803 %                   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 during the second quarter of 2021.  On October 20, 2017, we entered into interest rate swap agreements to convert $ 1,050,000 , which amortized down to $ 800,000 on October 20, 2021, of our $ 2,150,000 Term Loan B to a fixed interest rate of 4.0275 percent. See Note 7 for further discussion on the issuance of our Term Loan B. The combined fair value of the interest rate swaps was a liability of $ 12,366 at  November 27, 2021 and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as cash flow hedges. We are applying the hypothetical derivative method to assess hedge effectiveness for these interest rate swaps. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $ 1,125,000 variable rate Term Loan B are compared with the change in the fair value of the swaps.   On April 23, 2018, we amended our Term Loan B Credit Agreement to reduce the interest rate from LIBOR plus 2.25 percent to LIBOR plus 2.00 percent. Fixed interest rates related to swap agreements disclosed have been updated to reflect the amendment.   The amounts of pretax gains (losses) recognized in comprehensive income related to derivative instruments designated as cash flow hedges are as follows:       November 27, 2021     November 28, 2020     November 30, 2019   Cross-currency swap contracts   $ ( 4,556 )   $ 6,307     $ 14,429   Interest rate swap contracts   $ 20,109     $ ( 15,618 )   $ ( 46,254 )   Fair Value Hedges   On February 12, 2021, we entered into interest rate swap agreements to convert our $ 300,000  Public Notes that were issued on October  20, 2020 to a variable interest rate of 1 -month LIBOR plus 3.28 percent. See Note 7 for further discussion on the issuance of our Public Notes. The combined fair value of the interest rate swaps was a liabilit y of $ 10,539 at  November 27, 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. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $ 300,000 fixed rate Public Notes are compared with the change in the fair value of the swaps. On February 14, 2017, we entered into interest rate swap agreements to convert $ 150,000 of our $ 300,000 Public Notes that were issued on February 14, 2017 to a variable interest rate of 1 -month LIBOR plus 1.86 percent. The swap was designated for hedge accounting treatment as fair value hedges. We applied the hypothetical derivative method to assess hedge effectiveness for this interest rate swap. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $ 150,000 fixed rate Public Notes are compared with the change in the fair value of the swaps. On May 1, 2020, we terminated the swap agreement. Upon termination, we received $ 15,808 in cash. The remaining swap liability will be accounted for as a discount on long-term debt and will be amortized to interest expense over the remaining life of the Public Notes of seven years.   Derivatives Not Designated As Hedging Instruments   The company uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries that are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Foreign currency forward contracts are recorded as assets and liabilities on the balance sheet at fair value. Changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities. See Note 13 for fair value amounts of these derivative instruments.   As of November 27, 2021, we had forward foreign currency contracts maturing betwee n November 29, 2021 and September 13, 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 are as follows:       November 27, 2021     November 28, 2020     November 30, 2019   Foreign currency forward contracts   $ ( 357 )   $ ( 2,908 )   $ ( 573 )   57 Table of Contents   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 November 27, 2021 , there were no significant concentrations of credit risk.     Note 13: Fair Value Measurements   Overview   Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:     ● Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.   ● Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.   ● Level 3: Unobservable inputs that reflect management’s assumptions, and include situations where there is little, if any, market activity for the asset or liability.   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 November 27, 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:       November 27,                           Description   2021     Level 1     Level 2     Level 3   Assets:                                 Marketable securities   $ 2,079     $ 2,079     $ -     $ -   Foreign exchange contract assets     5,725       -       5,725       -   Cross-currency cash flow hedge assets     14,496       -       14,496       -                                     Liabilities:                                 Foreign exchange contract liabilities   $ 6,082     $ -     $ 6,082     $ -   Interest rate swaps, cash flow hedge liabilities     12,366       -       12,366       -   Interest rate swaps, fair value hedge liabilities     10,539       -       10,539       -   Contingent consideration liability     8,100       -       -       8,100                                                   Fair Value Measurements               Using:       November 28,                           Description   2020     Level 1     Level 2     Level 3   Assets:                                 Marketable securities   $ 22,560     $ 22,560     $ -     $ -   Foreign exchange contract assets     2,320       -       2,320       -   Cross-currency cash flow hedge assets     2,823       -       2,823       -                                     Liabilities:                                 Foreign exchange contract liabilities   $ 5,251     $ -     $ 5,251     $ -   Cross-currency cash flow hedge liabilities     280       -       280       -   Interest rate swaps, cash flow hedge liabilities     33,256       -       33,256       -       Contingent consideration liability     5,800       -       -       5,800     See Note 7 for discussion regarding the fair value of debt.   We use the income approach in calculating the fair value of our contingent consideration liability using a real option model with Level 3 inputs. The expected cash flows are affected by various significant judgments and assumptions, including revenue growth rates, volatility and discount rate, which are sensitive to change. Estimates of fair value are inherently uncertain and represent only management’s reasonable expectation regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will, in all likelihood, differ in some respects from actual future results. The valuation of our contingent consideration liability related to the acquisition of D.H.M. resulted in a fair value of $ 8,100  as of November 27, 2021 . Adjustments to the fair value of contingent consideration are recorded to selling, general and administrative expenses in the Statement of Income. See Note 2 for further discussion regarding our acquisitions.   Contingent consideration liability   2021   Level 3 balance at beginning of year   $ 5,800   Acquisition     1,700   Payment of contingent consideration     ( 1,700 ) Mark to market adjustment     2,300   Level 3 balance at end of year   $ 8,100     58 Table of Contents   Note 14: Commitments and Contingencies   Environmental Matters     From time to time, we become aware of compliance matters relating to, or receive notices from, federal, state or local entities regarding possible or alleged violations of environmental, health or safety laws and regulations. We review the circumstances of each individual site, considering the number of parties involved, the level of potential liability or our contribution relative to the other parties, the nature and magnitude of the hazardous substances involved, the method and extent of remediation, the estimated legal and consulting expense with respect to each site and the time period over which any costs would likely be incurred. Also, from time to time, we are identified as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and/or similar state laws that impose liability for costs relating to the clean up of contamination resulting from past spills, disposal or other release of hazardous substances. We are also subject to similar laws in some of the countries where current and former facilities are located. 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 $ 6,603  and $ 8,099  as of November 27, 2021 and November 28, 2020 , respectively, for probable and reasonably estimable environmental remediation costs. Of the amount reserved, $ 3,333  and $ 3,703  as of November 27, 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. In particular, we are currently deemed a PRP in conjunction with numerous other parties, in a number of government enforcement actions associated with landfills and/or hazardous waste sites. As a PRP, we may be required to pay a share of the costs of investigation and clean up of these sites. In addition, we are engaged in environmental remediation and monitoring efforts at a number of current and former operating facilities. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, will not have a material adverse effect on our results of operations, financial condition or cash flow.   Other Legal Proceedings     From time to time and in the ordinary course of business, we are a party to, or a target of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, contract, patent and intellectual property, environmental, health and safety, tax and employment matters. While we are unable to predict the outcome of these matters, we have concluded, based upon currently available information, that the ultimate resolution of any pending matter, individually or in the aggregate, including the asbestos litigation described in the following paragraphs, will not have a material adverse effect on our results of operations, financial condition or cash flow.   We have been named as a defendant in lawsuits in which plaintiffs have alleged injury due to products containing asbestos manufactured more than 35 years ago. The plaintiffs generally bring these lawsuits against multiple defendants and seek damages (both actual and punitive) in very large amounts. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable injuries or that the injuries suffered were the result of exposure to products manufactured by us. We are typically dismissed as a defendant in such cases without payment. If the plaintiff presents evidence indicating that compensable injury occurred as a result of exposure to our products, the case is generally settled for an amount that reflects the seriousness of the injury, the length, intensity and character of exposure to products containing asbestos, the number and solvency of other defendants in the case, and the jurisdiction in which the case has been brought.   A significant portion of the defense costs and settlements in asbestos-related litigation is paid by third parties, including indemnification pursuant to the provisions of a 1976 agreement under which we acquired a business from a third party. Currently, this third party is defending and paying settlement amounts, under a reservation of rights, in most of the asbestos cases tendered to the third party.   In addition to the indemnification arrangements with third parties, we have insurance policies that generally provide coverage for asbestos liabilities, including defense costs. Historically, insurers have paid a significant portion of our defense costs and settlements in asbestos-related litigation. However, certain of our insurers are insolvent.  We have entered into cost-sharing agreements with our insurers that provide for the allocation of defense costs and settlements and judgments in asbestos-related lawsuits. These agreements require, among other things, that we fund a share of settlements and judgments allocable to years in which the responsible insurer is insolvent.   A summary of the number of and settlement amounts for asbestos-related lawsuits and claims is as follows:       Year Ended     Year Ended     Year Ended       November 27,     November 28,     November 30,       2021     2020     2019   Lawsuits and claims settled     2       4       8   Settlement amounts   $ 85     $ 130     $ 424   Insurance payments received or expected to be received   $ 55     $ 88     $ 291     59 Table of Contents   We do not believe that it would be meaningful to disclose the aggregate number of asbestos-related lawsuits filed against us because relatively few of these lawsuits are known to involve exposure to asbestos-containing products that we manufactured. Rather, we believe it is more meaningful to disclose the number of lawsuits that are settled and result in a payment to the plaintiff. To the extent we can reasonably estimate the amount of our probable liabilities for pending asbestos-related claims, we establish a financial provision and a corresponding receivable for insurance recoveries.    Based on currently available information, we have concluded that the resolution of any pending matter, including asbestos-related litigation, individually or in the aggregate, will not have a material adverse effect on our results of operations, financial condition or cash flow.     Note 15: Segments   We are required to report segment information in the same way that we internally organize our business for assessing performance and making decisions regarding allocation of resources. Revenue and operating income of each of our segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance. Segment operating income is identified as gross profit less SG&A expenses. Corporate expenses, other than those included in Corporate Unallocated, are allocated to each operating segment. Consistent with our internal management reporting, Corporate Unallocated amounts include business acquisition and integration costs, organizational restructuring charges and project costs associated with our implementation of Project ONE. Corporate assets are not allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs.   We have  three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.  The business components within each operating segment are managed to maximize the results of the overall operating segment rather than the results of any individual business component of the operating segment. Results of individual components of each operating segment are subject to numerous allocations of segment-wide costs that may or may not have been focused on that particular component for a particular reporting period. The costs for these allocated resources are not tracked on a “where-used” basis as financial performance is assessed at the total operating segment level.   Reportable operating segment financial information for all periods presented is as follows:     2021     2020     2019   Net revenue                         Hygiene, Health and Consumable Adhesives   $ 1,472,756     $ 1,332,786     $ 1,328,286   Engineering Adhesives     1,371,756       1,088,313       1,158,403   Construction Adhesives     433,519       369,170       396,580   Corporate Unallocated 1     -       -       13,731   Total   $ 3,278,031     $ 2,790,269     $ 2,897,000                             Segment operating income                         Hygiene, Health and Consumable Adhesives   $ 138,366     $ 130,789     $ 115,961   Engineering Adhesives     135,913       103,974       136,299   Construction Adhesives     14,148       11,148       16,657   Total segment     288,427       245,911       268,917   Corporate Unallocated 1     ( 35,815 )     ( 27,594 )     ( 42,923 ) Total   $ 252,612     $ 218,317     $ 225,994                             Depreciation and amortization                         Hygiene, Health and Consumable Adhesives   $ 45,919     $ 44,329     $ 45,448   Engineering Adhesives     61,082       58,102       57,175   Construction Adhesives     35,002       35,811       35,851   Corporate Unallocated 1     1,171       575       2,732   Total   $ 143,174     $ 138,817     $ 141,206                             Total assets 2                                    Hygiene, Health and Consumable Adhesives   $ 1,370,924     $ 1,268,236                    Engineering Adhesives     1,710,000       1,515,302                    Construction Adhesives     810,824       934,397                    Corporate     382,782       318,769                    Total   $ 4,274,530     $ 4,036,704                                   Capital expenditures                                    Hygiene, Health and Consumable Adhesives   $ 60,164     $ 57,416                    Engineering Adhesives     8,815       18,212                    Construction Adhesives     3,591       7,635                    Corporate     23,519       12,580                    Total   $ 96,089     $ 95,843           1 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.   2 Segment assets include primarily inventory, accounts receivable, property, plant and equipment, goodwill, intangible assets and other miscellaneous assets. Corporate assets include primarily corporate property, plant and equipment, deferred tax assets, certain investments and other assets.   60 Table of Contents   Reconciliation of segment operating income to income before income taxes and income from equity method investments:       2021     2020     2019   Segment operating income   $ 252,612     $ 218,317     $ 225,994   Other income, net     32,855       15,398       37,943   Interest expense     ( 78,092 )     ( 86,776 )     ( 103,287 ) Interest income     9,476       11,417       12,178   Income before income taxes and income from equity method investments   $ 216,851     $ 158,356     $ 172,828     Financial information about geographic areas       Net Revenue       2021     2020     2019   United States   $ 1,421,623     $ 1,248,495     $ 1,309,056   China     433,998       351,204       347,304   Germany     409,193       330,755       -   Countries with more than 10 percent of total     2,264,814       1,930,454       1,656,360   All other countries with less than 10 percent of total     1,013,217       859,815       1,240,640   Total   $ 3,278,031     $ 2,790,269     $ 2,897,000         Property, Plant and Equipment, net       2021     2020     2019   United States   $ 331,864     $ 297,046     $ 287,372   Germany     120,548       131,879       127,497   China     96,300       99,513       80,606   All other countries with less than 10 percent of total     146,655       142,306       134,338   Total   $ 695,367     $ 670,744     $ 629,813     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:       November 27, 2021       Hygiene, Health and     Engineering     Construction     Corporate               Consumable Adhesives     Adhesives     Adhesives     Unallocated     Total   Americas   $ 826,172     $ 504,626     $ 384,576     $ -     $ 1,715,374   EIMEA     425,324       470,466       22,156       -       917,946   Asia Pacific     221,260       396,664       26,787       -       644,711       $ 1,472,756     $ 1,371,756     $ 433,519     $ -     $ 3,278,031         November 28, 2020       Hygiene, Health and     Engineering     Construction     Corporate               Consumable Adhesives     Adhesives     Adhesives     Unallocated     Total   Americas   $ 736,681     $ 430,866     $ 325,622     $ -     $ 1,493,169   EIMEA     388,271       347,417       20,506       -       756,194   Asia Pacific     207,834       310,030       23,042       -       540,906       $ 1,332,786     $ 1,088,313     $ 369,170     $ -     $ 2,790,269         November 30, 2019       Hygiene, Health and     Engineering     Construction     Corporate               Consumable Adhesives     Adhesives     Adhesives     Unallocated     Total   Americas   $ 733,125     $ 469,764     $ 351,924     $ 13,731     $ 1,568,544   EIMEA     392,497       380,673       20,767       -       793,937   Asia Pacific     202,664       307,966       23,889       -       534,519       $ 1,328,286     $ 1,158,403     $ 396,580     $ 13,731     $ 2,897,000     61 Table of Contents   Note 16: Subsequent Events   Acquisitions   On January 11, 2022, we completed the acquisition of Fourny NV for a base purchase price of approximately $ 18,200 . Fourny NV, headquartered in Willebroek, Belgium, is a manufacturer of construction and automotive adhesives supplying customers in Europe and China. The acquisition will be included in our Construction Adhesives operating segment.   On November  30, 2021, we completed the acquisition of certain assets of Tissue Seal, LLC for a base purchase price of $ 24,750 . Tissue Seal, LLC, headquartered in Ann Arbor, Michigan, is a manufacturer of topical tissue adhesives and sutures. The acquisition will be included in our Hygiene, Health and Consumable Adhesives operating segment.     Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   Not applicable.