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 December 2, 2023 and December 3, 2022, the related consolidated statements of income, comprehensive income, total equity and cash flows for each of the three years in the period ended December 2, 2023, 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 December 2, 2023 and December 3, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 2, 2023, 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 December 2, 2023, 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 24, 2024, 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 audits. 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 audits 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 audits 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 audits 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 audits provide 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.   38 Table of Contents   Valuation of Goodwill for the Construction Adhesives reporting unit   Description of the Matter   At December 2, 2023, the Company had goodwill of approximately $432.8 million related to the Construction Adhesives reporting unit. As discussed in the notes to 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, and the weighted average cost of capital 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.   /s/ Ernst & Young LLP   We have served as the Company’s auditor since 2019.   Minneapolis, Minnesota January 24, 2024   39 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 December 2, 2023, 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 December 3, 2023, 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 December 2, 2023 and December 3, 2022, the related consolidated statements of income, comprehensive income, total equity and cash flows for each of the three years in the period ended December 2, 2023, and the related notes, and our report dated January 24, 2024 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 24, 2024   40 Table of Contents     CONSOLIDATED STATEMENTS OF INCOME H.B. Fuller Company and Subsidiaries (In thousands, except per share amounts)       Fiscal Years       December 2,     December 3,     November 27,       2023     2022     2021   Net revenue   $ 3,510,934     $ 3,749,183     $ 3,278,031   Cost of sales     ( 2,502,037 )     ( 2,785,484 )     ( 2,432,709 ) Gross profit     1,008,897       963,699       845,322   Selling, general and administrative expenses     ( 653,760 )     ( 640,981 )     ( 592,710 ) Other income, net     9,682       12,952       32,855   Interest expense     ( 134,602 )     ( 91,521 )     ( 78,092 ) Interest income     3,943       7,779       9,476   Income before income taxes and income from equity method investments     234,160       251,928       216,851   Income tax expense     ( 93,529 )     ( 77,186 )     ( 63,033 ) Income from equity method investments     4,357       5,665       7,657   Net income including non-controlling interest     144,988       180,407       161,475   Net income attributable to non-controlling interest     ( 82 )     ( 94 )     ( 82 ) Net income attributable to H.B. Fuller   $ 144,906     $ 180,313     $ 161,393                             Earnings per share attributable to H.B. Fuller common stockholders:                         Basic   $ 2.67     $ 3.37     $ 3.05   Diluted   $ 2.59     $ 3.26     $ 2.97                             Weighted-average common shares outstanding:                         Basic     54,332       53,580       52,887   Diluted     55,958       55,269       54,315                             Dividends declared per common share   $ 0.805     $ 0.738     $ 0.665     See accompanying Notes to Consolidated Financial Statements.   41 Table of Contents     CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME H.B. Fuller Company and Subsidiaries (In thousands)       Fiscal Years       December 2,     December 3,     November 27,       2023     2022     2021   Net income including non-controlling interest   $ 144,988     $ 180,407     $ 161,475   Other comprehensive income (loss)                         Foreign currency translation     17,322       ( 131,806 )     ( 26,294 ) Defined benefit pension plans adjustment, net of tax     792       ( 15,063 )     48,181   Interest rate swaps, net of tax     4,472       9,924       15,179   Cash-flow hedges, net of tax     -       ( 3,483 )     ( 4,486 ) Net investment hedges, net of tax     ( 14,107 )     ( 40,743 )     -   Other comprehensive income (loss)     8,479       ( 181,171 )     32,580   Comprehensive income (loss)     153,467       ( 764 )     194,055   Less: Comprehensive income attributable to non-controlling interest     84       33       50   Comprehensive income (loss) attributable to H.B. Fuller   $ 153,383     $ ( 797 )   $ 194,005     See accompanying Notes to Consolidated Financial Statements.   42 Table of Contents     CONSOLIDATED BALANCE SHEETS H.B. Fuller Company and Subsidiaries (In thousands, except share and per share amounts)       December 2,     December 3,       2023     2022   Assets                 Current assets:                 Cash and cash equivalents   $ 179,453     $ 79,910   Trade receivables, net     577,932       607,365   Inventories     442,040       491,781   Other current assets     112,678       120,319   Total current assets     1,312,103       1,299,375                     Property, plant and equipment, net     824,655       733,667   Goodwill     1,486,512       1,392,627   Other intangibles, net     729,140       702,092   Other assets     371,165       335,868   Total assets   $ 4,723,575     $ 4,463,629                     Liabilities, non-controlling interest and total equity                 Current liabilities:                 Notes payable   $ 1,841     $ 28,860   Trade payables     439,700       460,669   Accrued compensation     95,680       108,328   Income taxes payable     47,688       18,530   Other accrued expenses     107,902       89,345   Total current liabilities     692,811       705,732                     Long-term debt, net of current maturities     1,836,590       1,736,256   Accrued pension liabilities     50,189       52,561   Other liabilities     388,072       358,286   Total liabilities     2,967,662       2,852,835                     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 – 54,092,987 and 53,676,576 for 2023 and 2022, respectively     54,093       53,677   Additional paid-in capital     301,485       266,491   Retained earnings     1,842,507       1,741,359   Accumulated other comprehensive loss     ( 442,880 )     ( 451,357 ) Total H.B. Fuller stockholders' equity     1,755,205       1,610,170   Non-controlling interest     708       624   Total equity     1,755,913       1,610,794   Total liabilities, non-controlling interest and total equity   $ 4,723,575     $ 4,463,629     See accompanying Notes to Consolidated Financial Statements.   43 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 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   Comprehensive income (loss)     -       -       180,313       ( 181,110 )     33       ( 764 ) Dividends     -       -       ( 39,555 )     -       -       ( 39,555 ) Stock option exercises     658       29,464       -       -       -       30,122   Share-based compensation plans other, net     296       27,284       -       -       -       27,580   Repurchases of common stock     ( 55 )     ( 3,894 )     -       -       -       ( 3,949 ) Balance at December 3, 2022   $ 53,677     $ 266,491     $ 1,741,359     $ ( 451,357 )   $ 624     $ 1,610,794   Comprehensive income     -       -       144,906       8,477       84       153,467   Dividends     -       -       ( 43,758 )     -       -       ( 43,758 ) Stock option exercises     314       14,304       -       -       -       14,618   Share-based compensation plans other, net     140       23,219       -       -       -       23,359   Repurchases of common stock     ( 38 )     ( 2,529 )     -       -       -       ( 2,567 ) Balance at December 2, 2023   $ 54,093     $ 301,485     $ 1,842,507     $ ( 442,880 )   $ 708     $ 1,755,913     44 Table of Contents     CONSOLIDATED STATEMENTS of CASH FLOWS H.B. Fuller Company and Subsidiaries (In thousands)       Fiscal Years       December 2,     December 3,     November 27,       2023     2022     2021   Cash flows from operating activities:                         Net income including non-controlling interest   $ 144,988     $ 180,407     $ 161,475   Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:                         Depreciation     80,327       72,593       72,106   Amortization     79,514       74,383       71,068   Deferred income taxes     ( 25,114 )     ( 15,230 )     16,192   Income from equity method investments, net of dividends received     1,259       ( 9 )     2,776   Loss (gain) on sale of assets     59       ( 1,195 )     648   Share-based compensation     19,911       24,368       22,366   Pension and other postretirement benefit plan contributions     ( 4,346 )     ( 3,009 )     ( 3,840 ) Pension and other postretirement benefit plan income     ( 18,591 )     ( 24,021 )     ( 28,662 ) Debt issuance cost write-off     2,689       -       -   Loss on fair value adjustment on contingent consideration liabilities     2,893       -       2,300   Change in assets and liabilities, net of effects of acquisitions:                         Trade receivables, net     68,721       ( 24,753 )     ( 124,849 ) Inventories     72,576       ( 55,772 )     ( 135,351 ) Other assets     ( 7,927 )     46,499       ( 79,097 ) Trade payables     ( 57,752 )     ( 22,629 )     176,337   Accrued compensation     ( 13,836 )     1,135       27,741   Other accrued expenses     ( 3,070 )     6,303       1,186   Income taxes payable     41,190       ( 12,873 )     ( 4,137 ) Other liabilities     22,918       4,104       ( 73,508 ) Other     ( 28,011 )     6,213       108,566   Net cash provided by operating activities     378,398       256,514       213,317   Cash flows from investing activities:                         Purchased property, plant and equipment     ( 119,137 )     ( 129,964 )     ( 96,089 ) Purchased businesses, net of cash acquired     ( 205,093 )     ( 250,807 )     ( 5,445 ) Proceeds from sale of property, plant and equipment     5,029       1,556       2,896   Cash received from government grant     -       3,928       5,800   Cash outflow related to government grant     -       -       ( 1,822 ) Net cash used in investing activities     ( 319,201 )     ( 375,287 )     ( 94,660 ) Cash flows from financing activities:                         Proceeds from issuance of long-term debt     2,233,300       335,000       -   Repayment of long-term debt     ( 2,126,450 )     ( 159,500 )     ( 156,500 ) Payment of debt issue costs     ( 10,214 )     ( 600 )     -   Net (payment on) proceeds from notes payable     ( 28,674 )     3,455       9,346   Dividends paid     ( 43,395 )     ( 39,207 )     ( 34,859 ) Contingent consideration payment     ( 1,477 )     ( 5,000 )     ( 1,700 ) Proceeds from stock options exercised     14,619       30,122       32,325   Repurchases of common stock     ( 2,567 )     ( 3,950 )     ( 2,682 ) Net cash provided by (used in) financing activities     35,142       160,320       ( 154,070 ) Effect of exchange rate changes on cash and cash equivalents     5,204       ( 23,423 )     ( 3,335 ) Net change in cash and cash equivalents     99,543       18,124       ( 38,748 ) Cash and cash equivalents at beginning of year     79,910       61,786       100,534   Cash and cash equivalents at end of year   $ 179,453     $ 79,910     $ 61,786                             Supplemental disclosure of cash flow information:                         Dividends paid with company stock   $ 363     $ 348     $ 339   Cash paid for interest, net of amount capitalized of $ 1,769 , $ 1,518 , and $ 905 for the years ended December 2, 2023, December 3, 2022 and November 27, 2021, respectively   $ 136,959     $ 83,527     $ 62,753   Cash paid for income taxes, net of refunds   $ 71,261     $ 73,449     $ 72,955     See accompanying Notes to Consolidated Financial Statements.   45 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, Asia Pacific, India, the Middle East and Africa.   We have  three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.  In 2023 , as a percentage of total net revenue by operating segment, Hygiene, Health and Consumable Adhesives accounted for 46  percent, Engineering Adhesives 41  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, 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 2023, 2022 and 2021 , 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  December 2, 2023, December 3, 2022, and November 27, 2021 for Sekisui-Fuller Company, Ltd. is not required.   Our fiscal year ends on the Saturday closest to November 30. Fiscal year-end dates were  December 2, 2023, December 3, 2022, and November 27, 2021 for 2023, 2022 and 2021 , respectively. Every five or six years we have a 53rd  week in our fiscal year. 2022  was a 53 -week year.   46 Table of Contents   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.   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 $ 35,896 , $ 50,146  and $ 33,441  in 2023, 2022 and 2021 , 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.   47 Table of Contents   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 December 2, 2023  or December 3, 2022. 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.   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.   48 Table of Contents   Investments   Investments with a value of $ 9,334  and $ 8,957  represent the cash surrender value of life insurance contracts as of December 2, 2023 and December 3, 2022 , 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 recognized impairment of $ 303 for the year ended December 3, 2022 and did not have any impairment of our equity investments for the years ended  December 2, 2023  and November 27, 2021.  The book value of the equity investments was $ 1,362  as of both  December 2, 2023  and  December 3, 2022 .   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 $ 1,769 , $ 1,518  and $ 905  were capitalized in 2023, 2022 and 2021 , 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  2023 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.   49 Table of Contents   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, India, the Middle East and Africa ("EIMEA") and Asia Pacific, have the same local and functional currency.   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 55 percent equities and 45 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 $ 3,147  and $ 2,888  at December 2, 2023 and December 3, 2022 , respectively.   50 Table of Contents   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)   2023     2022     2021   Net income attributable to H.B. Fuller   $ 144,906     $ 180,313     $ 161,393                             Weighted-average common shares – basic     54,332       53,580       52,887   Equivalent shares from share-based compensation plans     1,626       1,689       1,428   Weighted-average common and common equivalent shares – diluted     55,958       55,269       54,315                             Basic earnings per share   $ 2.67     $ 3.37     $ 3.05   Diluted earnings per share   $ 2.59     $ 3.26     $ 2.97     Share-based compensation awards for 1,089,054 ,  707,197  and 1,535,503  shares for 2023, 2022 and 2021 , respectively, were excluded from the diluted earnings per share calculation because they were antidilutive.   51 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 indirectly repurchased 113,868 , 49,869  and 47,481  shares of common stock in 2023, 2022 and 2021 , respectively, through a net-settlement feature in connection with the statutory minimum tax withholding related to vesting of restricted stock.   New Accounting Pronouncements   In December 2023, the FASB issued ASU No. 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures . This ASU requires entities to provide additional information in the rate reconciliation and additional disclosures about income taxes paid. This guidance requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. Our effective date of this ASU is our fiscal year ending November 28, 2026. We are evaluating the effect that this guidance will have on our Consolidated Financial Statements.    In November 2023, the FASB issued ASU  No. 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures. This ASU requires enhanced disclosures regarding significant segment expenses and other segment items. The guidance requires public entities to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. Our effective date of this ASU is our fiscal year ending November 29, 2025. We are evaluating the effect that this guidance will have on our Consolidated Financial Statements.    In September 2022, the FASB issued ASU  No. 2022 - 04, Liabilities - Supplier Finance Programs (Subtopic 405 - 50 ): Disclosure of Supplier Finance Program Obligations. This ASU requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs.  Our effective date of this ASU is our fiscal year ending December 1, 2024. We are evaluating the effect that this guidance will have on our Consolidated Financial Statements.    Recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the company.   52 Table of Contents     Note 2: Acquisitions   Sanglier Ltd.   On September 8, 2023, we acquired the assets of Sanglier Ltd. (“Sanglier”) for a base purchase price of 13,339 British pound sterling, or approximately $ 16,632 which was funded through existing cash. This includes a holdback amount of 2,100  British pound sterling that will be paid on the 18 -month anniversary of the closing date. Sanglier, headquartered in Mansfield, United Kingdom, is a manufacturer and filler of sprayable (aerosol and cannister) industrial adhesives. The acquisition of Sanglier expands our innovation capabilities and product portfolio across the United Kingdom and Europe transforming adhesives applications to enable sprayable delivery providing end users with an opportunity to greatly improve labor efficiency. The acquisition fair value measurement was preliminary as of December 2, 2023 and includes intangible assets of $ 10,695 and other net assets of $ 5,937 . Sanglier is included in our Construction Adhesives operating segment.   Adhezion Biomedical LLC   On June 23, 2023, we acquired Adhezion Biomedical LLC (“Adhezion”) for a base purchase price of $ 80,802 which was funded through borrowings on our credit facility. This includes a holdback amount of $ 780 that will be paid on the 12 -month anniversary of the closing date. The agreement includes a payment of contingent consideration up to $ 15,000 following the completion of certain performance goals and conditions. Adhezion, headquartered in Wyomissing, Pennsylvania, is a manufacturer of cyanoacrylate-based healthcare adhesives and infection prevention products. The acquisition of Adhezion positions us for expansion in the healthcare adhesives industry and creates a solid, unique platform from which to scale and innovate in the healthcare adhesives industry. The acquisition fair value measurement was preliminary as of December 2, 2023 and includes intangible assets of $ 38,500 , goodwill of $ 38,389 and other net assets of $ 3,913 . Goodwill represents expected synergies from combining Adhezion with our existing business. As of December 2, 2023, the amount of goodwill that is deductible for tax purposes i s $ 25,702 . Adhezion is included in our Hygiene, Health and Consumable Adhesives operating segment.   XChem International LLC   On June 12, 2023, we acquired XChem International LLC ("XChem") for a base purchase price of approximately $ 14,591 which was funded through borrowings on our credit facility. This includes a holdback amount of $ 1,650 that will be paid on the 18 -month anniversary of the closing date. XChem, headquartered in Ras Al-Khaimah, United Arab Emirates, is a manufacturer of adhesives and sealants for construction-related applications. The acquisition of XChem provides our construction adhesives global business with additional manufacturing presence for certain brands outside the U.S. and broadens our construction adhesives portfolio of highly specified applications and diversifies it toward both non-U.S. and infrastructure-oriented markets. The acquisition fair value measurement was preliminary as of December 2, 2023 and includes intangible assets of $ 4,400 , goodwill of $ 4,783 and other net assets of $ 5,408 . Goodwill represents expected synergies from combining XChem with our existing business. Goodwill is not deductible for tax purposes. XChem is included in our Construction Adhesives operating segment.   Beardow Adams Holdings Ltd.   On May 1, 2023, we acquired Beardow Adams Holdings Ltd. (“Beardow Adams”) for a total purchase price of 80,738 British pound sterling, or approximately $ 100,885 , which was funded through borrowings on our credit facility. This includes a holdback amount of 8,000 British pound sterling that will be paid on the 18 -month anniversary of the closing date. Beardow Adams, based in the United Kingdom, develops and manufactures adhesives, sealants and coatings, principally in the fields of packaging and related applications. The acquisition of Beardow Adams is expected to accelerate profitable growth in many of our core end markets and generate business synergies through better raw material pricing, production optimization and an expanded distribution platform. The acquisition fair value measurement was preliminary as of December 2, 2023 and includes intangible assets of $ 37,611 , goodwill of $ 25,674 and other net assets of $ 37,600 . Goodwill represents expected synergies from combining Beardow Adams with our existing business. As of December 2, 2023, the amount of goodwill that is deductible for tax purposes is $ 2,998 . The remaining goodwill is not deductible for tax purposes. Beardow Adams is included in our Hygiene, Health and Consumable Adhesives operating segment.   53 Table of Contents   Aspen Research Corporation   On January 31, 2023, we acquired the assets of Aspen Research Corporation (“Aspen”) for a total purchase price of $ 9,761 , which was funded through existing cash. This includes a holdback amount of $ 500 that will be paid on the 18 -month anniversary of the closing date. Aspen, located in Maple Grove, Minnesota, is a contract research organization that develops and manufactures innovative solutions for some of the adhesives used in our insulating glass market. Aspen is known for their superior understanding of materials science, engineering and analytical testing and specializes in custom materials manufacturing for chemicals and adhesives products. The acquisition of Aspen is expected to expand our Engineering Adhesives footprint in North America and strengthen our capabilities in the insulating glass market, in addition to bringing additive continuous flow, process manufacturing capabilities that we plan to leverage. The acquisition fair value measurement was final as of December 2, 2023 and includes intangible assets of $ 4,900 , goodwill of $ 3,832 and other net assets of $ 1,029 . Goodwill represents expected synergies from combining Aspen with our existing business. Goodwill is deductible for tax purposes. Aspen is included in our Engineering Adhesives operating segment.   Lemtapes Oy   On December 15, 2022, we acquired Lemtapes Oy (“Lemtapes”) for a total purchase price of $ 8,922 Euro, or approximately $ 9,482 which was funded through existing cash. This includes a holdback amount of 850 Euro that will be paid on the 18 -month anniversary of the closing date. Lemtapes, located in Valkeakoski, Finland, is a solutions provider of ecological, innovative tapes and adhesives for the packaging and plywood industries. The acquisition of Lemtapes is expected to reinforce our strategic position in Europe, especially for our adhesives coated solutions products. This acquisition will also accelerate our growth strategy of fast-growing, high margin businesses while adding technology capabilities and strong customer relationships. The acquisition fair value measurement was final as of December 2, 2023 and includes intangible assets of $ 5,526 , goodwill of $ 3,028 and other net assets of $ 928 . Goodwill represents expected synergies from combining Lemtapes with our existing business. Goodwill is not deductible for tax purposes. Lemtapes is included in our Hygiene, Health and Consumable Adhesives operating segment.   GSSI Sealants   On October 24, 2022, we acquired GSSI Sealants, Inc. ("GSSI") for a total purchase price of $ 7,701 , which was funded through existing cash. This includes a holdback amount of $ 1,050 that was paid on the 12 -month anniversary of the closing date. In addition, we recorded a liability for contingent consideration of $ 870 , to be paid following the completion of certain performance goals and conditions.  GSSI, headquartered in Houston, Texas, is a manufacturer of premier elastomeric butyl rubber sealant tapes. The acquisition of GSSI is expected to support our strategy to expand our Construction Adhesives business selectively via high margin applications. The acquisition fair value measurement was final as of September 2, 2023 and includes intangible assets of $ 3,400 , goodwill of $ 1,123 and other net assets of $ 3,178 . Goodwill represents expected synergies from combining GSSI with our existing business. Goodwill is not deductible for tax purposes. See Note 13 for further discussion of the fair value of the contingent consideration. GSSI is included in our Construction Adhesives operating segment.   ZKLT Polymer Co.   On August 16, 2022, we acquired ZKLT Polymer Co., Ltd. ("ZKLT") for a base purchase price of 143,965 Chinese renminbi, or approximately $ 21,260 , which was funded through existing cash. This includes a holdback of 27,000 Chinese renminbi, or approximately $ 3,987 , half of which was paid on the 12 -month anniversary of the closing date and half to be paid on the 18 -month anniversary of the closing date. In addition, we recorded a liability for contingent consideration of 30,000 Chinese renminbi, or approximately $ 4,132 , which was paid in the fourth quarter of 2023 following the completion of certain performance goals and conditions. ZKLT, headquartered in Chongquin City, China, is a manufacturer of liquid adhesives primarily for the automotive market. The acquisition of ZKLT is expected to add unique technology, strong customer relationships and a strategic manufacturing location to further strengthen our presence in central China. The acquisition fair value measurement was final as of September 2, 2023 and includes intangible assets of $ 5,183 , goodwill of $ 5,992 and other net assets of $ 10,085 . Goodwill represents expected synergies from combining ZKLT with our existing business. Goodwill is not deductible for tax purposes. See Note 13 for further discussion of the fair value of the contingent consideration. ZKLT is included in our Engineering Adhesives operating segment.   54 Table of Contents   Apollo   On January 26, 2022, we acquired Apollo Chemicals Limited, Apollo Roofing Solutions Limited and Apollo Construction Solutions Limited (collectively, "Apollo") for a total purchase price of 152,714 British pound sterling, or approximately $ 205,592 , which was funded through borrowings on our credit facility. Apollo, headquartered in Tamworth, UK, is a manufacturer of liquid adhesives, coatings and primers for the roofing, industrial and construction markets. Apollo is expected to enhance our position in key high-value, high-margin markets in the UK and throughout Europe. The acquisition fair value measurement was final as of December 3, 2022 and includes intangible assets of $ 76,198 , goodwill of $ 119,358 and other net assets of $ 10,036 . Goodwill represents expected synergies from combining Apollo with our existing business. Goodwill is not deductible for tax purposes. The acquisition is included in our Construction Adhesives operating segment.   Fourny NV   On January 11, 2022, we acquired Fourny NV ("Fourny") for a base purchase price of 12,867 Euro, or approximately $ 14,627 , which was funded through existing cash. The agreement required us to pay an additional holdback amount 18 months following the date of acquisition and during the three months ended September 2, 2023 we paid $ 3,060 . Fourny, headquartered in Willebroek, Belgium, is a manufacturer of construction adhesives. Fourny is expected to enhance our position in key high-value, high-margin markets in Europe. The acquisition fair value measurement was final as of December 3, 2022 and includes intangible assets of $ 10,117 , goodwill of $ 6,455 and other net assets of $ 1,391 . Goodwill represents expected synergies from combining Fourny with our existing business. Goodwill is not deductible for tax purposes. Fourny is included in our Construction Adhesives operating segment.   All acquisitions, individually and in the aggregate, are not material and therefore pro forma financial information is not provided.   Note 3: Restructuring Actions   During fiscal year  2023 ,  the Company approved restructuring plans (the "Plans") related to organizational changes and other actions to optimize operations and integrate acquired businesses. The Plans began to be implemented in the  second  quarter of fiscal year  2023  and are currently expected to be completed during fiscal year  2026 ,  with the majority of the charges recognized and cash payments occurring in fiscal  2023  and  2024 .  In implementing the Plans, the Company currently expects to incur pre-tax costs of approximately $ 39,100  to $ 44,100  for severance and related employee costs globally, other restructuring costs related to the streamlining of processes and the payment of anticipated income taxes in certain jurisdictions related to the Plans.    The following table summarizes the pre-tax distribution of charges under these restructuring plans by income statement classification:       December 2, 2023     December 3, 2022     November 27, 2021   Cost of sales   $ 15,012     $ ( 152 )   $ ( 188 ) Selling, general and administrative     9,575       ( 297 )     975       $ 24,587     $ ( 449 )   $ 787     The restructuring charges are all recorded in Corporate Unallocated for segment reporting purposes.   A summary of the restructuring liability is presented below:       Employee-                               Related     Asset-Related     Other     Total   Balance at November 27, 2021   $ 1,095     $ -     $ -     $ 1,095   Expense incurred     ( 449 )     -       -       ( 449 ) Non-cash charges     -       -       -       0   Cash payments     ( 529 )     -       -       ( 529 ) Foreign currency translation     ( 60 )     -       -       ( 60 ) Balance at December 3, 2022   $ 57     $ -     $ -     $ 57   Expense incurred     22,731       1,369       487       24,587   Non-cash charges     -       ( 1,369 )     ( 453 )     ( 1,822 ) Cash payments     ( 9,802 )     -       ( 34 )     ( 9,836 ) Foreign currency translation     ( 1,263 )     -       -       ( 1,263 ) Balance at December 2, 2023   $ 11,723     $ -     $ -     $ 11,723     55 Table of Contents   Non-cash charges include accelerated depreciation resulting from the cessation of use of certain long-lived assets, the recording of a provision related to the discontinuance of certain products and lease termination payments. 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  2023, 2022 and 2021 are as follows:       2023     2022     2021   Foreign currency transaction losses, net   $ ( 11,615 )   $ ( 12,935 )   $ ( 5,962 ) Gain (loss) on disposal of assets     ( 58 )     1,416       ( 648 ) Net periodic pension benefit     20,246       26,787       32,070   Other, net     1,109       ( 2,316 )     7,395   Total other income, net   $ 9,682     $ 12,952     $ 32,855                             Research and development expenses (included in SG&A expenses)   $ 48,640     $ 44,853     $ 39,344     56 Table of Contents   Balance Sheet Information   Additional details of balance sheet amounts as of  December 2, 2023 and December 3, 2022 are as follows:       2023     2022   Inventories                 Raw materials   $ 206,140     $ 237,071   Finished goods     235,900       254,710   Total inventories   $ 442,040     $ 491,781                     Other current assets                 Other receivables   $ 40,760     $ 36,338   Prepaid income taxes     12,327       27,169   Prepaid taxes other than income taxes     34,455       29,322   Prepaid expenses     25,136       27,490   Total other current assets   $ 112,678     $ 120,319                     Property, plant and equipment                 Land   $ 91,320     $ 84,320   Buildings and improvements     447,428       405,037   Machinery and equipment     1,058,916       957,371   Construction in progress     157,371       133,010   Total, at cost     1,755,035       1,579,738   Accumulated depreciation     ( 930,380 )     ( 846,071 ) Net property, plant and equipment   $ 824,655     $ 733,667                     Other assets                 Investments in company owned life insurance   $ 9,334     $ 8,957   Equity method investments     37,562       42,143   Equity investments     1,362       1,362   Long-term deferred income taxes     42,949       39,048   Prepaid pension costs     92,323       86,616   Postretirement other than pension asset     113,431       98,848   Operating lease right-of-use assets     47,433       32,440   Other long-term receivables     14,013       9,262   Other long-term assets     12,758       17,192   Total other assets   $ 371,165     $ 335,868                     Other accrued expenses                 Taxes other than income taxes   $ 22,497     $ 14,642   Miscellaneous services     8,319       7,092   Customer rebates     17,938       24,915   Interest     5,819       7,498   Product liability     175       154   Contingent consideration liability     1,370       1,977   Current operating lease liabilities     11,277       9,794   Current obligations of finance leases     16,184       1,541   Accrued expenses     24,323       21,732   Total other accrued expenses   $ 107,902     $ 89,345                     Other liabilities                 Asset retirement obligations   $ 3,147     $ 2,888   Long-term deferred income taxes     176,385       183,190   Long-term income tax liability     19,225       22,202   Long-term deferred compensation     9,884       9,957   Postretirement other than pension     1,893       2,021   Noncurrent operating lease liabilities     36,879       23,421   Environmental liabilities     2,563       3,064   Net investment hedge liabilities     72,589       54,046   Other long-term liabilities     65,507       57,497   Total other liabilities   $ 388,072     $ 358,286     57 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  2023, 2022 and 2021 are as follows:       2023     2022     2021   Balance at beginning of year   $ 10,939     $ 9,935     $ 12,905   Charged to expenses and other adjustments     1,224       1,794       ( 546 ) Write-offs     ( 1,522 )     ( 851 )     ( 2,278 ) Foreign currency translation effect     439       61       ( 146 ) Balance at end of year   $ 11,080     $ 10,939     $ 9,935     Statement of Comprehensive Income Information   The following tables provides details of total comprehensive income (loss):       December 2, 2023                               Non-controlling       H.B. Fuller Stockholders     Interest       Pretax     Tax     Net     Net   Net income attributable to H.B. Fuller and non-controlling interests     -       -     $ 144,906     $ 82   Other comprehensive income (loss)                                 Foreign currency translation adjustment 1   $ 17,320       -       17,320       2   Defined benefit pension plans adjustment 2     1,554       ( 762 )     792       -   Interest rate swap 3     5,932       ( 1,460 )     4,472       -   Net investment hedges 3     ( 18,555 )     4,448       ( 14,107 )     -   Other comprehensive income (loss)   $ 6,251     $ 2,226     $ 8,477     $ 2   Comprehensive income                   $ 153,383     $ 84         December 3, 2022                               Non-controlling       H.B. Fuller Stockholders     Interest       Pretax     Tax     Net     Net   Net income attributable to H.B. Fuller and non-controlling interests     -       -     $ 180,313     $ 94   Other comprehensive income (loss)                                 Foreign currency translation adjustment 1   $ ( 131,745 )     -       ( 131,745 )     ( 61 ) Defined benefit pension plans adjustment 2     ( 18,881 )     3,818       ( 15,063 )     -   Interest rate swap 3     13,148       ( 3,224 )     9,924       -   Other cash flow hedges 3     ( 3,536 )     53       ( 3,483 )     -   Net investment hedges 3     ( 54,040 )     13,297       ( 40,743 )     -   Other comprehensive income   $ ( 195,054 )   $ 13,944     $ ( 181,110 )   $ ( 61 ) Comprehensive income                   $ ( 797 )   $ 33     58 Table of Contents       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 (loss) income   $ 54,205     $ ( 21,593 )   $ 32,612     $ ( 32 ) Comprehensive income                   $ 194,005     $ 50     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.   Statement of Total Equity Information   Components of accumulated other comprehensive income (loss) are as follows:       December 2, 2023                       Non-               H.B. Fuller     controlling       Total     Stockholders     Interests   Foreign currency translation adjustment   $ ( 246,736 )   $ ( 246,692 )   $ ( 44 ) Defined benefit pension plans adjustment, net of taxes of $ 66,982     ( 127,469 )     ( 127,469 )     -   Interest rate swap, net of taxes of ($ 1,460 )     4,472       4,472       -   Net investment hedges, net of taxes of $ 17,744     ( 54,850 )     ( 54,850 )     -   Reclassification of AOCI tax effects     ( 18,341 )     ( 18,341 )     -   Total accumulated other comprehensive loss   $ ( 442,924 )   $ ( 442,880 )   $ ( 44 )       December 3, 2022                       Non-               H.B. Fuller     controlling       Total     Stockholders     Interests   Foreign currency translation adjustment   $ ( 264,054 )   $ ( 264,012 )   $ ( 42 ) Defined benefit pension plans adjustment, net of taxes of $ 67,744     ( 128,261 )     ( 128,261 )     -   Net investment hedges, net of taxes of $ 13,297     ( 40,743 )     ( 40,743 )     -   Reclassification of AOCI tax effects     ( 18,341 )     ( 18,341 )     -   Total accumulated other comprehensive loss   $ ( 451,399 )   $ ( 451,357 )   $ ( 42 )   59 Table of Contents       November 27, 2021                       Non-               H.B. Fuller     controlling       Total     Stockholders     Interests   Foreign currency translation adjustment   $ ( 132,370 )   $ ( 132,267 )   $ ( 103 ) Defined benefit pension plans adjustment, net of taxes of $ 63,925     ( 113,198 )     ( 113,198 )     -   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       -   Reclassification of AOCI tax effects     ( 18,341 )     ( 18,341 )     -   Total accumulated other comprehensive loss   $ ( 270,350 )   $ ( 270,247 )   $ ( 103 )     Note 5: Goodwill and Other Intangible Assets   Goodwill balances by reportable segment consisted of the following:                                         Hygiene, Health                               and Consumable     Engineering     Construction               Adhesives     Adhesives     Adhesives     Total   As of December 3, 2022   $ 328,962     $ 637,910     $ 425,755     $ 1,392,627   Acquisitions     67,523       5,983       6,179       79,685   Foreign currency translation effect     6,113       7,252       835       14,200   As of December 2, 2023   $ 402,598     $ 651,145     $ 432,769     $ 1,486,512     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 2023 , there were no indications of impairment for any of our reporting units.   60 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 December 2, 2023                                         Original cost   $ 144,763     $ 986,470     $ 58,484     $ 10,911     $ 1,200,628   Accumulated amortization     ( 59,631 )     ( 382,220 )     ( 23,099 )     ( 7,012 )     ( 471,962 ) Net identifiable intangibles   $ 85,132     $ 604,250     $ 35,385     $ 3,899     $ 728,666   Weighted-average useful lives (in years)     13       16       13       13       16   As of December 3, 2022                                         Original cost   $ 118,727     $ 1,004,008     $ 50,324     $ 11,053     $ 1,184,112   Accumulated amortization     ( 66,433 )     ( 388,394 )     ( 21,401 )     ( 6,251 )     ( 482,479 ) Net identifiable intangibles   $ 52,294     $ 615,614     $ 28,923     $ 4,802     $ 701,633   Weighted-average useful lives (in years)     13       17       13       13       16     Amortization expense with respect to amortizable intangible assets was $ 79,514 , $ 74,383 and $ 71,068  in 2023, 2022 and 2021 , 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   2024     2025     2026     2027     2028     Thereafter   Amortization Expense   $ 77,288     $ 77,678     $ 70,957     $ 67,652     $ 67,356     $ 367,735     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  December 2, 2023 and December 3, 2022 were $ 474  and $ 459 , respectively, and relate to trademarks and trade names. The change in non-amortizable assets in  2023 compared to  2022 was due to changes in foreign currency exchange rates.   61 Table of Contents     Note 6: Leases   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.   The components of lease expense are as follows:       December 2, 2023     December 3, 2022   Operating lease cost   $ 13,883     $ 12,026   Finance lease cost:                 Amortization of assets     2,045       1,535   Interest on lease liabilities     1,077       261   Variable lease cost     8,554       6,481   Total net lease cost   $ 25,559     $ 20,303     62 Table of Contents   Supplemental balance sheet information related to leases is as follows:     Location on                   Balance Sheet   December 2, 2023     December 3, 2022   Operating leases:                   Operating lease right-of-use assets Other assets   $ 47,433     $ 32,440                     Current operating lease liabilities Other accrued expenses     11,277       9,794   Noncurrent operating lease liabilities Other liabilities     36,879       23,421   Total operating lease liabilities   $ 48,156     $ 33,215                     Finance leases:                   Equipment right-of-use assets Property, plant and equipment   $ 11,681     $ 11,150   Building right-of-use asset Property, plant and equipment   $ 14,230     $ -                     Current obligations of finance leases Other accrued expenses   $ 16,184     $ 1,541   Finance leases, net of current obligations Other liabilities     6,534       7,507   Total finance lease liabilities   $ 22,718     $ 9,048     As of December 2, 2023 , the weighted average remaining lease term is  9.4 years and the weighted average discount rate is  4.2 % for the company's operating lease agreements. The weighted average remaining lease term is 4.0 years and the weighted average discount rate is 5.9 % for the company's finance lease agreements.   Supplemental information related to leases is as follows:       December 2, 2023     December 3, 2022   Cash paid amounts included in the measurement of lease liabilities:                 Operating cash flows from operating leases   $ 11,745     $ 15,209   Operating cash flows from finance leases     1,077       261   Financing cash flows from finance leases     268       607                     Non-cash investing and financing activities -                      additions to right-of-use assets obtained from:                 New operating lease liabilities   $ 26,687     $ 15,442   New finance lease liabilities     15,015       1,258     63 Table of Contents   Maturities of lease liabilities are as follows:       December 2, 2023   Fiscal Year   Finance Leases     Operating Leases   2024   $ 16,535     $ 12,993   2025     1,618       9,452   2026     1,441       7,085   2027     1,151       5,126   2028     684       3,505   2029 and beyond     2,376       18,869   Total     23,805       57,031   Less: amounts representing interest     ( 1,087 )     ( 8,875 ) Present value of future minimum payments     22,718       48,156   Less: current obligations     ( 16,184 )     ( 11,277 ) Noncurrent lease liabilities   $ 6,534     $ 36,879       Note 7: Notes Payable, Long-Term Debt and Lines of Credit   Notes Payable   Notes payable were $ 1,841  and $ 28,860  at December 2, 2023 and December 3, 2022 , 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 outstanding at December 2, 2023  were approximately 10.75  percent, 16.2  percent in 2022 and  8.1  percent in 2021. 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 December 2, 2023 .   64 Table of Contents   Long-Term Debt       Weighted-Average     Fiscal Year     Balance at     Balance at       Interest Rate at     Maturity     December 2,     December 3,   Long-Term Debt   December 2, 2023     Date     2023     2022   Revolving credit facility     6.95 %     2028     $ -     $ 175,500   Term Loan A 1     6.95 %     2028       487,500       -   Term Loan B 2     7.60 %     2030       796,000       1,001,150   Public Notes 3     4.00 %     2027       300,000       300,000   Public Notes 4     4.25 %     2028       300,000       300,000   Other, including debt issuance cost and discount                     ( 46,910 )     ( 40,394 ) Total debt                   $ 1,836,590     $ 1,736,256   Less: current maturities                     -       -   Total long-term debt, excluding current maturities                   $ 1,836,590     $ 1,736,256     1 Term Loan A, due on February 15, 2028, $ 500,000 variable rate at the Secured Overnight Financing Rate ("SOFR") plu s an adjustment of 0.10 percent and an interest rate spread of 1.50 percent based on a leverage grid  ( 6.95 percent at December 2, 2023 ).   2 Term Loan B, due on February 15, 2030, $ 800,000 variable rate at the SOFR plu s 2.25 percent with a SOFR floor of 0.50 percent  ( 7.60 percent at December 2, 2023 ).   3 Public Notes, due February 15, 2027, $ 300,000 4.00 percent fixed.   4 Public Notes, due October 15, 2028, $ 300,000 4.25 percent fixed; swapped to a floating rate as detailed below.   On February 15, 2023, we entered into a credit agreement with a consortium of financial institutions (“Second Amended and Restated Credit Agreement”) which replaces our existing revolving credit agreement under the amended and restated revolving credit agreement dated October 20, 2020 and also replaces our secured term loan credit agreement dated October 20, 2017. The Second Amended and Restated Credit Agreement provides for a new senior secured term loan A facility in an aggregate principal amount of $ 500,000 (“Term Loan A”), a new senior secured term loan B facility in an aggregate principal amount of $ 800,000 (“Term Loan B”) and amendments to and extension of our existing senior secured revolving credit facility with an aggregate commitment in the amount of $ 700,000 (“Revolving Credit Facility”). A portion of the proceeds of the combined facilities, (the “Credit Facilities”) was used to pay off the existing term loan and revolver. Additionally, we wrote off $ 2,689 of debt issuance costs related to this payoff which was recorded in interest expense for the year ended December 2, 2023 . The Credit Facilities will generally be used to finance working capital needs and acquisitions, and for general corporate purposes. All of our obligations under the Credit Facilities are secured by a first -lien security interest in substantially all personal property and material real property of the Company and its material U.S. subsidiaries, and are guaranteed by all of the Company’s material U.S. subsidiaries.   65 Table of Contents   Term Loans   Interest on Term Loan A is payable at a rate of SOFR plus an adjustment of 0.10 percent and an interest rate spread of 1.50 percent ( 6.95  percent at December 2, 2023 ). The interest rate spread is based on a secured leverage grid. Term Loan A matures on February 15, 2028. At December 2, 2023 , a balance of $ 487,500  was outstanding on the Term Loan A. On  August 16, 2023, we amended the Term Loan B agreement to an interest rate of SOFR plus an interest rate spread of 2.25 percent with a SOFR floor of 0.50  percent ( 7.60  percent at December 2, 2023 ). Term Loan B matures on February 15, 2030.  At December 2, 2023 , a balance of $ 796,000  was outstanding on the Term Loan B.     On January 12, 2023, we entered into an interest rate swap agreement to convert $ 400,000 of our variable rate 1 -month LIBOR rate debt to a fixed rate of  3.6895 percent. On February 28, 2023, after entering into the Second Amended and Restated Credit Agreement, we amended the interest rate swap agreement to 1 -month SOFR and a fixed rate of 3.7260 in accordance with the practical expedients included in ASC 848, Reference Rate Reform . See Note 12  for further discussion of this interest rate swap.   On March 16, 2023, we entered into an interest rate swap agreement to convert $ 300,000 of our 1 -month SOFR rate debt to a fixed rate of 3.7210 percent and to convert $ 100,000 of our 1 -month SOFR rate debt to a fixed rate of 3.8990 percent. See Note 12 for further discussion of this interest rate swap.   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 under the credit agreement at that time. 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.   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 at that time. 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. See Note 12 for further discussion of these interest rate swaps.   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 $ 1,785,199  and $ 1,713,257  as of December 2, 2023 and December 3, 2022 , 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   2024     2025     2026     2027     2028     Thereafter   Long-term debt obligations   $ -     $ -     $ -     $ 300,000     $ 787,500     $ 796,000     66 Table of Contents   Revolving Credit Facility   Interest on the Revolving Credit Facility is payable at SOFR plus an adjustment of 0.10 percent and an interest rate spread of 1.50 percent ( 6.95  percent at  December 2, 2023 ). A facility fee of 20  basis points of the unused commitment under the Revolving Credit Facility is payable quarterly. The interest rate spread and the facility fee are based on a secured leverage grid. At December 2, 2023 , there was no balance outstanding on the Revolving Credit Facility. The Revolving Credit Facility matures on February 15, 2028.    As of December 2, 2023 , amounts related to our revolving credit facility was as follows:       Committed     Drawn     Unused   Revolving credit facility   $ 700,000     $ -     $ 690,032     The secured, multi-currency revolving credit facility can be drawn upon for general corporate purposes up to a maximum of $ 700,000 , less issued letters of credit. At December 2, 2023 , letters of credit reduced the available amount under the revolving credit facility by $ 9,968 .   Covenants and Other   Under the Second Amended and Restated Credit Agreement, the Revolving Credit Facility and Term Loan A are subject to certain covenants and restrictions. For these facilities, we are required to maintain a secured leverage ratio, as defined in the agreement, no greater than 4.75 to 1.00 for our fiscal quarters ending on or prior to June 1, 2024 and then 4.50 to 1.00 thereafter. We are also required to maintain an interest coverage ratio of not less than 2.00 to 1.00.     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 total 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. We are subject to mandatory prepayments in the first quarter of each fiscal year equal to 50 percent of Excess Cash Flow, as defined in the Second Amended and Restated 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 percent when our Secured Leverage Ratio is below 4.25:1.00 and to 0 percent when our Secured Leverage Ratio is below 3.75:1.00.   The principal balance of the Term Loan B loans will be repayable in equal quarterly installments in an aggregate annual amount equal to 1 percent of the original principal amount thereof, with the balance due at maturity on February 15, 2030. The principal balance of the Term Loan A loans will be repayable in quarterly installments as follows: (i) with respect to the first eight fiscal quarters ended after the effective date of the Second Amended and Restated Credit Agreement, 1.25 percent of the aggregate principal amount of the original principal of the Term Loan A loans, (ii) with respect to the eight fiscal quarters ended after the end of the period set forth in the preceding clause (i), 1.875 percent of the aggregate principal amount of the original principal amount of the Term Loan A loans, and (iii) thereafter, 2.5 percent of the original principal amount of the Term Loan A loans, with the balance due at maturity on February 15, 2028.   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.   67 Table of Contents     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 54,092,987  and 53,676,576  shares issued and outstanding at December 2, 2023 and December 3, 2022 , respectively.   On April 7, 2022, the Board of Directors authorized a new share repurchase program of up to $ 300,000  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 April 6, 2017 authorization to repurchase shares. We did not repurchase any shares during  2023, 2022 and 2021 under our share repurchase program. Up to $ 300,000  of our outstanding common shares may still be repurchased under the current share repurchase program.   Common Shares Outstanding   2023     2022     2021   Beginning balance     53,676,576       52,777,753       51,906,663   Stock options exercised     314,832       657,789       740,731   Deferred compensation paid     102,108       118,429       19,895   Restricted units vested     113,339       172,474       157,945   Shares withheld for taxes     ( 113,868 )     ( 49,869 )     ( 47,481 ) Ending balance     54,092,987       53,676,576       52,777,753       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.   68 Table of Contents   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. Time-based restricted stock awards generally vest beginning one year from the date of grant or 33.3 percent per year for three years, depending on the grant. Performance-based restricted stock awards vest three years from the date of 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 any employee, officer, non-employee director, consultant, independent contractor or advisor providing services to us or any of our affiliates, or any person to whom an offer of employment or engagement with us or any of our affiliates has been made. 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 or non-employee directors deferred under the deferred compensation plans. There were 3,413,652  common shares available for grant as of December 2, 2023 .   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.   69 Table of Contents   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.   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  2023, 2022 and 2021 were calculated using the following assumptions:       2023     2022     2021   Expected life (in years)     5.00       5.00       5.00   Weighted-average expected volatility     35.28 %     33.35 %     32.50 % Expected volatility range     35.09 - 35.69 %     33.33 - 34.34 %     32.48 % - 32.94 %   Risk-free interest rate     3.48 - 4.72 %     1.53 - 4.06 %     0.39 % - 1.20 %   Weighted-average expected dividend     1.20 %     0.95 %     1.26 % Expected dividend yield range     1.13 - 1.22 %     0.94 - 1.23 %     0.92 % - 1.27 %   Weighted-average fair value of grants   $ 22.41     $ 20.91     $ 13.29     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 closing stock price on the date of grant.   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.   70 Table of Contents   Total share-based compensation expense was $ 19,911 , $ 24,368 and $ 22,366 for 2023, 2022 and 2021 , respectively. All share-based compensation was recorded as SG&A expense.   As of December 2, 2023 , $ 7,526  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 $ 8,940  which is expected to be recognized over a weighted-average period of 0.68  years.   Stock Option Activity   The stock option activity for the years ended  December 2, 2023, December 3, 2022, and November 27, 2021 is summarized below:               Weighted-               Average       Options     Exercise Price   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   Granted     549,458       72.75   Exercised     ( 657,789 )     45.79   Forfeited or cancelled     ( 40,991 )     61.31   Outstanding at December 3, 2022     4,823,070     $ 50.42   Granted     471,975       68.27   Exercised     ( 314,832 )     46.43   Forfeited or cancelled     ( 38,328 )     63.52   Outstanding at December 2, 2023     4,941,885     $ 52.28     The fair value of options granted during  2023, 2022 and 2021 was $ 10,577 , $ 5,400 and $ 17,250 , respectively. Total intrinsic value of options exercised during  2023, 2022 and 2021 was $ 8,015 , $ 16,877 and $ 15,261 , respectively. For options outstanding at December 2, 2023 , the weighted-average remaining contractual life was 5.6 years and the aggregate intrinsic value was $ 121,640 . There were 3,926,049 options exercisable at December 2, 2023 , with a weighted-average remaining contractual life of 4.9 years and an aggregate intrinsic value of $ 108,853 . 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  December 2, 2023, December 3, 2022, and November 27, 2021 were $ 14,619 , $ 30,122 and $ 32,325 , respectively. The company’s actual tax benefits realized for the tax deductions related to the exercise of stock options for  2023, 2022 and 2021 was $ 1,885 , $ 3,687 and $ 3,874 , respectively.   71 Table of Contents   Restricted Stock Unit Activity   The nonvested restricted stock unit activity for the years ended  December 2, 2023, December 3, 2022, and November 27, 2021 is summarized below:                       Weighted-               Weighted-     Average               Average     Remaining               Grant     Contractual               Date Fair     Life       Units     Value     (in Years)   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   Granted     179,603       67.92       3.2   Vested     ( 172,474 )     46.74       -   Forfeited     ( 68,374 )     45.83       0.1   Nonvested at December 3, 2022   $ 491,120     $ 58.98       0.7   Granted     187,185       63.32       2.2   Vested     ( 113,339 )     53.83       -   Forfeited     ( 36,276 )     44.48       0.2   Nonvested at December 2, 2023   $ 528,690     $ 62.61       0.7     Total fair value of restricted stock units vested during 2023 , 2022 , and  2021 was $ 6,101 , $ 8,062 and $ 7,691 , respectively. The total fair value of nonvested restricted stock at  December 2, 2023 was $ 33,101 .   We indirectly repurchased 37,715 , 55,081 and 50,799 shares during 2023, 2022 and 2021 , respectively, through a net-settlement feature 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  2023, 2022 and 2021 was $ 1,396 , $ 2,569  and $ 1,439 , respectively.   Deferred Compensation Activity   Deferred compensation units are fully vested at the date of contribution. The deferred compensation units outstanding for the years ended  December 2, 2023, December 3, 2022, and November 27, 2021 is summarized below:       Non-employee                       Directors     Employees     Total   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   Participant contributions     89,054       12,985       102,039   Company match contributions 1     26,843       1,299       28,142   Payouts     ( 118,429 )     ( 6,073 )     ( 124,502 ) Units outstanding December 3, 2022     465,992       56,572       522,564   Participant contributions     13,187       12,219       25,406   Company match contributions 1     18,899       1,222       20,121   Payouts     ( 102,108 )     ( 6,826 )     ( 108,934 ) Units outstanding December 2, 2023     395,970       63,187       459,157     1 The non-employee directors’ company match includes 17,580 , 17,937 and 18,814 deferred compensation units paid as discretionary awards to all non-employee directors in 2023, 2022 and 2021 , respectively.   72 Table of Contents   The fair value of non-employee directors’ company matches for  2023, 2022 and 2021 was $ 172 , $ 172 and $ 163 , respectively. The fair value of the non-employee directors’ discretionary award was $ 1,200 , $ 1,080  and $ 1,215 for  2023 ,  2022 and 2021 , respectively. The fair value of employee company matches was $ 79 , $ 86 and $ 61 for 2023, 2022 and 2021 , 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  2023 was $ 14,221 which included the cost of the 4 percent company match of $ 9,853 and the additional 1 percent contribution of $ 4,368 . T he total contributions to the 401 (k) plan were $ 12,113 and $ 12,488  in  2022 and 2021 , respectively.   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. There was no discretionary non-elective contribution for 2023  and a discretionary non-elective contribution of $ 950 was accrued for  2022 .   The defined contribution plan liability recorded in the Consolidated Balance Sheets was $ 11,626   and $ 12,263  in  2023 and 2022 , 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. No amounts were paid under this program in 2023 or 2022. Other U.S. postretirement benefits are funded through a Voluntary Employees' Beneficiaries Association Trust.   73 Table of Contents   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 December 2, 2023 and December 3, 2022 :       Pension Benefits     Other Postretirement       U.S. Plans     Non-U.S. Plans     Benefits       2023     2022     2023     2022     2023     2022   Change in projected benefit obligation                                                 Benefit obligation at beginning of year   $ 269,874     $ 361,212     $ 154,850     $ 238,400     $ 24,173     $ 31,262   Service cost     -       -       1,670       2,765       -       -   Interest cost     13,901       9,653       5,726       2,893       1,205       748   Participant contributions     -       -       -       -       232       296   Actuarial gain 1     ( 7,298 )     ( 80,296 )     ( 12,435 )     ( 57,159 )     ( 611 )     ( 5,395 ) Curtailments     -       -       -       231       -       -   Settlement payments     ( 141 )     ( 200 )     ( 252 )     ( 7,988 )     -       -   Benefits paid     ( 20,946 )     ( 20,495 )     ( 7,663 )     ( 8,370 )     ( 2,866 )     ( 2,738 ) Foreign currency translation effect     -       -       4,900       ( 15,922 )     -       -   Benefit obligation at end of year     255,390       269,874       146,796       154,850       22,133       24,173                                                     Change in plan assets                                                 Fair value of plan assets at beginning of year     326,786       409,811       141,908       216,623       120,782       135,701   Actual return on plan assets     12,811       ( 63,562 )     ( 5,545 )     ( 45,328 )     15,160       ( 12,613 ) Employer contributions     1,228       1,232       1,744       1,640       145       136   Participant contributions     -       -       -       -       232       296   Settlement payments     ( 141 )     ( 200 )     -       -       -       -   Benefits paid 2     ( 20,946 )     ( 20,495 )     ( 7,663 )     ( 8,369 )     ( 2,866 )     ( 2,738 ) Foreign currency translation effect     -       -       4,178       ( 22,658 )     -       -   Fair value of plan assets at end of year     319,738       326,786       134,622       141,908       133,453       120,782   Plan assets in excess of (less than) benefit obligation as of year end   $ 64,348     $ 56,912     $ ( 12,174 )   $ ( 12,942 )   $ 111,320     $ 96,608     1 Actuarial gain in  2023 and 2022 for the U.S. Plans is primarily due to assumption changes. Actuarial gain in  2023 and 2022 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.   74 Table of Contents   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       2023     2022     2023     2022     2023     2022   Unrecognized actuarial loss (gain)   $ 143,522     $ 137,351     $ 49,128     $ 49,306     $ ( 14,442 )   $ ( 8,530 ) Unrecognized prior service cost     -       -       1,196       1,219       -       -   Ending balance   $ 143,522     $ 137,351     $ 50,324     $ 50,525     $ ( 14,442 )   $ ( 8,530 )       Pension Benefits     Other Postretirement       U.S. Plans     Non-U.S. Plans     Benefits       2023     2022     2023     2022     2023     2022   Statement of financial position as of fiscal year-end                                                 Non-current assets   $ 76,677     $ 69,826     $ 15,635     $ 16,790     $ 113,431     $ 98,848   Accrued benefit cost                                                 Current liabilities     ( 1,239 )     ( 1,248 )     ( 1,464 )     ( 1,727 )     ( 218 )     ( 218 ) Non-current liabilities     ( 11,089 )     ( 11,666 )     ( 26,345 )     ( 28,006 )     ( 1,893 )     ( 2,021 ) Ending balance   $ 64,349     $ 56,912     $ ( 12,174 )   $ ( 12,943 )   $ 111,320     $ 96,609     The accumulated benefit obligation of the U.S. pension and other postretirement plans was $ 273,197 at  December 2, 2023 and $ 289,049  at December 3, 2022 . The accumulated benefit obligation of the non-U.S. pension plans was $ 141,402 at  December 2, 2023 and $ 148,927  at December 3, 2022 .   The following amounts relate to pension plans with accumulated benefit obligations in excess of plan assets as of December 2, 2023 and December 3, 2022 :       Pension Benefits and Other Postretirement Benefits       U.S. Plans     Non-U.S. Plans       2023     2022     2023     2022   Accumulated benefit obligation   $ 12,329     $ 12,914     $ 35,034     $ 36,820   Fair value of plan assets     -       -       9,700       9,617     The following amounts relate to pension plans with projected benefit obligations in excess of plan assets as of December 2, 2023 and December 3, 2022 :       Pension Benefits and Other Postretirement Benefits       U.S. Plans     Non-U.S. Plans       2023     2022     2023     2022   Projected benefit obligation   $ 12,329     $ 12,914     $ 37,510     $ 39,350   Fair value of plan assets     -       -     $ 9,700       9,617     75 Table of Contents   Information about the expected cash flows is as follows:         Pension Benefits     Other                 Non-U.S.     Postretirement         U.S. Plans     Plans     Benefits   Employer contributions                           2024     $ -     $ 5     $ -   Expected benefit payments                           2024       21,330       8,387       2,723   2025       21,351       8,470       2,622   2026       21,251       8,651       2,512   2027       21,168       8,948       2,382   2028- 2033       121,219       53,787       11,487     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  December 2, 2023, December 3, 2022, and November 27, 2021 are as follows:       Pension Benefits     Other       U.S. Plans     Non-U.S. Plans     Postretirement Benefits   Net periodic cost (benefit)   2023     2022     2021     2023     2022     2021     2023     2022     2021   Service cost   $ -     $ -     $ -     $ 1,670     $ 2,765     $ 3,280     $ -     $ -     $ 21   Interest cost     13,901       9,653       9,299       5,726       2,893       2,941       1,205       748       822   Expected return on assets     ( 28,821 )     ( 29,018 )     ( 31,123 )     ( 7,027 )     ( 6,465 )     ( 12,348 )     ( 9,859 )     ( 11,084 )     ( 8,945 ) Amortization:                                                                         Prior service (benefit) cost     -       ( 3 )     ( 3 )     62       63       69       -       -       -   Actuarial loss (gain)     2,541       4,132       3,198       1,993       2,411       4,053       -       ( 3,445 )     73   Settlement charge     -       -       -       19       3,329       -       -       -       -   Net periodic (benefit) cost   $ ( 12,379 )   $ ( 15,237 )   $ ( 18,629 )   $ 2,443     $ 4,996     $ ( 2,005 )   $ ( 8,654 )   $ ( 13,781 )   $ ( 8,029 )       Pension Benefits     Other       U.S. Plans     Non-U.S. Plans     Postretirement Benefits   Weighted-average assumptions used to determine benefit obligations   2023     2022     2021     2023     2022     2021     2023     2022     2021   Discount rate     5.66 %     5.36 %     2.75 %     4.37 %     3.70 %     1.27 %     5.61 %     5.29 %     2.51 % Rate of compensation increase 1     0.00 %     0.00 %     0.00 %     1.82 %     1.83 %     1.48 %     N/A       N/A       N/A     Weighted-average assumptions used to determine net costs for years ended   2023     2022     2021     2023     2022     2021     2023     2022     2021   Discount rate     5.36 %     2.75 %     2.50 %     3.71 %     1.29 %     1.19 %     5.29 %     2.51 %     2.19 % Expected return on plan assets     7.75 %     7.00 %     7.24 %     5.02 %     3.49 %     6.15 %     8.25 %     8.25 %     8.25 % Rate of compensation increase 1     0.00 %     0.00 %     0.00 %     1.82 %     1.68 %     1.67 %     0.00 %     0.00 %     0.00 %   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.    76 Table of Contents   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 5.66 percent at December 2, 2023 , 5.36 percent at  December 3, 2022 and 2.76 percent at November 27, 2021 . 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  December 2, 2023 would impact U.S. pension and other postretirement plan (income) expense by approximately $ 149  (pre-tax) in fiscal 2024. 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 7.75 percent in 2023 ,  7.00 percent in  2022 and 7.25 percent in  2021 . Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 55 percent equities and 45 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 2023 , the expected long-term rate of return on the target equities allocation was 8.50  p ercent and the expected long-term rate of return on the target fixed-income allocation was 5.60  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 $ 2,266   (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 5.02 percent in  2023 compared to 3.49 percent in  2022 and 6.15  percent in 2021 . 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 4.50 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   2023     2022     2021   Health care cost trend rate assumed for next year     6.25 %     6.50 %     6.50 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)     5.75 %     5.75 %     5.00 % Fiscal year that the rate reaches the ultimate trend rate   2026     2026     2028     The asset allocation for the company’s U.S. and non-U.S. pension plans at the end of  2023 and  2022 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   2023     2023     2022     2023     2023     2022     2023     2023     2022   Equities     55.0 %     53.8 %     53.1 %     21.0 %     22.0 %     25.5 %     0.0 %     0.0 %     0.0 % Fixed income     45.0 %     44.9 %     45.8 %     79.0 %     77.2 %     70.0 %     0.0 %     0.0 %     0.0 % Insurance     0.0 %     0.0 %     0.1 %     0.0 %     0.0 %     0.0 %     100.0 %     99.5 %     98.9 % Cash 1     0.0 %     1.3 %     1.0 %     0.0 %     0.8 %     4.5 %     0.0 %     0.5 %     1.1 % Total     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %     100 %   77 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  2023 and 2022 . 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 2023 , we maintained our assets within the allowed ranges of the target asset alloca tion mix of 55 percent equities and 45 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 outside the U.S., principally consisting of plans in Germany and the United Kingdom. During  2023 , 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 2024.   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  2023 and 2022 . 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.   78 Table of Contents   Fair Value of Plan Assets   The following table presents plan assets categorized within a three -level fair value hierarchy as described in Note 13.       December 2, 2023   U.S. Pension Plans   Level 1     Level 2     Level 3     Total Assets   Equities   $ -     $ 172,166     $ -     $ 172,166   Fixed income     -       129,044       -       129,044   Cash     4,054       -       -       4,054   Total categorized in the fair value hierarchy     4,054       301,210       -       305,264   Other investments measured at NAV 1     -       -       -       14,474   Total   $ 4,054     $ 301,210     $ -     $ 319,738     Non-U.S. Pension Plans   Level 1     Level 2     Level 3     Total Assets   Equities   $ 29,601     $ -     $ -     $ 29,601   Fixed income     40,686       -       726       41,412   Cash     1,137       -       -       1,137   Total categorized in the fair value hierarchy     71,424       -       726       72,150   Other investments measured at NAV 1                             62,472   Total   $ 71,424     $ -     $ 726     $ 134,622     Other Postretirement Benefits   Level 1     Level 2     Level 3     Total Assets   Insurance   $ -     $ -     $ 132,754     $ 132,754   Cash     699       -       -       699   Total   $ 699     $ -     $ 132,754     $ 133,453         December 3, 2022   U.S. Pension Plans   Level 1     Level 2     Level 3     Total Assets   Equities   $ -     $ 152,084     $ 21,525     $ 173,609   Fixed income     -       126,114       23,547       149,661   Insurance     -       -       179       179   Cash     3,337       -       -       3,337   Total categorized in the fair value hierarchy     3,337       278,198       45,251       326,786     79 Table of Contents   Non-U.S. Pension Plans   Level 1     Level 2     Level 3     Total Assets   Equities   $ 28,422     $ -     $ -     $ 28,422   Fixed income     41,515       -       703       42,218   Cash     491       -       -       491   Total categorized in the fair value hierarchy     70,428       -       703       71,131   Other investments measured at NAV 1                             70,777   Total   $ 70,428     $ -     $ 703     $ 141,908     Other Postretirement Benefits   Level 1     Level 2     Level 3     Total Assets   Insurance   $ -     $ -     $ 119,446     $ 119,446   Cash     1,336       -       -       1,336   Total   $ 1,336     $ -     $ 119,446     $ 120,782     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.   The definitions of fair values of our pension and other postretirement benefit plan assets at  December 2, 2023 and December 3, 2022 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.   80 Table of Contents   The following is a roll forward of the Level 3 investments of our pension and postretirement benefit plan assets during the years ended December 2, 2023 and December 3, 2022 :       Fixed Income   U.S. Pension Plans   2023     2022   Level 3 balance at beginning of year   $ 45,251     $ 186   Net transfers (out of)/into level 3     ( 45,072 )   $ 16,564   Purchases, sales, issuances and settlements, net     ( 179 )     28,501   Level 3 balance at end of year   $ -     $ 45,251         Fixed Income   Non-U.S. Pension Plans   2023     2022   Level 3 balance at beginning of year   $ 703     $ 749   Net transfers into level 3     -       7   Net losses     -       ( 1 ) Currency change effect     23       ( 52 ) Level 3 balance at end of year   $ 726     $ 703         Insurance   Other Postretirement Benefits   2023     2022   Level 3 balance at beginning of year   $ 119,446     $ 135,484   Net transfers out of level 3     -       ( 1,992 ) Purchases, sales, issuances and settlements, net     ( 1,144 )     ( 1,122 ) Net gains/(losses)     14,452       ( 12,924 ) Level 3 balance at end of year   $ 132,754     $ 119,446       81 Table of Contents   Note 11: Income Taxes   Income before income taxes and income from equity method investments   2023     2022     2021   United States   $ 15,276     $ 63,718     $ 14,989   Non-U.S.     218,885       188,210       201,862   Total   $ 234,161     $ 251,928     $ 216,851     Components of the provision for income tax expense (benefit)   2023     2022     2021   Current:                         U.S. federal   $ 18,347     $ 12,181     $ 10,310   State     5,529       3,389       2,265   Non-U.S.     87,449       63,750       57,801         111,325       79,320       70,376   Deferred:                         U.S. federal     ( 100 )     8,150       ( 6,891 ) State     ( 4,111 )     ( 1,767 )     ( 350 ) Non-U.S.     ( 13,585 )     ( 8,517 )     ( 102 )       ( 17,796 )     ( 2,134 )     ( 7,343 ) Total   $ 93,529     $ 77,186     $ 63,033     Reconciliation of effective income tax   2023     2022     2021   Tax at statutory U.S. federal income tax rate   $ 49,174     $ 52,760     $ 45,539   State income taxes, net of federal benefit     1,137       1,252       1,444   Foreign dividend repatriation 1       21,730       2,596       1,104   Foreign operations     12,558       1,868       19,673   Executive compensation over $1.0 million     784       2,847       2,507   Non-U.S. stock option expense     730       525       575   Change in valuation allowance     725       3,187       ( 9,572 ) Research and development tax credit     ( 1,400 )     ( 927 )     ( 993 ) Foreign-derived intangible income     ( 2,665 )     ( 2,786 )     ( 2,617 ) Global intangible low-taxed income     2,345       1,890       2,334   Provision to return     1,336       840       1,122   Cross currency swap     -       7,020       3,931   Contingency reserve     5,951       5,909       ( 2,139 ) Other     1,124       205       125   Total income tax expense   $ 93,529     $ 77,186     $ 63,033     1 Foreign dividend repatriation line includes impact of withholding tax recorded on earnings that are no longer permanently reinvested.   82 Table of Contents   Deferred income tax balances at each year-end related to:   2023     2022   Deferred tax assets:                 Pension and other post-retirement benefit plans   $ 5,306     $ 6,752   Employee benefit costs     27,672       25,196   Foreign tax credit carryforward     6,538       7,884   Tax loss carryforwards     25,894       22,948   Leases     12,716       8,538   Hedging activity     18,638       13,299   Interest deduction limitation     37,519       17,736   Other     33,022       28,840   Gross deferred tax assets     167,305       131,193   Less: valuation allowance     ( 15,595 )     ( 14,424 ) Total net deferred tax assets     151,710       116,769   Deferred tax liability:                 Depreciation and amortization     ( 209,266 )     ( 215,219 ) Pension and other post-retirement benefit plans     ( 41,444 )     ( 37,362 ) Undistributed earnings of non-U.S. subsidiaries     ( 21,926 )     -   Leases     ( 12,510 )     ( 8,329 ) Total deferred tax liability     ( 285,146 )     ( 260,910 ) Net deferred tax liability   $ ( 133,436 )   $ ( 144,141 )   The difference between the change in the deferred tax liability on the balance sheet and the deferred tax provision is primarily related to the defined benefit pension plan adjustment and hedges recorded in accumulated other comprehensive income (loss) offset by liabilities established in purchase accounting.   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 increase 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.   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.   83 Table of Contents   U.S. income taxes have not been provided on approximately $ 1,154,354  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 $ 81,655 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 $ 60,269 can be carried forward indefinitely, while the remaining $ 21,386 of tax losses must be utilized during 2024 to 2041.   The U.S. has a branch foreign tax credit carryforward of $ 4,465 . 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.       2023     2022   Balance at beginning of year   $ 17,582     $ 13,281   Tax positions related to the current year:                 Additions     723       469                     Tax positions related to prior years:                 Additions     5,658       5,885   Reductions     ( 965 )     ( 1,019 ) Settlements     ( 8,156 )     -   Lapses in applicable statutes of limitation     ( 588 )     ( 1,034 ) Balance at end of year   $ 14,254     $ 17,582     Included in the balance of unrecognized tax benefits as of  December 2, 2023 and December 3, 2022 are potential benefits of $ 10,338  and $ 12,663  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 December 2, 2023 , we recognized a net benefit for interest and penalties of $ 824  relating to unrecognized tax benefits and had net accumulated accrued interest and penalties of $ 6,708 as of December 2, 2023 . For the year ended December 3, 2022 , we recognized a net benefit for interest and penalties of $ 2,760  relating to unrecognized tax benefits and had net accumulated accrued interest and penalties of $ 6,275  as of December 3, 2022 .   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 2020  or Swiss income tax examination for years prior to 2020. 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.   84 Table of Contents     Note 12: Financial Instruments   Overview   As a result of being a global enterprise, foreign currency exchange rates and fluctuations in those rates may affect the Company's net investment in foreign subsidiaries and 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, interest rate swaps and net investment hedges 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 .   Cash Flow Hedges   On January 12, 2023, we entered into an interest rate swap agreement to convert $ 400,000 of our variable rate 1 -month LIBOR rate debt to a fixed rate of  3.6895 percent that matures on January 12, 2028. On February 28, 2023, after refinancing our debt, we amended the interest rate swap agreement to our 1 -month SOFR rate debt to a fixed rate of 3.7260 in accordance with the practical expedients included in ASC 848, Reference Rate Reform . The combined fair value of the interest rate swap was an asset of $ 2,458 at December 2, 2023 and was included in other assets in the Consolidated Balance Sheets. The swap was designated for hedge accounting treatment as a cash flow hedge. We are applying 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 variable rate debt are compared with the change in the fair value of the swap.   O n March 16, 2023, we entered into an interest rate swap agreement to convert $ 300,000 of our 1 -month SOFR rate debt to a fixed rate of 3.7210 percent that matures on February 15, 2028. The combined fair value of the interest rate swap was an asset of $ 1,174 at December 2, 2023 and was included in other assets in the Consolidated Balance Sheets. The swap was designated for hedge accounting treatment as a cash flow hedge. We are applying the hypothetical derivative method to assess h edge 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 variable rate debt are compared with the change in the fair value of the swaps.   On March 16, 2023, we entered into an interest rate swap agreement to convert $ 100,000 of our 1 -month SOFR rate debt to a fixed rate of 3.8990 percent that matures on February 15, 2028. The combined fair value of the interest rate swap was a liability of $ 63 at December 2, 2023 and was included in other liabilities in the Consolidated Balance Sheets. The swap was designated for hedge accounting treatment as a cash flow hedge. 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 variable rate debt are compared with the change in the fair value of the swaps.   85 Table of Contents   The amounts of pretax gains (losses) recognized in comprehensive income related to derivative instruments designated as cash flow hedges are as follows:       December 2, 2023     December 3, 2022     November 27, 2021   Cross-currency swap contracts   $ -     $ ( 3,536 )   $ ( 4,554 ) Interest rate swap contracts   $ 5,932     $ 13,148     $ 20,109   Net investment hedges   $ ( 18,555 )   $ ( 54,040 )     -     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. On June 30, 2023, 1 -month LIBOR rates ceased to exist and the IBOR Fallbacks Protocol published by the International Swaps and Derivatives Association ("ISDA") took effect as outlined in the interest rate swap agreement. As a result, the interest rate swap agreements were converted to Overnight SOFR plus 3.28 percent. We applied the practical expedients included in ASC 848, Reference Rate Reform . See Note 7 for further discussion on the issuance of our Public Notes. These interest rate swap agreements mature on October 15, 2028. The combined fair value of the interest rate swaps w as a liability of $ 41,532  at  December 2, 2023 , and was included in other liabilities in the Cons olidated 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 an interest rate swap agreement 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 a fair value hedge. 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 swap. 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.   Net Investment Hedges   On October 17, 2022, we entered into a float-to-float cross-currency interest rate swap agreement with a notional amount of €307,173 maturing in October 2028. On October 20, 2022, we entered into fixed-to-fixed cross-currency interest rate swap agreements for a total notional amount of €300,000 with tranches maturing in August 2025, August 2026 and February 2027.  On June 30, 2023, 1 -month LIBOR rates ceased to exist and the IBOR Fallbacks Protocol published by the International Swaps and Derivatives Association (ISDA) took effect as outlined in the interest rate swap agreement. As a result, the 1 -month LIBOR leg of the float-to-float agreement was converted to Overnight SOFR plus 3.28 percent. On July 17, 2023, we amended the 1 -month EURIBOR leg of the float-to-float agreement to Overnight ESTR plus 3.2195 percent. We applied the practical expedients included in ASC 848, Reference Rate Reform . As of December 2, 2023 , the combined fair value of the swaps was a liability of $ 72,589 and was included in other liabilities in the Consolidated Balance Sheets. The cross-currency interest rate swaps hedge a portion of the Company’s investment in Euro denominated foreign subsidiaries.   The swaps are designated as net investment hedges for accounting treatment. The net gains or losses attributable to changes in spot exchange rates are recorded in the cumulative translation adjustment within other comprehensive income (loss). The gains or losses are reclassified into earnings upon a liquidation event or deconsolidation of the foreign subsidiary. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The amount in accumulated other comprehensive income (loss) related to net investment hedge cross-currency sw aps was a loss of $ 54,850   as of December 2, 2023 . The amounts of pretax loss recognized in comprehensive income related to the net investment hedge was $ 18,712 in 2023. As of December 2, 2023 , we did not reclassify any gains or losses into earnings from net investment hedges and we do not expect to reclassify any such gain or loss into earnings within the next twelve months. No amounts related to net investment hedges have been excluded from the assessment of hedge effectiveness.   86 Table of Contents   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 December 2, 2023 , we had forward foreign currency contracts maturing bet ween December 4, 2023 and May 13, 2024. 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:       December 2, 2023     December 3, 2022     November 27, 2021   Foreign currency forward contracts   $ 8,497     $ 5,711     $ ( 357 )   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 December 2, 2023 , 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.   87 Table of Contents   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 December 2, 2023 and December 3, 2022 , and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.               Fair Value Measurements               Using:       December 2,                           Description   2023     Level 1     Level 2     Level 3   Assets:                                 Marketable securities   $ 19,314     $ 19,314     $ -     $ -   Foreign exchange contract assets     13,501       -       13,501       -   Interest rate swaps, cash flow hedge assets     3,632     $ -       3,632     $ -                                     Liabilities:                                 Foreign exchange contract liabilities   $ 5,004     $ -     $ 5,004     $ -   Interest rate swaps, cash flow hedge liabilities     63     $ -       63     $ -   Interest rate swaps, fair value hedge liabilities     41,532     $ -       41,532     $ -   Net investment hedge liability     72,589       -       72,589       -   Contingent consideration liability     1,370       -       -       1,370                                                   Fair Value Measurements               Using:       December 3,                           Description   2022     Level 1     Level 2     Level 3   Assets:                                 Marketable securities   $ 4,013     $ 4,013     $ -     $ -   Foreign exchange contract assets     10,282       -       10,282       -                                     Liabilities:                                 Foreign exchange contract liabilities   $ 4,570     $ -     $ 4,570     $ -   Cross-currency cash flow hedge liabilities     42,542       -       42,542       -   Interest rate swaps, cash flow hedge liabilities     54,046       -       54,046       -   Contingent consideration liability     1,977       -       -       1,977     The valuation of our contingent consideration liability related to the acquisitions of GSSI and TissueSeal was $ 870 and $ 500 , respectively, as of December 2, 2023 . As of December 2, 2023 , the agreement provisions for the ZKLT contingent consideration were met, and as a result, $ 4,132 was paid during 2023. 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   2023   Level 3 balance at beginning of year   $ 1,977   Fair value adjustment     3,763   Payment of contingent consideration     ( 4,132 ) Mark to market adjustment     ( 238 ) Level 3 balance at end of year   $ 1,370     Balances Measured at Fair Value on a Nonrecurring Basis   We measure certain assets and liabilities at fair value on a nonrecurring basis. These assets include intangible assets acquired in an acquisition. The identified intangible assets of customer relationships, technology and tradenames acquired in connection with our acquisitions were measured using unobservable (Level  3 ) inputs. The fair value of the intangible assets was calculated using either the income or cost approach. Significant inputs include estimated revenue growth rates, gross margins, operating expenses, attrition rate, royalty rate and discount rate.     88 Table of Contents   See Note  2  for further discussion regarding our acquisitions.   See Note 7 for discussion regarding the fair value of debt.   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 $ 5,034  and $ 5,754  as of December 2, 2023 and December 3, 2022 , respectively, for probable and reasonably estimable environmental remediation costs. Of the amount reserved, $ 2,301  and $ 2,789  as of December 2, 2023 and December 3, 2022 , 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.   89 Table of Contents   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       December 2,     December 3,     November 27,       2023     2022     2021   Lawsuits and claims settled     9       7       2   Settlement amounts   $ 4,200     $ 296     $ 85   Insurance payments received or expected to be received   $ 2,379     $ 195     $ 55     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.   90 Table of Contents   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:       2023     2022     2021   Net revenue                         Hygiene, Health and Consumable Adhesives   $ 1,601,487     $ 1,695,934     $ 1,472,756   Engineering Adhesives     1,428,744       1,532,639       1,371,756   Construction Adhesives     480,703       520,610       433,519   Total   $ 3,510,934     $ 3,749,183     $ 3,278,031                             Segment operating income (loss)                         Hygiene, Health and Consumable Adhesives   $ 215,088     $ 165,786     $ 138,366   Engineering Adhesives     187,346       168,873       135,913   Construction Adhesives     5,961       22,989       14,148              Total segment     408,395       357,648       288,427   Corporate Unallocated 1     ( 53,258 )     ( 34,930 )     ( 35,815 ) Total   $ 355,137     $ 322,718     $ 252,612                             Depreciation and amortization                         Hygiene, Health and Consumable Adhesives   $ 53,398     $ 46,374     $ 45,919   Engineering Adhesives     63,143       58,307       61,082   Construction Adhesives     41,915       41,713       35,002   Corporate Unallocated 1     1,384       582       1,171   Total   $ 159,840     $ 146,976     $ 143,174                             Total assets 2                         Hygiene, Health and Consumable Adhesives   $ 1,661,122     $ 1,488,277           Engineering Adhesives     1,627,715       1,610,015           Construction Adhesives     990,296       987,610           Corporate     444,442       377,727           Total   $ 4,723,575     $ 4,463,629                                     Capital expenditures                         Hygiene, Health and Consumable Adhesives   $ 67,933     $ 110,877           Engineering Adhesives     14,888       ( 2,302 )         Construction Adhesives     4,540       ( 5,772 )         Corporate     31,776       27,161           Total   $ 119,137     $ 129,964             1 Consistent with our internal management reporting, Corporate Unallocated amounts in the tables above include net revenue and 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.   91 Table of Contents   Reconciliation of segment operating income to income before income taxes and income from equity method investments:       2023     2022     2021   Segment operating income   $ 355,137     $ 322,718     $ 252,612   Other income, net     9,682       12,952       32,855   Interest expense     ( 134,602 )     ( 91,521 )     ( 78,092 ) Interest income     3,943       7,779       9,476   Income before income taxes and income from equity method investments   $ 234,160     $ 251,928     $ 216,851     Financial information about geographic areas       Net Revenue       2023     2022     2021   United States   $ 1,551,846     $ 1,692,903     $ 1,421,623   China     430,948       462,587       433,998   Germany     393,029       419,141       409,193   Countries with more than 10 percent of total     2,375,823       2,574,631       2,264,814   All other countries with less than 10 percent of total     1,135,111       1,174,552       1,013,217   Total   $ 3,510,934     $ 3,749,183     $ 3,278,031         Property, Plant and Equipment, net       2023     2022     2021   United States   $ 425,765     $ 375,353     $ 331,864   Germany     114,266       107,903       120,548   China     110,061       101,563       96,300   All other countries with less than 10 percent of total     174,563       148,848       146,655   Total   $ 824,655     $ 733,667     $ 695,367     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:       December 2, 2023       Hygiene, Health and Consumable     Engineering     Construction     Corporate               Adhesives     Adhesives     Adhesives     Unallocated     Total   Americas   $ 919,024     $ 577,751     $ 363,517     $ -     $ 1,860,292   EIMEA     476,397       460,327       85,738       -       1,022,462   Asia Pacific     206,066       390,666       31,448       -       628,180       $ 1,601,487     $ 1,428,744     $ 480,703     $ -     $ 3,510,934         December 3, 2022       Hygiene, Health and Consumable     Engineering     Construction     Corporate               Adhesives     Adhesives     Adhesives     Unallocated     Total   Americas   $ 1,003,179     $ 630,484     $ 411,951     $ -     $ 2,045,614   EIMEA     471,299       478,573       78,773       -       1,028,645   Asia Pacific     221,456       423,582       29,886       -       674,924       $ 1,695,934     $ 1,532,639     $ 520,610     $ -     $ 3,749,183     92 Table of Contents       November 27, 2021       Hygiene, Health and Consumable     Engineering     Construction     Corporate               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       Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   Not applicable.