What changed in this filing

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Item 1. Financial Statements

2024-09-26 compared with 2024-06-27 · 149 added, 105 removed, 691 unchanged (27% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of sales

6 unchanged sentences

Net income including non-controlling interest

Net income attributable to non-controlling interest

Net loss (income) attributable to non-controlling interest

Net income attributable to H.B.

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net income including non-controlling interest

$ 51,297 $ 40,422 $ 82,309 $ 62,338

Other comprehensive (loss) income

Other comprehensive income (loss)

Foreign currency translation

( 26,926 ) 26,410 ( 46,288 ) 22,774

Defined benefit pension plans adjustment, net of tax

419 858 2,538 1,709

Interest rate swaps, net of tax

10,196 ( 9,488 ) 7,731 ( 1,153 )

Net investment hedges, net of tax

123 ( 5,384 ) 3,913 ( 5,683 )

Other comprehensive (loss) income

( 16,188 ) 12,396 ( 32,106 ) 17,647

Other comprehensive income (loss)

Comprehensive income

35,109 52,818 50,203 79,985

Comprehensive income attributable to non-controlling interest

Comprehensive income attributable to H.B.

$ 35,108 $ 52,812 $ 50,190 $ 79,942

See accompanying Notes to Unaudited Consolidated Financial Statements.

5 unchanged sentences

$ 131,412 $ 179,453

Trade receivables (net of allowances of $ 12,523 and $ 11,080 , as of June 1, 2024 and December 2, 2023, respectively)

Trade receivables (net of allowances of $ 13,389 and $ 11,080 , as of August 31, 2024 and December 2, 2023, respectively)

574,781 577,932

40 unchanged sentences

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 – 54,507,836 and 54,092,987 as of June 1, 2024 and December 2, 2023, respectively

Common stock, par value $ 1.00 per share, shares authorized – 160,000,000 , shares outstanding – 54,612,541 and 54,092,987 as of August 31, 2024 and December 2, 2023, respectively

$ 54,613 $ 54,093

20 unchanged sentences

Balance at December 2, 2023

Comprehensive income

Comprehensive income (loss)

Stock option exercises

2 unchanged sentences

Balance at March 2, 2024

Comprehensive income

Comprehensive income (loss)

Stock option exercises

2 unchanged sentences

Balance at June 1, 2024

Comprehensive income

Stock option exercises

Share-based compensation plans and other, net

Repurchases of common stock

Balance at August 31, 2024

Fuller Company Shareholders

13 unchanged sentences

Balance at June 3, 2023

Comprehensive income

Stock option exercises

Share-based compensation plans other, net

Repurchases of common stock

Balance at September 2, 2023

See accompanying Notes to Unaudited Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

August 31, 2024

September 2, 2023

Cash flows from operating activities:

2 unchanged sentences

Deferred income taxes

Income from equity method investments, net of dividends received

Loss from equity method investments, net of dividends received

Gain on insurance claims

Loss on equity investment

Debt issuance costs write-off

46 unchanged sentences

New Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No.

2023 - 09, Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures .

20 unchanged sentences

The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements.

The outstanding payment obligations that were confirmed as valid and remained outstanding as of June 1, 2024 were approximately $ 4,710 .

The outstanding payment obligations that were confirmed as valid and remained outstanding as of August 31, 2024 , were approximately $ 4,457 .

These obligations under the Company’s supplier finance programs are included in Accounts payable in the Consolidated Balance Sheets, and the associated payments are reflected in the cash flows from operating activities section of the Consolidated Statements of Cash Flows.

Recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the company.

HS Butyl Limited

August 5, 2024, we acquired HS Butyl Limited (“HS Butyl”) for a purchase price of

18,148 British pound sterling, or approximat

ely $ 23,180 which was funded through existing cash.

This includes a holdback amount of

2,700 British pound sterling that will be paid on the

18 -month anniversary of the closing date.

HS Butyl, headquartered in Lymington, England, is the United Kingdom's largest manufacturer and distributor of high-quality butyl tapes, which provide strong, permanent, watertight seals for a wide variety of applications within the construction, infrastructure, automotive and renewable energy industries.

The acquisition of HS Butyl establishes our presence in the European waterproofing tape market, expanding our position as a solution provider to existing customers.

It also expands our relevance to more markets and creates opportunities to deliver new, in-demand solutions for our customers, given the technology's relevance to multiple high-value applications.

The acquisition fair value measurement was preliminary as of

August 31, 2024

and includes other intangible assets of $ 5,620 , goodwill of $ 4,927 and other net assets of $ 12,633 .

G oodwill represents expected synergies from combining HS Butyl with our existing business.

not deductible for tax purposes.

HS Butyl is included in our Construction Adhesives operating segment.

ND Industries, Inc.

4 unchanged sentences

The acquisition of ND Industries is expected to accelerate the realization of our top growth priorities, consistent with our strategy to proactively drive capital allocation to the highest margin, highest growth market segments within the functional coatings, adhesives, sealants and elastomer industry.

The acquisition fair value measurement was preliminary as of June 1, 2024 .

The acquisition fair value measurement was preliminary as of August 31, 2024 .

ND Industries is included in our Engineering Adhesives operating segment.

During the three months ended August 31, 2024, intangible assets increased $ 4,800 , goodwill decreased $ 5,966 , and other net assets increased $ 1,166 in the fair value measurement of ND Industries.

The following table summarizes the fair value measurement of the assets acquired and liabilities assumed as of the date of acquisition:

5 unchanged sentences

Current liabilities

Other liabilities

The expected useful lives of the acquired intangible assets are 12 years.

Based on the fair value measurement of the assets acquired and liabilities assumed, we allocated $ 89,825 to goodwill for the expected synergies from combining ND Industries with our existing business.

The expected useful lives of the acquired intangible assets are 15 years for technology, 13 years for customer relationships and ten years for trademarks and tradenames.

Based on the fair value measurement of the assets acquired and liabilities assumed, we a llocated $ 89,825 to goo dwill for the expected synergies from combining ND Industries with our existing business.

Such goodwill is deductible for tax purposes.

5 unchanged sentences

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 Un ited 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 June 1, 2024 and includes intangible assets of $ 7,354 , goodwill of $ 3,362 and other net assets of $ 5,944 .

The acquisition of Sanglier expands our innovation capabilities and product portfolio across the Un ited Kingdom and Europe.

Sanglier transforms adhesives applications to enable sprayable delivery providing end users with an opportunity to greatly improve labor efficiency.

The acquisition fair value measurement was final as of August 31, 2024 and includes other intangible assets of $ 7,354 , goodwill of $ 3,038 and other net assets of $ 6,261 .

G oodwill represents expected synergies from combining Sanglier with our existing business.

Goodwill is deductible for tax purposes.

Sanglier is included in our Construction Adhesives operating segment.

1 unchanged sentence

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.

This includes a holdback amount of $ 780 that was 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.

Adhezion, headquartered in Hudson, North Carolina, 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 is final as of June 1, 2024 and includes intangible assets of $ 38,500 , goodwill of $ 37,589 and other net assets of $ 4,713 .

The acquisition fair value measurement was final as of June 1, 2024 and includes other intangible assets of $ 38,500 , goodwill of $ 37,589 and other net assets of $ 4,713 .

Goodwill represents expected synergies from combining Adhezion with our existing business.

3 unchanged sentences

On June 12, 2023, we acquired XChem International LLC ("XChem") for a base purchase price of approximately $ 14,496 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.

This includes a holdback amount of $ 1,650 , 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.

XChem, headquartered in Ras Al-Khaimah, United Arab Emirates, is a manufacturer of adhesives and sealants for construction-related applications.

2 unchanged sentences

and infrastructure-oriented markets.

The acquisition fair value measurement is final as of June 1, 2024 and includes intangible assets of $ 4,600 , goodwill of $ 4,318 and other net assets of $ 5,578 .

The acquisition fair value measurement was final as of June 1, 2024 and includes other intangible assets of $ 4,600 , goodwill of $ 4,318 and other net assets of $ 5,578 .

Goodwill represents expected synergies from combining XChem with our existing business.

7 unchanged sentences

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 is final as of June 1, 2024 and includes intangible assets of $ 35,425 , goodwill of $ 28,148 and other net assets of $ 37,312 .

The acquisition fair value measurement was final as of June 1, 2024 and includes other intangible assets of $ 35,425 , goodwill of $ 28,148 and other net assets of $ 37,312 .

Goodwill represents expected synergies from combining Beardow Adams with our existing business.

4 unchanged sentences

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.

This includes a holdback amount of $ 500 that was 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 .

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 and process manufacturing capabilities that we plan to leverage.

The acquisition fair value measurement was final as of December 2, 2023 and includes other 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.

2 unchanged sentences

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.

This includes a holdback amount of 850 Euro that was 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.

1 unchanged sentence

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 .

The acquisition fair value measurement was final as of December 2, 2023 and includes other 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.

5 unchanged sentences

The Plans were 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.

In implementing the Plans, the Company currently expects to incur pre-tax costs of approx imately $ 39,100 to $ 50,100 for severa nce 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:

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2024

September 2, 2023

August 31, 2024

September 2, 2023

Cost of sales

27 unchanged sentences

( 44 ) - - ( 44 )

Balance at June 1, 2024

Balance at August 31, 2024

$ 7,045 $ - $ - $ 7,045

9 unchanged sentences

Goodwill and Other Intangible Assets

The goodwill activity by reportable segment for the six months ended June 1, 2024 is presented below:

The goodwill activity by reportable segment for the nine months ended August 31, 2024 is presented below:

Hygiene, Health

5 unchanged sentences

4,131 6,938 941 12,010

Balance at June 1, 2024

Balance at August 31, 2024

$ 408,403 $ 741,942 $ 441,364 $ 1,591,709

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

August 31, 2024

Amortizable Intangible Assets

15 unchanged sentences

$ 85,132 $ 604,250 $ 35,385 $ 3,899 $ 728,666

Amortization expense with respect to amortizable intangible assets was $ 19,219 and $ 19,130 for the three months ended June 1, 2024 and June 3, 2023 , respectively, and was $ 39,574 and $ 37,813 for the six months ended June 1, 2024 and June 3, 2023

Amortization expense with respect to amortizable intangible assets was $ 22,149 and $ 20,820 for the three months ended August 31, 2024 and September 2, 2023 , respectively, and was $ 61,723 and $ 58,633 for the nine months ended August 31, 2024 and September 2, 2023 .

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

3 unchanged sentences

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 June 1, 2024 and December 2, 2023 were $ 472 and $ 474 , respectively, and relate to trademarks and trade names.

The change in non-amortizable assets as of June 1, 2024 compared to December 2, 2023 was due to changes in foreign currency exchange rates.

Non-amortizable intangible assets as of August 31, 2024 and December 2, 2023 were $ 482 and $ 474 , respectively, and relate to trademarks and trade names.

The change in non-amortizable assets as of August 31, 2024 compared to December 2, 2023 was due to changes in foreign currency exchange rates.

Long-Term Debt

On March 4, 2024, we entered into a Refinancing and Incremental Amendment (the “Refinancing and Incremental Amendment”), which amends the Second Amended and Restated Credit Agreement dated as of February 15, 2023, as previously amended.

Pursuant to the Refinancing and Incremental Amendment, the existing Term B loans under the Credit Agreement were refinanced by “Refinancing Loans” (as defined in the Credit Agreement) in the principal amount of $ 794,000 (the “Amended TLB”), certain lenders party to the Refinancing and Incremental Amendment made additional Term B loans to the Company in the principal amount of $ 200,000 , thereby increasing the aggregate principal amount of the Amended TLB to $ 994,000 , and the interest rate margins applicable to the Amended TLB were decreased by 25 basis points ( 0.25 % per annum) to 200 basis points for SOFR rate loans and 100 basis points for prime rate loans.

On March 4, 2024, we entered into a Refinancing and Incremental Amendment (the “Refinancing and Incremental Amendment”), which amended the Second Amended and Restated Credit Agreement dated as of February 15, 2023, as previously amended.

Pursuant to the Refinancing and Incremental Amendment under the Credit Agreement, the existing $ 794,000 principal amount of Term B loans (the “Amended TLB”) were refinanced and certain lenders to the Refinancing and Incremental Amendment made additional Term B loans to the Company in the principal amount of $ 200,000 , thereby increasing the aggregate principal amount of the Amended TLB to $ 994,000 .

Furthermore, the interest rate margins applicable to the Amended TLB were decreased by 25 basis points ( 0.25 % per annum) to 200 basis points for SOFR loans and 100 basis points for prime rate loans.

The additional $ 200,000 of proceeds will be used to finance our working capital needs and for general corporate purposes, including permitted acquisitions.

Interest on Term Loan B borrowings are payable at SOFR plus an interest rate spread of 200 basis points with a SOFR floor of 50 basis points ( 7.33 percent at June 1, 2024).

Interest on Term Loan B borrowings is payable at SOFR plus an interest rate spread of 200 basis points with a SOFR floor of 50 basis points ( 7.32 percent at August 31, 2024 ).

The maturity date of February 15, 2030 remains unchanged.

1 unchanged sentence

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

Three Months Ended June 1, 2024 and June 3, 2023

Three Months Ended August 31, 2024 and September 2, 2023

Pension Benefits

13 unchanged sentences

$ ( 1,932 ) $ ( 3,095 ) $ 814 $ 613 $ ( 2,436 ) $ ( 2,164 )

Six Months Ended June 1, 2024 and June 3, 2023

Nine Months Ended August 31, 2024 and September 2, 2023

Pension Benefits

7 unchanged sentences

Amortization:

Prior service (benefit) cost

Prior service cost

- - 48 47 - -

Actuarial loss (gain)

Actuarial loss

3,478 1,906 1,540 1,496 - -

5 unchanged sentences

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

Three Months Ended June 1, 2024

Three Months Ended June 3, 2023

Three Months Ended August 31, 2024

Three Months Ended September 2, 2023

Fuller Stockholders

15 unchanged sentences

$ 55,980 $ 9 $ 41,037 $ 16

Six Months Ended June 1, 2024

Six Months Ended June 3, 2023

Nine Months Ended August 31, 2024

Nine Months Ended September 2, 2023

Fuller Stockholders

11 unchanged sentences

( 5,704 ) 1,386 ( 4,318 ) - ( 13,694 ) 3,370 ( 10,324 ) -

Other comprehensive income (loss)

Other comprehensive (loss) income

$ ( 37,412 ) $ 5,967 $ ( 31,445 ) $ ( 10 ) $ 23,382 $ ( 2,319 ) $ 21,063 $ ( 12 )

Comprehensive income (loss)

Comprehensive income

$ 106,170 $ 22 $ 120,979 $ 59

The components of accumulated other comprehensive loss are as follows:

August 31, 2024

Foreign currency translation adjustment

23 unchanged sentences

$ ( 442,924 ) $ ( 442,880 ) $ ( 44 )

Income tax expense for the three and six months ended June 1, 2024 includes $ 1,317 of discrete tax expense and $ 1,210 of discrete tax benefit, respectively, relating to various foreign tax matters, as well as an excess tax benefit related to U.S.

stock compensation.

Excluding the discrete tax expense and benefit, the overall effective tax rate was 28.9 percent and 28.4 percent for the three and six months ended June 1, 2024 , respectively.

Income tax expense for the three and six months ended June 3, 2023 includes $ 2,042 and $ 2,888 of discrete tax expense, respectively, relating to various foreign tax matters offset by an excess tax benefit related to U.S.

stock compensation.

Excluding the discrete tax expense, the overall effective tax rate was 29.5 percent and 29.4 percent for the three and six months ended June 3, 2023 , respectively.

As of June 1, 2024 , we had a liability of $ 14,097 recorded for gross unrecognized tax benefits (excluding interest) compared to $ 14,254 as of December 2, 2023 .

As of June 1, 2024 and December 2, 2023 , we had accrued $ 6,797 and $ 6,310 of gross interest relating to unrecognized tax benefits, respectively.

Income tax expense for the three and nine months ended August 31, 2024 includes $ 2,937 and $ 4,147 of discrete tax benefit, respectively, relating to an excess tax benefit on U.S.

stock compensation, as well as other various U.S.

and foreign tax matters.

Excluding the discrete tax benefit, the overall effective tax rate was 29.3 percent and 28.7 percent for the three and nine months ended August 31, 2024 , respectively.

Income tax expense for the three and nine months ended September 2, 2023 includes $ 6,243 and $ 9,130 of discrete tax expense, respectively, relating to various U.S.

and foreign tax matters.

Excluding the discrete tax expense, the overall effective tax rate was 27.1 percent and 28.5 percent for the three and nine months ended September 2, 2023 , respectively.

As of August 31, 2024 , we had a liability of $ 13,368 recorded for gross unrecognized tax benefits (excluding interest) compared to $ 14,254 as of December 2, 2023 .

As of August 31, 2024 and December 2, 2023 , we had accrued $ 6,622 and $ 6,310 of gross interest relating to unrecognized tax benefits, respectively.

Earnings Per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

(Shares in thousands)

11 unchanged sentences

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.

Share-based compensation awards of 787,801 and 1,026,155 shares for the three months ended June 1, 2024 and June 3, 2023 , respectively, and 1,110,664 and 1,156,557 shares for the six months ended June 1, 2024 and June 3, 2023 , respectively, were excluded from diluted earnings per share calculations because they were antidilutive.

Share-based compensation awards of 517,442 and 1,025,337 shares for the three months ended August 31, 2024 and September 2, 2023 , respectively, and 957,127 and 1,164,870 shares for the nine months ended August 31, 2024 and September 2, 2023 , respectively, were excluded from diluted earnings per share calculations because they were antidilutive.

Financial Instruments

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.

As a result of being a global enterprise, our earnings, cash flows and financial position are exposed to foreign currency risk from foreign currency denominated receivables and payables.

Foreign currency exchange rates and fluctuations in those rates may affect the Company's net investment in foreign subsidiaries.

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.

10 unchanged sentences

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 January 12, 2023, we entered into an interest rate swap agreement to convert $ 400,000 of our variable rate 1 -month LIBOR 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 t he 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 $ 8,454 at June 1, 2024 and was included in other assets in the Consolidated Balance Sheets.

The combined fair value of the interest rate swap was a liability of $ 3,168 at August 31, 2024 and was included in other liabilities in the Consolidated Balance Sheets.

The swap was designated for hedge accounting treatment as a cash flow hedge.

1 unchanged sentence

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.

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 that matures on February 15, 2028.

The combined fair value of the interest rate swap was an asset of $ 6,168 at June 1, 2024 and was included in other assets in the Consolidated Balance Sheets.

On March 16, 2023, we entered into an interest rate swap agreement to convert $ 300,000 of our 1 -month SOFR 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 a liability of $ 2,905 at August 31, 2024 and was included in other liabilities in the Consolidated Balance Sheets.

The swap was designated for hedge accounting treatment as a cash flow hedge.

1 unchanged sentence

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 an asset of $ 1,527 a t June 1, 2024 and was included i n other assets in the Consolidated Balance Sheets.

On March 16, 2023, we entered into an interest rate swap agreement to convert $ 100,000 of our 1 -month SOFR 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 $ 1,404 a t August 31, 2024 and was included i n other liabilities in the Consolidated Balance Sheets.

The swap was designated for hedge accounting treatment as a cash flow hedge.

1 unchanged sentence

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.

The amounts of pretax gains (losses) recognized in Comprehensive Income related to derivative instruments designated as cash flow hedges are as follows:

The amounts of pretax (losses) gains recognized in Comprehensive Income related to derivative instruments designated as cash flow hedges are as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

August 31, 2024

September 2, 2023

August 31, 2024

September 2, 2023

Interest rate swap contracts

6 unchanged sentences

These interest rate swap agreements mature on October 15, 2028.

The combined fair value of the interest rate swaps was a liabili ty of $ 42,374 a t June 1, 2024 , and was included in other liabilities in the Consolidated Balance Sheets.

The combined fair value of the interest rate swaps wa s a liability of $ 31,059 a t August 31, 2024 , and was included in ot her liabilities i n the Consolidated Balance Sheets.

The swaps were designated for hedge accounting treatment as fair value hedges.

8 unchanged sentences

We applied the practical expedients included in ASC 848, Reference Rate Reform .

As of June 1, 2024 , the combined fair value of the swaps w as a liability of $ 67,411 and was included in other liabilities in the C onsolidated Balance Sheets.

As of August 31, 2024 , the combined fair value of the swaps w as a liability of $ 78,304 and was included in other liabilities in the Consol idated Balance Sheets.

The cross-currency interest rate swaps hedge a portion of the Company’s investment in Euro denominated foreign subsidiaries.

3 unchanged sentences

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 $ 50,937 of June 1, 2024 .

The amounts of pretax gain recognized in comprehensive income related to the net investment he dge was $ 163 f or the three months ended June 1, 2024 .

As of June 1, 2024 , 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.

The amount in accumulated other comprehensive income (loss) related to net investment hedge cross-currency sw aps was a loss of $ 59,168 of August 31, 2024 .

The amounts of pretax loss recognized in comprehensive income related to the net investment he dge was $ 10,892 f or the three months ended August 31, 2024 .

As of August 31, 2024 , 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.

5 unchanged sentences

See Note 12 for the fair value amounts of these derivative instruments.

As of June 1, 2024 , we had forward foreign currency contracts maturing betw een June 3, 2024 and February 5, 2025.

As of August 31, 2024 , we had forward foreign currency contracts maturing betw een September 3, 2024 and February 5, 2025.

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

The amounts of pretax gains (losses) recognized in other income, net related to derivative instruments not designated as hedging instruments for the six months ended June 1, 2024 and June 3, 2023 were $ 263 a nd $ 1,276 , respectively.

The amounts of pretax gains losses recognized in other income, net related to derivative instruments not designated as hedging instruments for the nine months ended August 31, 2024 and September 2, 2023 were $ 1,524 a nd $ 798 , respectively.

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

As of June 1, 2024 , there were no significant concentrations of credit risk.

As of August 31, 2024 , there were no significant concentrations of credit risk.

Fair Value Measurements

9 unchanged sentences

Balances Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of June 1, 2024 and December 2, 2023 , and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of August 31, 2024 and December 2, 2023 , and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

Fair Value Measurements Using:

3 unchanged sentences

5,610 - 5,610 -

Interest rate swaps, cash flow hedge assets

16,149 - 16,149 -

Foreign exchange contract liabilities

$ 7,134 $ - 7,134 $ -

Interest rate swaps, cash flow hedge liabilities

Interest rate swaps, fair value hedge liabilities

19 unchanged sentences

1,370 - - 1,370

The valuation of our contingent consideration liability related to the acquisition of TissueSeal and was $ 500 as of June 1, 2024 .

The valuation of our contingent consideration liability related to the acquisition of TissueSeal and was $ 500 as of August 31, 2024 .

The contingent consideration of $ 870 related to the acquisition of GSSI was paid in the first quarter of 2024.

4 unchanged sentences

Contingent consideration payment

Balance at June 1, 2024

Balance at August 31, 2024

Balances Measured at Fair Value on a Nonrecurring Basis

6 unchanged sentences

Balances Disclosed at Fair Value

Long-term debt had an estimated fair value of $ 2,008,768 and $ 1,785,199 as of June 1, 2024 and December 2, 2023 , respectively.

Long-term debt had an estimated fair value of $ 2,019,615 and $ 1,785,199 as of August 31, 2024 and December 2, 2023 , 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.

8 unchanged sentences

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 $ 4,426 and $ 5,034 as of June 1, 2024 and December 2, 2023 , respectively, for probable and reasonably estimable environmental remediation costs.

Of the amount reserved, $ 1,745 and $ 2,301 as of June 1, 2024 and December 2, 2023 , 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.

We recorded liabilities of $ 3,974 and $ 5,034 as of August 31, 2024 and December 2, 2023 , respectively, for probable and reasonably estimable environmental remediation costs.

Of the amount reserved, $ 1,483 and $ 2,301 as of August 31, 2024 and December 2, 2023 , 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.

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.

15 unchanged sentences

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

Six Months Ended

Nine Months Ended

3 Years Ended

August 31, 2024

September 2, 2023

December 2, 2023

13 unchanged sentences

The Company intends to vigorously defend itself against the claims outlined in this lawsuit.

As of June 1, 2024 , we are unable to estimate any possible loss or range of possible losses and have not recorded a loss contingency for this matter.

As of August 31, 2024 , we are unable to estimate any possible loss or range of possible losses and have not recorded a loss contingency for this matter.

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.

4 unchanged sentences

Upon repurchasing shares, we reduce our common stock for the par value of the shares with the excess being applied against additional paid-in capital.

During the second quarter of 2024, we repurchased shares under this program with an aggregate value of $ 14,262 .

During the third quarter of 2024, we repurchased shares under this program with an aggregate value of $ 17,549 .

Of this amount, $ 225 reduced common stock and $ 17,324 reduced additional paid-in capital.

There were no shares repurchased under this program during the first quarter of 2024 or the first six months of 2023.

During the nine months ended August 31, 2024, we repurchased shares under this program with an aggregate value of $ 31,811 .

Of this amount $ 407 reduced common stock and $ 31,404 reduced additional paid-in capital.

There were no shares repurchased under this program during the third quarter and first nine months of 2023.

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.

12 unchanged sentences

Three Months Ended

August 31, 2024

September 2, 2023

Income (Loss)

11 unchanged sentences

$ 917,927 $ 104,341 $ 900,634 $ 91,319

Six Months Ended

Nine Months Ended

August 31, 2024

September 2, 2023

Income (Loss)

11 unchanged sentences

$ 2,645,452 $ 271,813 $ 2,608,055 $ 241,735

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

The table below provides a reconciliation of operating income to income before income taxes and income from equity method investments:

Three Months Ended

Six Months Ended

Nine Months Ended

Operating income

9 unchanged sentences

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

Three Months Ended June 1, 2024

Three Months Ended August 31, 2024

Hygiene, Health

4 unchanged sentences

$ 389,854 $ 374,923 $ 153,150 $ 917,927

Three Months Ended June 3, 2023

Three Months Ended September 2, 2023

Hygiene, Health

4 unchanged sentences

$ 402,388 $ 365,862 $ 132,384 $ 900,634

Six Months Ended June 1, 2024

Nine Months Ended August 31, 2024

Hygiene, Health

4 unchanged sentences

$ 1,150,658 $ 1,077,206 $ 417,588 $ 2,645,452

Six Months Ended June 3, 2023

Nine Months Ended September 2, 2023

Hygiene, Health

5 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements