FULLER H B CO 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of H.B. Fuller Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of H.B. Fuller Company and subsidiaries (the Company) as of November 30, 2024 and December 2, 2023, the related consolidated statements of income, comprehensive income (loss), total equity and cash flows for each of the three years in the period ended November 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at November 30, 2024 and December 2, 2023, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of November 30, 2024, 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 23, 2025, 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 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. 39 Table of Contents Valuation of Goodwill for the Construction Adhesives reporting unit Description of the Matter At November 30, 2024, the Company had goodwill of approximately $406 million related to the Construction Adhesive 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 trends as well as other relevant factors. We assessed the reasonableness of the forecasted future revenue growth rate and EBITDA margins rates by comparing the forecasts to historical results and previous assumptions. 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 23, 2025 40 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of H.B. Fuller Company Opinion on Internal Control Over Financial Reporting We have audited H.B. Fuller Company and subsidiaries’ internal control over financial reporting as of November 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, H.B. Fuller Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of November 30, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of November 30, 2024 and December 2, 2023, the related consolidated statements of income, comprehensive income (loss), total equity and cash flows for each of the three years in the period ended November 30, 2024, and the related notes, and our report dated January 23, 2025 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 23, 2025 41 Table of Contents CONSOLIDATED STATEMENTS OF INCOME H.B. Fuller Company and Subsidiaries (In thousands, except per share amounts) Fiscal Years November 30, December 2, December 3, 2024 2023 2022 Net revenue $ 3,568,736 $ 3,510,934 $ 3,749,183 Cost of sales ( 2,506,859 ) ( 2,502,037 ) ( 2,785,484 ) Gross profit 1,061,877 1,008,897 963,699 Selling, general and administrative expenses ( 713,657 ) ( 653,760 ) ( 640,981 ) Other (expense) income, net ( 37,115 ) 9,682 12,952 Interest expense ( 133,124 ) ( 134,602 ) ( 91,521 ) Interest income 4,682 3,943 7,779 Income before income taxes and income from equity method investments 182,663 234,160 251,928 Income tax expense ( 56,381 ) ( 93,529 ) ( 77,186 ) Income from equity method investments 4,113 4,357 5,665 Net income including non-controlling interest 130,395 144,988 180,407 Net income attributable to non-controlling interest ( 139 ) ( 82 ) ( 94 ) Net income attributable to H.B. Fuller $ 130,256 $ 144,906 $ 180,313 Earnings per share attributable to H.B. Fuller common stockholders: Basic $ 2.37 $ 2.67 $ 3.37 Diluted $ 2.30 $ 2.59 $ 3.26 Weighted-average common shares outstanding: Basic 54,932 54,332 53,580 Diluted 56,629 55,958 55,269 See accompanying Notes to Consolidated Financial Statements. 42 Table of Contents CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) H.B. Fuller Company and Subsidiaries (In thousands) Fiscal Years November 30, December 2, December 3, 2024 2023 2022 Net income including non-controlling interest $ 130,395 $ 144,988 $ 180,407 Other comprehensive (loss) income Foreign currency translation ( 74,764 ) 17,322 ( 131,806 ) Defined benefit pension plans adjustment, net of tax 38,438 792 ( 15,063 ) Interest rate swaps, net of tax ( 11,216 ) 4,472 9,924 Cash-flow hedges, net of tax - - ( 3,483 ) Net investment hedges, net of tax 17,369 ( 14,107 ) ( 40,743 ) Other comprehensive (loss) income ( 30,173 ) 8,479 ( 181,171 ) Comprehensive income (loss) 100,222 153,467 ( 764 ) Less: Comprehensive income attributable to non-controlling interest 481 84 33 Comprehensive income (loss) attributable to H.B. Fuller $ 99,741 $ 153,383 $ ( 797 ) See accompanying Notes to Consolidated Financial Statements. 43 Table of Contents CONSOLIDATED BALANCE SHEETS H.B. Fuller Company and Subsidiaries (In thousands, except share and per share amounts) November 30, December 2, 2024 2023 Assets Current assets: Cash and cash equivalents $ 169,352 $ 179,453 Trade receivables, net 558,336 577,932 Inventories 467,498 442,040 Other current assets 104,019 112,678 Total current assets 1,299,205 1,312,103 Property, plant and equipment, net 881,927 824,655 Goodwill 1,532,221 1,486,512 Other intangibles, net 770,226 729,140 Other assets 449,665 371,165 Total assets $ 4,933,244 $ 4,723,575 Liabilities, non-controlling interest and total equity Current liabilities: Notes payable $ 587 $ 1,841 Trade payables 491,435 439,700 Accrued compensation 106,005 95,680 Income taxes payable 24,225 47,688 Other accrued expenses 97,038 107,902 Total current liabilities 719,290 692,811 Long-term debt, net of current maturities 2,010,052 1,836,590 Accrued pension liabilities 51,755 50,189 Other liabilities 322,299 388,072 Total liabilities 3,103,396 2,967,662 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 – 54,657,103 and 54,092,987 for 2024 and 2023, respectively 54,657 54,093 Additional paid-in capital 322,636 301,485 Retained earnings 1,924,761 1,842,507 Accumulated other comprehensive loss ( 473,395 ) ( 442,880 ) Total H.B. Fuller stockholders' equity 1,828,659 1,755,205 Non-controlling interest 1,189 708 Total equity 1,829,848 1,755,913 Total liabilities, non-controlling interest and total equity $ 4,933,244 $ 4,723,575 See accompanying Notes to Consolidated Financial Statements. 44 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 27, 2021 52,778 213,637 $ 1,600,601 $ ( 270,247 ) $ 591 $ 1,597,360 Comprehensive 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 Comprehensive income - - 130,256 ( 30,515 ) 481 100,222 Dividends - - ( 48,002 ) - - ( 48,002 ) Stock option exercises 747 35,180 - - - 35,927 Share-based compensation plans other, net 325 25,020 - - - 25,345 Repurchases of common stock ( 508 ) ( 39,049 ) - - - ( 39,557 ) Balance at November 30, 2024 $ 54,657 $ 322,636 $ 1,924,761 $ ( 473,395 ) $ 1,189 $ 1,829,848 45 Table of Contents CONSOLIDATED STATEMENTS of CASH FLOWS H.B. Fuller Company and Subsidiaries (In thousands) Fiscal Years November 30, December 2, December 3, 2024 2023 2022 Cash flows from operating activities: Net income including non-controlling interest $ 130,395 $ 144,988 $ 180,407 Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: Depreciation 91,054 80,327 72,593 Amortization 83,656 79,514 74,383 Deferred income taxes ( 36,186 ) ( 25,114 ) ( 15,230 ) (Income) loss from equity method investments, net of dividends received ( 537 ) 1,259 ( 9 ) Foreign currency remeasurement 9,724 ( 28,011 ) 6,213 Loss on impairment of assets held for sale 47,267 - - Loss on impairment of equity investment 1,966 - - Gain from insurance proceeds ( 4,871 ) - - (Gain) loss on disposal of assets ( 501 ) 59 ( 1,195 ) Share-based compensation 21,914 19,911 24,368 Pension and other postretirement benefit plan contributions ( 2,909 ) ( 4,346 ) ( 3,009 ) Pension and other postretirement benefit plan income ( 14,444 ) ( 18,591 ) ( 24,021 ) Debt issuance cost write-off - 2,689 - (Gain) loss on fair value adjustment on contingent consideration liabilities ( 500 ) 2,893 - Change in assets and liabilities, net of effects of acquisitions: Trade receivables, net 10,749 68,721 ( 24,753 ) Inventories ( 30,099 ) 72,576 ( 55,772 ) Other assets ( 17,465 ) ( 7,927 ) 46,499 Trade payables 47,915 ( 57,752 ) ( 22,629 ) Accrued compensation 12,653 ( 13,836 ) 1,135 Other accrued expenses 6,008 ( 3,070 ) 6,303 Income taxes payable ( 23,090 ) 41,190 ( 12,873 ) Other liabilities ( 30,262 ) 22,918 4,104 Net cash provided by operating activities 302,437 378,398 256,514 Cash flows from investing activities: Purchased property, plant and equipment ( 139,238 ) ( 119,137 ) ( 129,964 ) Purchased businesses, net of cash acquired ( 273,863 ) ( 205,093 ) ( 250,807 ) Proceeds from sale of property, plant and equipment 1,152 5,029 1,556 Proceeds from insurance recoveries 4,871 - - Cash received from government grant - - 3,928 Net cash used in investing activities ( 407,078 ) ( 319,201 ) ( 375,287 ) Cash flows from financing activities: Proceeds from issuance of long-term debt 1,932,900 2,233,300 335,000 Repayment of long-term debt ( 1,764,870 ) ( 2,126,450 ) ( 159,500 ) Payment of debt issue costs ( 3,493 ) ( 10,214 ) ( 600 ) Net (payment on) proceeds from notes payable ( 1,219 ) ( 28,674 ) 3,455 Dividends paid ( 47,598 ) ( 43,395 ) ( 39,207 ) Contingent consideration payment - ( 1,477 ) ( 5,000 ) Proceeds from stock options exercised 35,927 14,619 30,122 Repurchases of common stock ( 39,558 ) ( 2,567 ) ( 3,950 ) Net cash provided by financing activities 112,089 35,142 160,320 Effect of exchange rate changes on cash and cash equivalents ( 17,549 ) 5,204 ( 23,423 ) Net change in cash and cash equivalents ( 10,101 ) 99,543 18,124 Cash and cash equivalents at beginning of year 179,453 79,910 61,786 Cash and cash equivalents at end of year $ 169,352 $ 179,453 $ 79,910 Supplemental disclosure of cash flow information: Dividends paid with company stock $ 404 $ 363 $ 348 Cash paid for interest, net of amount capitalized of $ 1,859 , $ 1,769 , and $ 1,518 for the years ended November 30, 2024, December 2, 2023 and December 3, 2022, respectively $ 134,743 $ 136,959 $ 83,527 Cash paid for income taxes, net of refunds $ 123,091 $ 71,261 $ 73,449 See accompanying Notes to Consolidated Financial Statements. 46 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 2024 , as a percentage of total net revenue by operating segment, Hygiene, Health and Consumable Adhesives accounted for 43 percent, Engineering Adhesives 41 percent and Construction Adhesives 16 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 2024, 2023 and 2022 , this equity method investment was not significant as defined in Regulation S- X under the Securities Exchange Act of 1934. As such, financial information as of November 30, 2024, December 2, 2023, and December 3, 2022 for Sekisui-Fuller Company, Ltd. is not required. Our fiscal year ends on the Saturday closest to November 30. Fiscal year-end dates were November 30, 2024, December 2, 2023, and December 3, 2022 for 2024, 2023 and 2022 , respectively. Every five or six years we have a 53rd week in our fiscal year. 2022 was a 53 -week year. 47 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 $ 43,548 , $ 35,896 and $ 50,146 in 2024, 2023 and 2022 , 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. 48 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 November 30, 2024 or December 2, 2023 . 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 as determined by the weighted-average cost method and are valued at the lower of cost or net realizable value. 49 Table of Contents Investments Investments with a value of $ 9,814 and $ 9,334 represent the cash surrender value of life insurance contracts as of November 30, 2024 and December 2, 2023 , 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 $ 339 and $ 303 for the years ended November 30, 2024 and December 3, 2022, respectively, and did not have any impairment of our equity investments for the year ended December 2, 2023 . The book value of the equity investments was $ 1,023 and $ 1,362 as of November 30, 2024 and December 2, 2023 , respectively and are presented in Other assets in the Consolidated Balance Sheets. 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 (expense) 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 $ 1,859 , $ 1,769 and $ 1,518 were capitalized in 2024, 2023 and 2022 , 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 2024 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 2 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. 50 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 (expense) 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 $ 3,321 and $ 3,147 at November 30, 2024 and December 2, 2023 , respectively. 51 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) 2024 2023 2022 Net income attributable to H.B. Fuller $ 130,256 $ 144,906 $ 180,313 Weighted-average common shares – basic 54,932 54,332 53,580 Equivalent shares from share-based compensation plans 1,697 1,626 1,689 Weighted-average common and common equivalent shares – diluted 56,629 55,958 55,269 Basic earnings per share $ 2.37 $ 2.67 $ 3.37 Diluted earnings per share $ 2.30 $ 2.59 $ 3.26 Share-based compensation awards for 853,398 , 1,089,054 and 707,197 shares for 2024, 2023 and 2022 , respectively, were excluded from the diluted earnings per share calculation because they were antidilutive. 52 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 93,102 , 113,868 and 49,869 shares of common stock in 2024, 2023 and 2022 , respectively, through a net-settlement feature in connection with the statutory minimum tax withholding related to vesting of restricted stock. We repurchased 407,400 shares of common stock from our share repurchase program in 2024. No shares were repurchased from our share repurchase program in 2023 and 2022. Supplier Finance Program We have agreements with third parties to provide supplier finance programs which facilitate participating suppliers' ability to finance payment obligations of the Company with designated third -party financial institutions. Participating suppliers may, at their sole discretion, elect to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company has no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. 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 November 30, 2024 were appro ximately $ 5,233 . 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. The following table summarizes the outstanding obligations confirmed as valid under the Company’s supplier finance programs for the year ended November 30, 2024: 2024 Confirmed obligations outstanding, beginning of year $ 980 Invoices confirmed during the year 29,518 Confirmed invoices paid during the year ( 25,265 ) Confirmed obligations outstanding, end of year $ 5,233 53 Table of Contents Business Interruption Insurance Proceeds The company made insurance claims to recover lost margin and additional costs incurred in connection with a fire at our Tucker production facility in June 2022 and unprecedented freezing weather that impacted our Texas facilities in February 2021. During the year ended November 30, 2024, the Company received business interruption insurance recovery payments of $ 2,393 , which have been recorded in selling, general and administrative expenses. The insurance claims were fully settled in September 2024. New Accounting Pronouncements In November 2024, the FASB issued Accounting Standards Update ("ASU") No. 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses , which requires additional disclosure of the nature of expenses included in our Consolidated Financial Statements. Our effective date of this ASU is our fiscal year ending December 2, 2028. We are evaluating the effect this guidance will have on our Consolidated Finance Statements. 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. ASU 2022 - 04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the requirement on roll-forward information which is an annual requirement. During the first quarter of our fiscal year ending November 30, 2024, we adopted ASU 2022 - 04. See Supplier Finance Program for further information. Recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the Company. Note 2: Acquisitions and Divestiture Acquisitions HS Butyl Limited On August 5, 2024, we acquired HS Butyl Limited (“HS Butyl”) for a purchase price of 18,148 British pound sterling, or approximately $ 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 November 30, 2024, and includes other intangible assets of $ 6,412 , goodwill of $ 3,233 and other net assets of $ 13,535 . Goodwill represents expected synergies from combining HS Butyl with our existing business. Goodwill is not deductible for tax purposes. HS Butyl is included in our Construction Adhesives operating segment. 54 Table of Contents ND Industries, Inc. On May 20, 2024, we acquired the assets of ND Industries, Inc. (“ND Industries”) for a base purchase price of $ 254,037 which was funded through borrowings on our credit facility and existing cash. ND Industries, headquartered in Clawson, Michigan, is a leading provider of specialty adhesives and fastener locking and sealing solutions serving customers in the automotive, electronics, aerospace and other industries. 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 November 30, 2024 . ND Industries is included in our Engineering Adhesives operating segment. During the three months ended November 30, 2024, intangible assets decreased $ 2,200 , goodwill decreased $ 2,591 , and other net assets increased $ 3,094 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: Amounts Current assets $ 17,085 Property, plant and equipment 26,044 Goodwill 81,268 Other intangibles Customer relationships 110,100 Trademarks/trade names 8,700 Technology 13,600 Other assets 13 Current liabilities ( 2,773 ) Total $ 254,037 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 allocated $ 81,268 to goodwill for the expected synergies from combining ND Industries with our existing business. Such goodwill is deductible for tax purposes. Sanglier Ltd. On September 8, 2023, we acquired the assets of Sanglier Ltd. (“Sanglier”) for a base purchase price of 13,361 British pound sterling, or approximately $ 16,660 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. 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 . Goodwill 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. 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 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 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 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. The amount of goodwill that is deductible for tax purposes is $ 25,717 . Adhezion is included in our Hygiene, Health and Consumable Adhesives operating segment. 55 Table of Contents XChem International LLC On June 12, 2023, we acqui red 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 , 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. 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 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. 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 was paid on the 18 -month anniversary of the closing date. Beardo w 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 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. The amount of goodwill that is deductible for tax purposes is $ 3,561 . The remaining goodwill is not deductible for tax purposes. Beardow Adams is included in our Hygiene, Health and Consumable Adhesives operating segment. 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 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 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. 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 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. 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 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. Goodwill is not deductible for tax purposes. Lemtapes is included in our Hygiene, Health and Consumable Adhesives operating segment. All acquisitions, individually and in the aggregate, are not material and therefore pro forma financial information is not provided. 56 Table of Contents Divestiture North America Flooring During the fourth quarter of the year ended November 30, 2024, we committed to a plan to sell our North American Flooring business, which is included in our Construction Adhesives segment. The sale of this business was completed on December 2, 2024. The assets and liabilities of this business are classified as held for sale and are included in their corresponding categories in the Consolidated Balance Sheets as of November 30, 2024. Assets and liabilities held for sale are required to be recorded at the lower of carrying value or fair value, less costs to sell in accordance with ASC 360, Impairment or Disposal of Long Lived Assets. We measured the fair value of these assets and liabilities primarily using observable inputs at the measurement date, and determined their carrying value was greater than the fair value less costs to sell. Accordingly, we recorded a pre-tax loss on assets held for sale of $ 47,267 . Included in this amount is $ 32,079 for goodwill impairment, $ 6,109 for net intangible impairment and $9,079 for net property, plant and equipment impairment. The loss is recorded in other (expense) income, net in the Consolidated Statements of Income for the year ended November 30, 2024. The following table summarizes the condensed assets and liabilities held for sale: November 30, 2024 Trade receivables, net $ 19,888 Inventories 27,587 Other current assets 321 Property, plant and equipment, net 37,429 Other intangibles, net 12,673 Other assets 2,343 Trade payables ( 16,110 ) Other accrued expenses ( 5,548 ) Other liabilities ( 1,707 ) Total $ 76,876 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 20 23 and 2024 . In implementing the Plans, the Company currently expects to incur pre-tax costs of approximately $ 60,000 to $ 65,000 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: November 30, 2024 December 2, 2023 December 3, 2022 Cost of sales $ 12,263 $ 15,012 $ ( 152 ) Selling, general and administrative 9,823 9,575 ( 297 ) $ 22,086 $ 24,587 $ ( 449 ) The restructuring charges are all recorded in Corporate Unallocated for segment reporting purposes. 57 Table of Contents A summary of the restructuring liability is presented below: Employee- Related Asset-Related Other Total 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 Expense incurred 13,477 4,673 3,936 22,086 Non-cash charges - ( 4,673 ) ( 3,925 ) ( 8,598 ) Cash payments ( 16,427 ) - ( 11 ) ( 16,438 ) Foreign currency translation ( 343 ) - - ( 343 ) Balance at November 30, 2024 $ 8,430 $ - $ - $ 8,430 Non-cash charges include accelerated depreciation resulting from the cessation of use of certain long-lived assets, write-offs of certain long-lived assets, the recording of an inventory provision related to the discontinuance of certain products, inventory disposals 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 2024, 2023 and 2022 are as follows: 2024 2023 2022 Foreign currency transaction losses, net $ ( 2,501 ) $ ( 11,615 ) $ ( 12,935 ) Gain (loss) on disposal of assets 424 ( 58 ) 1,416 Net periodic pension benefit 15,920 20,246 26,787 Loss on impairment of assets held for sale ( 47,267 ) - - Other, net ( 3,691 ) 1,109 ( 2,316 ) Total other (expense) income, net $ ( 37,115 ) $ 9,682 $ 12,952 Research and development expenses (included in SG&A expenses) $ 49,565 $ 48,640 $ 44,853 58 Table of Contents Balance Sheet Information Additional details of balance sheet amounts as of November 30, 2024 and December 2, 2023 are as follows: 2024 2023 Inventories Raw materials $ 215,936 $ 206,140 Finished goods 251,562 235,900 Total inventories $ 467,498 $ 442,040 Other current assets Other receivables $ 39,149 $ 40,760 Prepaid income taxes 12,218 12,327 Prepaid taxes other than income taxes 31,295 34,455 Prepaid expenses 21,357 25,136 Total other current assets $ 104,019 $ 112,678 Property, plant and equipment Land $ 108,093 $ 91,320 Buildings and improvements 470,106 447,428 Machinery and equipment 1,161,379 1,058,916 Construction in progress 124,980 157,371 Total, at cost 1,864,558 1,755,035 Accumulated depreciation ( 982,631 ) ( 930,380 ) Net property, plant and equipment $ 881,927 $ 824,655 Other assets Investments in company owned life insurance $ 9,814 $ 9,334 Equity method investments 37,059 37,562 Equity investments 1,023 1,362 Long-term deferred income taxes 39,298 42,949 Prepaid pension costs 119,493 92,323 Postretirement other than pension asset 156,576 113,431 Operating lease right-of-use assets 61,116 47,433 Other long-term receivables 14,577 14,013 Other long-term assets 10,709 12,758 Total other assets $ 449,665 $ 371,165 Other accrued expenses Taxes other than income taxes $ 24,559 $ 22,497 Miscellaneous services 9,026 8,319 Customer rebates 21,901 17,938 Interest 5,628 5,819 Product liability 233 175 Contingent consideration liability - 1,370 Current operating lease liabilities 13,473 11,277 Current obligations of finance leases 1,908 16,184 Accrued expenses 20,310 24,323 Total other accrued expenses $ 97,038 $ 107,902 Other liabilities Asset retirement obligations $ 3,321 $ 3,147 Long-term deferred income taxes 141,693 176,385 Long-term income tax liability 18,195 19,225 Long-term deferred compensation 11,716 9,884 Postretirement other than pension 1,837 1,893 Noncurrent operating lease liabilities 48,628 36,879 Environmental liabilities 1,174 2,563 Net investment hedge liabilities 49,542 72,589 Other long-term liabilities 46,193 65,507 Total other liabilities $ 322,299 $ 388,072 59 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 2024, 2023 and 2022 are as follows: 2024 2023 2022 Balance at beginning of year $ 11,080 $ 10,939 $ 9,935 Charged to expenses and other adjustments 2,187 1,224 1,794 Write-offs ( 1,071 ) ( 1,522 ) ( 851 ) Foreign currency translation effect ( 575 ) 439 61 Balance at end of year $ 11,621 $ 11,080 $ 10,939 Statement of Comprehensive Income Information The following tables provides details of total comprehensive income (loss): November 30, 2024 Non-controlling H.B. Fuller Stockholders Interest Pretax Tax Net Net Net income attributable to H.B. Fuller and non-controlling interests $ 130,256 $ 139 Other comprehensive (loss) income Foreign currency translation adjustment 1 $ ( 75,106 ) - ( 75,106 ) 342 Defined benefit pension plans adjustment 2 50,875 ( 12,437 ) 38,438 - Interest rate swap 3 ( 14,831 ) 3,615 ( 11,216 ) - Net investment hedges 3 23,058 ( 5,689 ) 17,369 - Other comprehensive (loss) income $ ( 16,004 ) $ ( 14,511 ) $ ( 30,515 ) $ 342 Comprehensive income $ 99,741 $ 481 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 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 $ 6,251 $ 2,226 $ 8,477 $ 2 Comprehensive income $ 153,383 $ 84 60 Table of Contents 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 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 loss $ ( 195,054 ) $ 13,944 $ ( 181,110 ) $ ( 61 ) Comprehensive income $ ( 797 ) $ 33 1 Income taxes are not provided for foreign currency translation relating to indefinite investments in international subsidiaries. 2 Loss reclassified from accumulated other comprehensive 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 loss into earnings is reported in other (expense) income, net. Statement of Total Equity Information Components of accumulated other comprehensive income (loss) are as follows: November 30, 2024 Non- H.B. Fuller controlling Total Stockholders Interests Foreign currency translation adjustment $ ( 322,184 ) $ ( 321,798 ) $ ( 386 ) Defined benefit pension plans adjustment, net of taxes of $ 54,545 ( 89,031 ) ( 89,031 ) - Interest rate swap, net of taxes of $ 2,169 ( 6,744 ) ( 6,744 ) - Net investment hedges, net of taxes of $ 12,056 ( 37,481 ) ( 37,481 ) - Reclassification of AOCI tax effects ( 18,341 ) ( 18,341 ) - Total accumulated other comprehensive loss $ ( 473,781 ) $ ( 473,395 ) $ ( 386 ) 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 ) 61 Table of Contents 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 $ 63,925 ( 128,261 ) ( 128,261 ) - Interest rate swap, net of taxes of $ 3,224 ( 40,743 ) ( 40,743 ) - Reclassification of AOCI tax effects ( 18,341 ) ( 18,341 ) - Total accumulated other comprehensive loss $ ( 451,399 ) $ ( 451,357 ) $ ( 42 ) 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 2, 2023 $ 402,598 $ 651,145 $ 432,769 $ 1,486,512 Acquisitions 1,674 81,268 5,813 88,755 Impairment - - ( 32,079 ) ( 32,079 ) Foreign currency translation effect ( 4,759 ) ( 5,733 ) ( 475 ) ( 10,967 ) As of November 30, 2024 $ 399,513 $ 726,680 $ 406,028 $ 1,532,221 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 2024 , there were no indications of impairment for any of our reporting units. 62 Table of Contents Balances of amortizable identifiable intangible assets, excluding goodwill and other non-amortizable intangible assets, are as follows: Purchased Technology Customer Amortizable Intangible Assets and Patents Relationships Tradename All Other Total As of November 30, 2024 Original cost $ 145,313 $ 1,063,210 $ 67,280 $ 10,031 $ 1,285,834 Impairment ( 343 ) ( 5,616 ) ( 150 ) - ( 6,109 ) Accumulated amortization ( 55,398 ) ( 418,805 ) ( 28,745 ) ( 7,012 ) ( 509,960 ) Net identifiable intangibles $ 89,572 $ 638,789 $ 38,385 $ 3,019 $ 769,765 Weighted-average useful lives (in years) 13 16 13 13 16 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 Amortization expense with respect to amortizable intangible assets was $ 83,656 , $ 79,514 and $ 74,383 in 2024, 2023 and 2022 , respectively. See Note 2 for further discussion of the impairment to assets held for sale. 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 2025 2026 2027 2028 2029 Thereafter Amortization Expense $ 81,437 $ 79,468 $ 76,752 $ 77,519 $ 75,088 $ 379,501 The above amortization expense forecast is an estimate. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, potential impairment, accelerated amortization or other events. Non-amortizable intangible assets as of November 30, 2024 and December 2, 2023 were $ 461 and $ 474 , respectively, and relate to trademarks and trade names. The change in non-amortizable assets in 2024 compared to 2023 was due to changes in foreign currency exchange rates. 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. 63 Table of Contents 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: November 30, 2024 December 2, 2023 Operating net lease cost $ 16,559 $ 13,883 Finance net lease cost: Amortization of assets 1,698 2,045 Interest on lease liabilities 402 1,077 Variable net lease cost 12,091 8,554 Total net lease cost $ 30,750 $ 25,559 Supplemental balance sheet information related to leases is as follows: Location on Balance Sheet November 30, 2024 December 2, 2023 Operating leases: Operating lease right-of-use assets Other assets $ 61,116 $ 47,433 Current operating lease liabilities Other accrued expenses 13,473 11,277 Noncurrent operating lease liabilities Other liabilities 48,628 36,879 Total operating lease liabilities $ 62,101 $ 48,156 Finance leases: Equipment right-of-use assets Property, plant and equipment $ 9,183 $ 11,681 Building right-of-use asset Property, plant and equipment $ - $ 14,230 Current obligations of finance leases Other accrued expenses $ 1,908 $ 16,184 Finance leases, net of current obligations Other liabilities 7,600 6,534 Total finance lease liabilities $ 9,508 $ 22,718 As of November 30, 2024 , the weighted average remaining lease term is 7.6 years and the weighted average discount rate is 4.8 % for the Company's operating lease agreements. The weighted average remaining lease term is 6.6 years and the weighted average discount rate is 4.0 % for the Company's finance lease agreements. Supplemental information related to leases is as follows: November 30, 2024 December 2, 2023 Cash paid amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 15,707 $ 11,745 Operating cash flows from finance leases 402 1,077 Financing cash flows from finance leases 16,089 268 Non-cash investing and financing activities Additions to right-of-use assets obtained from: New operating lease liabilities $ 29,651 $ 26,687 New finance lease liabilities 3,282 15,015 64 Table of Contents Maturities of lease liabilities are as follows: November 30, 2024 Fiscal Year Finance Leases Operating Leases 2025 $ 2,258 $ 16,082 2026 2,090 12,807 2027 1,795 10,007 2028 1,252 7,368 2029 885 5,459 2030 and beyond 2,507 22,548 Total 10,787 74,271 Less: amounts representing interest ( 1,279 ) ( 12,170 ) Present value of future minimum payments 9,508 62,101 Less: current obligations ( 1,908 ) ( 13,473 ) Noncurrent lease liabilities $ 7,600 $ 48,628 Note 7: Notes Payable, Long-Term Debt and Lines of Credit Notes Payable Notes payable were $ 587 and $ 1,841 at November 30, 2024 and December 2, 2023 , respectively. This amount primarily represents various foreign subsidiaries’ other short-term borrowings that were not part of committed lines. The weighted-average interest rate on short-term borrowings outstanding at November 30, 2024 was approximately 1.35 percent and was 10.75 percent and 16.2 percent in 2023 and 2022 respectively. Fair values of these short-term obligations approximate their carrying values due to their short maturity. There were no funds drawn from the short-term committed lines at November 30, 2024 . Long-Term Debt Weighted-Average Fiscal Year Balance at Balance at Interest Rate at Maturity November 30, December 2, Long-Term Debt November 30, 2024 Date 2024 2023 Revolving credit facility 6.17 % 2028 $ - $ - Term Loan A 1 6.17 % 2028 462,500 487,500 Term Loan B 2 6.57 % 2030 989,030 796,000 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 ( 41,478 ) ( 46,910 ) Total debt $ 2,010,052 $ 1,836,590 Less: current maturities - - Total long-term debt, excluding current maturities $ 2,010,052 $ 1,836,590 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 ( 6.17 percent at November 30, 2024 ). 2 Term Loan B, due on February 15, 2030, $ 994,000 variable rate at the SOFR plu s 2.00 percent with a SOFR floor of 0.50 percent ( 6.57 percent at November 30, 2024 ). 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. 65 Table of Contents On February 15, 2023, we entered into a credit agreement with a consortium of financial institutions (“Second Amended and Restated Credit Agreement”) which replaced our existing revolving credit agreement under the amended and restated revolving credit agreement dated October 20, 2020 and also replaced our secured term loan credit agreement dated October 20, 2017. The Second Amended and Restated Credit Agreement provides for a senior secured term loan A facility in an aggregate principal amount of $ 500,000 (“Term Loan A”), a 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. 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. 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 acquisitio ns. The maturity date of Term B loans remains unchanged. The commitment fee rates and interest rates applicable to the revolving credit facility and the Term Loan A facility remain unchanged. 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 ( 6.17 percent at November 30, 2024 ). The interest rate spread is based on a secured leverage grid. Term Loan A matures on February 15, 2028. At November 30, 2024 , a balance of $ 462,500 was outstanding on the Term L oan A. Interest on Term Loan B borrowings is payable at SOFR plus an interest rate spread of 2.00 percent with a SOFR floor of 50 basis points ( 6.57 per cent at November 30, 2024 ). Term Loan B matures on February 15, 2030. At November 30, 2024 , a balance of $ 989,030 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 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. On June 30, 2023, 1 -month LIBOR 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 agreement was converted to Overnight SOFR plus 3.28 percent. See Note 12 for further discussion of these interest rate swaps. 66 Table of Contents 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 $ 2,015,468 and $ 1,785,199 as of November 30, 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. 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 2025 2026 2027 2028 2029 Thereafter Long-term debt obligations $ 41,190 $ 47,440 $ 53,690 $ 959,940 $ 9,940 $ 939,330 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 ( 6.17 percent at November 30, 2024 ). 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 November 30, 2024 , there was no balance outstanding on the Revolving Credit Facility. The Revolving Credit Facility matures on February 15, 2028. As of November 30, 2024 , amounts related to our revolving credit facility was as follows: Committed Drawn Unused Revolving credit facility $ 700,000 $ - $ 689,682 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 November 30, 2024 , letters of credit reduced the available amount under the revolving credit facility by $ 10,318 . Covenants and Other Under the Refinancing and Incremental Amendment , 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 the Refinancing and Incremental Amendment , 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. 67 Table of Contents 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. As of November 30, 2024 , we were in compliance with all covenants of our contractual obligations for outstanding indebtedness. 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 54,657,103 and 54,092,987 shares issued and outstanding at November 30, 2024 and December 2, 2023 , respectively. On April 22 2022, the Board of Directors authorized a 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. We repurchased shares under this program with an aggregate value of $ 31,811 during 2024 . We did not repurchase any shares during 2023 and 2022 under our share repurchase program. Up to $ 268,000 of our outstanding common shares may still be repurchased under the current share repurchase program. Common Shares Outstanding 2024 2023 2022 Beginning balance 54,092,987 53,676,576 52,777,753 Stock options exercised 746,892 314,832 657,789 Deferred compensation paid 20,691 102,108 118,429 Restricted units vested 297,035 113,339 172,474 Shares withheld for taxes ( 93,102 ) ( 113,868 ) ( 49,869 ) Share repurchases ( 407,400 ) - - Ending balance 54,657,103 54,092,987 53,676,576 Dividends declared per common share were $ 0.856 and $ 0.805 for the year ended November 30, 2024 and December 2, 2023 , respectively. 68 Table of Contents Note 9: Accounting for Share-Based Compensation Overview We have various share-based compensation programs, which provide for equity awards including non-qualified stock options, incentive stock options, restricted stock units, performance awards and deferred compensation. These equity awards fall under several plans and are described below. Share-based Compensation Plans We currently grant stock options and restricted stock units under equity compensation and deferred compensation plans. Stock options are granted to officers and key employees at prices not less than the fair market value at the date of grant. Non-qualified stock options are generally exercisable beginning one year from the date of grant in cumulative yearly amounts of 33.3 percent. Incentive stock options are based on certain performance-based criteria and are generally exercisable at a stated date when the performance criteria is measured. Stock options generally have a contractual term of 10 years. Options exercised represent newly issued shares. Restricted stock awards are nonvested stock-based awards that include grants of restricted stock units. Restricted stock awards are independent of option grants and are subject to forfeiture if employment terminates prior to the release of the restrictions. 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 2,854,679 common shares available for grant as of November 30, 2024 . 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 2024, 2023 and 2022 were calculated using the following assumptions: 2024 2023 2022 Expected life (in years) 5.86 5.00 5.00 Weighted-average expected volatility 35.12 % 35.28 % 33.35 % Expected volatility range 33.88 - 35.14 % 35.09 - 35.69 % 33.33 - 34.34 % Risk-free interest rate 3.73 - 4.58 % 3.48 - 4.72 % 1.53 - 4.06 % Weighted-average expected dividend 1.13 % 1.20 % 0.95 % Expected dividend yield range 1.03 - 1.19 % 1.13 - 1.22 % 0.94 - 1.23 % Weighted-average fair value of grants $ 28.07 $ 22.41 $ 20.91 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 $ 21,914 , $ 19,911 and $ 24,368 for 2024, 2023 and 2022 , respectively. All share-based compensation was recorded as SG&A expense. As of November 30, 2024 , $ 9,499 of unrecognized compensation costs related to unvested stock option awards is expected to be recognized over a weighted-average period of 1.1 years. Unrecognized compensation costs related to unvested restricted stock units was $ 9,944 which is expected to be recognized over a weighted-average period of 0.9 years. Stock Option Activity The stock option activity for the years ended November 30, 2024, December 2, 2023, and December 3, 2022 is summarized below: Weighted- Average Options Exercise Price 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 Granted 470,748 77.77 Exercised ( 746,892 ) 48.10 Forfeited or cancelled ( 60,637 ) 64.07 Outstanding at November 30, 2024 4,605,104 55.40 The fair value of options granted during 2024, 2023 and 2022 was $ 13,214 , $ 10,577 and $ 5,400 , respectively. Total intrinsic value of options exercised during 2024, 2023 and 2022 was $ 25,258 , $ 8,015 and $ 16,877 , respectively. For options outstanding at November 30, 2024 , the weighted-average remaining contractual life was 5.3 years and the aggregate intrinsic value was $ 99,352 . There were 3,756,728 options exercisable at November 30, 2024 , with a weighted-average remaining contractual life of 4.6 years and an aggregate intrinsic value of $ 96,416 . Intrinsic value is the difference between our closing stock price on the respective trading day and the exercise price, multiplied by the number of options exercised. Proceeds received from option exercises during the year ended November 30, 2024, December 2, 2023, and December 3, 2022 were $ 35,927 , $ 14,619 and $ 30,122 , respectively. The Company’s actual tax benefits realized for the tax deductions related to the exercise of stock options for 2024, 2023 and 2022 was $ 6,114 , $ 1,885 and $ 3,687 , respectively. 71 Table of Contents Restricted Stock Unit Activity The nonvested restricted stock unit activity for the years ended November 30, 2024, December 2, 2023, and December 3, 2022 is summarized below: Weighted- Weighted- Average Average Remaining Grant Contractual Date Fair Life Units Value (in Years) Nonvested at November 27, 2021 552,365 $ 50.63 1.9 Granted 179,603 67.92 Vested ( 172,474 ) 46.74 Forfeited ( 68,374 ) 45.83 Nonvested at December 3, 2022 491,120 58.98 0.7 Granted 187,185 63.32 Vested ( 113,339 ) 53.83 Forfeited ( 36,276 ) 44.48 Nonvested at December 2, 2023 528,690 62.61 0.7 Granted 194,689 73.34 Vested ( 297,035 ) 57.32 Forfeited ( 15,603 ) 70.61 Nonvested at November 30, 2024 410,741 71.21 0.9 Total fair value of restricted stock units vested during 2024 , 2023 , and 2022 was $ 17,027 , $ 6,101 and $ 8,062 , respectively. The total fair value of nonvested restricted stock at November 30, 2024 was $ 29,250 . We indirectly repurchased 100,560 , 37,715 and 55,081 shares during 2024, 2023 and 2022 , 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 2024, 2023 and 2022 was $ 4,237 , $ 1,396 and $ 2,569 , respectively. Deferred Compensation Activity Deferred compensation units are fully vested at the date of contribution. The deferred compensation units outstanding for the years ended November 30, 2024, December 2, 2023, and December 3, 2022 is summarized below: Non-employee Directors Employees Total 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 Participant contributions 13,103 9,309 22,412 Company match contributions 1 15,236 931 16,167 Payouts ( 20,691 ) ( 8,357 ) ( 29,048 ) Units outstanding November 30, 2024 403,618 65,070 468,688 1 The non-employee directors’ company match includes 13,926 , 17,580 and 17,937 deferred compensation units paid as discretionary awards to all non-employee directors in 2024, 2023 and 2022 , respectively. 72 Table of Contents The fair value of non-employee directors’ company matches for 2024, 2023 and 2022 was $ 182 , $ 172 and $ 172 , respectively. The fair value of the non-employee directors’ discretionary award was $ 1,200 , $ 1,200 and $ 1,080 for 2024 , 2023 and 2022 , respectively. The fair value of employee company matches was $ 78 , $ 79 and $ 86 for 2024, 2023 and 2022 , 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 2024 was $ 15,590 which included the cost of the 4 percent company match of $ 10,070 and the additional 1 percent contribution of $ 5,520 . T he total contributions to the 401 (k) plan were $ 14,221 and $ 12,113 in 2023 and 2022 , 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 2024 and 2023 . The defined contribution plan liability recorded in the Consolidated Balance Sheets was $ 11,992 and $ 11,626 in 2024 and 2023 , 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. 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 November 30, 2024 and December 2, 2023 : Pension Benefits Other Postretirement U.S. Plans Non-U.S. Plans Benefits 2024 2023 2024 2023 2024 2023 Change in projected benefit obligation Benefit obligation at beginning of year $ 255,390 $ 269,874 $ 146,796 $ 154,850 $ 22,133 $ 24,173 Acquisitions - - 951 - - - Service cost - - 1,538 1,670 - - Interest cost 13,855 13,901 6,215 5,726 1,166 1,205 Participant contributions - - - - 252 232 Actuarial gain 1 10,747 ( 7,298 ) 3,391 ( 12,435 ) ( 125 ) ( 611 ) Plan amendments - - 497 - - - Settlement payments - ( 141 ) - ( 252 ) - - Benefits paid ( 21,182 ) ( 20,946 ) ( 8,526 ) ( 7,663 ) ( 2,576 ) ( 2,866 ) Foreign currency translation effect - - ( 2,552 ) 4,900 - - Benefit obligation at end of year 258,810 255,390 148,310 146,796 20,850 22,133 Change in plan assets Fair value of plan assets at beginning of year 319,738 326,786 134,622 141,908 133,453 120,782 Acquisitions - - 615 - - - Actual return on plan assets 49,271 12,811 9,189 ( 5,545 ) 44,160 15,160 Employer contributions 1,197 1,228 1,624 1,744 85 145 Participant contributions - - - - 252 232 Settlement payments - ( 141 ) - - - - Benefits paid 2 ( 21,182 ) ( 20,946 ) ( 8,526 ) ( 7,663 ) ( 2,575 ) ( 2,866 ) Foreign currency translation effect - - ( 1,957 ) 4,178 - - Fair value of plan assets at end of year 349,024 319,738 135,567 134,622 175,375 133,453 Plan assets in excess of (less than) benefit obligation as of year end $ 90,214 $ 64,348 $ ( 12,743 ) $ ( 12,174 ) $ 154,525 $ 111,320 1 Actuarial gain in 2024 and 2023 for the U.S. Plans is primarily due to assumption changes. Actuarial gain in 2024 and 2023 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 2024 2023 2024 2023 2024 2023 Unrecognized actuarial loss (gain) $ 126,583 $ 143,522 $ 47,595 $ 49,128 $ ( 47,532 ) $ ( 14,442 ) Unrecognized prior service cost - - 1,600 1,196 - - Ending balance $ 126,583 $ 143,522 $ 49,195 $ 50,324 $ ( 47,532 ) $ ( 14,442 ) Pension Benefits Other Postretirement U.S. Plans Non-U.S. Plans Benefits 2024 2023 2024 2023 2024 2023 Statement of financial position as of fiscal year-end Non-current assets $ 102,637 $ 76,677 $ 16,846 $ 15,635 $ 156,576 $ 113,431 Accrued benefit cost Current liabilities ( 1,239 ) ( 1,239 ) ( 1,443 ) ( 1,464 ) ( 214 ) ( 218 ) Non-current liabilities ( 11,184 ) ( 11,089 ) ( 28,146 ) ( 26,345 ) ( 1,837 ) ( 1,893 ) Ending balance $ 90,214 $ 64,349 $ ( 12,743 ) $ ( 12,174 ) $ 154,525 $ 111,320 The accumulated benefit obligation of the U.S. pension and other postretirement plans was $ 275,599 at November 30, 2024 and $ 273,197 at December 2, 2023 . The accumulated benefit obligation of the non-U.S. pension plans was $ 142,503 at November 30, 2024 and $ 141,402 at December 2, 2023 . The following amounts relate to pension plans with accumulated benefit obligations in excess of plan assets as of November 30, 2024 and December 2, 2023 : Pension Benefits and Other Postretirement Benefits U.S. Plans Non-U.S. Plans 2024 2023 2024 2023 Accumulated benefit obligation $ 12,423 $ 12,329 $ 36,809 $ 35,034 Fair value of plan assets - - 10,046 9,700 The following amounts relate to pension plans with projected benefit obligations in excess of plan assets as of November 30, 2024 and December 2, 2023 : Pension Benefits and Other Postretirement Benefits U.S. Plans Non-U.S. Plans 2024 2023 2024 2023 Projected benefit obligation $ 12,423 $ 12,329 $ 39,635 $ 37,510 Fair value of plan assets - - $ 10,046 9,700 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 2025 $ - $ - $ - Expected benefit payments 2025 21,474 8,332 2,606 2026 21,376 8,573 2,491 2027 21,267 8,897 2,338 2028 21,215 8,634 2,210 2029- 2034 119,274 53,638 10,424 The components of our net period defined benefit pension and postretirement benefit costs other than service cost are presented as non-operating expenses and service cost is presented in operating expenses. Components of net periodic benefit cost and other supplemental information for the years ended November 30, 2024, December 2, 2023, and December 3, 2022 are as follows: Pension Benefits Other U.S. Plans Non-U.S. Plans Postretirement Benefits Net periodic cost (benefit) 2024 2023 2022 2024 2023 2022 2024 2023 2022 Service cost $ - $ - $ - $ 1,538 $ 1,670 $ 2,765 $ - $ - $ - Interest cost 13,855 13,901 9,653 6,215 5,726 2,893 1,166 1,205 748 Expected return on assets ( 26,220 ) ( 28,821 ) ( 29,018 ) ( 6,587 ) ( 7,027 ) ( 6,465 ) ( 10,909 ) ( 9,859 ) ( 11,084 ) Amortization: Prior service (benefit) cost - - ( 3 ) 84 62 63 - - - Actuarial loss (gain) 4,637 2,541 4,132 2,066 1,993 2,411 ( 287 ) - ( 3,445 ) Settlement charge - - - - 19 3,329 - - - Net periodic (benefit) cost $ ( 7,728 ) $ ( 12,379 ) $ ( 15,237 ) $ 3,314 $ 2,443 $ 4,996 $ ( 10,030 ) $ ( 8,654 ) $ ( 13,781 ) Pension Benefits Other U.S. Plans Non-U.S. Plans Postretirement Benefits Weighted-average assumptions used to determine benefit obligations 2024 2023 2022 2024 2023 2022 2024 2023 2022 Discount rate 5.23 % 5.66 % 5.36 % 4.03 % 4.37 % 3.70 % 5.09 % 5.61 % 5.29 % Rate of compensation increase 1 0.00 % 0.00 % 0.00 % 1.76 % 1.82 % 1.83 % N/A N/A N/A Weighted-average assumptions used to determine net costs for years ended 2024 2023 2022 2024 2023 2022 2024 2023 2022 Discount rate 5.66 % 5.36 % 2.75 % 4.36 % 3.71 % 1.29 % 5.61 % 5.29 % 2.51 % Expected return on plan assets 7.75 % 7.75 % 7.00 % 5.01 % 5.02 % 3.49 % 8.25 % 8.25 % 8.25 % Rate of compensation increase 1 0.00 % 0.00 % 0.00 % 1.86 % 1.82 % 1.68 % 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 5.23 percent at November 30, 2024 , 5.66 percent at December 2, 2023 and 5.36 percent at December 3, 2022 . Net periodic pension cost for a given fiscal year is based on assumptions developed at the end of the previous fiscal year. A discount rate change of 0.5 percentage points at November 30, 2024 would impact U.S. pension and other postretirement plan (income) expense by approximately $ 144 (pre-tax) in fiscal 2025. 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 2024 , 7.75 percent in 2023 and 7.00 percent in 2022 . 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 2024 , 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 $ 2,622 (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 5.01 percent in 2024 compared to 5.02 percent in 2023 and 3.49 percent in 2022 . 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 2024 2023 2022 Health care cost trend rate assumed for next year 6.00 % 6.25 % 6.50 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.75 % 5.75 % 5.75 % Fiscal year that the rate reaches the ultimate trend rate 2026 2026 2026 The asset allocation for the Company’s U.S. and non-U.S. pension plans at the end of 2024 and 2023 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 2024 2024 2023 2024 2024 2023 2024 2024 2023 Equities 55.0 % 52.4 % 53.8 % 21.7 % 23.0 % 22.0 % 0.0 % 0.0 % 0.0 % Fixed income 45.0 % 46.1 % 44.9 % 78.3 % 76.5 % 77.2 % 0.0 % 0.0 % 0.0 % Insurance 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 100.0 % 98.0 % 99.5 % Cash 1 0.0 % 1.5 % 1.3 % 0.0 % 0.5 % 0.8 % 0.0 % 2.0 % 0.5 % 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 2024 and 2023 . 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 2024 , 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 2024 , 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 2024 and 2023 . 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. November 30, 2024 U.S. Pension Plans Level 1 Level 2 Level 3 Total Assets Equities $ - $ 183,061 $ - $ 183,061 Fixed income - 134,261 - 134,261 Cash 5,169 - - 5,169 Total categorized in the fair value hierarchy 5,169 317,322 - 322,491 Other investments measured at NAV 1 26,533 Total $ 5,169 $ 317,322 $ - $ 349,024 Non-U.S. Pension Plans Level 1 Level 2 Level 3 Total Assets Equities $ 31,015 $ - $ - $ 31,015 Fixed income 41,869 - 722 42,591 Insurance - - 603 603 Cash 674 - - 674 Total categorized in the fair value hierarchy 73,558 - 1,325 74,883 Other investments measured at NAV 1 60,684 Total $ 73,558 $ - $ 1,325 $ 135,567 Other Postretirement Benefits Level 1 Level 2 Level 3 Total Assets Insurance $ - $ - $ 171,809 $ 171,809 Cash 3,566 - - 3,566 Total $ 3,566 $ - $ 171,809 $ 175,375 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 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. 79 Table of Contents The definitions of fair values of our pension and other postretirement benefit plan assets at November 30, 2024 and December 2, 2023 by asset category are as follows: Equities —Primarily publicly traded common stock for purposes of total return and to maintain equity exposure consistent with policy allocations. Investments include: (i) U.S. and non-U.S. equity securities and mutual funds valued at closing prices from national exchanges; and (ii) commingled funds valued at unit values or net asset values provided by the investment managers, which are based on the fair value of the underlying investments. Funds valued at net asset value have various investment strategies including seeking maximum total returns consistent with prudent investment management, seeking current income consistent with preservation of capital and daily liquidity and seeking to approximate the risk and return characterized by a specific index fund. There are no restrictions for redeeming holdings out of these funds and the funds have no unfunded commitments. Fixed income —Primarily corporate and government debt securities for purposes of total return and managing fixed income exposure to policy allocations. Investments include (i) mutual funds valued at closing prices from national exchanges, (ii) corporate and government debt securities valued at closing prices from national exchanges, (iii) commingled funds valued at unit values or net asset value provided by the investment managers, which are based on the fair value of the underlying investments, and (iv) an annuity contract, the value of which is determined by the provider and represents the amount the plan would receive if the contract were cashed out at year-end. Insurance —Insurance contracts for purposes of funding postretirement medical benefits. Fair values are the cash surrender values as determined by the providers which are the amounts the plans would receive if the contracts were cashed out at year end. Cash – Cash balances on hand, accrued income and pending settlements of transactions for purposes of handling plan payments. Fair values are the cash balances as reported by the Trustees of the plans. The following is a roll forward of the Level 3 investments of our pension and postretirement benefit plan assets during the years ended November 30, 2024 and December 2, 2023 : Fixed Income U.S. Pension Plans 2024 2023 Level 3 balance at beginning of year $ - $ 45,251 Net transfers out of level 3 - $ ( 45,072 ) Purchases, sales, issuances and settlements, net - ( 179 ) Level 3 balance at end of year $ - $ - Fixed Income Non-U.S. Pension Plans 2024 2023 Level 3 balance at beginning of year $ 726 $ 703 Transfers into level 3 603 - Net gains 17 - Currency change effect ( 21 ) 23 Level 3 balance at end of year $ 1,325 $ 726 Insurance Other Postretirement Benefits 2024 2023 Level 3 balance at beginning of year $ 132,754 $ 119,446 Purchases, sales, issuances and settlements, net ( 1,431 ) ( 1,144 ) Net gains 40,486 14,452 Level 3 balance at end of year $ 171,809 $ 132,754 80 Table of Contents Note 11: Income Taxes Income before income taxes and income from equity method investments 2024 2023 2022 United States $ ( 46,064 ) $ 15,276 $ 63,718 Non-U.S. 228,727 218,884 188,210 Total $ 182,663 $ 234,160 $ 251,928 Components of the provision for income tax expense (benefit) 2024 2023 2022 Current: U.S. federal $ 14,150 $ 18,347 $ 12,181 State 4,104 5,529 3,389 Non-U.S. 92,721 87,449 63,750 110,975 111,325 79,320 Deferred: U.S. federal ( 44,784 ) ( 100 ) 8,150 State ( 4,442 ) ( 4,111 ) ( 1,767 ) Non-U.S. ( 5,368 ) ( 13,585 ) ( 8,517 ) ( 54,594 ) ( 17,796 ) ( 2,134 ) Total $ 56,381 $ 93,529 $ 77,186 Reconciliation of effective income tax 2024 2023 2022 Tax at statutory U.S. federal income tax rate $ 38,359 $ 49,174 $ 52,760 State income taxes, net of federal benefit ( 307 ) 1,137 1,252 Foreign dividend repatriation 1,943 21,730 2,596 Foreign operations 13,232 12,558 1,868 Executive compensation over $1.0 million 1,690 784 2,847 Non-U.S. stock option expense 676 730 525 Change in valuation allowance ( 1,800 ) 725 3,187 Research and development tax credit ( 1,460 ) ( 1,400 ) ( 927 ) Foreign-derived intangible income ( 625 ) ( 2,665 ) ( 2,786 ) Global intangible low-taxed income 1,581 2,345 1,890 Provision to return ( 1,595 ) 1,336 840 Cross currency swap - - 7,020 Contingency reserve 3,416 5,951 5,909 Excess Tax Benefit Related to Stock Options & Restricted Stock ( 3,083 ) ( 850 ) ( 2,016 ) Goodwill Impairment Related to Flooring 2,373 - - Other 1,981 1,974 2,221 Total income tax expense $ 56,381 $ 93,529 $ 77,186 1 Foreign dividend repatriation line includes impact of withholding tax recorded on earnings that are no longer permanently reinvested. 81 Table of Contents Deferred income tax balances at each year-end related to: 2024 2023 Deferred tax assets: Pension and other post-retirement benefit plans $ 4,318 $ 5,306 Employee benefit costs 28,116 27,672 Foreign tax credit carryforward 7,555 6,538 Tax loss carryforwards 20,059 25,894 Leases 16,203 12,716 Hedging activity 11,688 18,638 Interest deduction limitation 57,233 37,519 Other 31,026 33,022 Gross deferred tax assets 176,198 167,305 Less: valuation allowance ( 11,696 ) ( 15,595 ) Total net deferred tax assets 164,502 151,710 Deferred tax liability: Depreciation and amortization ( 187,897 ) ( 209,266 ) Pension and other post-retirement benefit plans ( 58,119 ) ( 41,444 ) Undistributed earnings of non-U.S. subsidiaries ( 4,933 ) ( 21,926 ) Leases ( 15,948 ) ( 12,510 ) Total deferred tax liability ( 266,897 ) ( 285,146 ) Net deferred tax liability $ ( 102,395 ) $ ( 133,436 ) 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 decrease in the valuation allowance is primarily related to a decrease in foreign net operating losses for which the Company does not expect to receive a full tax benefit. 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. 82 Table of Contents U.S. income taxes have not been provided on approximately $ 1,197,517 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 $ 68,380 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 $ 45,177 can be carried forward indefinitely, while the remaining $ 23,203 of tax losses must be utilized during 2025 to 2042. The U.S. has a branch foreign tax credit carryforward of $ 4,351 . 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. 2024 2023 Balance at beginning of year $ 14,254 $ 17,582 Tax positions related to the current year: Additions 1,027 723 Tax positions related to prior years: Additions 4,434 5,658 Reductions ( 755 ) ( 965 ) Settlements ( 775 ) ( 8,156 ) Lapses in applicable statutes of limitation ( 2,595 ) ( 588 ) Balance at end of year $ 15,590 $ 14,254 Included in the balance of unrecognized tax benefits as of November 30, 2024 and December 2, 2023 are potential benefits of $ 12,431 and $ 10,338 respectively, that, if recognized, would affect the effective tax rate. We report accrued interest and penalties related to unrecognized tax benefits in income tax expense. For the year ended November 30, 2024 , we recognized a net benefit for interest and penalties of $ 658 relating to unrecognized tax benefits and had net accumulated accrued interest and penalties of $ 4,840 as of November 30, 2024 . 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 . 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 2021 or Swiss income tax examination for years prior to 2022. During the fourth quarter of 2024, H.B. Fuller (China) Adhesives, Ltd. settled its transfer pricing audit covering the calendar years 2005 through 2014. We are in various stages of examination and appeal in other foreign jurisdictions. Although the final outcomes of these examinations cannot currently be determined, we believe that we have recorded adequate liabilities with respect to these examinations. Note 12: Financial Instruments Overview As a result of being a global enterprise, 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. 83 Table of Contents 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. We evaluate 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 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 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 $ 1,120 at November 30, 2024 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. 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 an asset of $ 661 at November 30, 2024 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 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 $ 265 at November 30, 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. 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. 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 November 30, 2024 , the combined fair value of the swaps was a liability of $ 51,871 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. 84 Table of Contents 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 $ 37,481 a s of November 30, 2024 . As of November 30, 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. The amounts of pretax gains (losses) recogn ized in comprehensive income related to derivative instruments designated as cross-currency swaps, interest rate swaps and net investment hedges are as follows: November 30, 2024 December 2, 2023 December 3, 2022 Cross-currency swaps $ - $ - $ 5,536 Interest rate swap contracts $ ( 14,831 ) $ 5,932 $ 13,148 Net investment hedges $ 23,058 $ ( 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 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 agreement was 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 swap s was a liability of $ 32,775 at November 30, 2024 , 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. Derivatives Not Designated As Hedging Instruments The Company uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries that are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Foreign currency forward contracts are recorded as assets and liabilities on the balance sheet at fair value. Changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities. See Note 13 for fair value amounts of these derivative instruments. As of November 30, 2024 , we had forward foreign currency contracts maturing bet ween December 2, 2024 and February 4, 2025. 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 (losses) gains recognized in other (expense) income, net related to derivative instruments not designated as hedging instruments are as follows: November 30, 2024 December 2, 2023 December 3, 2022 Foreign currency forward contracts $ ( 4,927 ) $ 8,497 $ 5,711 Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities in the customer base and their dispersion across many different industries and countries. As of November 30, 2024 , there were no significant concentrations of credit risk. 85 Table of Contents Note 13: Fair Value Measurements Overview Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: ● Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. ● Level 3: Unobservable inputs that reflect management’s assumptions, and include situations where there is little, if any, market activity for the asset or liability. Balances Measured at Fair Value on a Recurring Basis The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of November 30, 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: November 30, Description 2024 Level 1 Level 2 Level 3 Assets: Marketable securities $ 8,584 $ 8,584 $ - $ - Foreign exchange contract assets 2,147 - 2,147 - Interest rate swaps, cash flow hedge asset 1,781 - 1,781 - Liabilities: Foreign exchange contract liabilities $ 7,074 $ - $ 7,074 $ - Interest rate swaps, cash flow hedge liability 265 - 265 - Interest rate swaps, fair value hedge liabilities 32,775 - 32,775 - Net investment hedge liability 51,871 - 51,871 - 86 Table of Contents 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 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 . Contingent consideration of $ 870 related to the acquisition of GSSI was paid during 2024 following the completion of certain performance goals and conditions and contingent consideration of $ 500 related to the acquisition of TissueSeal was reversed during 2024 as conditions for payment were not met. 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 2024 Level 3 balance at beginning of year $ 1,370 Payment of contingent consideration ( 870 ) Reversal of contingent consideration ( 500 ) Level 3 balance at end of year $ - 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. 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 $ 3,445 and $ 5,034 as of November 30, 2024 and December 2, 2023 , respectively, for probable and reasonably estimable environmental remediation costs. Of the amount reserved, $ 1,055 and $ 2,301 as of November 30, 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. 87 Table of Contents Currently we are involved in various environmental investigations, clean up activities and administrative proceedings and lawsuits. In particular, we are currently deemed a PRP in conjunction with numerous other parties, in a number of government enforcement actions associated with landfills and/or hazardous waste sites. As a PRP, we may be required to pay a share of the costs of investigation and clean up of these sites. In addition, we are engaged in environmental remediation and monitoring efforts at a number of current and former operating facilities. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, will not have a material adverse effect on our results of operations, financial condition or cash flow. Other Legal Proceedings From time to time and in the ordinary course of business, we are a party to, or a target of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, contract, patent and intellectual property, environmental, health and safety, tax and employment matters. While we are unable to predict the outcome of these matters, we have concluded, based upon currently available information, that the ultimate resolution of any pending matter, individually or in the aggregate, including the asbestos litigation described in the following paragraphs, will not have a material adverse effect on our results of operations, financial condition or cash flow. We have been named as a defendant in lawsuits in which plaintiffs have alleged injury due to products containing asbestos manufactured more than 35 years ago. The plaintiffs generally bring these lawsuits against multiple defendants and seek damages (both actual and punitive) in very large amounts. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable injuries or that the injuries suffered were the result of exposure to products manufactured by us. We are typically dismissed as a defendant in such cases without payment. If the plaintiff presents evidence indicating that compensable injury occurred as a result of exposure to our products, the case is generally settled for an amount that reflects the seriousness of the injury, the length, intensity and character of exposure to products containing asbestos, the number and solvency of other defendants in the case, and the jurisdiction in which the case has been brought. A significant portion of the defense costs and settlements in asbestos-related litigation is paid by third parties, including indemnification pursuant to the provisions of a 1976 agreement under which we acquired a business from a third party. Currently, this third party is defending and paying settlement amounts, under a reservation of rights, in most of the asbestos cases tendered to the third party. In addition to the indemnification arrangements with third parties, we have insurance policies that generally provide coverage for asbestos liabilities, including defense costs. Historically, insurers have paid a significant portion of our defense costs and settlements in asbestos-related litigation. However, certain of our insurers are insolvent. We have entered into cost-sharing agreements with our insurers that provide for the allocation of defense costs and settlements and judgments in asbestos-related lawsuits. These agreements require, among other things, that we fund a share of settlements and judgments allocable to years in which the responsible insurer is insolvent. A summary of the number of and settlement amounts for asbestos-related lawsuits and claims is as follows: Year Ended Year Ended Year Ended November 30, December 2, December 3, 2024 2023 2022 Lawsuits and claims settled 9 9 7 Settlement amounts $ 1,208 $ 4,200 $ 296 Insurance payments received or expected to be received $ 844 $ 2,379 $ 195 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. 88 Table of Contents Note 15: Segments We are required to report segment information in the same way that we internally organize our business for assessing performance and making decisions regarding allocation of resources. Revenue and operating income of each of our segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance. Segment operating income is identified as gross profit less SG&A expenses. Corporate expenses, other than those included in Corporate Unallocated, are allocated to each operating segment. Consistent with our internal management reporting, Corporate Unallocated amounts include business acquisition and integration costs, organizational restructuring charges and project costs associated with our implementation of Project ONE. Corporate assets are not allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs. We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. The business components within each operating segment are managed to maximize the results of the overall operating segment rather than the results of any individual business component of the operating segment. Results of individual components of each operating segment are subject to numerous allocations of segment-wide costs that may or may not have been focused on that particular component for a particular reporting period. The costs for these allocated resources are not tracked on a “where-used” basis as financial performance is assessed at the total operating segment level. Reportable operating segment financial information for all periods presented is as follows: 2024 2023 2022 Net revenue Hygiene, Health and Consumable Adhesives $ 1,546,351 $ 1,601,487 $ 1,695,934 Engineering Adhesives 1,459,137 1,428,744 1,532,639 Construction Adhesives 563,248 480,703 520,610 Total $ 3,568,736 $ 3,510,934 $ 3,749,183 Segment operating income (loss) Hygiene, Health and Consumable Adhesives $ 187,413 $ 215,088 $ 165,786 Engineering Adhesives 193,038 187,346 168,873 Construction Adhesives 25,304 5,961 22,989 Total segment 405,755 408,395 357,648 Corporate Unallocated 1 ( 57,535 ) ( 53,258 ) ( 34,930 ) Total $ 348,220 $ 355,137 $ 322,718 Depreciation and amortization Hygiene, Health and Consumable Adhesives $ 53,359 $ 53,398 $ 46,374 Engineering Adhesives 73,041 63,143 58,307 Construction Adhesives 44,173 41,915 41,713 Corporate Unallocated 1 4,137 1,384 582 Total $ 174,710 $ 159,840 $ 146,976 Total assets 2 Hygiene, Health and Consumable Adhesives $ 1,610,902 $ 1,661,122 Engineering Adhesives 1,687,391 1,627,715 Construction Adhesives 1,085,811 990,296 Corporate 549,140 444,442 Total $ 4,933,244 $ 4,723,575 Capital expenditures Hygiene, Health and Consumable Adhesives $ 87,945 $ 67,933 Engineering Adhesives 11,071 14,888 Construction Adhesives 6,482 4,540 Corporate 33,740 31,776 Total $ 139,238 $ 119,137 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. 89 Table of Contents Reconciliation of segment operating income to income before income taxes and income from equity method investments: 2024 2023 2022 Segment operating income $ 348,220 $ 355,137 $ 322,718 Other (expense) income, net ( 37,115 ) 9,682 12,952 Interest expense ( 133,124 ) ( 134,602 ) ( 91,521 ) Interest income 4,682 3,943 7,779 Income before income taxes and income from equity method investments $ 182,663 $ 234,160 $ 251,928 Financial information about geographic areas Net Revenue 2024 2023 2022 United States $ 1,623,854 $ 1,551,846 $ 1,692,903 China 438,512 430,948 462,587 Germany 362,919 393,029 419,141 Countries with more than 10 percent of total 2,425,285 2,375,823 2,574,631 All other countries with less than 10 percent of total 1,143,451 1,135,111 1,174,552 Total $ 3,568,736 $ 3,510,934 $ 3,749,183 Property, Plant and Equipment, net 2024 2023 2022 United States $ 472,084 $ 425,765 $ 375,353 China 109,665 110,061 101,563 Germany 98,233 114,266 107,903 All other countries with less than 10 percent of total 201,945 174,563 148,848 Total $ 881,927 $ 824,655 $ 733,667 We view the following disaggregation of net revenue by geographic region as useful to understanding the composition of revenue recognized during the respective reporting periods: November 30, 2024 Hygiene, Health and Consumable Engineering Construction Corporate Adhesives Adhesives Adhesives Unallocated Total Americas $ 882,614 $ 617,171 $ 413,984 $ - $ 1,913,769 EIMEA 455,751 451,174 117,553 - 1,024,478 Asia Pacific 207,986 390,792 31,711 - 630,489 $ 1,546,351 $ 1,459,137 $ 563,248 $ - $ 3,568,736 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 90 Table of Contents 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 Note 16: Subsequent Events Acquisitions On December 2, 2024, we completed the acquisition of Medifill Limited (“Medifill”) for a purchase price of 49,919 Euros, or approximately $ 51,252 . Headquartered in Dublin, Ireland, Medifill produces medical-grade cyanoacrylate adhesives tailored to the wound closure market. The acquisition establishes European production capabilities for our medical adhesives offerings. The fair value measurement for this acquisition has not been completed. The acquisition will be included in our Hygiene, Health and Consumable Adhesives operating segment. On January 15, 2025, we completed the acquisition of GEM S.r.l. (“GEM”) for a purchase price of 144,041 Euros, or approximately $ 147,886 . Headquartered in Viareggio, Italy, GEM develops, produces and sells medical adhesives for wound closure in both surgical and topical applications. The acquisition establishes a European headquarters for our Medical Adhesives Technologies business and expands the Company's medical adhesive offerings, further shifting our portfolio toward highly profitable, higher growth markets. The fair value measurement for this acquisition has not been completed. The acquisition will be included in our Hygiene, Health and Consumable Adhesives operating segment. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.