10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 3, 2017

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to

Commission file number: 001-09225

H.B. FULLER COMPANY

(Exact name of registrant as specified in its charter)

Minnesota	41-0268370
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1200 Willow Lake Boulevard, St. Paul, Minnesota	55110-5101
(Address of principal executive offices)	(Zip Code)

(651) 236-5900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[X]	Accelerated filer	[  ]
Non-accelerated filer	[  ]	(Do not check if a smaller reporting company)
		Smaller reporting company	[  ]
		Emerging growth company	[  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [  ] No [X]

The number of shares outstanding of the Registrant’s Common Stock, par value $1.00 per share, was 50,533,586 as of June 23, 2017.

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Table of Contents

H.B. Fuller Company

Quarterly Report on Form 10-Q

Table of Contents

		Page
PART 1. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	3
	Condensed Consolidated Statements of Income for the three and six months ended June 3, 2017 and May 28, 2016	3
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 3, 2017 and May 28, 2016	4
	Condensed Consolidated Balance Sheets as of June 3, 2017 and December 3, 2016	5
	Condensed Consolidated Statements of Total Equity as of June 3, 2017 and December 3, 2016	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 3, 2017 and May 28, 2016	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2.	MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
ITEM 4.	CONTROLS AND PROCEDURES	41
PART II. OTHER INFORMATION		41
ITEM 1.	LEGAL PROCEEDINGS	41
ITEM 1A.	RISK FACTORS	43
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	43
ITEM 6.	EXHIBITS	44
SIGNATURES		45

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

H.B. FULLER COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 3,			May 28,			June 3,			May 28,
	2017			2016			2017			2016
Net revenue	$	561,651		$	532,514		$	1,064,974		$	1,006,840
Cost of sales		(415,613	)		(374,258	)		(779,940	)		(710,979	)
Gross profit		146,038			158,256			285,034			295,861
Selling, general and administrative expenses		(102,770	)		(103,684	)		(215,685	)		(203,451	)
Special charges, net		-			(370	)		-			(783	)
Other income (expense), net		(110	)		(1,565	)		511			(6,647	)
Interest expense		(8,148	)		(6,597	)		(16,528	)		(12,905	)
Income before income taxes and income from equity method investments		35,010			46,040			53,332			72,075
Income taxes		(11,151	)		(14,290	)		(16,916	)		(23,050	)
Income from equity method investments, net of tax		2,005			1,640			4,279			3,332
Net income including non-controlling interests		25,864			33,390			40,695			52,357
Net income (loss) attributable to non-controlling interests		3			(59	)		(33	)		(108	)
Net income attributable to H.B. Fuller	$	25,867		$	33,331		$	40,662		$	52,249
Earnings per share attributable to H.B. Fuller common stockholders:
Basic		0.51			0.66			0.81			1.04
Diluted		0.50			0.65			0.79			1.02
Weighted-average common shares outstanding:
Basic		50,496			50,145			50,369			50,052
Diluted		51,686			51,253			51,573			51,124
Dividends declared per common share	$	0.15		$	0.14		$	0.29		$	0.27

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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H.B. FULLER COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 3,			May 28,			June 3,		May 28,
	2017			2016			2017		2016
Net income including non-controlling interests	$	25,864		$	33,390		$	40,695	$	52,357
Other comprehensive income
Foreign currency translation		18,513			1,442			7,994		492
Defined benefit pension plans adjustment, net of tax		1,593			690			3,183		3,355
Interest rate swaps, net of tax		10			10			20		20
Cash-flow hedges, net of tax		(23	)		(440	)		106		(191	)
Other comprehensive income		20,093			1,702			11,303		3,676
Comprehensive income		45,957			35,092			51,998		56,033
Less: Comprehensive income attributable to non-controlling interests		3			64			34		108
Comprehensive income attributable to H.B. Fuller	$	45,954		$	35,028		$	51,964	$	55,925

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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H.B. FULLER COMPANY AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

	(Unaudited)
	June 3,			December 3,
	2017			2016
Assets
Current assets:
Cash and cash equivalents	$	94,102		$	142,245
Trade receivables (net of allowances of $12,376 and $12,310, as of June 3, 2017 and December 3, 2016, respectively)		378,622			351,130
Inventories		302,336			247,399
Other current assets		75,380			70,479
Total current assets		850,440			811,253
Property, plant and equipment		1,111,423			1,093,141
Accumulated depreciation		(595,540	)		(577,866	)
Property, plant and equipment, net		515,883			515,275
Goodwill		434,210			366,248
Other intangibles, net		239,418			205,359
Other assets		160,285			157,733
Total assets	$	2,200,236		$	2,055,868
Liabilities, redeemable non-controlling interest and total equity
Current liabilities:
Notes payable	$	28,371		$	37,334
Current maturities of long-term debt		10,000			80,178
Trade payables		181,979			162,964
Accrued compensation		49,193			52,444
Income taxes payable		9,482			7,985
Other accrued expenses		46,356			50,939
Total current liabilities		325,381			391,844
Long-term debt, excluding current maturities		747,738			585,759
Accrued pension liabilities		69,245			73,545
Other liabilities		66,121			62,174
Total liabilities		1,208,485			1,113,322
Commitments and contingencies (Note 16)
Redeemable non-controlling interest		-			4,277
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 – 50,517,212 and 50,141,343, as of June 3, 2017 and December 3, 2016, respectively		50,517			50,141
Additional paid-in capital		75,390			59,564
Retained earnings		1,116,883			1,090,900
Accumulated other comprehensive loss		(251,427	)		(262,729	)
Total H.B. Fuller stockholders' equity		991,363			937,876
Non-controlling interests		388			393
Total equity		991,751			938,269
Total liabilities, redeemable non-controlling interest and total equity	$	2,200,236		$	2,055,868

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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H.B. FULLER COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Total Equity

(In thousands)

(Unaudited)

	H.B. Fuller Company Shareholders
	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Non- Controlling Interests			Total
Balance at November 28, 2015	$	50,074		$	55,522		$	994,608		$	(227,284	)	$	406		$	873,326
Comprehensive income (loss)		-			-			124,128			(35,445	)		226			88,909
Dividends		-			-			(27,836	)		-			-			(27,836	)
Stock option exercises		519			10,750			-			-			-			11,269
Share-based compensation plans other, net		116			14,485			-			-			-			14,601
Tax benefit on share-based compensation plans		-			1,467			-			-			-			1,467
Repurchases of common stock		(568	)		(22,660	)		-			-			-			(23,228	)
Redeemable non-controlling interest		-			-			-			-			(239	)		(239	)
Balance at December 3, 2016		50,141			59,564			1,090,900			(262,729	)		393			938,269
Comprehensive income		-			-			40,662			11,302			34			51,998
Dividends		-			-			(14,679	)		-			-			(14,679	)
Stock option exercises		407			13,519			-			-			-			13,926
Share-based compensation plans other, net		148			9,553			-			-			-			9,701
Tax benefit on share-based compensation plans		-			1,353			-			-			-			1,353
Repurchases of common stock		(179	)		(8,693	)		-			-			-			(8,872	)
Purchase of redeemable non-controlling interest		-			94			-			-			-			94
Redeemable non-controlling interest		-			-			-			-			(39	)		(39	)
Balance at June 3, 2017	$	50,517		$	75,390		$	1,116,883		$	(251,427	)	$	388		$	991,751

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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H.B. FULLER COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended
	June 3, 2017			May 28, 2016
Cash flows from operating activities:
Net income including non-controlling interests	$	40,695		$	52,357
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities:
Depreciation		23,971			25,067
Amortization		15,229			13,486
Deferred income taxes		7			1,101
Income from equity method investments, net of dividends received		(4,279	)		(3,332	)
Gain on sale of assets		(91	)		-
Share-based compensation		8,843			6,968
Excess tax benefit from share-based compensation		(1,353	)		(592	)
Gain on mark to market adjustment to contingent consideration liability		(3,603	)		(891	)
Non-cash charge for sale of inventories revalued at acquisition		193			103
Change in assets and liabilities, net of effects of acquisitions:
Trade receivables, net		(9,890	)		13,280
Inventories		(45,390	)		(9,059	)
Other assets		12,602			9,948
Trade payables		20,443			(7,521	)
Accrued compensation		(4,666	)		(2,925	)
Other accrued expenses		(6,259	)		(6,434	)
Income taxes payable		(5,569	)		4,451
Accrued / prepaid pensions		(2,989	)		(1,785	)
Other liabilities		3,336			(7,829	)
Other		(8,436	)		(3,790	)
Net cash provided by operating activities		32,794			82,603
Cash flows from investing activities:
Purchased property, plant and equipment		(27,104	)		(35,720	)
Purchased businesses, net of cash acquired		(123,305	)		(9,123	)
Purchased investments		(1,250	)		-
Proceeds from sale of property, plant and equipment		868			870
Net cash used in investing activities		(150,791	)		(43,973	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		598,000			-
Repayment of long-term debt and payment of debt issuance costs		(508,024	)		(11,250	)
Net (payment of) proceeds from notes payable		(10,287	)		11,246
Dividends paid		(14,614	)		(13,537	)
Purchase of redeemable non-controlling interest		(3,127	)		-
Proceeds from stock options exercised		13,926			7,083
Excess tax benefit from share-based compensation		1,353			592
Repurchases of common stock		(8,872	)		(6,566	)
Net cash provided by (used in) financing activities		68,355			(12,432	)
Effect of exchange rate changes on cash and cash equivalents		1,499			656
Net change in cash and cash equivalents		(48,143	)		26,854
Cash and cash equivalents at beginning of period		142,245			119,168
Cash and cash equivalents at end of period	$	94,102		$	146,022
Supplemental disclosure of cash flow information:
Dividends paid with company stock	$	65		$	124
Cash paid for interest, net of amount capitalized of $101 and $314 for the periods ended June 3, 2017 and May 28, 2016, respectively	$	15,393		$	14,157
Cash paid for income taxes, net of refunds	$	15,739		$	18,503

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H.B. FULLER COMPANY AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Amounts in thousands, except share and per share amounts)

(Unaudited)

Note 1: Basis of Presentation

The accompanying unaudited interim Condensed Consolidated Financial Statements of H.B. Fuller Company and Subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a fair presentation of results of operations, comprehensive income, financial position, and cash flows in conformity with U.S. generally accepted accounting principles. In our opinion, the unaudited interim Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary for the fair presentation of the results for the periods presented. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from these estimates. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended December 3, 2016 as filed with the Securities and Exchange Commission.

On December 4, 2016, for our subsidiaries in Latin America, we changed the functional currency from the U.S. dollar to the entity’s local currency based on management’s analysis of the changes of the economic facts and circumstances in which these subsidiaries operate. The change in functional currency is accounted for prospectively from December 4, 2016 and financial statements prior to and including the six months ended May 28, 2016 and the year ended December 3, 2016 have not been restated for the change in functional currency. Monetary assets and liabilities have been remeasured to the U.S. dollar at current exchange rates. Non-monetary assets (property, plant and equipment, net; goodwill; and intangible assets, net) have been remeasured to reflect the difference between the exchange rate when the asset arose and the exchange rate on the date of the change in functional currency. As a result of this change in functional currency, we recorded an $11,317 cumulative translation adjustment included in other comprehensive income for the six months ended June 3, 2017.

New Accounting Pronouncements

In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU was issued to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Our effective date for adoption of this guidance is our fiscal year beginning December 2, 2018 with early adoption permitted. We will apply this guidance to applicable transactions after the adoption date.

In March 2017, the FASB issued ASU No. 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires employers to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses. The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. The ASU also stipulates that only the service cost component of net benefit cost is eligible for capitalization.  Our effective date for adoption of this guidance is our fiscal year beginning December 2, 2018 with early adoption permitted.  We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In February 2017, the FASB issued ASU No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The ASU was issued to clarify the scope of the previous standard and to add guidance for partial sales of nonfinancial assets. Our effective date for adoption of this guidance is our fiscal year beginning December 2, 2018. We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will not have a material impact.

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In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which removes Step 2 of the goodwill impairment test.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  Our effective date for prospective adoption of this guidance is our fiscal year beginning November 29, 2020 with early adoption permitted. We will apply this guidance to applicable impairment tests after the adoption date.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business.  This ASU clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.  Our effective date for prospective adoption of this guidance is our fiscal year beginning December 2, 2018. We will apply this guidance to applicable transactions after the adoption date.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). This ASU requires that the reconciliation of the beginning-of-period and end-of-period amounts shown in the statement of cash flows include cash and restricted cash equivalents. Our effective date for adoption of this guidance is our fiscal year beginning December 2, 2018. We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will not have a material impact.

In October 2016, the FASB issued ASU No. 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control. This ASU changes how a decision maker treats indirect interests in a managed variable interest entity held through an entity under common control in its primary beneficiary (consolidation) analysis. Our effective date for adoption of this guidance is our fiscal year beginning December 3, 2017. We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will not have a material impact.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This ASU changes the timing of income tax recognition for an intercompany sale of assets. The ASU requires the seller’s tax effects and the buyer’s deferred taxes to be recognized immediately upon the sale instead of deferring accounting for the income tax implications until the assets are sold to a third party or recovered through use. Our effective date for adoption of this guidance is our fiscal year beginning December 2, 2018. We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). This ASU requires changes in the presentation of certain items including but not limited to debt prepayment or debt extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies and distributions received from equity method investees. Our effective date for adoption of this guidance is our fiscal year beginning December 2, 2018. We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In June 2016, the FASB ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. This ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Our effective date for adoption of this guidance is our fiscal year beginning November 29, 2020. We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. This ASU provides simplification in the accounting for share-based payment transactions including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification in the statement of cash flows. Our effective date for adoption of this guidance is our fiscal year beginning December 3, 2017. We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net).  This ASU provides guidance on recording revenue on a gross basis versus a net basis based on the determination of whether an entity is a principal or an agent when another party is involved in providing goods or services to a customer.  The amendments in this ASU affect the guidance in ASU No. 2014-09 and are effective in the same timeframe as ASU No. 2014-09 as discussed below.

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In February 2016, the FASB issued ASU No. 2016-02, Leases (Subtopic 842). This guidance changes accounting for leases and requires lessees to recognize the assets and liabilities arising from all leases, including those classified as operating leases under previous accounting guidance, on the balance sheet and requires disclosure of key information about leasing arrangements to increase transparency and comparability among organizations. Our effective date for adoption of this guidance is our fiscal year beginning December 1, 2019 with early adoption permitted. The new guidance must be adopted using a modified retrospective transition approach, and provides for certain practical expedients. We are currently evaluating the impact that the new guidance will have on our Consolidated Financial Statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which requires that equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Furthermore, equity investments without readily determinable fair values are to be assessed for impairment using a quantitative approach. Our effective date for adoption of this guidance is our fiscal year beginning December 2, 2018. We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will not have a material impact.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires a company to measure inventory within the scope of this guidance (inventory measured using first-in, first-out (FIFO) or average cost) at the lower of cost and net realizable value methods. Subsequent measurement is unchanged for inventory measured using the last-in, first-out (LIFO) or retail inventory method. Our effective date for adoption of this guidance is our fiscal year beginning December 3, 2017. We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will not have a material impact.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017 (as stated in ASU No. 2015-14 which defers the effective date and was issued in August 2015) and is now effective for our fiscal year beginning December 2, 2018. Early application as of the original effective date is permitted under ASU 2015-14. The standard permits the use of either the retrospective or cumulative effect transition method. We are continuing to evaluate the effect this guidance will have on our Consolidated Financial Statements, including potential impacts on the timing of revenue recognition and additional information that may be necessary for expanded disclosures regarding revenue. We have identified an implementation project team and related oversight processes and have commenced the assessment phase of the project. We have not concluded as to whether the new guidance will be adopted on a full or modified retrospective basis, but will not apply the early adoption provisions of the new guidance.

Note 2: Acquisitions

Wisdom Adhesives

On January 27, 2017, we acquired substantially all of the assets of H.E. Wisdom & Sons, Inc. and its affiliate Wisdom Adhesives Southeast, L.L.C., (“Wisdom Adhesives”) headquartered in Elgin, Illinois. Wisdom Adhesives is a provider of adhesives for the packaging, paper converting and assembly markets. The acquisition will help strengthen our position in the North America adhesives market. The purchase price of $123,305 was financed through borrowings on our revolving credit facility and was recorded in our Americas Adhesives operating segment. We incurred acquisition related costs of approximately $548, which were recorded as selling, general and administrative (“SG&A”) expenses in the Condensed Consolidated Statement of Income for the six months ended June 3, 2017.

The acquisition fair value measurement was preliminary as of June 3, 2017, subject to the completion of the valuation of Wisdom Adhesives and further management reviews and assessment of the preliminary fair values of the assets acquired and liabilities assumed. We expect the fair value measurement process to be completed when the final appraisals are available, but no later than twelve months from the acquisition date.

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

	Amount
Current assets	$	13,741
Property, plant and equipment		10,516
Goodwill		60,557
Other intangibles
Customer relationships		33,300
Trademarks/trade names		13,600
Current liabilities		(8,409	)
Total purchase price	$	123,305

The preliminary expected lives of the acquired intangible assets are 15 years for customer relationships and 10 years for trademarks/trade names.

Based on the preliminary fair value measurement of the assets acquired and liabilities assumed, we allocated $60,557 to goodwill for the expected synergies from combining Wisdom Adhesives with our existing business. Such goodwill is deductible for tax purposes. The goodwill was assigned to our Americas Adhesives operating segment. The Wisdom Adhesives acquisition does not represent a material business combination, therefore pro forma financial information is not provided.

Cyberbond

On June 8, 2016, we acquired Cyberbond, L.L.C., (“Cyberbond”) headquartered in Batavia, Illinois with operations in the United States and Europe. Cyberbond is a provider of industrial adhesives for the electronics, medical, audio equipment, automotive and structural markets. The acquisition will help us to broaden our global position and accelerate our growth in the high margin, high growth Engineering Adhesives segment. The purchase price of $42,182, net of cash acquired of $332, was funded through existing cash and was recorded in our Engineering Adhesives operating segment. We incurred acquisition related costs of approximately $527, which were recorded as SG&A expenses in the Condensed Consolidated Statement of Income for the year ended December 3, 2016.

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

	Amount
Current assets	$	4,425
Property, plant and equipment		2,038
Goodwill		23,654
Other intangibles
Developed technology		2,000
Customer relationships		14,400
Trademarks/trade names		700
Other assets		161
Current liabilities		(1,889	)
Long-term liabilities		(3,307	)
Total purchase price	$	42,182

The expected lives of the acquired intangible assets are seven years for developed technology, 15 years for customer relationships and 10 years for trademarks/trade names.

Based on the fair value measurement of the assets acquired and liabilities assumed, we allocated $23,654 to goodwill for the expected synergies from combining Cyberbond with our existing business. The amount of goodwill deductible for tax purposes is $10,658. The goodwill was assigned to our Engineering Adhesives operating segment. The Cyberbond acquisition does not represent a material business combination, therefore pro forma financial information is not provided.

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Advanced Adhesives

On April 29, 2016, we acquired Advanced Adhesives Pty Limited and the business assets of Advanced Adhesives (New Zealand) Limited (together referred to as “Advanced Adhesives”), providers of industrial adhesives in Australia and New Zealand. The acquisition will help us to strengthen our industrial adhesives market position and leverage a broader technology portfolio in both Australia and New Zealand. The combined purchase price of $10,365 was funded through existing cash and was recorded in our Asia Pacific operating segment. We incurred acquisition related costs of approximately $646, which were recorded as SG&A expenses in the Condensed Consolidated Statements of Income for the year ended December 3, 2016.

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

	Amount
Current assets	$	5,704
Property, plant and equipment		594
Goodwill		102
Other intangibles
Customer relationships		7,575
Trademarks/trade names		146
Current liabilities		(2,671	)
Long-term liabilities		(1,085	)
Total purchase price	$	10,365

The expected lives of the acquired intangible assets are 15 years for customer relationships and one year for trademarks/trade names.

Based on the fair value measurement of the assets acquired and liabilities assumed, we allocated $102 to goodwill for the expected synergies from combining Advanced Adhesives with our existing business. Such goodwill is not deductible for tax purposes. The goodwill was assigned to our Asia Pacific operating segment. The Advanced Adhesives acquisition does not represent a material business combination, therefore pro forma financial information is not provided.

Note 3: Restructuring Actions

Business Integration Project

The integration of the industrial adhesives business we acquired in March 2012 involved a significant amount of restructuring and capital investment to optimize the new combined entity. In addition, we took a series of actions in our existing EIMEA operating segment to improve the profitability and future growth prospects of this operating segment. We combined these two initiatives into a single project which we refer to as the “Business Integration Project.” During the second quarter and six months ended May 28, 2016, we incurred costs of $370 and $783 related to transformation costs, workforce reduction costs, facility exit costs and other related costs for the Business Integration Project, which are included in special charges, net in the Condensed Consolidated Statements of Income. The Business Integration Project was substantially complete at the end of 2016.

2017 Restructuring Plan

During the first quarter of 2017, we approved a restructuring plan (the “2017 Restructuring Plan”) related to organizational changes and other actions to optimize operations. The 2017 Restructuring Plan was implemented in the first quarter of 2017 and is currently expected to be completed by mid-year of fiscal 2018. During the three and six months ended June 3, 2017, we recorded a pre-tax charge of $5,634 and $15,802, respectively, related to the implementation of the 2017 Restructuring Plan.

The following table summarizes the pre-tax distribution of restructuring charges by income statement classification:

	Three Months Ended		Six Months Ended
	June 3, 2017		June 3, 2017
Cost of sales	$	5,252	$	8,899
Selling, general and administrative		382		6,903
	$	5,634	$	15,802

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The following table summarizes the pre-tax impact of restructuring charges by segment:

	Three Months Ended		Six Months Ended
	June 3, 2017		June 3, 2017
Americas Adhesives	$	39	$	1,765
EIMEA		1,266		6,055
Asia Pacific		35		1,887
Construction Products		4,209		5,458
Engineering Adhesives		85		637
	$	5,634	$	15,802

A summary of the restructuring liability during the six months ended June 3, 2017 is presented below:

	Employee- Related			Asset-Related			Other			Total
Balance at December 3, 2016	$	-		$	-		$	-		$	-
Expenses incurred		9,898			5,094			810			15,802
Non-cash charges		-			(4,291	)		-			(4,291	)
Cash payments		(5,810	)		(803	)		(505	)		(7,118	)
Foreign currency translation		261			-			-			261
Balance at June 3, 2017	$	4,349		$	-		$	305		$	4,654

Non-cash charges include accelerated depreciation resulting from the cessation of use of certain long-lived assets and the recording of a provision related to the discontinuance of certain retail and wholesale products. Restructuring liabilities have been classified as a component of other accrued expenses on the Condensed Consolidated Balance Sheets.

Note 4: Inventories

The composition of inventories is as follows:

	June 3,			December 3,
	2017			2016
Raw materials	$	149,629		$	116,200
Finished goods		165,028			142,397
LIFO reserve		(12,321	)		(11,198	)
Total inventories	$	302,336		$	247,399

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Note 5: Goodwill and Other Intangible Assets

The goodwill activity for the six months ended June 3, 2017 is presented below:

	Americas					Asia		Construction		Engineering
	Adhesives			EIMEA		Pacific		Products		Adhesives		Total
Balance at December 3, 2016	$	59,821		$	98,876	$	17,481	$	21,901	$	168,169	$	366,248
Acquisitions		60,557	1		-		-		-		-		60,557
Currency impact		(646	)		4,844		339		22		2,846		7,405
Balance at June 3, 2017	$	119,732		$	103,720	$	17,820	$	21,923	$	171,015	$	434,210

¹ Preliminary goodwill balance as of June 3, 2017.

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

	June 3, 2017
Amortizable Intangible Assets	Purchased Technology & Patents			Customer Relationships			All Other			Total
Original cost	$	70,651		$	289,181		$	65,350		$	425,182
Accumulated amortization		(29,189	)		(123,054	)		(34,092	)		(186,335	)
Net identifiable intangibles	$	41,462		$	166,127		$	31,258		$	238,847

	December 3, 2016
Amortizable Intangible Assets	Purchased Technology & Patents			Customer Relationships			All Other			Total
Original cost	$	70,504		$	251,329		$	51,116		$	372,949
Accumulated amortization		(21,448	)		(116,411	)		(30,198	)		(168,057	)
Net identifiable intangibles	$	49,056		$	134,918		$	20,918		$	204,892

Amortization expense with respect to amortizable intangible assets was $7,874 and $6,788 for the second quarter ended June 3, 2017 and May 28, 2016, respectively, and $15,229 and $13,486 for the six months ended June 3, 2017 and May 28, 2016, respectively.

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

	Remainder of
Fiscal Year	2017		2018		2019		2020		2021		Thereafter
Amortization Expense	$	16,751	$	32,398	$	30,224	$	27,843	$	26,372	$	105,259

Non-amortizable intangible assets as of June 3, 2017 are $571 and are related to trademarks and trade names.

Note 6: Long-Term Debt

On April 12, 2017, we entered into a credit agreement with a consortium of financial institutions under which we established a $400,000 multi-currency revolving credit facility and a $100,000 term loan that we can use to repay existing indebtedness, finance working capital needs, finance acquisitions, and for general corporate purposes. Interest on the revolving credit facility is payable at LIBOR plus 1.10 percent. A facility fee of 0.15 percent is payable quarterly. The interest rate on the term loan is payable at LIBOR plus 1.25 percent. The interest rates and the facility fee are based on a ratings grid. The credit agreement replaced the previous credit agreement entered into on October 31, 2014. The April 12, 2017 credit agreement expires April 12, 2022.

During the second quarter ended June 3, 2017, we entered into an interest rate swap agreement to convert $125,000 of our Series E private placement to a variable interest rate of 1-month LIBOR (in arrears) plus 2.22 percent.

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On February 14, 2017, we issued $300,000 aggregate principal of 10-year long-term unsecured public notes (“4.000% 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 and prepay $158,750 of our term loan. We entered into interest rate swap agreements to convert $150,000 of the $300,000 4.000% Notes to a variable interest rate of 1-month LIBOR (in advance) plus 1.86 percent.

See Note 13 for further discussion of the interest rate swaps.

We adopted ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issue Costs, during the quarter ended March 4, 2017 on a retrospective basis. The impact of adopting ASU No. 2015-03 on our financial statements was the reclassification of deferred debt issuance costs related to our long-term debt, with the exception of our revolving credit line, from an asset to a direct deduction to the corresponding debt.  Reclassifications from an asset to a direct deduction to the corresponding debt of $2,386 was included in our Condensed Consolidated Balance Sheets as of December 3, 2016. 

Note 7: Redeemable Non-Controlling Interest

We account for the non-controlling interest in H.B. Fuller Kimya Sanayi Ticaret A.S. (“HBF Kimya”) as a redeemable non-controlling interest because both the non-controlling shareholder and H.B. Fuller had an option, exercisable beginning August 1, 2018, to require the redemption of the shares owned by the non-controlling shareholder at a price determined by a formula based on 24 months trailing EBITDA. Since the option made the redemption of the non-controlling ownership shares of HBF Kimya outside of our control, these shares are classified as a redeemable non-controlling interest in temporary equity in the Condensed Consolidated Balance Sheets. The non-controlling shareholder was entitled to increase his ownership by 1 percent per year for 5 years up to a maximum of 13 percent ownership based on the achievement of profitability targets in each year. The option was subject to a minimum price of €3,500.

The results of operations for the HBF Kimya non-controlling interest is consolidated in our financial statements. Both the non-controlling interest and the accretion adjustment to redemption value are included in net income attributable to non-controlling interests in the Condensed Consolidated Statements of Income and in the carrying value of the redeemable non-controlling interest on the Condensed Consolidated Balance Sheets. HBF Kimya’s functional currency is the Turkish lira and changes in exchange rates affect the reported amount of the redeemable non-controlling interest.

During the first quarter of 2017, we purchased the remaining shares from the non-controlling shareholder for €4,206. The difference between the non-controlling interest balance and the purchase price was recorded in additional paid-in capital in the first quarter of 2017.

	Redeemable
	Non-Controlling
	Interest
Balance at December 3, 2016	$	4,277
Net income attributed to redeemable non-controlling interest		39
Purchase of redeemable non-controlling interest		(4,468	)
Foreign currency translation adjustment		152
Balance at June 3, 2017	$	-

Note 8: Accounting for Share-Based Compensation

Overview 

We have various share-based compensation programs which provide for equity awards including non-qualified stock options, restricted stock shares, restricted stock units, performance awards and deferred compensation. These equity awards fall under several plans and are described in detail in our Annual Report on Form 10-K for the year ended December 3, 2016.

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Grant-Date Fair Value 

We use the Black-Scholes option pricing model to calculate the grant-date fair value of an award. The fair value of options granted during the quarter ended June 3, 2017 and May 28, 2016 were calculated using the following weighted average assumptions:

	Three Months Ended								Six Months Ended
	June 3, 2017				May 28, 2016				June 3, 2017				May 28, 2016
Expected life (in years)			4.75				4.75				4.75				4.75
Weighted-average expected volatility			24.32%				28.55%				24.85%				29.01%
Expected volatility		24.31%	-	24.33%		28.00%	-	29.20%		24.31%	-	24.88%		28.00%	-	29.23%
Risk-free interest rate			1.81%				1.25%				1.89%				1.43%
Expected dividend yield			1.11%				1.27%				1.12%				1.55%
Weighted-average fair value of grants			$10.90				$9.81				$10.81				$7.72

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 our future volatility will differ materially from historical volatility.

Risk-free interest rate – The rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the same period of time as the expected life.

Expected dividend yield – The calculation is based on the total expected annual dividend payout divided by the average stock price.

Expense

We use the straight-line attribution method to recognize share-based compensation expense for option awards, restricted stock shares and restricted stock units with graded and cliff vesting. Incentive stock options and performance awards are based on certain performance-based metrics and the expense is adjusted quarterly, based on our projections of the achievement of those metrics. The amount of share-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The expense is recognized over the requisite service period, which for us is the period between the grant date and the earlier of the award’s stated vesting term or the date the employee is eligible for early vesting based on the terms of the plans.

Total share-based compensation expense of $3,811 and $2,701 was included in our Condensed Consolidated Statements of Income for the second quarter ended June 3, 2017 and May 28, 2016, respectively. Total share-based compensation expense of $8,843 and $6,968 was included in our Condensed Consolidated Statements of Income for the six months ended June 3, 2017 and May 28, 2016, respectively. All share-based compensation expense was recorded as SG&A expense. For the second quarter ended June 3, 2017 and May 28, 2016, there was $300 and $933 of excess tax benefit recognized. For the six months ended June 3, 2017 and May 28, 2016, there was $1,353 and $592 of excess tax benefit recognized.

As of June 3, 2017, there was $10,198 of unrecognized compensation costs related to unvested stock option awards, which is expected to be recognized over a weighted-average period of 1.4 years. Unrecognized compensation costs related to unvested restricted stock units was $16,463, which is expected to be recognized over a weighted-average period of 1.5 years.

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Stock Option Activity

The stock option activity for the six months ended June 3, 2017 is presented below:

				Average
	Options			Exercise Price
Outstanding at December 3, 2016		2,986,481		$	34.92
Granted		717,596			50.04
Exercised		(407,288	)		34.19
Forfeited or cancelled		(74,113	)		36.84
Outstanding at June 3, 2017		3,222,676		$	38.34

The total fair value of options granted during the quarter ended June 3, 2017 and May 28, 2016 were $373 and $324, respectively. Total intrinsic value of options exercised during the second quarter ended June 3, 2017 and May 28, 2016 were $2,204 and $7,265, respectively. 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. The total fair value of options granted during the six months ended June 3, 2017 and May 28, 2016 were $7,757 and $6,462, respectively. Total intrinsic value of options exercised during the six months ended June 3, 2017 and May 28, 2016 were $6,624 and $7,276, respectively.

Proceeds received from option exercises during the second quarter ended June 3, 2017 and May 28, 2016 was $5,377 and $7,051, respectively, and $13,926 and $7,083 during the six months ended June 3, 2017 and May 28, 2016.

Restricted Stock Activity

The nonvested restricted stock activity for the quarter ended June 3, 2017 is presented below:

												Weighted-
										Weighted-		Average
										Average		Remaining
										Grant		Contractual
										Date Fair		Life
	Units			Shares			Total			Value		(in Years)
Nonvested at December 3, 2016		352,744			36,953			389,697		$	38.36		1.0
Granted		281,507			-			281,507			51.31		1.7
Vested		(149,095	)		(36,953	)		(186,048	)		39.79		-
Forfeited		(17,400	)		-			(17,400	)		37.86		1.5
Nonvested at June 3, 2017		467,756			-			467,756		$	44.68		1.5

Total fair value of restricted stock vested during the second quarter ended June 3, 2017 and May 28, 2016 was $432 and $179, respectively. Total fair value of restricted stock vested during the six months ended June 3, 2017 and May 28, 2016 was $7,402 and $6,012, respectively. The total fair value of nonvested restricted stock at June 3, 2017 was $21,214.

We repurchased 3,122 and 1,106 restricted stock shares during the second quarter ended June 3, 2017 and May 28, 2016, respectively. We repurchased 53,809 and 67,533 restricted stock shares during the six month ended June 3, 2017 and May 28, 2016, respectively. The repurchases relate to statutory minimum tax withholding.

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Deferred Compensation Activity

We have a Directors’ Deferred Compensation plan that allows non-employee directors to defer all or a portion of their directors’ compensation in a number of investment choices, including units representing shares of our common stock. We also have a Key Employee Deferred Compensation Plan that allows key employees to defer a portion of their eligible compensation in a number of investment choices, including units, representing shares of our common stock. We provide a 10 percent match on deferred compensation invested into units, representing shares of our common stock. The deferred compensation units activity for the six months ended June 3, 2017 is presented below:

	Non-employee
	Directors			Employees			Total
Units outstanding December 3, 2016		424,319			41,116			465,435
Participant contributions		8,373			4,582			12,955
Company match contributions		837			458			1,295
Payouts		(14,143	)		(7,712	)		(21,855	)
Units outstanding June 3, 2017		419,386			38,444			457,830

Deferred compensation units are fully vested at the date of contribution.

Note 9: Components of Net Periodic Cost (Benefit) related to Pension and Other Postretirement Benefit Plans

	Three Months Ended June 3, 2017 and May 28, 2016
													Other
	Pension Benefits												Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
Net periodic cost (benefit):	2017			2016			2017			2016			2017			2016
Service cost	$	28		$	27		$	512		$	481		$	52		$	84
Interest cost		3,603			3,768			1,147			1,366			398			480
Expected return on assets		(6,364	)		(6,077	)		(2,400	)		(2,483	)		(1,447	)		(1,342	)
Amortization:
Prior service cost		7			7			(1	)		(1	)		-			(10	)
Actuarial loss		1,307			1,293			846			753			253			532
Net periodic (benefit) cost	$	(1,419	)	$	(982	)	$	104		$	116		$	(744	)	$	(256	)

	Six Months Ended June 3, 2017 and May 28, 2016
													Other
	Pension Benefits												Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
Net periodic cost (benefit):	2017			2016			2017			2016			2017			2016
Service cost	$	56		$	54		$	1,020		$	961		$	104		$	168
Interest cost		7,206			7,535			2,291			2,733			796			960
Expected return on assets		(12,728	)		(12,154	)		(4,791	)		(4,965	)		(2,894	)		(2,684	)
Amortization:
Prior service cost		14			14			(2	)		(2	)		-			(20	)
Actuarial loss		2,614			2,586			1,688			1,505			506			1,064
Net periodic (benefit) cost	$	(2,838	)	$	(1,965	)	$	206		$	232		$	(1,488	)	$	(512	)

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Note 10: Accumulated Other Comprehensive Income (Loss)

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

	Three Months Ended June 3, 2017												Three Months Ended May 28, 2016
	H.B. Fuller Stockholders									Non- controlling Interests			H.B. Fuller Stockholders									Non- controlling Interests
	Pre-tax			Tax			Net			Net			Pre-tax			Tax			Net			Net
Net income including non-controlling interests		-			-		$	25,867		$	(3	)		-			-		$	33,331		$	59
Foreign currency translation adjustment¹	$	18,507			-			18,507			6		$	1,437			-			1,437			5
Reclassification to earnings:
Defined benefit pension plans adjustment²		2,412		$	(819	)		1,593			-			1,173		$	(483	)		690			-
Interest rate swap³		16			(6)			10			-			16			(6	)		10			-
Cash-flow hedges³		(37	)		14			(23	)		-			(711	)		271			(440	)		-
Other comprehensive income (loss)	$	20,898		$	(811	)		20,087			6		$	1,915		$	(218	)		1,697			5
Comprehensive income (loss)							$	45,954		$	3								$	35,028		$	64

	Six Months Ended June 3, 2017									Six Months Ended May 28, 2016
	H.B. Fuller Stockholders							Non- controlling Interests		H.B. Fuller Stockholders									Non- controlling Interests
	Pretax		Tax			Net		Net		Pretax			Tax			Net			Net
Net income including non-controlling interests		-		-		$	40,662	$	33		-			-		$	52,249		$	108
Foreign currency translation adjustment¹	$	7,993		-			7,993		1	$	492			-			492			-
Reclassification to earnings:
Defined benefit pension plans adjustment²		4,820	$	(1,637	)		3,183		-		5,170		$	(1,815	)		3,355			-
Interest rate swap³		32		(12	)		20		-		29			(9	)		20			-
Cash-flow hedges³		171		(65	)		106		-		(308	)		117			(191	)		-
Other comprehensive income (loss)	$	13,016	$	(1,714	)		11,302		1	$	5,383		$	(1,707	)		3,676			-
Comprehensive income (loss)						$	51,964	$	34							$	55,925		$	108

¹ Income taxes are not provided for foreign currency translation relating to permanent investments in international subsidiaries. As discussed in Note 1, the foreign currency translation adjustment for the six months ended June 3, 2017 includes the impact of the change in functional currency for our subsidiaries in Latin America.

² Loss reclassified from accumulated other comprehensive income ("AOCI") into earnings as part of net periodic cost related to pension and other postretirement benefit plans is reported in cost of sales, SG&A expense and special charges, net.

³ Loss reclassified from AOCI into earnings is reported in other income (expense), net.

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The components of accumulated other comprehensive loss is as follows:

	June 3, 2017
	Total			H.B. Fuller Stockholders			Non-controlling Interests
Foreign currency translation adjustment	$	(77,453	)	$	(77,388	)	$	(65	)
Defined benefit pension plans adjustment, net of taxes of $89,097		(172,918	)		(172,918	)		-
Interest rate swap, net of taxes of ($30)		48			48			-
Cash-flow hedges, net of taxes of $720		(1,169	)		(1,169	)		-
Accumulated other comprehensive loss	$	(251,492	)	$	(251,427	)	$	(65	)

	December 3, 2016
	Total			H.B. Fuller Stockholders			Non-controlling Interests
Foreign currency translation adjustment	$	(85,447	)	$	(85,381	)	$	(66	)
Defined benefit pension plans adjustment, net of taxes of $90,734		(176,101	)		(176,101	)		-
Interest rate swap, net of taxes of ($17)		28			28			-
Cash-flow hedges, net of taxes of $785		(1,275	)		(1,275	)		-
Accumulated other comprehensive loss	$	(262,795	)	$	(262,729	)	$	(66	)

Note 11: Income Taxes

As of June 3, 2017, we had a liability of $4,508 recorded under FASB ASC 740, Income Taxes, for gross unrecognized tax benefits (excluding interest), compared to $4,165 as of December 3, 2016. As of June 3, 2017, we had accrued $717 of gross interest relating to unrecognized tax benefits. For the quarter ended June 3, 2017, our recorded liability for gross unrecognized tax benefits increased by $154.

Note 12: Earnings Per Share

A reconciliation of the common share components for the basic and diluted earnings per share calculations is as follows:

	Three Months Ended				Six Months Ended
	June 3,		May 28,		June 3,		May 28,
(Shares in thousands)	2017		2016		2017		2016
Weighted-average common shares - basic		50,496		50,145		50,369		50,052
Equivalent shares from share-based compensations plans		1,190		1,108		1,204		1,072
Weighted-average common and common equivalent shares - diluted		51,686		51,253		51,573		51,124

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 shares, which computes total employee proceeds as the sum of (a) the amount the employee must pay upon exercise of the award, (b) the amount of unearned share-based compensation costs attributed to future services and (c) the amount of tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of the award. 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.

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Options to purchase 6,857 and 406,028 shares of common stock at a weighted-average exercise price of $52.75 and $48.59 for the quarters ended June 3, 2017 and May 28, 2016, respectively, were excluded from the diluted earnings per share calculations because they were antidilutive. Options to purchase 132,560 and 950,516 shares of common stock at a weighted-average exercise price of $50.17 and $44.10 for the six months ended June 3, 2017 and May 28, 2016, respectively, were excluded from the diluted earnings per share calculations because they were antidilutive.

Note 13: Financial Instruments

Overview

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

We use foreign currency forward contracts, cross-currency swaps, and interest rate swaps to manage risks associated with foreign currency exchange rates and interest rates. We do not hold derivative financial instruments of a speculative nature or for trading purposes. We record derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items subject to the designated hedge or undesignated (economic) hedge relationship. 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 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

Effective February 24, 2017, we entered into a cross-currency swap agreement to convert a notional amount of $42,600 of foreign currency denominated intercompany loans into U.S. dollars. The swap matures in 2020.

Effective October 7, 2015, we entered into three cross-currency swap agreements to convert a notional amount of $134,736 of foreign currency denominated intercompany loans into U.S. dollars. The first swap matures in 2017, the second swap matures in 2018 and the third swap matures in 2019.

As of June 3, 2017, the combined fair value of the swaps was a liability of $5,054 and was included in other liabilities in the Condensed Consolidated Balance Sheets. The swaps were designated as cash-flow hedges for accounting treatment. The lesser amount between the cumulative change in the fair value of the actual swaps and the cumulative change in the fair value of hypothetical swaps is recorded in accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets. The difference between the cumulative change in the fair value of the actual swaps and the cumulative change in the fair value of hypothetical swaps are recorded as other income (expense), net in the Condensed Consolidated Statements of Income. In a perfectly effective hedge relationship, the two fair value calculations would exactly offset each other. Any difference in the calculation represents hedge ineffectiveness. The ineffectiveness calculations as of June 3, 2017 resulted in additional pre-tax gain of $7 for the six months ended June 3, 2017 as the change in fair value of the cross-currency swaps was more than the change in the fair value of the hypothetical swaps. The amount in accumulated other comprehensive income (loss) related to cross-currency swaps was a loss of $1,169 as of June 3, 2017. The estimated net amount of the existing loss that is reported in accumulated other comprehensive income (loss) as of June 3, 2017 that is expected to be reclassified into earnings within the next twelve months is $719. As of June 3, 2017, we do not believe any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will not occur.

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 The following table summarizes the cross-currency swaps outstanding as of June 3, 2017:

	Fiscal Year of Expiration	Interest Rate			Notional Value		Fair Value
Pay EUR	2017		3.05	%	$	44,912	$	(378	)
Receive USD			3.9145	%
Pay EUR	2018		3.45	%	$	44,912	$	(847	)
Receive USD			4.5374	%
Pay EUR	2019		3.80	%	$	44,912	$	(1,248	)
Receive USD			5.0530	%
Pay EUR	2020		1.95	%	$	42,600	$	(2,581	)
Receive USD			4.30375	%
Total					$	177,336	$	(5,054	)

Except for the cross-currency swap agreements listed above, foreign currency derivative instruments outstanding are not designated as hedges for accounting purposes. The gains and losses related to mark-to-market adjustments are recognized as other income or expense in the Condensed Consolidated Statements of Income during the periods in which the derivative instruments are outstanding. See Note 14 for the fair value amounts of these derivative instruments.

As of June 3, 2017, we had forward foreign currency contracts maturing between June 15, 2017 and April 13, 2018. The mark-to-market effect associated with these contracts, on a net basis, was a gain of $328 as of June 3, 2017. These gains were largely offset by the underlying transaction gains and losses resulting from the foreign currency exposures for which these contracts relate.

Fair Value Hedges

During the second quarter ended June 3, 2017, we entered into interest rate swap agreements to convert $125,000 of our Series E private placement to variable interest rates of 1-month LIBOR (in arrears) plus 2.22 percent. The combined fair value of the interest rate swaps in total was an asset of $993 at June 3, 2017 and was included in other assets in the Condensed Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. We are applying the shortcut method in accounting for these interest rate swaps as we expect that the changes in the fair value of the swap will offset the changes in the fair value of the 5.61% Notes resulting in no ineffectiveness. As a result of applying the shortcut method, the change in the fair value of the interest rate swap and an equivalent amount for the change in the fair value of the debt will be reflected in other income (expense), net and no ineffectiveness will be recognized in our Condensed Consolidated Statements of Income.

We entered into interest rate swap agreements to convert $150,000 of our $300,000 4.000% Notes that were issued on February 14, 2017 to a variable interest rate of 1-month LIBOR (in advance) plus 1.86 percent. See Note 6 for further discussion on the issuance of our 4.000% Notes. The combined fair value of the interest rate swaps in total was an asset of $1,007 at June 3, 2017 and was included in other assets in the Condensed Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. We are applying the shortcut method in accounting for these interest rate swaps as we expect that the changes in the fair value of the swap will offset the changes in the fair value of the 4.000% Notes resulting in no ineffectiveness. As a result of applying the shortcut method, the change in the fair value of the interest rate swap and an equivalent amount for the change in the fair value of the debt will be reflected in other income (expense), net and no ineffectiveness will be recognized in our Condensed Consolidated Statements of Income.

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We entered into interest rate swap agreements to convert $75,000 of our senior notes that were issued in November 2009 to variable interest rates. At June 3, 2017, one swap remains in place to convert $25,000 of our 5.61% senior notes issued on December 16, 2009 to a variable interest rate of 6-month LIBOR (in arrears) plus 1.78 percent. The change in fair value of the senior notes, attributable to the change in the risk being hedged, was a liability of $1,160 at June 3, 2017 and was included in long-term debt and current maturities of long-term debt in the Condensed Consolidated Balance Sheets. The combined fair value of the swaps in total was an asset of $1,224 at June 3, 2017 and $1,579 at December 3, 2016 and were included in other assets in the Condensed Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. The changes in the fair value of the swap and the fair value of the senior notes attributable to the change in the risk being hedged are recorded as other income (expense), net in the Condensed Consolidated Statements of Income. In a perfectly effective hedge relationship, the two fair value calculations would exactly offset each other. Any difference in the calculation represents hedge ineffectiveness. For the six months ended June 3, 2017 and May 28, 2016, a pre-tax loss of $91 and $48, respectively, was recorded as the fair value of the Senior Notes decreased by more than the fair value of the interest rate swap attributable to the change in the risk being hedged.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities in the customer base and their dispersion across many different industries and countries. As of June 3, 2017, there were no significant concentrations of credit risk.

Note 14: 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 June 3, 2017 and December 3, 2016, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

	June 3,		Fair Value Measurements Using:
Description	2017		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,763	$	2,763	$	-	$	-
Foreign exchange contract assets		2,359		-		2,359		-
Interest rate swaps		3,224		-		3,224		-
Liabilities:
Foreign exchange contract liabilities	$	2,031	$	-	$	2,031	$	-
Contingent consideration liability		1,082		-		-		1,082
Cash-flow hedges		5,054		-		5,054		-

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	December 3,		Fair Value Measurements Using:
Description	2016		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	1,020	$	1,020	$	-	$	-
Foreign exchange contract assets		11,697		-		11,697		-
Interest rate swaps		1,579		-		1,579		-
Cash-flow hedges		4,654		-		4,654		-
Liabilities:
Foreign exchange contract liabilities	$	6,925	$	-	$	6,925	$	-
Contingent consideration liability		4,720		-		-		4,720

Long-term debt had an estimated fair value of $791,936 and $693,283 as of June 3, 2017 and December 3, 2016, 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.

We use the income approach in calculating the fair value of our contingent consideration liability using a real option model with Level 3 inputs. The expected cash flows are affected by various significant judgments and assumptions, including revenue growth rates, profit margin percentages, volatility and discount rate, which are sensitive to change. Estimates of fair value are inherently uncertain and represent only management’s reasonable expectation regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will, in all likelihood, differ in some respects from actual future results. The contingent consideration liability activity for the six months ended June 3, 2017 is presented below:

	Amount
Balance at December 3, 2016	$	4,720
Mark to market adjustment		(3,603	)
Foreign currency translation adjustment		(35	)
Balance at June 3, 2017	$	1,082

Subsequent to the second quarter of 2017, we entered into an agreement to modify the terms of the earnout calculation associated with the contingent consideration liability. This modification results in an increase to the contingent consideration liability by approximately $1,100 based on assumptions utilized for the second quarter 2017 valuation.

Note 15: Share Repurchase Program

On April 6, 2017, the Board of Directors authorized a share repurchase program of up to $200,000 of our outstanding common shares for a period up to five years. Under the program, we are authorized to repurchase shares for cash on the open market, from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. The timing of such repurchases is dependent on price, market conditions and applicable regulatory requirements. Upon repurchase of the shares, we reduce our common stock for the par value of the shares with the excess being applied against additional paid-in capital. This authorization replaces the September 30, 2010 authorization to repurchase shares. During six months ended June 3, 2017, no shares were repurchased shares under the April 6, 2017 program.

During the six months ended June 3, 2017, we repurchased shares under the September 30, 2010 program with an aggregate value of $6,284. Of this amount, $125 reduced common stock and $6,159 reduced additional paid-in capital. During the six months ended May 28, 2016, we repurchased shares with an aggregate value of $4,210. Of this amount, $125 reduced common stock and $4,085 reduced additional paid-in capital.

Note 16: 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 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 a financial provision. 

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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 30 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:

	Six Months Ended				3 Years Ended
	June 3, 2017		May 28, 2016		December 3, 2016
Lawsuits and claims settled		7		4		33
Settlement amounts	$	1,423	$	343	$	3,061
Insurance payments received or expected to be received	$	1,132	$	251	$	2,253

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. 

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Based on currently available information, we have concluded that the resolution of any pending matter, including asbestos-related litigation, individually or in the aggregate, will not have a material adverse effect on our results of operations, financial condition or cash flow.  

Note 17: Operating 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. For segment evaluation by the chief operating decision maker, segment operating income is identified as gross profit less SG&A expenses. Segment operating income excludes special charges, net. Corporate expenses are fully allocated to each operating segment. Corporate assets are not allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs. Operating results of each segment are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance.

The table below provides certain information regarding net revenue and segment operating income for each of our operating segments:

	Three Months Ended
	June 3, 2017							May 28, 2016
			Inter-		Segment					Inter-		Segment
	Trade		Segment		Operating			Trade		Segment		Operating
	Revenue		Revenue		Income (Loss)			Revenue		Revenue		Income
Americas Adhesives	$	229,622	$	4,048	$	26,455		$	206,147	$	4,095	$	35,884
EIMEA		135,226		4,452		8,083			139,897		4,494		11,027
Asia Pacific		64,466		1,416		4,751			60,119		1,309		3,036
Construction Products		63,754		-		(1,853	)		67,634		51		2,534
Engineering Adhesives		68,583		-		5,832			58,717		-		2,091
Total	$	561,651			$	43,268		$	532,514			$	54,572

	Six Months Ended
	June 3, 2017							May 28, 2016
			Inter-		Segment					Inter-		Segment
	Trade		Segment		Operating			Trade		Segment		Operating
	Revenue		Revenue		Income			Revenue		Revenue		Income
Americas Adhesives	$	422,784	$	7,857	$	47,488		$	389,466	$	7,725	$	62,143
EIMEA		259,265		7,899		9,880			264,188		9,765		17,190
Asia Pacific		127,112		2,503		6,630			113,979		2,261		6,789
Construction Products		120,800		-		(2,536	)		127,708		155		3,319
Engineering Adhesives		135,013		-		7,887			111,499		-		2,969
Total	$	1,064,974			$	69,349		$	1,006,840			$	92,410

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

	Three Months Ended						Six Months Ended
	June 3,			May 28,			June 3,			May 28,
	2017			2016			2017			2016
Segment operating income	$	43,268		$	54,572		$	69,349		$	92,410
Special charges, net		-			(370	)		-			(783	)
Other income (expense), net		(110	)		(1,565	)		511			(6,647	)
Interest expense		(8,148	)		(6,597	)		(16,528	)		(12,905	)
Income before income taxes and income from equity method investments	$	35,010		$	46,040		$	53,332		$	72,075

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the MD&A included in our Annual Report on Form 10-K for the year ended December 3, 2016 for important background information related to our business.

Net revenue in the second quarter of 2017 increased 5.5 percent from the second quarter of 2016. Revenue increased 9.4 percent due to sales volume, including 5.4 percent from acquisitions, and a 0.2 percent increase due to favorable sales mix compared to the second quarter of 2016. A weaker Egyptian pound, Euro, Chinese renminbi, Turkish lira and Mexican peso compared to the U.S. dollar for the second quarter of 2017 compared to the second quarter of 2016 were the main drivers of a negative 4.1 percent currency effect. Gross profit margin decreased 370 basis points primarily due to higher raw material costs and the implementation of the 2017 Restructuring Plan.

Net revenue in the first six months of 2017 increased 5.8 percent from the first six months of 2016. Revenue increased 10.8 percent due to sales volume, including 4.4 percent from acquisitions, but was partially offset by a 1.0 percent decrease due to unfavorable sales mix and a 0.2 percent decrease in product pricing compared to the first six months of 2016. A weaker Egyptian pound, Euro, Chinese renminbi, Turkish lira and Mexican peso compared to the U.S. dollar for the first six months of 2017 compared to the first six months of 2016 were the main drivers of a negative 3.8 percent currency effect. Gross profit margin decreased 260 basis points primarily due to higher raw material costs and the implementation of the 2017 Restructuring Plan.

Net income attributable to H.B. Fuller in the second quarter of 2017 was $25.9 million compared to $33.3 million in the second quarter of 2016. On a diluted earnings per share basis, the second quarter of 2017 was $0.50 per share compared to $0.65 per share for the second quarter of 2016.

Net income attributable to H.B. Fuller in the first six months of 2017 was $40.7 million compared to $52.2 million in the first six months of 2016. On a diluted earnings per share basis, the first six months of 2017 was $0.79 per share compared to $1.02 per share for the first six months of 2016.

Restructuring Plan

During the first quarter of 2017, we approved a restructuring plan (the “2017 Restructuring Plan”) related to organizational changes and other actions to optimize operations. In implementing the 2017 Restructuring Plan, we expect to incur costs of approximately $17.0 million to $20.0 million which includes severance and related employee costs, and costs related to the optimization of production facilities, streamlining of processes, rationalization of product offerings and accelerated depreciation of long-lived assets. The 2017 Restructuring Plan was implemented in the first quarter of 2017 and is currently expected to be completed by mid-year of fiscal 2018. During the second quarter and six months ended June 3, 2017, we recorded a pre-tax charge of $5.6 million and $15.8 million, respectively, related to the 2017 Restructuring Plan.  

Results of Operations

Net revenue:

	Three Months Ended							Six Months Ended
	June 3,		May 28,		2017 vs			June 3,		May 28,		2017 vs
($ in millions)	2017		2016		2016			2017		2016		2016
Net revenue	$	561.7	$	532.5		5.5	%	$	1,065.0	$	1,006.8		5.8	%

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We review variances in net revenue in terms of changes related to sales volume, product pricing, sales mix, business acquisitions and changes in foreign currency exchange rates. The impact of sales volume, product pricing, sales mix and acquisitions are viewed as constant currency growth. The following table shows the net revenue variance analysis for the second quarter and first six months of 2017 compared to the same periods in 2016:

	Three Months Ended June 3, 2017			Six Months Ended June 3, 2017
	vs May 28, 2016			vs May 28, 2016
Constant currency growth		9.6	%		9.6	%
Currency		(4.1	%)		(3.8	%)
Total		5.5	%		5.8	%

Constant currency growth was a positive 9.6 percent in the second quarter of 2017 compared to the second quarter of 2016. The 9.6 percent constant currency growth in the second quarter of 2017 was driven by 21.7 percent growth in Engineering Adhesives, 11.0 percent growth in Asia Pacific, 8.1 percent growth in EIMEA and 11.8 percent growth in Americas Adhesives, offset by a 6.1 percent decrease in Construction Products. The negative 4.1 percent currency impact was primarily driven by the devaluation of the Egyptian pound, Euro, Chinese renminbi, Turkish lira and Mexican peso.

Constant currency growth was a positive 9.6 percent in the first six months of 2017 compared to the first six months of 2016. The 9.6 percent constant currency growth in the first six months of 2017 was driven by 25.7 percent growth in Engineering Adhesives, 15.2 percent growth in Asia Pacific, 8.6 percent growth in EIMEA and 9.0 percent growth in Americas Adhesives, offset by a 5.7 percent decrease in Construction Products. The negative 3.8 percent currency impact was primarily driven by the devaluation of the Egyptian pound, Euro, Chinese renminbi, Turkish lira and Mexican peso.

Cost of sales:                        

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
Raw materials	$	312.4		$	285.0			9.6	%	$	585.8		$	539.4			8.6	%
Other manufacturing costs		103.2			89.3			15.6	%		194.1			171.6			13.2	%
Cost of sales	$	415.6		$	374.3			11.0	%	$	779.9		$	711.0			9.7	%
Percent of net revenue		74.0	%		70.3	%					73.2	%		70.6	%

Cost of sales in the second quarter of 2017 compared to the second quarter of 2016 increased 370 basis points as a percentage of net revenue. Raw material cost as a percentage of net revenue increased 210 basis points in the second quarter of 2017 compared to the second quarter of 2016 primarily due to higher raw material costs. Other manufacturing costs as a percentage of revenue increased 160 basis points in the second quarter of 2017 compared to the second quarter of 2016 driven primarily by the impact of acquired businesses and the implementation of the 2017 Restructuring Plan.

Cost of sales in the first six months of 2017 compared to the first six months of 2016 increased 260 basis points as a percentage of net revenue. Raw material cost as a percentage of net revenue increased 140 basis points in the first six months of 2017 compared to the first six months of 2016 primarily due to higher raw material costs. Other manufacturing costs as a percentage of revenue increased 120 basis points in the first six months of 2017 compared to the first six months of 2016 driven primarily by the impact of acquired businesses and the implementation of the 2017 Restructuring Plan.

Gross profit:

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
Gross profit	$	146.0		$	158.3			(7.7%	)	$	285.0		$	295.9			(3.7%	)
Percent of net revenue		26.0	%		29.7	%					26.8	%		29.4	%

Gross profit in the secondquarter of 2017 decreased 7.7 percent and gross profit margin decreased 370 basis points compared to the second quarter of 2016. The decrease in gross profit margin was primarily due to higher raw material costs, the impact of acquired businesses and the implementation of the 2017 Restructuring Plan.

Gross profit in the first six months of 2017 decreased 3.7 percent and gross profit margin decreased 260 basis points compared to the first sixmonths of 2016. The decrease in gross profit margin was primarily due to higher raw material costs, the impact of acquired businesses and the implementation of the 2017 Restructuring Plan.

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Selling, general and administrative (SG&A) expenses:

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
SG&A	$	102.8		$	103.7			(0.9%	)	$	215.7		$	203.5			6.0	%
Percent of net revenue		18.3	%		19.5	%					20.3	%		20.2	%

SG&A expenses for the second quarter of 2017 decreased $0.9 million, or 0.9 percent, compared to the second quarter of 2016. The decrease is mainly due to lower expenses related to general spending reductions and foreign currency exchange rate benefits on spending outside the U.S., partially offset by the impact of acquired businesses.

SG&A expenses for the first six months of 2017 increased $12.2 million, or 6.0 percent, compared to the first six months of 2016. The increase is mainly due to the impact of acquired businesses and the implementation of the 2017 Restructuring Plan, partially offset by lower expenses related to general spending reductions and foreign currency exchange rate benefits on spending outside the U.S.

We make SG&A expense plans at the beginning of each fiscal year and barring significant changes in business conditions or our outlook for the future, we maintain these spending plans for the entire year. Management routinely monitors our SG&A spending relative to these fiscal year plans for each operating segment and for the company overall. We feel it is important to maintain a consistent spending program in this area as many of the activities within the SG&A category such as the sales force, technology development, and customer service are critical elements of our business strategy.

Special charges, net:

	Three Months Ended						Six Months Ended
	June 3,		May 28,		2017 vs		June 3,		May 28,		2017 vs
($ in millions)	2017		2016		2016		2017		2016		2016
Special charges, net	$	-	$	0.4		NMP	$	-	$	0.8		NMP

NMP = Non-meaningful percentage

The following table provides detail of special charges, net:

	Three Months Ended				Six Months Ended
	June 3,		May 28,		June 3,		May 28,
($ in millions)	2017		2016		2017		2016
Acquisition and transformation related costs	$	-	$	0.1	$	-	$	0.2
Facility exit costs		-		0.1		-		0.4
Other related costs		-		0.2		-		0.2
Special charges, net	$	-	$	0.4	$	-	$	0.8

The integration of the industrial adhesives business we acquired in March 2012 involved a significant amount of restructuring and capital investment to optimize the new combined entity. In addition to this acquisition, we announced our intentions to take a series of actions in our existing EIMEA operating segment to improve the profitability and future growth prospects of this operating segment. We combined these two initiatives into a single project which we refer to as the “Business Integration Project”. During the second quarter and six months ended May 28, 2016, we incurred special charges, net of $0.4 million and $0.8 million respectively, for costs related to the Business Integration Project. The Business Integration Project was substantially complete at the end of 2016.

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Other income (expense), net:

	Three Months Ended								Six Months Ended
	June 3,			May 28,			2017 vs		June 3,		May 28,			2017 vs
($ in millions)	2017			2016			2016		2017		2016			2016
Other income (expense), net	$	(0.1	)	$	(1.6	)		NMP	$	0.5	$	(6.6	)		NMP
NMP = Non-meaningful percentage

Other income (expense), net in the second quarter of 2017 included $1.0 million of currency transaction losses off set by $0.8 million of interest income. Other income (expense), net in the second quarter of 2016 included $2.4 million of currency transaction losses offset by $0.3 million of net financing income and $0.5 million of interest income.

Other income (expense), net in the first six months of 2017 included $1.4 million of interest income offset by $1.0 million of currency transaction losses. Other income (expense), net in the first six months of 2016 included $8.2 million of currency transaction losses offset by $0.6 million of net financing income and $1.0 million of interest income.

Interest expense:

	Three Months Ended							Six Months Ended
	June 3,		May 28,		2017 vs			June 3,		May 28,		2017 vs
($ in millions)	2017		2016		2016			2017		2016		2016
Interest expense	$	8.1	$	6.6		23.5	%	$	16.5	$	12.9		28.1	%

Interest expense in the second quarter of 2017 compared to the second quarter of 2016 was higher due to U.S. debt balances at higher interest rates from the issuance of our 4.00% Notes, and higher LIBOR rates on floating rate debt held in the U.S. We capitalized less than $0.1 million of interest expense in the second quarter of 2017 compared to $0.2 million in the same period last year.

Interest expense in the first six months of 2017 compared to the same period last year was higher due to higher U.S. debt balances at higher interest rates from the issuance of our 4.00% Notes and higher LIBOR rates on floating rate debt held in the U.S. In addition, and as a result of the issuance of our 4.000% Notes during the first six months of 2017, we recorded $0.5 million of accelerated amortization of debt issuance costs related to debt facilities that were repaid with proceeds from the 4.000% Notes. We capitalized $0.1 million of interest expense in the first six months of 2017 compared to $0.3 million in the same period last year.

Income taxes:

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
Income taxes	$	11.2		$	14.3			(22.0	%)	$	16.9		$	23.1			(26.6	%)
Effective tax rate		31.9	%		31.0	%					31.7	%		32.0	%

Income tax expense of $11.2 million in the second quarter of 2017 includes $0.8 million of discrete tax expense and $1.9 million of tax benefit from costs primarily related to the restructuring plans and other non-recurring items. Excluding the discrete tax expense and the effects of these items, the overall effective tax rate was 29.2 percent.

Income tax expense of $16.9 million in the first six months of 2017 includes $0.9 million of discrete tax expense and $5.9 million of tax benefit from costs primarily related to the restructuring plans and other non-recurring items. Excluding the discrete tax expense and the effects of these items, the overall effective tax rate was 29.4 percent.

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Income from equity method investments:

	Three Months Ended							Six Months Ended
	June 3,		May 28,		2017 vs			June 3,		May 28,		2017 vs
($ in millions)	2017		2016		2016			2017		2016		2016
Income from equity method investments	$	2.0	$	1.6		22.3	%	$	4.3	$	3.3		28.4	%

The income from equity method investments relates to our 50 percent ownership of the Sekisui-Fuller joint venture in Japan. The higher income for the second quarter and first six months of 2017 compared to the same periods of 2016 is primarily related to higher net income in our joint venture.

Net income attributable to non-controlling interests:

Net income attributable to non-controlling interests relates primarily to an 11 percent redeemable non-controlling interest in HBF Turkey and was not material for the quarter ended June 3, 2017 and May 28, 2016. During the first quarter of 2017, we purchased the remaining shares from the non-controlling shareholder.

Net income attributable to H.B. Fuller:

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
Net income attributable to H.B. Fuller	$	25.9		$	33.3			(22.4%	)	$	40.7		$	52.2			(22.2%	)
Percent of net revenue		4.6	%		6.3	%					3.8	%		5.2	%

The net income attributable to H.B. Fuller for the second quarter of 2017 was $25.9 million compared to $33.3 million for the second quarter of 2016. The diluted earnings per share for the second quarter of 2017 was $0.50 per share as compared to $0.65 per share for the second quarter of 2016.

The net income attributable to H.B. Fuller for the first six months of 2017 was $40.7 million compared to $52.2 million for the first six months of 2016. The diluted earnings per share for the first six months of 2017 was $0.79 per share as compared to $1.02 per share for the first six months of 2016.

Operating Segment Results

We have five reportable segments: Americas Adhesives, EIMEA (Europe, India, Middle East and Africa), Asia Pacific, Construction Products and Engineering Adhesives. Operating results of each of these 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.

The tables below provide certain information regarding the net revenue and segment operating income of each of our operating segments. For segment evaluation by the chief operating decision maker, segment operating income is defined as gross profit less SG&A expenses. Segment operating income excludes special charges, net.

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Net Revenue by Segment:

	Three Months Ended										Six Months Ended
	June 3, 2017					May 28, 2016					June 3, 2017					May 28, 2016
	Net		% of			Net		% of			Net		% of			Net		% of
($ in millions)	Revenue		Total			Revenue		Total			Revenue		Total			Revenue		Total
Americas Adhesives	$	229.6		41	%	$	206.2		39	%	$	422.8		40	%	$	389.5		39	%
EIMEA		135.2		24	%		139.9		26	%		259.3		24	%		264.2		26	%
Asia Pacific		64.5		12	%		60.1		11	%		127.1		12	%		113.9		11	%
Construction Products		63.8		11	%		67.6		13	%		120.8		11	%		127.7		13	%
Engineering Adhesives		68.6		12	%		58.7		11	%		135.0		13	%		111.5		11	%
Total	$	561.7		100	%	$	532.5		100	%	$	1,065.0		100	%	$	1,006.8		100	%

Segment Operating Income (Loss):

	Three Months Ended											Six Months Ended
	June 3, 2017						May 28, 2016					June 3, 2017						May 28, 2016
($ in millions)	Segment Operating Income (Loss)			% of Total			Segment Operating Income		% of Total			Segment Operating Income			% of Total			Segment Operating Income		% of Total
Americas Adhesives	$	26.5			61	%	$	35.9		66	%	$	47.5			68	%	$	62.1		67	%
EIMEA		8.1			19	%		11.0		20	%		9.8			14	%		17.2		19	%
Asia Pacific		4.8			11	%		3.1		5	%		6.6			10	%		6.8		7	%
Construction Products		(1.9	)		(4	%)		2.5		5	%		(2.5	)		(4	%)		3.3		4	%
Engineering Adhesives		5.8			13	%		2.1		4	%		7.9			12	%		3.0		3	%
Total	$	43.3			100	%	$	54.6		100	%	$	69.3			100	%	$	92.4		100	%

The following table provides a reconciliation of segment operating income to income before income taxes and income from equity method investments, as reported on the Condensed Consolidated Statements of Income:

	Three Months Ended						Six Months Ended
	June 3,			May 28,			June 3,			May 28,
($ in millions)	2017			2016			2017			2016
Segment operating income	$	43.3		$	54.6		$	69.3		$	92.4
Special charges, net		-			(0.4	)		-			(0.8	)
Other income (expense), net		(0.1	)		(1.6	)		0.5			(6.6	)
Interest expense		(8.2	)		(6.6	)		(16.5	)		(12.9	)
Income before income taxes and income from equity method investments	$	35.0		$	46.0		$	53.3		$	72.1

Americas Adhesives

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
Net revenue	$	229.6		$	206.2			11.4	%	$	422.8		$	389.5			8.6	%
Segment operating income	$	26.5		$	35.9			(26.3	%)	$	47.5		$	62.1			(23.6	%)
Segment operating margin		11.5	%		17.4	%					11.2	%		16.0	%

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	Three Months Ended June 3, 2017			Six Months Ended June 3, 2017
	vs May 28, 2016			vs May 28, 2016
Constant currency growth		11.8	%		9.0	%
Currency		(0.4	%)		(0.4	%)
Total		11.4	%		8.6	%

Net revenue increased 11.4 percent in the second quarter of 2017 compared to the second quarter of 2016. The 11.8 percent increase in constant currency growth was attributable to a 12.3 percent increase in sales volume, including a 10.7 percent increase due to the Wisdom Adhesives acquisition, and a 0.8 percent increase in sales mix offset by an unfavorable 1.3 percent decrease in product pricing. The negative currency effect was due to the weaker Mexico peso, Canadian dollar and Argentinian peso compared to the U.S. dollar. As a percentage of net revenue, raw material costs increased 450 basis points mainly due to lower sales prices and higher raw material costs. Other manufacturing costs as a percentage of net revenue increased 200 basis points, primarily due to the acquisition and integration of Wisdom Adhesives and higher delivery expense. SG&A expenses as a percentage of net revenue decreased 60 basis points due to the implementation of the 2017 Restructuring Plan. Segment operating income decreased 26.3 percent and segment operating margin as a percentage of net revenue decreased 590 basis points compared to the second quarter of 2016.

Net revenue increased 8.6 percent in the first six months of 2017 compared to the first six months of 2016. The 9.0 percent increase in constant currency growth was attributable to a 11.8 percent increase in sales volume, including a 7.7 percent increase due to the Wisdom Adhesives acquisition, offset by a 1.4 percent decrease due to unfavorable sales mix and a 1.4 percent decrease in product pricing. The negative currency effect was due to the weaker Mexico peso and Argentinian peso compared to the U.S. dollar. As a percentage of net revenue, raw material costs increased 310 basis points mainly due to lower sales prices, higher raw material costs, and the impact of valuing inventories related to the Wisdom Adhesives acquisition at fair value. Other manufacturing costs as a percentage of net revenue increased 160 basis points, primarily due to the acquisition and integration of Wisdom Adhesives and higher delivery expense. Segment operating income decreased 23.6 percent and segment operating margin as a percentage of net revenue decreased 480 basis points compared to the first six months of 2016.

EIMEA

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
Net revenue	$	135.2		$	139.9			(3.3	%)	$	259.3		$	264.2			(1.9	%)
Segment operating income	$	8.1		$	11.0			(26.7	%)	$	9.8		$	17.2			(42.5	%)
Segment operating margin		6.0	%		7.9	%					3.8	%		6.5	%

The following table provides details of the EIMEA net revenue variances:

	Three Months Ended June 3, 2017			Six Months Ended June 3, 2017
	vs May 28, 2016			vs May 28, 2016
Constant currency growth		8.1	%		8.6	%
Currency		(11.4	%)		(10.5	%)
Total		(3.3	%)		(1.9	%)

Net revenue decreased 3.3 percent in the second quarter of 2017 compared to the second quarter of 2016. The 8.1 percent increase in constant currency growth was attributable to a 4.0 percent increase in sales volume, a 3.7 percent increase in product pricing, and a 0.4 percent increase in favorable sales mix. The negative currency effect of 11.4 percent was primarily the result of a weaker Egyptian pound, Euro and Turkish lira compared to the U.S. dollar. Sales volume growth was primarily related to the hygiene and durable assembly markets, and strong growth in the emerging markets. Raw material cost as a percentage of net revenue increased 140 basis points in the second quarter compared to the second quarter last year primarily due to higher raw material costs. Other manufacturing costs as a percentage of net revenue were 30 basis points higher than the second quarter of 2016. Segment operating income decreased 26.7 percent and segment operating margin decreased 190 basis points compared to the second quarter of 2016.

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Net revenue decreased 1.9 percent in the first six months of 2017 compared to the first six months of 2016. The 8.6 percent increase in constant currency growth was attributable to a 5.1 percent increase in sales volume, a 3.4 percent increase in product pricing and a 0.1 percent increase in sales mix. The negative currency effect of 10.5 percent was primarily the result of a weaker Egyptian pound, Euro and Turkish lira compared to the U.S. dollar. Sales volume growth was primarily related to the hygiene and durable assembly markets, and strong growth in the emerging markets. Raw material cost as a percentage of net revenue increased 40 basis points in the six months compared to the six months last year primarily due to higher raw material costs. Other manufacturing costs as a percentage of net revenue were 90 basis points higher than the second quarter of 2016 due to the implementation of the 2017 Restructuring Plan. SG&A expenses as a percentage of net revenue increased 140 basis points due to the implementation of the 2017 Restructuring Plan. Segment operating income decreased 42.5 percent and segment operating margin decreased 270 basis points compared to the first six months of 2016.

Asia Pacific

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
Net revenue	$	64.5		$	60.1			7.2	%	$	127.1		$	113.9			11.5	%
Segment operating income	$	4.8		$	3.1			56.5	%	$	6.6		$	6.8			(2.3	%)
Segment operating margin		7.4	%		5.0	%					5.2	%		6.0	%

The following table provides details of the Asia Pacific net revenue variances:

	Three Months Ended June 3, 2017			Six Months Ended June 3, 2017
	vs May 28, 2016			vs May 28, 2016
Constant currency growth		11.0	%		15.2	%
Currency		(3.8	%)		(3.7	%)
Total		7.2	%		11.5	%

Net revenue in the second quarter of 2017 increased 7.2 percent compared to the second quarter of 2016. The 11.0 percent increase in constant currency growth was attributable to a 12.5 percent increase in sales volume including a 4.8 percent increase due to the Advanced Adhesives acquisition, partially offset by a 0.4 percent decrease due to unfavorable sales mix and a 1.1 percent decrease in product pricing. Organic constant currency growth was primarily driven by volume growth in Greater China. Negative currency effects of 3.8 percent compared to the second quarter of 2016 were primarily driven by the weaker Chinese renminbi and Malaysian ringgit compared to the U.S. dollar partially offset by a stronger Australian dollar. Raw material costs as a percentage of net revenue decreased 20 basis points compared to the second quarter of 2016. Other manufacturing costs as a percentage of net revenue decreased 60 basis points compared to the second quarter of 2016 primarily due to the acquisition of Advanced Adhesives. SG&A expenses as a percentage of net revenue decreased 160 basis points due to lower expenses related to general spending reductions, foreign currency exchange rate benefits on spending outside the U.S and the impact of the acquisition of Advanced Adhesives. Segment operating income increased 56.5 percent and segment operating margin increased 240 basis points compared to the second quarter of 2016.

Net revenue in the first six months of 2017 increased 11.5 percent compared to the first six months of 2016. The 15.2 percent increase in constant currency growth was attributable to a 18.3 percent increase in sales volume including a 5.8 percent increase due to the Advanced Adhesives acquisition, partially offset by a 1.5 percent decrease due to unfavorable sales mix and a 1.6 percent decrease in product pricing. Organic constant currency growth was primarily driven by volume growth in Greater China. Negative currency effects of 3.7 percent compared to the first six months of 2016 were primarily driven by the weaker Chinese renminbi and Malaysian ringgit compared to the U.S. dollar partially offset by a stronger Australian dollar. Raw material costs as a percentage of net revenue increased 60 basis points compared to the first six months of 2016 due to unfavorable sales mix and higher raw material costs. Other manufacturing costs as a percentage of net revenue was flat compared to the first six months of 2016. Segment operating income decreased 2.3 percent and segment operating margin decreased 80 basis points compared to the first six months of 2016.

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Construction Products

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
Net revenue	$	63.8		$	67.6			(5.7	%)	$	120.8		$	127.7			(5.4	%)
Segment operating income	$	(1.9	)	$	2.5			(173.1	%)	$	(2.5	)	$	3.3			(176.4	%)
Segment operating margin		(2.9	%)		3.7	%					(2.1	%)		2.6	%

The following tables provide details of the Construction Products net revenue variances:

	Three Months Ended June 3, 2017			Six Months Ended June 3, 2017
	vs May 28, 2016			vs May 28, 2016
Constant currency growth		(6.1	%)		(5.7	%)
Currency		0.4	%		0.3	%
Total		(5.7	%)		(5.4	%)

Net revenue decreased 5.7 percent in the second quarter of 2017 compared to the second quarter of 2016. The 6.1 percent decrease in constant currency growth was driven by a 0.8 percent decrease due to unfavorable sales mix, a 5.0 percent decrease in sales volume and a 0.3 percent decrease in product pricing. The positive currency effect was due to the stronger Australian dollar compared to the U.S. dollar. Raw material cost as a percentage of net revenue was 230 basis points lower in the second quarter of 2017 compared to last year primarily due to sales mix and lower raw material costs. Other manufacturing costs as a percentage of net revenue were 920 basis points higher in the second quarter of 2017 compared to the second quarter of 2016 due to the discontinuance of certain retail and wholesale products in connection with the implementation of the 2017 Restructuring Plan and inefficiencies related to the facility upgrade and expansion project. Segment operating income decreased 173.1 percent and segment operating margin decreased 660 basis points compared to the second quarter of 2016.

Net revenue decreased 5.4 percent in the first six months of 2017 compared to the first six months of 2016. The 5.7 percent decrease in constant currency growth was driven by a 2.1 percent decrease due to unfavorable sales mix, a 3.4 percent decrease in sales volume and a 0.2 percent decrease in product pricing. The positive currency effect was due to the stronger Australian dollar compared to the U.S. dollar. Raw material cost as a percentage of net revenue was 170 basis points lower in the first six months of 2017 compared to the first six months of 2016 primarily due to sales mix and lower raw material costs. Other manufacturing costs as a percentage of net revenue were 610 basis points higher in the first six months of 2017 compared to the first six months of 2016 due to the discontinuance of certain retail and wholesale products in connection with the implementation of the 2017 Restructuring Plan and inefficiencies related to the facility upgrade and expansion project. Segment operating income decreased 176.4 percent and segment operating margin decreased 470 basis points compared to the first six months of 2016.

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Engineering Adhesives

	Three Months Ended									Six Months Ended
	June 3,			May 28,			2017 vs			June 3,			May 28,			2017 vs
($ in millions)	2017			2016			2016			2017			2016			2016
Net revenue	$	68.6		$	58.7			16.8	%	$	135.0		$	111.5			21.1	%
Segment operating income	$	5.8		$	2.1			178.9	%	$	7.9		$	3.0			(165.7	%)
Segment operating margin		8.5	%		3.6	%					5.8	%		2.7	%

The following tables provide details of the Engineering Adhesives net revenue variances:

	Three Months Ended June 3, 2017			Six Months Ended June 3, 2017
	vs May 28, 2016			vs May 28, 2016
Constant currency growth		21.7	%		25.7	%
Currency		(4.9	%)		(4.6	%)
Total		16.8	%		21.1	%

Net revenue increased 16.8 percent in the second quarter of 2017 compared to the second quarter of 2016. The 21.7 percent increase in constant currency growth was attributable to a 25.3 percent increase in sales volume including a 6.8 percent increase due to the acquisition of Cyberbond, partially offset by a 2.4 percent decrease in product pricing and a 1.2 percent decrease due to unfavorable sales mix. Organic constant currency growth was driven by strong performance in the automotive, electronics and Tonsan markets. Negative currency effects of 4.9 percent compared to the second quarter of last year were primarily driven by the weaker Chinese renminbi compared to the U.S. dollar. Raw material cost as a percentage of net revenue was 100 basis points higher in the second quarter of 2017 compared to the second quarter of 2016 due to lower product prices and higher raw material costs. Other manufacturing costs as a percentage of net revenue were 20 basis points lower in the second quarter of 2017 compared to the second quarter of 2016. SG&A expenses as a percentage of net revenue decreased 570 basis points due to the mark to market adjustment related to the Tonsan contingent consideration liability. Segment operating income increased 178.9 percent and segment operating margin increased 490 basis points compared to the second quarter of 2016.

Net revenue increased 21.1 percent in the first six months of 2017 compared to the first six months of 2016. The 25.7 percent increase in constant currency growth was attributable to a 28.6 percent increase in sales volume including a 6.7 percent increase due to the acquisition of Cyberbond, partially offset by a 2.9 percent decrease in product pricing. Organic constant currency growth was driven by strong performance in the automotive, electronics and Tonsan markets. Negative currency effects of 4.6 percent compared to the first six months of last year were primarily driven by the weaker Chinese renminbi compared to the U.S. dollar. Raw material cost as a percentage of net revenue was 150 basis points higher in the first six months of 2017 compared to the first six months of 2016 due to lower product prices and higher raw material costs. Other manufacturing costs as a percentage of net revenue were 100 basis points lower in the first six months of 2017 compared to the first six months of 2016 due to higher sales volume. SG&A expenses as a percentage of net revenue decreased 360 basis points due to the mark to market adjustment related to the Tonsan contingent consideration liability. Segment operating income decreased 165.7 percent and segment operating margin increased 310 basis points compared to the first six months of 2016.

Financial Condition, Liquidity and Capital Resources

Total cash and cash equivalents as of June 3, 2017 were $94.1 million compared to $142.2 million as of December 3, 2016 and $146.0 million as of May 28, 2016. The majority of the $94.1 million in cash and cash equivalents as of June 3, 2017 was held outside the United States. Total long and short-term debt was $786.1 million as of June 3, 2017, $703.3 million as of December 3, 2016 and $719.1 million as of May 28, 2016. The total debt to total capital ratio as measured by Total Debt divided by (Total Debt plus Total Stockholders’ Equity) was 44.2 percent as of June 3, 2017 as compared to 42.8 percent as of December 3, 2016 and 43.8 percent as of May 28, 2016.

We believe that cash flows from operating activities will be adequate to meet our ongoing liquidity and capital expenditure needs. In addition, we believe we have the ability to obtain both short-term and long-term debt to meet our financing needs for the foreseeable future. Cash available in the United States has historically been sufficient and we expect it will continue to be sufficient to fund U.S. operations and U.S. capital spending and U.S. pension and other postretirement benefit contributions in addition to funding U.S. acquisitions, dividend payments, debt service and share repurchases as needed. For those international earnings considered to be reinvested indefinitely, we currently have no intention to, and plans do not indicate a need to, repatriate these funds for U.S. operations.

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Our credit agreements and note purchase agreements include restrictive covenants that, if not met, could lead to a renegotiation of our credit lines and a significant increase in our cost of financing. At June 3, 2017, we were in compliance with all covenants of our contractual obligations as shown in the following table:

Covenant	Debt Instrument	Measurement	Result as of June 3, 2017
TTM EBITDA / TTM Interest Expense	All Debt Instruments	Not less than 2.5	8.4
Total Indebtedness / TTM EBITDA	All Debt Instruments	Not greater than 3.5	2.9

● TTM = Trailing 12 months

● EBITDA for covenant purposes is defined as consolidated net income, plus interest expense, taxes, depreciation and amortization, non-cash impairment losses, extraordinary non-cash losses incurred other than in the ordinary course of business, nonrecurring extraordinary non-cash restructuring charges, minus extraordinary non-cash gains incurred other than in the ordinary course of business. For the Total Indebtedness / TTM EBITDA ratio, TTM EBITDA is adjusted for the pro forma results from Material Acquisitions and Material Divestitures as if the acquisition or divestiture occurred at the beginning of the calculation period. Additional detail is provided in the Form 8-K dated April 12, 2017.

We believe we have the ability to meet all of our contractual obligations and commitments in fiscal 2017.

Selected Metrics of Liquidity

Key metrics we monitor are net working capital as a percent of annualized net revenue, trade accounts receivable days sales outstanding (“DSO”), inventory days on hand, free cash flow and debt capitalization ratio.

	June 3,			May 28,
	2017			2016
Net working capital as a percentage of annualized net revenue1		22.2	%		21.3	%
Accounts receivable DSO2 (Days)		61			59
Inventory days on hand3 (Days)		70			65
Free cash flow4 (million)	$	(9.1	)	$	33.3
Total debt to total capital ratio5		44.2	%		43.8	%

¹ Current quarter net working capital (trade receivables, net of allowance for doubtful accounts plus inventory minus trade payables) divided by annualized net revenue (current quarter multiplied by four).

² Trade receivables net of the allowance for doubtful accounts at the balance sheet date multiplied by 56 (8 weeks) and divided by the net revenue for the last 2 months of the quarter.

³ Total inventory multiplied by 56 and divided by cost of sales (excluding delivery costs) for the last 2 months of the quarter.

⁴ Year-to-date net cash provided by operating activities, less purchased property, plant and equipment and dividends paid.

⁵ Total debt divided by (total debt plus total stockholders’ equity).

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Summary of Cash Flows

Cash Flows from Operating Activities:

	Six Months Ended
	June 3,		May 28,
($ in millions)	2017		2016
Net cash provided by operating activities	$	32.8	$	82.6

Net income including non-controlling interests was $40.7 million in the first six months of 2017 compared to $52.4 million in the first six months of 2016. Depreciation and amortization expense totaled $39.2 million in the first six months of 2017 compared to $38.6 million in the first six months of 2016. Accrued compensation was a use of cash of $4.7 million in 2017 compared to a use of cash of $2.9 million last year related to higher accruals for our employee incentive plans. Other accrued expenses was a use of cash of $6.3 million in the six months ending June 3, 2017 compared to a $6.4 million use of cash in same period last year. Other liabilities was a source of cash of $3.3 million in the first six months of 2017 compared to a use of cash of $7.8 million in the first six months of 2016.

Changes in net working capital (trade receivables, inventory and trade payables) accounted for a use of cash of $34.9 million compared to $3.3 million last year. The table below provides the cash flow impact due to changes in the components of net working capital:

	Six Months Ended
	June 3,			May 28,
($ in millions)	2017			2016
Trade receivables, net	$	(9.9	)	$	13.3
Inventory		(45.4	)		(9.1	)
Trade payables	20.4				(7.5	)
Total cash flow impact	$	(34.9	)	$	(3.3	)

● Trade Receivables, net – Trade Receivables, net was a use of cash of $9.9 million in 2017 compared to a source of cash of $13.3 million in 2016. The use of cash in 2017 compared to source of cash in 2016 was due to an increase in trade receivables in the current year compared to the prior year. The DSO were 61 days at June 3, 2017 and 59 days at May 28, 2016.

● Inventory – Inventory was a use of cash of $45.4 million and $9.1 million in 2017 and 2016, respectively. The higher use of cash in 2017 is due to higher raw material costs and increasing inventory levels to maintain service levels while integrating our Wisdom acquisition. The lower use of cash in 2016 is related to lower seasonal build of inventory in 2016. Inventory days on hand were 70 days as of June 3, 2017 and 65 days as of May 28, 2016.

● Trade Payables – For the first six months of 2017, trade payables was a source of cash of $20.4 million compared to a use of cash of $7.5 million in 2016. The use of cash in 2016 compared to the source of cash in 2017 is primarily related to higher purchases of inventory somewhat offset by lower purchases of property, plant and equipment.

Cash Flows from Investing Activities:

	Six Months Ended
	June 3,			May 28,
($ in millions)	2017			2016
Net cash used in investing activities	$	(150.8	)	$	(44.0	)

In the first quarter of 2017, we acquired Wisdom Adhesives for $123.3 million. Purchases of property, plant and equipment were $27.1 million during the six months ended June 3, 2017 as compared to $35.7 million for the same period of 2016.

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Cash Flows from Financing Activities:

	Six Months Ended
	June 3,		May 28,
($ in millions)	2017		2016
Net cash provided by (used in) financing activities	$	68.4	$	(12.4	)

We had $598.0 million of proceeds from the issuance of long-term debt in the six months ended June 3, 2017 which consisted of $300.0 million of proceeds from the issuance of the 4.00% Notes, $100 million of proceeds from our refinanced term loan and $198.0 million of proceeds from our revolving credit facility. Proceeds from our revolving credit facility were drawn in conjunction with the acquisition of Wisdom Adhesives and from borrowing from ongoing operations. Repayments of long-term debt were $504.3 million in the six months ended June 3, 2017 and $11.3 million in the six months ended May 28, 2016. We also paid $3.8 million in debt issuance costs associated with the issuance of the 4.000% Notes in the first six months of 2017. Net payments of notes payable were $10.3 million in 2017 compared to net proceeds of $11.2 million in 2016. Cash dividends paid were $14.6 million in 2017 compared to $13.5 million in 2016. Repurchases of common stock were $8.9 million in the six months ended June 3, 2017 compared to $6.6 million in the same period of 2016.

Forward-Looking Statements and Risk Factors

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In this Quarterly Report on Form 10-Q, we discuss expectations regarding our future performance which include anticipated financial performance, savings from restructuring and process initiatives, global economic conditions, liquidity requirements, the impact of litigation and environmental matters, the effect of new accounting pronouncements and one-time accounting charges and credits, and similar matters. This Quarterly Report on Form 10-Q contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of words like "plan," "expect," "aim," "believe," "project," "anticipate," "intend," "estimate," "will," "should," "could" (including the negative or variations thereof) and other expressions that indicate future events and trends. These plans and expectations are based upon certain underlying assumptions, including those mentioned with the specific statements. Such assumptions are in turn based upon internal estimates and analyses of current market conditions and trends, our plans and strategies, economic conditions and other factors. These plans and expectations and the assumptions underlying them are necessarily subject to risks and uncertainties inherent in projecting future conditions and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions and expectations proves to be inaccurate or is unrealized. In addition to the factors described in this report, Part II, Item 1A. Risk Factors in this report and Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 3, 2016, identify some of the important factors that could cause our actual results to differ materially from those in any such forward-looking statements. This list of important factors does not include all such factors nor necessarily present them in order of importance. In order to comply with the terms of the safe harbor, we have identified these important factors which could affect our financial performance and could cause our actual results for future periods to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. Additionally, the variety of products sold by us and the regions where we do business makes it difficult to determine with certainty the increases or decreases in revenues resulting from changes in the volume of products sold, currency impact, changes in geographic and product mix and selling prices. Our best estimates of these changes as well as changes in other factors have been included. References to volume changes include volume, product mix and delivery charges, combined. These factors should be considered, together with any similar risk factors or other cautionary language, which may be made elsewhere in this Quarterly Report on Form 10-Q.

We may refer to Part II, Item 1A. Risk Factors and this section of the Form 10-Q to identify risk factors related to other forward looking statements made in oral presentations, including investor conferences and/or webcasts open to the public.

This disclosure, including that under "Forward-Looking Statements and Risk Factors," and other forward-looking statements and related disclosures made by us in this report and elsewhere from time to time, represents our best judgment as of the date the information is given. We do not undertake responsibility for updating any of such information, whether as a result of new information, future events, or otherwise, except as required by law. Investors are advised, however, to consult any further public company disclosures (such as in filings with the Securities and Exchange Commission or in company press releases) on related subjects.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risk 

We are exposed to various market risks, including changes in interest rates, foreign currency rates and prices of raw materials. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates.

Our financial performance has been, and may continue to be, negatively affected by the unfavorable economic conditions. Continued or further recessionary economic conditions may have an adverse impact on our sales volumes, pricing levels and profitability. As domestic and international economic conditions change, trends in discretionary consumer spending also become unpredictable and subject to reductions due to uncertainties about the future. A general reduction in consumer discretionary spending due to recession in the domestic and international economies, or uncertainties regarding future economic prospects, could have a material adverse effect on our results of operations.

Interest Rate Risk 

Exposure to changes in interest rates result primarily from borrowing activities used to fund operations. Committed floating rate credit facilities are used to fund a portion of operations. We believe that probable near-term changes in interest rates would not materially affect financial condition, results of operations or cash flows. The annual impact on interest expense of a one-percentage point interest rate change on the outstanding balance of our variable rate debt as of June 3, 2017 would have resulted in a change in net income of approximately $7.9 million or $0.15 per diluted share.

Foreign Exchange Risk 

As a result of being a global enterprise, there is exposure to market risks from changes in foreign currency exchange rates, which may adversely affect operating results and financial condition. Approximately 57 percent of net revenue was generated outside of the United States for the second quarter of 2017. Principal foreign currency exposures relate to the Euro, British pound sterling, Canadian dollar, Chinese renminbi, Japanese yen, Australian dollar, Argentine peso, Brazilian real, Colombian peso, Mexican peso, Turkish lira, Egyptian pound, Indian rupee, Indonesian rupiah and Malaysian ringgit.

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 enter into cross border transactions through importing and exporting goods to and from different countries and locations. These transactions generate foreign exchange risk as they create assets, liabilities and cash flows in currencies other than their functional currency. This also applies to services provided and other cross border agreements among subsidiaries. Based on financial results for the six months ended June 3, 2017, a hypothetical one percent change in our cost of sales due to foreign currency rate changes would have resulted in a change in net income attributable to H.B. Fuller of approximately $2.9 million or $0.06 per diluted share.

We take steps to minimize risks from foreign currency exchange rate fluctuations through normal operating and financing activities and, when deemed appropriate, through the use of derivative instruments. We do not enter into any speculative positions with regard to derivative instruments.

Based on financial results for the six months ended June 3, 2017 and foreign currency balance sheet positions as of June 3, 2017, a hypothetical overall 10 percent change in the U.S. dollar would have resulted in a change in net income of approximately $4.0 million or $0.08 per diluted share.

On December 4, 2016, for our subsidiaries in Latin America, we changed the functional currency from the U.S. dollar to the entity’s local currency based on management’s analysis of the changes of the economic facts and circumstances in which these subsidiaries operate. The change in functional currency is accounted for prospectively from December 4, 2016 and financial statements prior to and including the year ended December 3, 2016 have not been restated for the change in functional currency.

Raw Materials 

The principal raw materials used to manufacture products include resins, polymers, synthetic rubbers, vinyl acetate monomer and plasticizers. We generally avoid sole source supplier arrangements for raw materials. While alternate supplies of most key raw materials are available, unplanned supplier production outages may lead to strained supply-demand situations for several key raw materials such as ethylene and propylene, several polymers and other petroleum derivatives such as waxes.

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The purchase of raw materials is our largest expenditure. Our objective is to purchase raw materials that meet both our quality standards and production needs at the lowest total cost. Most raw materials are purchased on the open market or under contracts that limit the frequency but not the magnitude of price increases. In some cases, however, the risk of raw material price changes is managed by strategic sourcing agreements which limit price increases to increases in supplier feedstock costs, while requiring decreases as feedstock costs decline. The leverage of having substitute raw materials approved for use wherever possible is used to minimize the impact of possible price increases. Based on financial results for the six months ended June 3, 2017, a hypothetical one percent change in our raw material costs would have resulted in a change in net income of approximately $4.1 million or $0.08 per diluted share.

Item 4. Controls and Procedures

Controls and Procedures

We conducted an evaluation, under the supervision and with the participation of our president and chief executive officer and executive vice president, chief financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of June 3, 2017.  We acquired Wisdom Adhesives in the first quarter of 2017. They represented approximately six percent of our total assets as of June 3, 2017. As this acquisition occurred in the first quarter of 2017, the scope of our assessment of the effectiveness of internal control over financial reporting does not include this recent acquisition. This exclusion is in accordance with the SEC’s general guidance that an assessment of a recently acquired business may be omitted from our scope in the year of acquisition. Based on this evaluation, our president and chief executive officer and executive vice president, chief financial officer concluded that, as of June 3, 2017, our disclosure controls and procedures were effective.

For purposes of Rule 13a-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its president and chief executive officer and executive vice president, chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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 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 a financial provision. 

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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. However, adverse developments and/or periodic settlements could negatively impact the results of operations or cash flows in one or more future periods.

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 30 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:

	Six Months Ended				3 Years Ended
($ in millions)	June 3, 2017		May 28, 2016		December 3, 2016
Lawsuits and claims settled		7		4		33
Settlement amounts	$	1.4	$	0.3	$	3.1
Insurance payments received or expected to be received	$	1.1	$	0.3	$	2.3

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. However, adverse developments and/or periodic settlements could negatively impact the results of operations or cash flows in one or more future periods.

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Item 1A. Risk Factors

This Form 10-Q contains forward-looking statements concerning our future programs, products, expenses, revenue, liquidity and cash needs as well as our plans and strategies. These forward-looking statements are based on current expectations and we assume no obligation to update this information. Numerous factors could cause actual results to differ significantly from the results described in these forward-looking statements, including the risk factors identified under Part I, Item 1A. Risk Factors contained in our Annual Report on Form 10-K for the fiscal year ended December 3, 2016. There have been no material changes in the risk factors disclosed by us under Part I, Item 1A. Risk Factors contained in the Annual Report on Form 10-K for the fiscal year ended December 3, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Information on our purchases of equity securities during the second quarter ended June 3, 2017 follows:

Period	(a) Total Number of Shares Purchased1		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of a Publicly Announced Plan of Program2		(d) Maximum Approximate Dollar Value of Shares that may yet be Purchased Under the Plan or Program (millions)
March 5, 2017 - April 8, 2017		70,000	$	50.23		70,000	$	20,520
April 9 2017 - May 6, 2017		55,000	$	50.32		55,000	$	17,752
May 7, 2017 - June 3, 2017		3,122	$	50.61		-	$	17,752

¹ The total number of shares purchased include shares withheld to satisfy the employees’ withholding taxes upon vesting of restricted stock.

² Shares repurchased were under the September 30, 2010 share repurchase program.

Repurchases of common stock are made to support our stock-based employee compensation plans and for other corporate purposes. Upon vesting of restricted stock awarded to employees, shares are withheld to cover the employees’ minimum withholding taxes.

On April 6, 2017, the Board of Directors authorized a new share repurchase program of up to $200.0 million of our outstanding common shares. 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 reduced our common stock for the par value of the shares with the excess being applied against additional paid-in capital. This authorization replaces the September 30, 2010 authorization to repurchase shares.

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Item 6. Exhibits

10.1 Credit Agreement dated as of April 12, 2017 among (i) H.B. Fuller Company, a Minnesota corporation, as Borrower, (ii) certain of its subsidiaries party thereto as Foreign Subsidiary Borrowers, (iii) JPMorgan Chase Bank, N.A., as Administrative Agent, (iv) U.S. Bank National Association, Citibank, N.A., and Morgan Stanley MUFG Loan Partners, LLC, as Co-Syndication Agents, (v) Bank of America, N.A., HSBC Bank USA, National Association, and PNC Bank, National Association, as Co-Documentation Agents, and (iv) various other financial institutions party thereto as Lenders (incorporated by reference to Exhibit 10.1 in H.B. Fuller’s Current Report on Form 8-K filed on April 18, 2017)

10.2 Guaranty made as of April 12, 2017 by H.B. Fuller Construction Products, Inc., a Minnesota corporation, as Initial Guarantor, in favor of J.P. Morgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 in H.B. Fuller’s Current Report on Form 8-K filed on April 18, 2017)

31.1 Form of 302 Certification –James J. Owens

31.2 Form of 302 Certification –John J. Corkrean

32.1 Form of 906 Certification –James J. Owens

32.2 Form of 906 Certification –John J. Corkrean

101 The following materials from the H.B. Fuller Company Quarterly Report on Form 10-Q for the quarter ended June 3, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Total Equity, (v) the Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	H.B. Fuller Company
Dated: June 30, 2017		/s/ John J. Corkrean
		John J. Corkrean
		Executive Vice President, Chief Financial Officer

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Exhibit Index

Exhibits

10.1 Credit Agreement dated as of April 12, 2017 among (i) H.B. Fuller Company, a Minnesota corporation, as Borrower, (ii) certain of its subsidiaries party thereto as Foreign Subsidiary Borrowers, (iii) JPMorgan Chase Bank, N.A., as Administrative Agent, (iv) U.S. Bank National Association, Citibank, N.A., and Morgan Stanley MUFG Loan Partners, LLC, as Co-Syndication Agents, (v) Bank of America, N.A., HSBC Bank USA, National Association, and PNC Bank, National Association, as Co-Documentation Agents, and (iv) various other financial institutions party thereto as Lenders (incorporated by reference to Exhibit 10.1 in H.B. Fuller’s Current Report on Form 8-K filed on April 18, 2017)

10.2 Guaranty made as of April 12, 2017 by H.B. Fuller Construction Products, Inc., a Minnesota corporation, as Initial Guarantor, in favor of J.P. Morgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 in H.B. Fuller’s Current Report on Form 8-K filed on April 18, 2017)

31.1 Form of 302 Certification – James J. Owens

31.2 Form of 302 Certification – John J. Corkrean

32.1 Form of 906 Certification –James J. Owens

32.2 Form of 906 Certification –John J. Corkrean

101 The following materials from the H.B. Fuller Company Quarterly Report on Form 10-Q for the quarter ended June 3, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Total Equity, (v) the Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Condensed Consolidated Financial Statements.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, James J. Owens, certify that:

1.     I have reviewed this report on Form 10-Q of H.B. Fuller Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-115(e) and 15d-115(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d–15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 30, 2017

/s/ James J. Owens

James J. Owens

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, John J. Corkrean, certify that:

1.     I have reviewed this report on Form 10-Q of H.B. Fuller Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-115(e) and 15d-115(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d–15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 30, 2017

/s/ John J. Corkrean

John J. Corkrean

Executive Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

I, James J. Owens, in connection with the Quarterly Report of H.B. Fuller Company on Form 10-Q for the quarter ended June 3, 2017 (the “Report”), hereby certify that:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of H.B. Fuller Company.

Date: June 30, 2017

/s/ James J. Owens

James J. Owens

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION

I, John J. Corkrean, in connection with the Quarterly Report of H.B. Fuller Company on Form 10-Q for the quarter ended June 3, 2017 (the “Report”), hereby certify that:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of H.B. Fuller Company.

Date: June 30, 2017

/s/ John J. Corkrean

John J. Corkrean

Executive Vice President, Chief Financial Officer

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 03, 2017	Jun. 23, 2017
Document Information [Line Items]
Entity Registrant Name	FULLER H B CO
Entity Central Index Key	0000039368
Trading Symbol	ful
Current Fiscal Year End Date	--12-02
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding (in shares)		50,533,586
Document Type	10-Q
Document Period End Date	Jun. 03, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Net revenue	$ 561,651	$ 532,514	$ 1,064,974	$ 1,006,840
Cost of sales	(415,613)	(374,258)	(779,940)	(710,979)
Gross profit	146,038	158,256	285,034	295,861
Selling, general and administrative expenses	(102,770)	(103,684)	(215,685)	(203,451)
Special charges, net		(370)		(783)
Other income (expense), net	(110)	(1,565)	511	(6,647)
Interest expense	(8,148)	(6,597)	(16,528)	(12,905)
Income before income taxes and income from equity method investments	35,010	46,040	53,332	72,075
Income taxes	(11,151)	(14,290)	(16,916)	(23,050)
Income from equity method investments, net of tax	2,005	1,640	4,279	3,332
Net income including non-controlling interests	25,864	33,390	40,695	52,357
Net income (loss) attributable to non-controlling interests	3	(59)	(33)	(108)
Net income attributable to H.B. Fuller	$ 25,867	$ 33,331	$ 40,662	$ 52,249
Basic (in dollars per share)	$ 0.51	$ 0.66	$ 0.81	$ 1.04
Diluted (in dollars per share)	$ 0.50	$ 0.65	$ 0.79	$ 1.02
Weighted-average common shares outstanding:
Basic (in shares)	50,496	50,145	50,369	50,052
Diluted (in shares)	51,686	51,253	51,573	51,124
Dividends declared per common share (in dollars per share)	$ 0.15	$ 0.14	$ 0.29	$ 0.27

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Net income including non-controlling interests	$ 25,864	$ 33,390	$ 40,695	$ 52,357
Other comprehensive income
Foreign currency translation	18,513	1,442	7,994	492
Defined benefit pension plans adjustment, net of tax	1,593	690	3,183	3,355
Interest rate swaps, net of tax	10	10	20	20
Cash-flow hedges, net of tax	(23)	(440)	106	(191)
Other comprehensive income	20,093	1,702	11,303	3,676
Comprehensive income	45,957	35,092	51,998	56,033
Less: Comprehensive income attributable to non-controlling interests	3	64	34	108
Comprehensive income attributable to H.B. Fuller	$ 45,954	$ 35,028	$ 51,964	$ 55,925

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 03, 2017	Dec. 03, 2016
Current assets:
Cash and cash equivalents	$ 94,102	$ 142,245
Trade receivables (net of allowances of $12,376 and $12,310, as of June 3, 2017 and December 3, 2016, respectively)	378,622	351,130
Inventories	302,336	247,399
Other current assets	75,380	70,479
Total current assets	850,440	811,253
Property, plant and equipment	1,111,423	1,093,141
Accumulated depreciation	(595,540)	(577,866)
Property, plant and equipment, net	515,883	515,275
Goodwill	434,210	366,248
Other intangibles, net	239,418	205,359
Other assets	160,285	157,733
Total assets	2,200,236	2,055,868
Current liabilities:
Notes payable	28,371	37,334
Current maturities of long-term debt	10,000	80,178
Trade payables	181,979	162,964
Accrued compensation	49,193	52,444
Income taxes payable	9,482	7,985
Other accrued expenses	46,356	50,939
Total current liabilities	325,381	391,844
Long-term debt, excluding current maturities	747,738	585,759
Accrued pension liabilities	69,245	73,545
Other liabilities	66,121	62,174
Total liabilities	1,208,485	1,113,322
Commitments and contingencies (Note 16)
Redeemable non-controlling interest		4,277
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 – 50,517,212 and 50,141,343, as of June 3, 2017 and December 3, 2016, respectively	50,517	50,141
Additional paid-in capital	75,390	59,564
Retained earnings	1,116,883	1,090,900
Accumulated other comprehensive loss	(251,427)	(262,729)
Total H.B. Fuller stockholders' equity	991,363	937,876
Non-controlling interests	388	393
Total equity	991,751	938,269
Total liabilities, redeemable non-controlling interest and total equity	$ 2,200,236	$ 2,055,868

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 03, 2017	Dec. 03, 2016
Allowance for doubtful accounts	$ 12,376	$ 12,310
Preferred stock, shares authorized (in shares)	10,045,900	10,045,900
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	160,000,000	160,000,000
Common stock, shares outstanding (in shares)	50,517,212	50,141,343

XML

Condensed Consolidated Statements of Total Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Nov. 28, 2015	$ 50,074	$ 55,522	$ 994,608	$ (227,284)	$ 406	$ 873,326
Comprehensive income (loss)			124,128	(35,445)	226	88,909
Dividends			(27,836)			(27,836)
Stock option exercises	519	10,750				11,269
Share-based compensation plans other, net	116	14,485				14,601
Tax benefit on share-based compensation plans		1,467				1,467
Repurchases of common stock	(568)	(22,660)				(23,228)
Redeemable non-controlling interest					(239)	(239)
Balance at Dec. 03, 2016	50,141	59,564	1,090,900	(262,729)	393	938,269
Comprehensive income (loss)			40,662	11,302	34	51,998
Dividends			(14,679)			(14,679)
Stock option exercises	407	13,519				13,926
Share-based compensation plans other, net	148	9,553				9,701
Tax benefit on share-based compensation plans		1,353				1,353
Repurchases of common stock	(179)	(8,693)				(8,872)
Purchase of redeemable non-controlling interest		94				94
Redeemable non-controlling interest					(39)	(39)
Balance at Jun. 03, 2017	$ 50,517	$ 75,390	$ 1,116,883	$ (251,427)	$ 388	$ 991,751

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 03, 2017	May 28, 2016
Cash flows from operating activities:
Net income including non-controlling interests	$ 40,695	$ 52,357
Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities:
Depreciation	23,971	25,067
Amortization	15,229	13,486
Deferred income taxes	7	1,101
Income from equity method investments, net of dividends received	(4,279)	(3,332)
Gain on sale of assets	(91)
Share-based compensation	8,843	6,968
Excess tax benefit from share-based compensation	(1,353)	(592)
Gain on mark to market adjustment to contingent consideration liability	(3,603)	(891)
Non-cash charge for sale of inventories revalued at acquisition	193	103
Change in assets and liabilities, net of effects of acquisitions:
Trade receivables, net	(9,890)	13,280
Inventories	(45,390)	(9,059)
Other assets	12,602	9,948
Trade payables	20,443	(7,521)
Accrued compensation	(4,666)	(2,925)
Other accrued expenses	(6,259)	(6,434)
Income taxes payable	5,569	(4,451)
Accrued / prepaid pensions	(2,989)	(1,785)
Other liabilities	(3,336)	7,829
Other	(8,436)	(3,790)
Net cash provided by operating activities	32,794	82,603
Cash flows from investing activities:
Purchased property, plant and equipment	(27,104)	(35,720)
Purchased businesses, net of cash acquired	(123,305)	(9,123)
Purchased investments	(1,250)
Proceeds from sale of property, plant and equipment	868	870
Net cash used in investing activities	(150,791)	(43,973)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	598,000
Repayment of long-term debt and payment of debt issuance costs	(508,024)	(11,250)
Net (payment of) proceeds from notes payable	(10,287)	11,246
Dividends paid	(14,614)	(13,537)
Purchase of redeemable non-controlling interest	(3,127)
Proceeds from stock options exercised	13,926	7,083
Excess tax benefit from share-based compensation	1,353	592
Repurchases of common stock	(8,872)	(6,566)
Net cash provided by (used in) financing activities	68,355	(12,432)
Effect of exchange rate changes on cash and cash equivalents	1,499	656
Net change in cash and cash equivalents	(48,143)	26,854
Cash and cash equivalents at beginning of period	142,245	119,168
Cash and cash equivalents at end of period	94,102	146,022
Supplemental disclosure of cash flow information:
Dividends paid with company stock	65	124
Cash paid for interest, net of amount capitalized of $101 and $314 for the periods ended June 3, 2017 and May 28, 2016, respectively	15,393	14,157
Cash paid for income taxes, net of refunds	$ 15,739	$ 18,503

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) - USD ($)	6 Months Ended
	Jun. 03, 2017	May 28, 2016
Capitalized interest costs	$ 101	$ 314

XML

Note 1 - Basis of Presentation

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Nature of Operations [Text Block]

Note

1

:

Basis of Presentation

The accompanying unaudited interim Condensed Consolidated Financial Statements of H.B. Fuller Company and Subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

Accordingly, they do

not

include all of the information necessary for a fair presentation of results of operations, comprehensive income, financial position, and cash flows in conformity with U.S. generally accepted accounting principles. In our opinion, the unaudited interim Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary for the fair presentation of the results for the periods presented. Operating results for interim periods are

not

necessarily indicative of results that

may

be expected for the fiscal year as a whole.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from these estimates. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form

10

-K for the year ended

December 3, 2016

as filed with the Securities and Exchange Commission.

On

December 4, 2016,

for our subsidiaries in Latin America, we changed the functional currency from the U.S. dollar to the entity’s local currency based on management’s analysis of the changes of the economic facts and circumstances in which these subsidiaries operate. The change in functional currency is accounted for prospectively from

December 4, 2016

and financial statements prior to and including the

six

months ended

May 28, 2016

and the year ended

December 3, 2016

have

not

been restated for the change in functional currency. Monetary assets and liabilities have been remeasured to the U.S. dollar at current exchange rates. Non-monetary assets (property, plant and equipment, net; goodwill; and intangible assets, net)

have been remeasured to reflect the difference between the exchange rate when the asset arose and the exchange rate on the date of the change in functional currency. As a result of this change in functional currency, we recorded an 

$11,317

 cumulative translation adjustment included in other comprehensive income for the

six

months ended

June 3, 2017.

New Accounting Pronouncements

In

May 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2017

-

09,

Compensation—Stock Compensation (Topic

718

): Scope of Modification Accounting

. The ASU was issued to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018

with early adoption permitted. We will apply this guidance to applicable transactions after the adoption date.

In

March 2017,

the FASB issued ASU

No.

2017

-

07,

 

Compensation—Retirement Benefits (Topic

715

): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,

which requires employers to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses. The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. The ASU also stipulates that only the service cost component of net benefit cost is eligible for capitalization.  Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018

with early adoption permitted.  We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

February 2017,

the FASB issued ASU

No.

2017

-

05,

 

Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic

610

-

20

): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.

 The ASU was issued to clarify the scope of the previous standard and to add guidance for partial sales of nonfinancial assets. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018. 

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

 

Intangibles—Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment,

which removes Step

2

of the goodwill impairment test.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,

not

to exceed the carrying amount of goodwill.  Our effective date for prospective adoption of this guidance is our fiscal year beginning

November 29, 2020

with early adoption permitted. We will apply this guidance to applicable impairment tests after the adoption date.

In

January 2017,

the FASB issued ASU

No.

2017

-

01,

Business Combinations (Topic

805

): Clarifying the Definition of a Business. 

This ASU clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.  Our effective date for prospective adoption of this guidance is our fiscal year beginning

December 2, 2018.

We will apply this guidance to applicable transactions after the adoption date.

In

November 2016,

the FASB issued ASU

No.

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).

This ASU requires that the reconciliation of the beginning-of-period and end-of-period amounts shown in the statement of cash flows include cash and restricted cash equivalents. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018.

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

October 2016,

the FASB issued ASU

No.

2016

-

17,

Consolidation (Topic

810

): Interests Held through Related Parties That Are under Common Control.

This ASU changes how a decision maker treats indirect interests in a managed variable interest entity held through an entity under common control in its primary beneficiary (consolidation) analysis. Our effective date for adoption of this guidance is our fiscal year beginning

December 3, 2017.

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

October 2016,

the FASB issued ASU

No.

2016

-

16,

Income Taxes (Topic

740

): Intra-Entity Transfers of Assets Other Than Inventory.

This ASU changes the timing of income tax recognition for an intercompany sale of assets. The ASU requires the seller’s tax effects and the buyer’s deferred taxes to be recognized immediately upon the sale instead of deferring accounting for the income tax implications until the assets are sold to a

third

party or recovered through use. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018.

We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

August 2016,

the FASB issued ASU

No.

2016

-

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).

This ASU requires changes in the presentation of certain items including but

not

limited to debt prepayment or debt extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies and distributions received from equity method investees. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018.

We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

June 2016,

the FASB ASU

No.

2016

-

13

, Financial Instruments - Credit Losses (Topic

326

), Measurement of Credit Losses on Financial Statements.

This ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Our effective date for adoption of this guidance is our fiscal year beginning

November 29, 2020.

We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

Compensation - Stock Compensation (Topic

718

), Improvements to Employee Share-Based Payment Accounting.

This ASU provides simplification in the accounting for share-based payment transactions including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification in the statement of cash flows.

Our effective date for adoption of this guidance is our fiscal year beginning

December 3, 2017.

We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

March 2016,

the FASB issued ASU

No.

2016

-

08,

Revenue from Contracts with Customers (Topic

606

), Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

.  This ASU provides guidance on recording revenue on a gross basis versus a net basis based on the determination of whether an entity is a principal or an agent when another party is involved in providing goods or services to a customer.  The amendments in this ASU affect the guidance in ASU

No.

2014

-

09

and are effective in the same timeframe as ASU

No.

2014

-

09

as discussed below.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

Leases (Subtopic

842

).

This guidance changes accounting for leases and requires lessees to recognize the assets and liabilities arising from all leases, including those classified as operating leases under previous accounting guidance, on the balance sheet and requires disclosure of key information about leasing arrangements to increase transparency and comparability among organizations. Our effective date for adoption of this guidance is our fiscal year beginning

December 1, 2019

with early adoption permitted. The new guidance must be adopted using a modified retrospective transition approach, and provides for certain practical expedients. We are currently evaluating the impact that the new guidance will have on our Consolidated Financial Statements.

In

January 2016,

the FASB issued ASU

No.

2016

-

01,

 

Financial Instruments - Overall (Subtopic

825

-

10

): Recognition and Measurement of Financial Assets and Financial Liabilities

, which requires that equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are to be measured at fair value with changes in fair value recognized in net income. However, an entity

may

choose to measure equity investments that do

not

have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Furthermore, equity investments without readily determinable fair values are to be assessed for impairment using a quantitative approach.

Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018.

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

July 2015,

the FASB issued ASU

No.

2015

-

11,

 

Inventory (Topic

330

): Simplifying the Measurement of

Inventory

, which requires a company to measure inventory within the scope of this guidance (inventory measured using

first

-in,

first

-out (FIFO) or average cost) at the lower of cost and net realizable value methods. Subsequent measurement is unchanged for inventory measured using the last-in,

first

-out (LIFO) or retail inventory method. Our effective date for adoption of this guidance is our fiscal year beginning

December 3, 2017.

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

May 2014,

the FASB issued ASU

No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606

),

which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years and interim periods beginning after

December 15, 2017 (

as stated in ASU

No.

2015

-

14

which defers the effective date and was issued in

August 2015)

and is now effective for our fiscal year beginning

December 2, 2018.

Early application as of the original effective date is permitted under ASU

2015

-

14.

The standard permits the use of either the retrospective or cumulative effect transition method.

We are continuing to evaluate the effect this guidance will have on our Consolidated Financial Statements, including potential impacts on the timing of revenue recognition and additional information that

may

be necessary for expanded disclosures regarding revenue.

We have identified an implementation project team and related oversight processes and have commenced the assessment phase of the project. We have

not

concluded as to whether the new guidance will be adopted on a full or modified retrospective basis, but will

not

apply the early adoption provisions of the new guidance.

XML

Note 2 - Acquisitions

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Business Combination Disclosure [Text Block]

Note

2:

Acquisitions

Wisdom Adhesives

On

January 27, 2017,

we acquired substantially all of the assets of H.E. Wisdom & Sons, Inc. and its affiliate Wisdom Adhesives Southeast, L.L.C., (“Wisdom Adhesives”) headquartered in Elgin, Illinois. Wisdom Adhesives is a provider of adhesives for the packaging, paper converting and assembly markets. The acquisition will help strengthen our position in the North America adhesives market.

The purchase price of

$123,305

was financed through borrowings on our revolving credit facility and was recorded in our Americas Adhesives operating segment. We incurred acquisition related costs of approximately

$548,

which were recorded as selling, general and administrative (“SG&A”) expenses in the Condensed Consolidated Statement of Income for the

six

months ended

June 3, 2017.

The acquisition fair value measurement was preliminary as of

June 3, 2017,

subject to the completion of the valuation of Wisdom Adhesives and further management reviews and assessment of the preliminary fair values of the assets acquired and liabilities assumed. We expect the fair value measurement process to be completed when the final appraisals are available, but

no

later than

twelve

months from the acquisition date.

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

	Amount
Current assets	$	13,741
Property, plant and equipment		10,516
Goodwill		60,557
Other intangibles
Customer relationships		33,300
Trademarks/trade names		13,600
Current liabilities		(8,409	)
Total purchase price	$	123,305

The preliminary expected lives of the acquired intangible assets are

15

years for customer relationships and

10

years for trademarks/trade names.

Based on the preliminary fair value measurement of the assets acquired and liabilities assumed, we allocated

$60,557

to goodwill for the expected synergies from combining Wisdom Adhesives with our existing business. Such goodwill is deductible for tax purposes. The goodwill was assigned to our Americas Adhesives operating segment. The Wisdom Adhesives acquisition does

not

represent a material business combination, therefore pro forma financial information is

not

provided.

Cyberbond

On

June 8, 2016,

we acquired Cyberbond, L.L.C., (“Cyberbond”) headquartered in Batavia, Illinois with operations in the United States and Europe. Cyberbond is a provider of industrial adhesives for the electronics, medical, audio equipment, automotive and structural markets. The acquisition will help us to broaden our global position and accelerate our growth in the high margin, high growth Engineering Adhesives segment.

The purchase price of

$42,182,

net of cash acquired of

$332,

was funded through existing cash and was recorded in our Engineering Adhesives operating segment. We incurred acquisition related costs of approximately

$527,

which were recorded as SG&A expenses in the Condensed Consolidated Statement of Income for the year ended

December 3, 2016.

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

	Amount
Current assets	$	4,425
Property, plant and equipment		2,038
Goodwill		23,654
Other intangibles
Developed technology		2,000
Customer relationships		14,400
Trademarks/trade names		700
Other assets		161
Current liabilities		(1,889	)
Long-term liabilities		(3,307	)
Total purchase price	$	42,182

The expected lives of the acquired intangible assets are

seven

years for developed technology,

15

years for customer relationships and

10

years for trademarks/trade names.

Based on the fair value measurement of the assets acquired and liabilities assumed, we allocated

$23,654

to goodwill for the expected synergies from combining Cyberbond with our existing business. The amount of goodwill deductible for tax purposes is

$10,658.

The goodwill was assigned to our Engineering Adhesives operating segment. The Cyberbond acquisition does

not

represent a material business combination, therefore pro forma financial information is

not

provided.

Advanced Adhesives

On

April 29, 2016,

we acquired Advanced Adhesives Pty Limited and the business assets of Advanced Adhesives (New Zealand) Limited (together referred to as “Advanced Adhesives”), providers of industrial adhesives in Australia and New Zealand. The acquisition will help us to strengthen our industrial adhesives market position and leverage a broader technology portfolio in both Australia and New Zealand. The combined purchase price of

$10,365

was funded through existing cash and was recorded in our Asia Pacific operating segment. We incurred acquisition related costs of approximately

$646,

which were recorded as SG&A expenses in the Condensed Consolidated Statements of Income for the year ended

December 3, 2016

.

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

	Amount
Current assets	$	5,704
Property, plant and equipment		594
Goodwill		102
Other intangibles
Customer relationships		7,575
Trademarks/trade names		146
Current liabilities		(2,671	)
Long-term liabilities		(1,085	)
Total purchase price	$	10,365

The expected lives of the acquired intangible assets are

15

years for customer relationships and

one

year for trademarks/trade names.

Based on the fair value measurement of the assets acquired and liabilities assumed, we allocated

$102

to goodwill for the expected synergies from combining Advanced Adhesives with our existing business. Such goodwill is

not

deductible for tax purposes. The goodwill was assigned to our Asia Pacific operating segment. The Advanced Adhesives acquisition does

not

represent a material business combination, therefore pro forma financial information is

not

provided.

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Note 3 - Restructuring Actions

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

Note

3

:

Restructuring Actions

Business Integration Project

The integration of the industrial adhesives business we acquired in

March 2012

involved a significant amount of restructuring and capital investment to optimize the new combined entity. In addition, we took a series of actions in our existing EIMEA operating segment to improve the profitability and future growth prospects of this operating segment. We combined these

two

initiatives into a single project which we refer to as the “Business Integration Project.” During the

second

quarter and

six

months ended

May 28, 2016,

we

incurred costs of

$370

and

$783

related to transformation costs, workforce reduction costs, facility exit costs and other related costs for the Business Integration Project, which are included in special charges, net in the Condensed Consolidated Statements of Income. The Business Integration Project was substantially complete at the end of

2016.

2017

Restructuring

Plan

During the

first

quarter of

2017,

we approved a restructuring plan (the

“2017

Restructuring Plan”) related to organizational changes and other actions to optimize operations. The

2017

Restructuring Plan was implemented in the

first

quarter of

2017

and is currently expected to be completed by mid-year of fiscal

2018.

During the

three

and

six

months ended

June 3, 2017,

we recorded a pre-tax charge of

$5,634

and

$15,802,

respectively, related to the implementation of the

2017

Restructuring Plan.

The following table summarizes the pre

-

tax distribution of restructuring charges by income statement classification:

	Three Months Ended		Six Months Ended
	June 3, 2017		June 3, 2017
Cost of sales	$	5,252	$	8,899
Selling, general and administrative		382		6,903
	$	5,634	$	15,802

The following table summarizes the pre-tax impact of restructuring charges by segment:

	Three Months Ended		Six Months Ended
	June 3, 2017		June 3, 2017
Americas Adhesives	$	39	$	1,765
EIMEA		1,266		6,055
Asia Pacific		35		1,887
Construction Products		4,209		5,458
Engineering Adhesives		85		637
	$	5,634	$	15,802

A summary of the restructuring liability during the

six

months ended

June 3, 2017

is presented below:

	Employee- Related			Asset-Related			Other			Total
Balance at December 3, 2016	$	-		$	-		$	-		$	-
Expenses incurred		9,898			5,094			810			15,802
Non-cash charges		-			(4,291	)		-			(4,291	)
Cash payments		(5,810	)		(803	)		(505	)		(7,118	)
Foreign currency translation		261			-			-			261
Balance at June 3, 2017	$	4,349		$	-		$	305		$	4,654

Non-cash charges include accelerated depreciation resulting from the cessation of use of certain long-lived assets and the recording of a provision related to the discontinuance of certain retail and wholesale products. Restructuring liabilities have been classified as a component of other accrued expenses on the Condensed Consolidated Balance Sheets.

XML

Note 4 - Inventories

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

Note

4:

Inventories

The composition of inventories is as follows:

	June 3,			December 3,
	2017			2016
Raw materials	$	149,629		$	116,200
Finished goods		165,028			142,397
LIFO reserve		(12,321	)		(11,198	)
Total inventories	$	302,336		$	247,399

XML

Note 5 - Goodwill and Other Intangible Assets

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note

5

: Goodwill

and Other Intangible Assets

The goodwill activity for the

six

months ended

June 3, 2017

is presented below:

	Americas					Asia		Construction		Engineering
	Adhesives			EIMEA		Pacific		Products		Adhesives		Total
Balance at December 3, 2016	$	59,821		$	98,876	$	17,481	$	21,901	$	168,169	$	366,248
Acquisitions		60,557	1		-		-		-		-		60,557
Currency impact		(646	)		4,844		339		22		2,846		7,405
Balance at June 3, 2017	$	119,732		$	103,720	$	17,820	$	21,923	$	171,015	$	434,210

1 Preliminary goodwill balance as of June 3, 2017.

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

	June 3, 2017
Amortizable Intangible Assets	Purchased Technology & Patents			Customer Relationships			All Other			Total
Original cost	$	70,651		$	289,181		$	65,350		$	425,182
Accumulated amortization		(29,189	)		(123,054	)		(34,092	)		(186,335	)
Net identifiable intangibles	$	41,462		$	166,127		$	31,258		$	238,847

	December 3, 2016
Amortizable Intangible Assets	Purchased Technology & Patents			Customer Relationships			All Other			Total
Original cost	$	70,504		$	251,329		$	51,116		$	372,949
Accumulated amortization		(21,448	)		(116,411	)		(30,198	)		(168,057	)
Net identifiable intangibles	$	49,056		$	134,918		$	20,918		$	204,892

Amortization expense with respect to amortizable intangible assets was

$7,874

and

$6,788

for the

second

quarter ended

June 3, 2017

and

May 28, 2016,

respectively, and

$15,229

and

$13,486

for the

six

months ended

June 3, 2017

and

May 28, 2016,

respectively.

Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets for the next

five

fiscal years are as follows:

	Remainder of
Fiscal Year	2017		2018		2019		2020		2021		Thereafter
Amortization Expense	$	16,751	$	32,398	$	30,224	$	27,843	$	26,372	$	105,259

Non-amortizable intangible assets as of

June 3, 2017

are

$571

and are related to trademarks and trade names.

XML

Note 6 - Long-term Debt

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

6:

Long-Term Debt

On

April 12, 2017,

we entered into a credit agreement with a consortium of financial institutions under which we established a

$400,000

multi-currency revolving credit facility and a

$100,000

term loan that we can use to repay existing indebtedness, finance working capital needs, finance acquisitions, and for general corporate purposes. Interest on the revolving credit facility is payable at LIBOR plus

1.10

percent. A facility fee of

0.15

percent is payable quarterly. The interest rate on the term loan is payable at LIBOR plus

1.25

percent. The interest rates and the facility fee are based on a ratings grid. The credit agreement replaced the previous credit agreement entered into on

October 31, 2014.

The

April 12, 2017

credit agreement expires

April 12, 2022.

During the

second

quarter ended

June 3, 2017,

we entered into an interest rate swap agreement to convert

$125,000

of our Series E private placement to a variable interest rate of

1

-month LIBOR (in arrears) plus

2.22

percent.

On

February 14, 2017,

we issued

$300,000

aggregate principal of

10

-year long-term unsecured public notes (

“4.000%

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 and prepay

$158,750

of our term loan. We entered into interest rate swap agreements to convert

$150,000

of the

$300,000

4.000%

Notes to a variable interest rate of

1

-month LIBOR (in advance) plus

1.86

percent.

See Note

13

for further discussion of the interest rate swaps.

We adopted ASU

No.

2015

-

03,

Interest-Imputation of Interest (Subtopic

835

-

30

): Simplifying the Presentation of Debt Issue Costs

, during the quarter ended

March 4, 2017

on a retrospective basis. The impact of adopting ASU

No.

2015

-

03

on our financial statements was the reclassification of deferred debt issuance costs related to our long-term debt, with the exception of our revolving credit line, from an asset to a direct deduction to the corresponding debt.  Reclassifications from an asset to a direct deduction to the corresponding debt of

$2,386

was included in our Condensed Consolidated Balance Sheets as of

December 3, 2016. 

XML

Note 7 - Redeemable Non-controlling Interest

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Noncontrolling Interest Disclosure [Text Block]

Note

7:

Redeemable Non-Controlling Interest

We account for the non-controlling interest in H.B. Fuller Kimya Sanayi Ticaret A.S. (“HBF Kimya”) as a redeemable non-controlling interest because both the non-controlling shareholder and H.B. Fuller had an option, exercisable beginning

August 1, 2018,

to require the redemption of the shares owned by the non-controlling shareholder at a price determined by a formula based on

24

months trailing EBITDA. Since the option made the redemption of the non-controlling ownership shares of HBF Kimya outside of our control, these shares are classified as a redeemable non-controlling interest in temporary equity in the Condensed Consolidated Balance Sheets. The non-controlling shareholder was entitled to increase his ownership by

1

percent per year for

5

years up to a maximum of

13

percent ownership based on the achievement of profitability targets in each year. The option was subject to a minimum price of

€3,500.

The results of operations for the HBF Kimya non-controlling interest is consolidated in our financial statements. Both the non-controlling interest and the accretion adjustment to redemption value are included in net income attributable to non-controlling interests in the Condensed Consolidated Statements of Income and in the carrying value of the redeemable non-controlling interest on the Condensed Consolidated Balance Sheets. HBF Kimya’s functional currency is the Turkish lira and changes in exchange rates affect the reported amount of the redeemable non-controlling interest.

During the

first

quarter of

2017,

we purchased the remaining shares from the non-controlling shareholder for

€4,206.

The difference between the non-controlling interest balance and the purchase price was recorded in additional paid-in capital in the

first

quarter of

2017.

	Redeemable
	Non-Controlling
	Interest
Balance at December 3, 2016	$	4,277
Net income attributed to redeemable non-controlling interest		39
Purchase of redeemable non-controlling interest		(4,468	)
Foreign currency translation adjustment		152
Balance at June 3, 2017	$	-

XML

Note 8 - Accounting for Share-based Compensation

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note

8:

Accounting for Share-Based Compensation

Overview

 

We have various share-based compensation programs which provide for equity awards including non-qualified stock options, restricted stock shares, restricted stock units, performance awards and deferred compensation. These equity awards fall under several plans and are described in detail in our Annual Report on Form

10

-K for the year ended

December 3, 2016.

Grant-Date Fair Value

We use the Black-Scholes option pricing model to calculate the grant-date fair value of an award. The fair value of options granted during the quarter ended

June 3, 2017

and

May 28, 2016

were calculated using the following weighted average assumptions:

	Three Months Ended								Six Months Ended
	June 3, 2017				May 28, 2016				June 3, 2017				May 28, 2016
Expected life (in years)			4.75				4.75				4.75				4.75
Weighted-average expected volatility			24.32%				28.55%				24.85%				29.01%
Expected volatility		24.31%	-	24.33%		28.00%	-	29.20%		24.31%	-	24.88%		28.00%	-	29.23%
Risk-free interest rate			1.81%				1.25%				1.89%				1.43%
Expected dividend yield			1.11%				1.27%				1.12%				1.55%
Weighted-average fair value of grants			$10.90				$9.81				$10.81				$7.72

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 our future volatility will differ materially from historical volatility.

Risk-free interest rate – The rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the same period of time as the expected life.

Expected dividend yield – The calculation is based on the total expected annual dividend payout divided by the average stock price.

Expense

We use the straight-line attribution method to recognize share-based compensation expense for option awards, restricted stock shares and restricted stock units with graded and cliff vesting. Incentive stock options and performance awards are based on certain performance-based metrics and the expense is adjusted quarterly, based on our projections of the achievement of those metrics. The amount of share-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The expense is recognized over the requisite service period, which for us is the period between the grant date and the earlier of the award’s stated vesting term or the date the employee is eligible for early vesting based on the terms of the plans.

Total share-based compensation expense of

$3,811

and

$2,701

was included in our Condensed Consolidated Statements of Income for the

second

quarter ended

June 3, 2017

and

May 28, 2016,

respectively. Total share-based compensation expense of

$8,843

and

$6,968

was included in our Condensed Consolidated Statements of Income for the

six

months ended

June 3, 2017

and

May 28, 2016,

respectively. All share-based compensation expense was recorded as SG&A expense. For the

second

quarter ended

June 3, 2017

and

May 28, 2016,

there was

$300

and

$933

of excess tax benefit recognized. For the

six

months ended

June 3, 2017

and

May 28, 2016,

there was

$1,353

and

$592

of excess tax benefit recognized.

As of

June 3, 2017,

there was

$10,198

of unrecognized compensation costs related to unvested stock option awards, which is expected to be recognized over a weighted-average period of

1.4

years. Unrecognized compensation costs related to unvested restricted stock units was

$16,463,

which is expected to be recognized over a weighted-average period of

1.5

years.

Stock Option Activity

The stock option activity for the 

six

months ended

June 3, 2017

is presented below:

				Average
	Options			Exercise Price
Outstanding at December 3, 2016		2,986,481		$	34.92
Granted		717,596			50.04
Exercised		(407,288	)		34.19
Forfeited or cancelled		(74,113	)		36.84
Outstanding at June 3, 2017		3,222,676		$	38.34

The total fair value of options granted during the quarter ended

June 3, 2017

and

May 28, 2016

were

$373

and

$324,

respectively. Total intrinsic value of options exercised during the

second

quarter ended

June 3, 2017

and

May 28, 2016

were

$2,204

and

$7,265,

respectively. 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. The total fair value of options granted during the

six

months ended

June 3, 2017

and

May 28, 2016

were

$7,757

and

$6,462,

respectively. Total intrinsic value of options exercised during the

six

months ended

June 3, 2017

and

May 28, 2016

were

$6,624

and

$7,276,

respectively.

Proceeds received from option exercises during the

second

quarter ended

June 3, 2017

and

May 28, 2016

was

$5,377

and

$7,051,

respectively, and

$13,926

and

$7,083

during the

six

months ended

June 3, 2017

and

May 28, 2016.

Restricted Stock Activity

The nonvested restricted stock activity for the quarter ended

June 3, 2017

is presented below:

												Weighted-
										Weighted-		Average
										Average		Remaining
										Grant		Contractual
										Date Fair		Life
	Units			Shares			Total			Value		(in Years)
Nonvested at December 3, 2016		352,744			36,953			389,697		$	38.36		1.0
Granted		281,507			-			281,507			51.31		1.7
Vested		(149,095	)		(36,953	)		(186,048	)		39.79		-
Forfeited		(17,400	)		-			(17,400	)		37.86		1.5
Nonvested at June 3, 2017		467,756			-			467,756		$	44.68		1.5

Total fair value of restricted stock vested during the

second

quarter ended

June 3, 2017

and

May 28, 2016

was

$432

and

$179,

respectively. Total fair value of restricted stock vested during the

six

months ended

June 3, 2017

and

May 28, 2016

was

$7,402

and

$6,012,

respectively. The total fair value of nonvested restricted stock at

June 3, 2017

was

$21,214.

We repurchased

3,122

and

1,106

restricted stock shares during the

second

quarter ended

June 3, 2017

and

May 28, 2016,

respectively. We repurchased

53,809

and

67,533

restricted stock shares during the

six

month ended

June 3, 2017

and

May 28, 2016,

respectively. The repurchases relate to statutory minimum tax withholding.

Deferred Compensation Activity

We have a Directors’ Deferred Compensation plan that allows non-employee directors to defer all or a portion of their directors’ compensation in a number of investment choices, including units representing shares of our common stock. We also have a Key Employee Deferred Compensation Plan that allows key employees to defer a portion of their eligible compensation in a number of investment choices, including units, representing shares of our common stock. We provide a

10

percent match on deferred compensation invested into units, representing shares of our common stock. The deferred compensation units activity for the 

six

months ended

June 3, 2017

is presented below:

	Non-employee
	Directors			Employees			Total
Units outstanding December 3, 2016		424,319			41,116			465,435
Participant contributions		8,373			4,582			12,955
Company match contributions		837			458			1,295
Payouts		(14,143	)		(7,712	)		(21,855	)
Units outstanding June 3, 2017		419,386			38,444			457,830

Deferred compensation units are fully vested at the date of contribution.

XML

Note 9 - Components of Net Periodic Cost (Benefit) Related to Pension and Other Postretirement Benefit Plans

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

Note

9:

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

	Three Months Ended June 3, 2017 and May 28, 2016
													Other
	Pension Benefits												Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
Net periodic cost (benefit):	2017			2016			2017			2016			2017			2016
Service cost	$	28		$	27		$	512		$	481		$	52		$	84
Interest cost		3,603			3,768			1,147			1,366			398			480
Expected return on assets		(6,364	)		(6,077	)		(2,400	)		(2,483	)		(1,447	)		(1,342	)
Amortization:
Prior service cost		7			7			(1	)		(1	)		-			(10	)
Actuarial loss		1,307			1,293			846			753			253			532
Net periodic (benefit) cost	$	(1,419	)	$	(982	)	$	104		$	116		$	(744	)	$	(256	)

	Six Months Ended June 3, 2017 and May 28, 2016
													Other
	Pension Benefits												Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
Net periodic cost (benefit):	2017			2016			2017			2016			2017			2016
Service cost	$	56		$	54		$	1,020		$	961		$	104		$	168
Interest cost		7,206			7,535			2,291			2,733			796			960
Expected return on assets		(12,728	)		(12,154	)		(4,791	)		(4,965	)		(2,894	)		(2,684	)
Amortization:
Prior service cost		14			14			(2	)		(2	)		-			(20	)
Actuarial loss		2,614			2,586			1,688			1,505			506			1,064
Net periodic (benefit) cost	$	(2,838	)	$	(1,965	)	$	206		$	232		$	(1,488	)	$	(512	)

XML

Note 10 - Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Accumulated Other Comprehensive Income (Loss) Disclosure [Text Block]

Note

10:

Accumulated Other Comprehensive Income (Loss)

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

	Three Months Ended June 3, 2017												Three Months Ended May 28, 2016
	H.B. Fuller Stockholders									Non- controlling Interests			H.B. Fuller Stockholders									Non- controlling Interests
	Pre-tax			Tax			Net			Net			Pre-tax			Tax			Net			Net
Net income including non-controlling interests		-			-		$	25,867		$	(3	)		-			-		$	33,331		$	59
Foreign currency translation adjustment¹	$	18,507			-			18,507			6		$	1,437			-			1,437			5
Reclassification to earnings:
Defined benefit pension plans adjustment²		2,412		$	(819	)		1,593			-			1,173		$	(483	)		690			-
Interest rate swap³		16			(6)			10			-			16			(6	)		10			-
Cash-flow hedges³		(37	)		14			(23	)		-			(711	)		271			(440	)		-
Other comprehensive income (loss)	$	20,898		$	(811	)		20,087			6		$	1,915		$	(218	)		1,697			5
Comprehensive income (loss)							$	45,954		$	3								$	35,028		$	64

	Six Months Ended June 3, 2017									Six Months Ended May 28, 2016
	H.B. Fuller Stockholders							Non- controlling Interests		H.B. Fuller Stockholders									Non- controlling Interests
	Pretax		Tax			Net		Net		Pretax			Tax			Net			Net
Net income including non-controlling interests		-		-		$	40,662	$	33		-			-		$	52,249		$	108
Foreign currency translation adjustment¹	$	7,993		-			7,993		1	$	492			-			492			-
Reclassification to earnings:
Defined benefit pension plans adjustment²		4,820	$	(1,637	)		3,183		-		5,170		$	(1,815	)		3,355			-
Interest rate swap³		32		(12	)		20		-		29			(9	)		20			-
Cash-flow hedges³		171		(65	)		106		-		(308	)		117			(191	)		-
Other comprehensive income (loss)	$	13,016	$	(1,714	)		11,302		1	$	5,383		$	(1,707	)		3,676			-
Comprehensive income (loss)						$	51,964	$	34							$	55,925		$	108

¹

Income taxes are

not

provided for foreign currency translation relating to permanent investments in international subsidiaries. As discussed in Note

1,

the foreign currency translation adjustment for the

six

months ended

June 3, 2017

includes the impact of the change in functional currency for our subsidiaries in Latin America.

²

Loss reclassified from accumulated other comprehensive income ("AOCI") into earnings as part of net periodic cost related to pension and other postretirement benefit plans is reported in cost of sales, SG&A expense and special charges, net.

³

Loss reclassified from AOCI into earnings is reported in other income (expense), net.

The components of accumulated other comprehensive loss is as follows:

	June 3, 2017
	Total			H.B. Fuller Stockholders			Non-controlling Interests
Foreign currency translation adjustment	$	(77,453	)	$	(77,388	)	$	(65	)
Defined benefit pension plans adjustment, net of taxes of $89,097		(172,918	)		(172,918	)		-
Interest rate swap, net of taxes of ($30)		48			48			-
Cash-flow hedges, net of taxes of $720		(1,169	)		(1,169	)		-
Accumulated other comprehensive loss	$	(251,492	)	$	(251,427	)	$	(65	)

	December 3, 2016
	Total			H.B. Fuller Stockholders			Non-controlling Interests
Foreign currency translation adjustment	$	(85,447	)	$	(85,381	)	$	(66	)
Defined benefit pension plans adjustment, net of taxes of $90,734		(176,101	)		(176,101	)		-
Interest rate swap, net of taxes of ($17)		28			28			-
Cash-flow hedges, net of taxes of $785		(1,275	)		(1,275	)		-
Accumulated other comprehensive loss	$	(262,795	)	$	(262,729	)	$	(66	)

XML

Note 11 - Income Taxes

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

11

: Income Taxes

As of

June 3, 2017,

we had a liability of

$4,508

recorded under FASB ASC

740,

Income Taxes,

for gross unrecognized tax benefits (excluding interest), compared to

$4,165

as of

December 3, 2016.

As of

June 3, 2017,

we had accrued

$717

of gross interest relating to unrecognized tax benefits. For the quarter ended

June 3, 2017,

our recorded liability for gross unrecognized tax benefits increased by

$154.

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Note 12 - Earnings Per Share

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

Note

12:

Earnings Per Share

A reconciliation of the common share components for the basic and diluted earnings per share calculations is as follows:

	Three Months Ended				Six Months Ended
	June 3,		May 28,		June 3,		May 28,
(Shares in thousands)	2017		2016		2017		2016
Weighted-average common shares - basic		50,496		50,145		50,369		50,052
Equivalent shares from share-based compensations plans		1,190		1,108		1,204		1,072
Weighted-average common and common equivalent shares - diluted		51,686		51,253		51,573		51,124

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 shares, which computes total employee proceeds as the sum of (a) the amount the employee must pay upon exercise of the award, (b) the amount of unearned share-based compensation costs attributed to future services and (c) the amount of tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of the award. 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.

Options to purchase

6,857

and

406,028

shares of common stock at a weighted-average exercise price of

$52.75

and

$48.59

for the quarters ended

June 3, 2017

and

May 28, 2016,

respectively, were excluded from the diluted earnings per share calculations because they were antidilutive. Options to purchase

132,560

and

950,516

shares of common stock at a weighted-average exercise price of

$50.17

and

$44.10

for the

six

months ended

June 3, 2017

and

May 28, 2016,

respectively, were excluded from the diluted earnings per share calculations because they were antidilutive.

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Note 13 - Financial Instruments

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note

13:

Financial Instruments

Overview

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

We use foreign currency forward contracts, cross-currency swaps, and interest rate swaps to manage risks associated with foreign currency exchange rates and interest rates. We do

not

hold derivative financial instruments of a speculative nature or for trading purposes. We record derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the statement of cash flows in the same category as the cash flows from the items subject to the designated hedge or undesignated (economic) hedge relationship. 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 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

Effective

February 24, 2017,

we entered into a cross-currency swap agreement to convert a notional amount of

$42,600

of foreign currency denominated intercompany loans into U.S. dollars. The swap matures in

2020.

Effective

October 7, 2015,

we entered into

three

cross-currency swap agreements to convert a notional amount of

$134,736

of foreign currency denominated intercompany loans into U.S. dollars. The

first

swap matures in

2017,

the

second

swap matures in

2018

and the

third

swap matures in

2019.

As of

June 3, 2017,

the combined fair value of the swaps was a liability of

$5,054

and was included in other liabilities in the Condensed Consolidated Balance Sheets. The swaps were designated as cash-flow hedges for accounting treatment. The lesser amount between the cumulative change in the fair value of the actual swaps and the cumulative change in the fair value of hypothetical swaps is recorded in accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets. The difference between the cumulative change in the fair value of the actual swaps and the cumulative change in the fair value of hypothetical swaps are recorded as other income (expense), net in the Condensed Consolidated Statements of Income. In a perfectly effective hedge relationship, the

two

fair value calculations would exactly offset each other. Any difference in the calculation represents hedge ineffectiveness. The ineffectiveness calculations as of

June 3, 2017

resulted in additional pre-tax gain of

$7

for the

six

months ended

June 3, 2017

as the change in fair value of the cross-currency swaps was more than the change in the fair value of the hypothetical swaps. The amount in accumulated other comprehensive income (loss) related to cross-currency swaps was a loss of

$1,169

as of

June 3, 2017.

The estimated net amount of the existing loss that is reported in accumulated other comprehensive income (loss) as of

June 3, 2017

that is expected to be reclassified into earnings within the next

twelve

months is

$719.

As of

June 3, 2017,

we do

not

believe any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will

not

occur.

 The following table summarizes the cross-currency swaps outstanding as of

June 3, 2017:

	Fiscal Year of Expiration	Interest Rate			Notional Value		Fair Value
Pay EUR	2017		3.05	%	$	44,912	$	(378	)
Receive USD			3.9145	%
Pay EUR	2018		3.45	%	$	44,912	$	(847	)
Receive USD			4.5374	%
Pay EUR	2019		3.80	%	$	44,912	$	(1,248	)
Receive USD			5.0530	%
Pay EUR	2020		1.95	%	$	42,600	$	(2,581	)
Receive USD			4.30375	%
Total					$	177,336	$	(5,054	)

Except for the cross-currency swap agreements listed above, foreign currency derivative instruments outstanding are

not

designated as hedges for accounting purposes. The gains and losses related to mark-to-market adjustments are recognized as other income or expense in the Condensed Consolidated Statements of Income during the periods in which the derivative instruments are outstanding. See Note

14

for the fair value amounts of these derivative instruments.

As of

June 3, 2017,

we had forward foreign currency contracts maturing between

June 15, 2017

and

April 13, 2018.

The mark-to-market effect associated with these contracts, on a net basis, was a gain of

$328

as of

June 3, 2017.

These gains were largely offset by the underlying transaction gains and losses resulting from the foreign currency exposures for which these contracts relate.

Fair Value Hedges

During the

second

quarter ended

June 3, 2017,

we entered into interest rate swap agreements to convert

$125,000

of our Series E private placement to variable interest rates of

1

-month LIBOR (in arrears) plus

2.22

percent. The combined fair value of the interest rate swaps in total was an asset of

$993

at

June 3, 2017

and was included in other assets in the Condensed Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. We are applying the shortcut method in accounting for these interest rate swaps as we expect that the changes in the fair value of the swap will offset the changes in the fair value of the

5.61%

Notes resulting in

no

ineffectiveness. As a result of applying the shortcut method, the change in the fair value of the interest rate swap and an equivalent amount for the change in the fair value of the debt will be reflected in other income (expense), net and

no

ineffectiveness will be recognized in our Condensed Consolidated Statements of Income.

We entered into interest rate swap agreements to convert

$150,000

of our

$300,000

4.000%

Notes that were issued on

February 14, 2017

to a variable interest rate of

1

-month LIBOR (in advance) plus

1.86

percent. See Note

6

for further discussion on the issuance of our

4.000%

Notes. The combined fair value of the interest rate swaps in total was an asset of

$1,007

at

June 3, 2017

and was included in other assets in the Condensed Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. We are applying the shortcut method in accounting for these interest rate swaps as we expect that the changes in the fair value of the swap will offset the changes in the fair value of the

4.000%

Notes resulting in

no

ineffectiveness. As a result of applying the shortcut method, the change in the fair value of the interest rate swap and an equivalent amount for the change in the fair value of the debt will be reflected in other income (expense), net and

no

ineffectiveness will be recognized in our Condensed Consolidated Statements of Income.

We entered into interest rate swap agreements to convert

$75,000

of our senior notes that were issued in

November 2009

to variable interest rates. At

June 3, 2017,

one

swap remains in place to convert

$25,000

of our

5.61%

senior notes issued on

December 16, 2009

to a variable interest rate of

6

-month LIBOR (in arrears) plus

1.78

percent. The change in fair value of the senior notes, attributable to the change in the risk being hedged, was a liability of

$1,160

at

June 3, 2017

and was included in long-term debt and current maturities of long-term debt in the Condensed Consolidated Balance Sheets. The combined fair value of the swaps in total was an asset of

$1,224

at

June 3, 2017

and

$1,579

at

December 3, 2016

and were included in other assets in the Condensed Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. The changes in the fair value of the swap and the fair value of the senior notes attributable to the change in the risk being hedged are recorded as other income (expense), net in the Condensed Consolidated Statements of Income. In a perfectly effective hedge relationship, the

two

fair value calculations would exactly offset each other. Any difference in the calculation represents hedge ineffectiveness. For the

six

months ended

June 3, 2017

and

May 28, 2016,

a pre-tax loss of

$91

and

$48,

respectively, was recorded as the fair value of the Senior Notes decreased by more than the fair value of the interest rate swap attributable to the change in the risk being hedged.

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

June 3, 2017,

there were

no

significant concentrations of credit risk.

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Note 14 - Fair Value Measurements

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note

14:

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

June 3, 2017

and

December 3, 2016,

and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

	June 3,		Fair Value Measurements Using:
Description	2017		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,763	$	2,763	$	-	$	-
Foreign exchange contract assets		2,359		-		2,359		-
Interest rate swaps		3,224		-		3,224		-
Liabilities:
Foreign exchange contract liabilities	$	2,031	$	-	$	2,031	$	-
Contingent consideration liability		1,082		-		-		1,082
Cash-flow hedges		5,054		-		5,054		-

	December 3,		Fair Value Measurements Using:
Description	2016		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	1,020	$	1,020	$	-	$	-
Foreign exchange contract assets		11,697		-		11,697		-
Interest rate swaps		1,579		-		1,579		-
Cash-flow hedges		4,654		-		4,654		-
Liabilities:
Foreign exchange contract liabilities	$	6,925	$	-	$	6,925	$	-
Contingent consideration liability		4,720		-		-		4,720

Long-term debt had an estimated fair value of

$791,936

and

$693,283

as of

June 3, 2017

and

December 3, 2016,

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.

We use the income approach in calculating the fair value of our contingent consideration liability using a real option model with Level

3

inputs. The expected cash flows are affected by various significant judgments and assumptions, including revenue growth rates, profit margin percentages, volatility and discount rate, which are sensitive to change. Estimates of fair value are inherently uncertain and represent only management’s reasonable expectation regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will, in all likelihood, differ in some respects from actual future results. The contingent consideration liability activity for the 

six

months ended

June 3, 2017

is presented below:

	Amount
Balance at December 3, 2016	$	4,720
Mark to market adjustment		(3,603	)
Foreign currency translation adjustment		(35	)
Balance at June 3, 2017	$	1,082

Subsequent to the

second

quarter of

2017,

we entered into an agreement to modify the terms of the earnout calculation associated with the contingent consideration liability. This modification results in an increase to the contingent consideration liability by approximately

$1,100

based on assumptions utilized for the

second

quarter

2017

valuation.

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Note 15 - Share Repurchase Program

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note

15

: Share Repurchase Program

On

April 6, 2017,

the Board of Directors authorized a share repurchase program of up to

$200,000

of our outstanding common shares for a period up to

five

years. Under the program, we are authorized to repurchase shares for cash on the open market, from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. The timing of such repurchases is dependent on price, market conditions and applicable regulatory requirements. Upon repurchase of the shares, we reduce our common stock for the par value of the shares with the excess being applied against additional paid-in capital. This authorization replaces the

September 30, 2010

authorization to repurchase shares. During

six

months ended

June 3, 2017,

no

shares were repurchased shares under the

April 6, 2017

program.

During the

six

months ended

June 3, 2017,

we repurchased shares under the

September 30, 2010

program with an aggregate value of

$6,284.

Of this amount,

$125

reduced common stock and

$6

,

159

reduced additional paid-in capital. During the

six

months ended

May 28, 2016,

we repurchased shares with an aggregate value of

$4,210.

Of this amount,

$125

reduced common stock and

$4,085

reduced additional paid-in capital.

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Note 16 - Commitments and Contingencies

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

16

: 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 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 a financial provision. 

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

30

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:

	Six Months Ended				3 Years Ended
	June 3, 2017		May 28, 2016		December 3, 2016
Lawsuits and claims settled		7		4		33
Settlement amounts	$	1,423	$	343	$	3,061
Insurance payments received or expected to be received	$	1,132	$	251	$	2,253

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.  

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Note 17 - Operating Segments

6 Months Ended

Jun. 03, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

17

: Operating 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. For segment evaluation by the chief operating decision maker, segment operating income is identified as gross profit less SG&A expenses. Segment operating income excludes special charges, net. Corporate expenses are fully allocated to each operating segment. Corporate assets are

not

allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs. Operating results of each segment are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance.

The table below provides certain information regarding net revenue and segment operating income for each of our operating segments:

	Three Months Ended
	June 3, 2017							May 28, 2016
			Inter-		Segment					Inter-		Segment
	Trade		Segment		Operating			Trade		Segment		Operating
	Revenue		Revenue		Income (Loss)			Revenue		Revenue		Income
Americas Adhesives	$	229,622	$	4,048	$	26,455		$	206,147	$	4,095	$	35,884
EIMEA		135,226		4,452		8,083			139,897		4,494		11,027
Asia Pacific		64,466		1,416		4,751			60,119		1,309		3,036
Construction Products		63,754		-		(1,853	)		67,634		51		2,534
Engineering Adhesives		68,583		-		5,832			58,717		-		2,091
Total	$	561,651			$	43,268		$	532,514			$	54,572

	Six Months Ended
	June 3, 2017							May 28, 2016
			Inter-		Segment					Inter-		Segment
	Trade		Segment		Operating			Trade		Segment		Operating
	Revenue		Revenue		Income			Revenue		Revenue		Income
Americas Adhesives	$	422,784	$	7,857	$	47,488		$	389,466	$	7,725	$	62,143
EIMEA		259,265		7,899		9,880			264,188		9,765		17,190
Asia Pacific		127,112		2,503		6,630			113,979		2,261		6,789
Construction Products		120,800		-		(2,536	)		127,708		155		3,319
Engineering Adhesives		135,013		-		7,887			111,499		-		2,969
Total	$	1,064,974			$	69,349		$	1,006,840			$	92,410

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

	Three Months Ended						Six Months Ended
	June 3,			May 28,			June 3,			May 28,
	2017			2016			2017			2016
Segment operating income	$	43,268		$	54,572		$	69,349		$	92,410
Special charges, net		-			(370	)		-			(783	)
Other income (expense), net		(110	)		(1,565	)		511			(6,647	)
Interest expense		(8,148	)		(6,597	)		(16,528	)		(12,905	)
Income before income taxes and income from equity method investments	$	35,010		$	46,040		$	53,332		$	72,075

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 03, 2017

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

The accompanying unaudited interim Condensed Consolidated Financial Statements of H.B. Fuller Company and Subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

Accordingly, they do

not

include all of the information necessary for a fair presentation of results of operations, comprehensive income, financial position, and cash flows in conformity with U.S. generally accepted accounting principles. In our opinion, the unaudited interim Condensed Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary for the fair presentation of the results for the periods presented. Operating results for interim periods are

not

necessarily indicative of results that

may

be expected for the fiscal year as a whole.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from these estimates. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form

10

-K for the year ended

December 3, 2016

as filed with the Securities and Exchange Commission.

On

December 4, 2016,

for our subsidiaries in Latin America, we changed the functional currency from the U.S. dollar to the entity’s local currency based on management’s analysis of the changes of the economic facts and circumstances in which these subsidiaries operate. The change in functional currency is accounted for prospectively from

December 4, 2016

and financial statements prior to and including the

six

months ended

May 28, 2016

and the year ended

December 3, 2016

have

not

been restated for the change in functional currency. Monetary assets and liabilities have been remeasured to the U.S. dollar at current exchange rates. Non-monetary assets (property, plant and equipment, net; goodwill; and intangible assets, net)

have been remeasured to reflect the difference between the exchange rate when the asset arose and the exchange rate on the date of the change in functional currency. As a result of this change in functional currency, we recorded an 

$11,317

 cumulative translation adjustment included in other comprehensive loss for the

six

months ended

June 3, 2017.

New Accounting Pronouncements

In

May 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2017

-

10,

Compensation—Stock Compensation (Topic

718

): Scope of Modification Accounting

. The ASU was issued to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018

with early adoption permitted. We will apply this guidance to applicable transactions after the adoption date.

In

March 2017,

the FASB issued ASU

No.

2017

-

07,

 

Compensation—Retirement Benefits (Topic

715

): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,

which requires employers to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses. The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. The ASU also stipulates that only the service cost component of net benefit cost is eligible for capitalization.  Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018

with early adoption permitted.  We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

February 2017,

the FASB issued ASU

No.

2017

-

05,

 

Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic

610

-

20

): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.

 The ASU was issued to clarify the scope of the previous standard and to add guidance for partial sales of nonfinancial assets. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018. 

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

January 2017,

the FASB issued ASU

No.

2017

-

04,

 

Intangibles—Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment,

which removes Step

2

of the goodwill impairment test.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value,

not

to exceed the carrying amount of goodwill.  Our effective date for prospective adoption of this guidance is our fiscal year beginning

November 29, 2020

with early adoption permitted. We will apply this guidance to applicable impairment tests after the adoption date.

In

January 2017,

the FASB issued ASU

No.

2017

-

01,

Business Combinations (Topic

805

): Clarifying the Definition of a Business. 

This ASU clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.  Our effective date for prospective adoption of this guidance is our fiscal year beginning

December 2, 2018.

We will apply this guidance to applicable transactions after the adoption date.

In

November 2016,

the FASB issued ASU

No.

2016

-

18,

Statement of Cash Flows (Topic

230

): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).

This ASU requires that the reconciliation of the beginning-of-period and end-of-period amounts shown in the statement of cash flows include cash and restricted cash equivalents. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018.

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

October 2016,

the FASB issued ASU

No.

2016

-

17,

Consolidation (Topic

810

): Interests Held through Related Parties That Are under Common Control.

This ASU changes how a decision maker treats indirect interests in a managed variable interest entity held through an entity under common control in its primary beneficiary (consolidation) analysis. Our effective date for adoption of this guidance is our fiscal year beginning

December 3, 2017.

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

October 2016,

the FASB issued ASU

No.

2016

-

16,

Income Taxes (Topic

740

): Intra-Entity Transfers of Assets Other Than Inventory.

This ASU changes the timing of income tax recognition for an intercompany sale of assets. The ASU requires the seller’s tax effects and the buyer’s deferred taxes to be recognized immediately upon the sale instead of deferring accounting for the income tax implications until the assets are sold to a

third

party or recovered through use. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018.

We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

August 2016,

the FASB issued ASU

No.

2016

-

15,

Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).

This ASU requires changes in the presentation of certain items including but

not

limited to debt prepayment or debt extinguishment costs; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies and distributions received from equity method investees. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018.

We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

June 2016,

the FASB ASU

No.

2016

-

13

, Financial Instruments - Credit Losses (Topic

326

), Measurement of Credit Losses on Financial Statements.

This ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Our effective date for adoption of this guidance is our fiscal year beginning

November 29, 2020.

We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

Compensation - Stock Compensation (Topic

718

), Improvements to Employee Share-Based Payment Accounting.

This ASU provides simplification in the accounting for share-based payment transactions including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification in the statement of cash flows.

Our effective date for adoption of this guidance is our fiscal year beginning

December 3, 2017.

We are currently evaluating the effect that this guidance will have on our Consolidated Financial Statements.

In

March 2016,

the FASB issued ASU

No.

2016

-

08,

Revenue from Contracts with Customers (Topic

606

), Principal versus Agent Considerations (Reporting Revenue Gross versus Net)

.  This ASU provides guidance on recording revenue on a gross basis versus a net basis based on the determination of whether an entity is a principal or an agent when another party is involved in providing goods or services to a customer.  The amendments in this ASU affect the guidance in ASU

No.

2014

-

09

and are effective in the same timeframe as ASU

No.

2014

-

09

as discussed below.

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

Leases (Subtopic

842

).

This guidance changes accounting for leases and requires lessees to recognize the assets and liabilities arising from all leases, including those classified as operating leases under previous accounting guidance, on the balance sheet and requires disclosure of key information about leasing arrangements to increase transparency and comparability among organizations. Our effective date for adoption of this guidance is our fiscal year beginning

December 1, 2019

with early adoption permitted. The new guidance must be adopted using a modified retrospective transition approach, and provides for certain practical expedients. We are currently evaluating the impact that the new guidance will have on our Consolidated Financial Statements.

In

January 2016,

the FASB issued ASU

No.

2016

-

01,

 

Financial Instruments - Overall (Subtopic

825

-

10

): Recognition and Measurement of Financial Assets and Financial Liabilities

, which requires that equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) are to be measured at fair value with changes in fair value recognized in net income. However, an entity

may

choose to measure equity investments that do

not

have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Furthermore, equity investments without readily determinable fair values are to be assessed for impairment using a quantitative approach.

Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018.

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

July 2015,

the FASB issued ASU

No.

2015

-

11,

 

Inventory (Topic

330

): Simplifying the Measurement of

Inventory

, which requires a company to measure inventory within the scope of this guidance (inventory measured using

first

-in,

first

-out (FIFO) or average cost) at the lower of cost and net realizable value methods. Subsequent measurement is unchanged for inventory measured using the last-in,

first

-out (LIFO) or retail inventory method. Our effective date for adoption of this guidance is our fiscal year beginning

December 3, 2017.

We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and related disclosures and determined it will

not

have a material impact.

In

May 2014,

the FASB issued ASU

No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606

),

which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for fiscal years and interim periods beginning after

December 15, 2017 (

as stated in ASU

No.

2015

-

14

which defers the effective date and was issued in

August 2015)

and is now effective for our fiscal year beginning

December 2, 2018.

Early application as of the original effective date is permitted under ASU

2015

-

14.

The standard permits the use of either the retrospective or cumulative effect transition method.

We are continuing to evaluate the effect this guidance will have on our Consolidated Financial Statements, including potential impacts on the timing of revenue recognition and additional information that

may

be necessary for expanded disclosures regarding revenue.

We have identified an implementation project team and related oversight processes and have commenced the assessment phase of the project. We have

not

concluded as to whether the new guidance will be adopted on a full or modified retrospective basis, but will

not

apply the early adoption provisions of the new guidance.

XML

Note 2 - Acquisitions (Tables)

6 Months Ended

Jun. 03, 2017

Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member]

Notes Tables

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

	Amount
Current assets	$	5,704
Property, plant and equipment		594
Goodwill		102
Other intangibles
Customer relationships		7,575
Trademarks/trade names		146
Current liabilities		(2,671	)
Long-term liabilities		(1,085	)
Total purchase price	$	10,365

Cyberbond LLC [Member]

Notes Tables

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

	Amount
Current assets	$	4,425
Property, plant and equipment		2,038
Goodwill		23,654
Other intangibles
Developed technology		2,000
Customer relationships		14,400
Trademarks/trade names		700
Other assets		161
Current liabilities		(1,889	)
Long-term liabilities		(3,307	)
Total purchase price	$	42,182

H. E. Wisdom & Sons, Inc. and Wisdom Adhesives Southeast, LLC [Member]

Notes Tables

Schedule of Business Acquisitions, by Acquisition [Table Text Block]

	Amount
Current assets	$	13,741
Property, plant and equipment		10,516
Goodwill		60,557
Other intangibles
Customer relationships		33,300
Trademarks/trade names		13,600
Current liabilities		(8,409	)
Total purchase price	$	123,305

XML

Note 3 - Restructuring Actions (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Restructuring and Related Costs [Table Text Block]

	Three Months Ended		Six Months Ended
	June 3, 2017		June 3, 2017
Cost of sales	$	5,252	$	8,899
Selling, general and administrative		382		6,903
	$	5,634	$	15,802

Schedule of Restructuring Charges by Segment [Table Text Block]

	Three Months Ended		Six Months Ended
	June 3, 2017		June 3, 2017
Americas Adhesives	$	39	$	1,765
EIMEA		1,266		6,055
Asia Pacific		35		1,887
Construction Products		4,209		5,458
Engineering Adhesives		85		637
	$	5,634	$	15,802

Schedule of Restructuring Reserve by Type of Cost [Table Text Block]

	Employee- Related			Asset-Related			Other			Total
Balance at December 3, 2016	$	-		$	-		$	-		$	-
Expenses incurred		9,898			5,094			810			15,802
Non-cash charges		-			(4,291	)		-			(4,291	)
Cash payments		(5,810	)		(803	)		(505	)		(7,118	)
Foreign currency translation		261			-			-			261
Balance at June 3, 2017	$	4,349		$	-		$	305		$	4,654

XML

Note 4 - Inventories (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 3,			December 3,
	2017			2016
Raw materials	$	149,629		$	116,200
Finished goods		165,028			142,397
LIFO reserve		(12,321	)		(11,198	)
Total inventories	$	302,336		$	247,399

XML

Note 5 - Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block]

	June 3, 2017
Amortizable Intangible Assets	Purchased Technology & Patents			Customer Relationships			All Other			Total
Original cost	$	70,651		$	289,181		$	65,350		$	425,182
Accumulated amortization		(29,189	)		(123,054	)		(34,092	)		(186,335	)
Net identifiable intangibles	$	41,462		$	166,127		$	31,258		$	238,847

	December 3, 2016
Amortizable Intangible Assets	Purchased Technology & Patents			Customer Relationships			All Other			Total
Original cost	$	70,504		$	251,329		$	51,116		$	372,949
Accumulated amortization		(21,448	)		(116,411	)		(30,198	)		(168,057	)
Net identifiable intangibles	$	49,056		$	134,918		$	20,918		$	204,892

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

	Remainder of
Fiscal Year	2017		2018		2019		2020		2021		Thereafter
Amortization Expense	$	16,751	$	32,398	$	30,224	$	27,843	$	26,372	$	105,259

Operating Segments [Member]

Notes Tables

Schedule of Goodwill [Table Text Block]

	Americas					Asia		Construction		Engineering
	Adhesives			EIMEA		Pacific		Products		Adhesives		Total
Balance at December 3, 2016	$	59,821		$	98,876	$	17,481	$	21,901	$	168,169	$	366,248
Acquisitions		60,557	1		-		-		-		-		60,557
Currency impact		(646	)		4,844		339		22		2,846		7,405
Balance at June 3, 2017	$	119,732		$	103,720	$	17,820	$	21,923	$	171,015	$	434,210

XML

Note 7 - Redeemable Non-controlling Interest (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Redeemable Noncontrolling Interest [Table Text Block]

	Redeemable
	Non-Controlling
	Interest
Balance at December 3, 2016	$	4,277
Net income attributed to redeemable non-controlling interest		39
Purchase of redeemable non-controlling interest		(4,468	)
Foreign currency translation adjustment		152
Balance at June 3, 2017	$	-

XML

Note 8 - Accounting for Share-based Compensation (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value [Table Text Block]

	Three Months Ended								Six Months Ended
	June 3, 2017				May 28, 2016				June 3, 2017				May 28, 2016
Expected life (in years)			4.75				4.75				4.75				4.75
Weighted-average expected volatility			24.32%				28.55%				24.85%				29.01%
Expected volatility		24.31%	-	24.33%		28.00%	-	29.20%		24.31%	-	24.88%		28.00%	-	29.23%
Risk-free interest rate			1.81%				1.25%				1.89%				1.43%
Expected dividend yield			1.11%				1.27%				1.12%				1.55%
Weighted-average fair value of grants			$10.90				$9.81				$10.81				$7.72

Share-based Compensation, Stock Options, Activity [Table Text Block]

				Average
	Options			Exercise Price
Outstanding at December 3, 2016		2,986,481		$	34.92
Granted		717,596			50.04
Exercised		(407,288	)		34.19
Forfeited or cancelled		(74,113	)		36.84
Outstanding at June 3, 2017		3,222,676		$	38.34

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

												Weighted-
										Weighted-		Average
										Average		Remaining
										Grant		Contractual
										Date Fair		Life
	Units			Shares			Total			Value		(in Years)
Nonvested at December 3, 2016		352,744			36,953			389,697		$	38.36		1.0
Granted		281,507			-			281,507			51.31		1.7
Vested		(149,095	)		(36,953	)		(186,048	)		39.79		-
Forfeited		(17,400	)		-			(17,400	)		37.86		1.5
Nonvested at June 3, 2017		467,756			-			467,756		$	44.68		1.5

Schedule of Deferred Compensation Arrangement with Individual, Share-based Payments [Table Text Block]

	Non-employee
	Directors			Employees			Total
Units outstanding December 3, 2016		424,319			41,116			465,435
Participant contributions		8,373			4,582			12,955
Company match contributions		837			458			1,295
Payouts		(14,143	)		(7,712	)		(21,855	)
Units outstanding June 3, 2017		419,386			38,444			457,830

XML

Note 9 - Components of Net Periodic Cost (Benefit) Related to Pension and Other Postretirement Benefit Plans (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Schedule of Net Benefit Costs [Table Text Block]

	Three Months Ended June 3, 2017 and May 28, 2016
													Other
	Pension Benefits												Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
Net periodic cost (benefit):	2017			2016			2017			2016			2017			2016
Service cost	$	28		$	27		$	512		$	481		$	52		$	84
Interest cost		3,603			3,768			1,147			1,366			398			480
Expected return on assets		(6,364	)		(6,077	)		(2,400	)		(2,483	)		(1,447	)		(1,342	)
Amortization:
Prior service cost		7			7			(1	)		(1	)		-			(10	)
Actuarial loss		1,307			1,293			846			753			253			532
Net periodic (benefit) cost	$	(1,419	)	$	(982	)	$	104		$	116		$	(744	)	$	(256	)

	Six Months Ended June 3, 2017 and May 28, 2016
													Other
	Pension Benefits												Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
Net periodic cost (benefit):	2017			2016			2017			2016			2017			2016
Service cost	$	56		$	54		$	1,020		$	961		$	104		$	168
Interest cost		7,206			7,535			2,291			2,733			796			960
Expected return on assets		(12,728	)		(12,154	)		(4,791	)		(4,965	)		(2,894	)		(2,684	)
Amortization:
Prior service cost		14			14			(2	)		(2	)		-			(20	)
Actuarial loss		2,614			2,586			1,688			1,505			506			1,064
Net periodic (benefit) cost	$	(2,838	)	$	(1,965	)	$	206		$	232		$	(1,488	)	$	(512	)

XML

Note 10 - Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended June 3, 2017												Three Months Ended May 28, 2016
	H.B. Fuller Stockholders									Non- controlling Interests			H.B. Fuller Stockholders									Non- controlling Interests
	Pre-tax			Tax			Net			Net			Pre-tax			Tax			Net			Net
Net income including non-controlling interests		-			-		$	25,867		$	(3	)		-			-		$	33,331		$	59
Foreign currency translation adjustment¹	$	18,507			-			18,507			6		$	1,437			-			1,437			5
Reclassification to earnings:
Defined benefit pension plans adjustment²		2,412		$	(819	)		1,593			-			1,173		$	(483	)		690			-
Interest rate swap³		16			(6)			10			-			16			(6	)		10			-
Cash-flow hedges³		(37	)		14			(23	)		-			(711	)		271			(440	)		-
Other comprehensive income (loss)	$	20,898		$	(811	)		20,087			6		$	1,915		$	(218	)		1,697			5
Comprehensive income (loss)							$	45,954		$	3								$	35,028		$	64

	Six Months Ended June 3, 2017									Six Months Ended May 28, 2016
	H.B. Fuller Stockholders							Non- controlling Interests		H.B. Fuller Stockholders									Non- controlling Interests
	Pretax		Tax			Net		Net		Pretax			Tax			Net			Net
Net income including non-controlling interests		-		-		$	40,662	$	33		-			-		$	52,249		$	108
Foreign currency translation adjustment¹	$	7,993		-			7,993		1	$	492			-			492			-
Reclassification to earnings:
Defined benefit pension plans adjustment²		4,820	$	(1,637	)		3,183		-		5,170		$	(1,815	)		3,355			-
Interest rate swap³		32		(12	)		20		-		29			(9	)		20			-
Cash-flow hedges³		171		(65	)		106		-		(308	)		117			(191	)		-
Other comprehensive income (loss)	$	13,016	$	(1,714	)		11,302		1	$	5,383		$	(1,707	)		3,676			-
Comprehensive income (loss)						$	51,964	$	34							$	55,925		$	108

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	June 3, 2017
	Total			H.B. Fuller Stockholders			Non-controlling Interests
Foreign currency translation adjustment	$	(77,453	)	$	(77,388	)	$	(65	)
Defined benefit pension plans adjustment, net of taxes of $89,097		(172,918	)		(172,918	)		-
Interest rate swap, net of taxes of ($30)		48			48			-
Cash-flow hedges, net of taxes of $720		(1,169	)		(1,169	)		-
Accumulated other comprehensive loss	$	(251,492	)	$	(251,427	)	$	(65	)

	December 3, 2016
	Total			H.B. Fuller Stockholders			Non-controlling Interests
Foreign currency translation adjustment	$	(85,447	)	$	(85,381	)	$	(66	)
Defined benefit pension plans adjustment, net of taxes of $90,734		(176,101	)		(176,101	)		-
Interest rate swap, net of taxes of ($17)		28			28			-
Cash-flow hedges, net of taxes of $785		(1,275	)		(1,275	)		-
Accumulated other comprehensive loss	$	(262,795	)	$	(262,729	)	$	(66	)

XML

Note 12 - Earnings Per Share (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended				Six Months Ended
	June 3,		May 28,		June 3,		May 28,
(Shares in thousands)	2017		2016		2017		2016
Weighted-average common shares - basic		50,496		50,145		50,369		50,052
Equivalent shares from share-based compensations plans		1,190		1,108		1,204		1,072
Weighted-average common and common equivalent shares - diluted		51,686		51,253		51,573		51,124

XML

Note 13 - Financial Instruments (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

	Fiscal Year of Expiration	Interest Rate			Notional Value		Fair Value
Pay EUR	2017		3.05	%	$	44,912	$	(378	)
Receive USD			3.9145	%
Pay EUR	2018		3.45	%	$	44,912	$	(847	)
Receive USD			4.5374	%
Pay EUR	2019		3.80	%	$	44,912	$	(1,248	)
Receive USD			5.0530	%
Pay EUR	2020		1.95	%	$	42,600	$	(2,581	)
Receive USD			4.30375	%
Total					$	177,336	$	(5,054	)

XML

Note 14 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	June 3,		Fair Value Measurements Using:
Description	2017		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,763	$	2,763	$	-	$	-
Foreign exchange contract assets		2,359		-		2,359		-
Interest rate swaps		3,224		-		3,224		-
Liabilities:
Foreign exchange contract liabilities	$	2,031	$	-	$	2,031	$	-
Contingent consideration liability		1,082		-		-		1,082
Cash-flow hedges		5,054		-		5,054		-

	December 3,		Fair Value Measurements Using:
Description	2016		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	1,020	$	1,020	$	-	$	-
Foreign exchange contract assets		11,697		-		11,697		-
Interest rate swaps		1,579		-		1,579		-
Cash-flow hedges		4,654		-		4,654		-
Liabilities:
Foreign exchange contract liabilities	$	6,925	$	-	$	6,925	$	-
Contingent consideration liability		4,720		-		-		4,720

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Amount
Balance at December 3, 2016	$	4,720
Mark to market adjustment		(3,603	)
Foreign currency translation adjustment		(35	)
Balance at June 3, 2017	$	1,082

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Note 16 - Commitments and Contingencies (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Schedule of Loss Contingencies by Contingency [Table Text Block]

	Six Months Ended				3 Years Ended
	June 3, 2017		May 28, 2016		December 3, 2016
Lawsuits and claims settled		7		4		33
Settlement amounts	$	1,423	$	343	$	3,061
Insurance payments received or expected to be received	$	1,132	$	251	$	2,253

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Note 17 - Operating Segments (Tables)

6 Months Ended

Jun. 03, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended
	June 3, 2017							May 28, 2016
			Inter-		Segment					Inter-		Segment
	Trade		Segment		Operating			Trade		Segment		Operating
	Revenue		Revenue		Income (Loss)			Revenue		Revenue		Income
Americas Adhesives	$	229,622	$	4,048	$	26,455		$	206,147	$	4,095	$	35,884
EIMEA		135,226		4,452		8,083			139,897		4,494		11,027
Asia Pacific		64,466		1,416		4,751			60,119		1,309		3,036
Construction Products		63,754		-		(1,853	)		67,634		51		2,534
Engineering Adhesives		68,583		-		5,832			58,717		-		2,091
Total	$	561,651			$	43,268		$	532,514			$	54,572

	Six Months Ended
	June 3, 2017							May 28, 2016
			Inter-		Segment					Inter-		Segment
	Trade		Segment		Operating			Trade		Segment		Operating
	Revenue		Revenue		Income			Revenue		Revenue		Income
Americas Adhesives	$	422,784	$	7,857	$	47,488		$	389,466	$	7,725	$	62,143
EIMEA		259,265		7,899		9,880			264,188		9,765		17,190
Asia Pacific		127,112		2,503		6,630			113,979		2,261		6,789
Construction Products		120,800		-		(2,536	)		127,708		155		3,319
Engineering Adhesives		135,013		-		7,887			111,499		-		2,969
Total	$	1,064,974			$	69,349		$	1,006,840			$	92,410

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]

	Three Months Ended						Six Months Ended
	June 3,			May 28,			June 3,			May 28,
	2017			2016			2017			2016
Segment operating income	$	43,268		$	54,572		$	69,349		$	92,410
Special charges, net		-			(370	)		-			(783	)
Other income (expense), net		(110	)		(1,565	)		511			(6,647	)
Interest expense		(8,148	)		(6,597	)		(16,528	)		(12,905	)
Income before income taxes and income from equity method investments	$	35,010		$	46,040		$	53,332		$	72,075

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Note 1 - Basis of Presentation (Details Textual) $ in Thousands	6 Months Ended
	Jun. 03, 2017 USD ($)
Cumulative Transalation Adjustment Due to Change in Functional Currency	$ (11,317)

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Note 2 - Acquisitions (Details Textual) - USD ($) $ in Thousands				6 Months Ended		7 Months Ended
	Jan. 27, 2017	Jun. 08, 2016	Apr. 29, 2016	Jun. 03, 2017	Dec. 03, 2016	Dec. 03, 2016
Goodwill				$ 434,210	$ 366,248	$ 366,248
H. E. Wisdom & Sons, Inc. and Wisdom Adhesives Southeast, LLC [Member]
Goodwill	$ 60,557
Payments to Acquire Businesses, Gross	$ 123,305
H. E. Wisdom & Sons, Inc. and Wisdom Adhesives Southeast, LLC [Member] | Customer Relationships [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	15 years
H. E. Wisdom & Sons, Inc. and Wisdom Adhesives Southeast, LLC [Member] | Trademarks and Trade Names [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	10 years
H. E. Wisdom & Sons, Inc. and Wisdom Adhesives Southeast, LLC [Member] | Selling, General and Administrative Expenses [Member]
Business Combination, Acquisition Related Costs				$ 548
Cyberbond LLC [Member]
Goodwill		$ 23,654
Business Acquisition, Goodwill, Expected Tax Deductible Amount		10,658
Payments to Acquire Businesses, Gross		42,182
Cash Acquired from Acquisition		$ 332
Cyberbond LLC [Member] | Customer Relationships [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		15 years
Cyberbond LLC [Member] | Trademarks and Trade Names [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		10 years
Cyberbond LLC [Member] | Developed Technology Rights [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		7 years
Cyberbond LLC [Member] | Selling, General and Administrative Expenses [Member]
Business Combination, Acquisition Related Costs					$ 527
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member]
Goodwill			$ 102
Payments to Acquire Businesses, Gross			$ 10,365
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member] | Customer Relationships [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			15 years
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member] | Trademarks and Trade Names [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			1 year
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member] | Selling, General and Administrative Expenses [Member]
Business Combination, Acquisition Related Costs						$ 646

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Note 2 - Acquisitions - Purchase Price Allocation of Assets and Liabilities Assumed of Wisdom Adhesives (Details) - USD ($) $ in Thousands	Jun. 03, 2017	Jan. 27, 2017	Dec. 03, 2016
Goodwill	$ 434,210		$ 366,248
H. E. Wisdom & Sons, Inc. and Wisdom Adhesives Southeast, LLC [Member]
Current assets		$ 13,741
Property, plant and equipment		10,516
Goodwill		60,557
Current liabilities		(8,409)
Total purchase price		123,305
H. E. Wisdom & Sons, Inc. and Wisdom Adhesives Southeast, LLC [Member] | Customer Relationships [Member]
Other intangibles		33,300
H. E. Wisdom & Sons, Inc. and Wisdom Adhesives Southeast, LLC [Member] | Trademarks and Trade Names [Member]
Other intangibles		$ 13,600

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Note 2 - Acquisitions - Purchase Price Allocation of Assets and Liabilities Assumed of Cyberbond (Details) - USD ($) $ in Thousands	Jun. 03, 2017	Dec. 03, 2016	Jun. 08, 2016	Apr. 29, 2016
Goodwill	$ 434,210	$ 366,248
Cyberbond LLC [Member]
Current assets			$ 4,425
Property, plant and equipment			2,038
Goodwill			23,654
Cyberbond LLC [Member] | Developed Technology Rights [Member]
Other intangibles			2,000
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member]
Current assets				$ 5,704
Property, plant and equipment				594
Goodwill				102
Other assets			161
Current liabilities			(1,889)	(2,671)
Long-term liabilities			(3,307)	(1,085)
Total purchase price			42,182
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member] | Customer Relationships [Member]
Other intangibles			14,400	7,575
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member] | Trademarks and Trade Names [Member]
Other intangibles			$ 700	$ 146

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Note 2 - Acquisitions - Purchase Price Allocation of Assets and Liabilities Assumed of Advanced Adhesives (Details) - USD ($) $ in Thousands	Jun. 03, 2017	Dec. 03, 2016	Jun. 08, 2016	Apr. 29, 2016
Goodwill	$ 434,210	$ 366,248
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member]
Current assets				$ 5,704
Property, plant and equipment				594
Goodwill				102
Current liabilities			$ (1,889)	(2,671)
Long-term liabilities			(3,307)	(1,085)
Total purchase price			42,182
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member] | Customer Relationships [Member]
Other intangibles			14,400	7,575
Advanced Adhesives Pty Limited and Advance Adhesives (New Zealand) [Member] | Trademarks and Trade Names [Member]
Other intangibles			$ 700	146
Continental Products Limited [Member]
Total purchase price				$ 10,365

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Note 3 - Restructuring Actions (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Restructuring Charges	$ 5,634		$ 15,802
Business Integration Project [Member]
Restructuring Charges		$ 370		$ 783
Restructuring Plan 2017 [Member]
Restructuring Charges	$ 5,634,000		$ 15,802,000

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Note 3 - Restructuring Actions - Restructuring Charges (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 03, 2017	Jun. 03, 2017
Expenses incurred	$ 5,634	$ 15,802
Cost of Sales [Member]
Expenses incurred	5,252	8,899
Selling, General and Administrative Expenses [Member]
Expenses incurred	$ 382	$ 6,903

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Note 3 - Restructuring Actions - Restructuring Charges by Segment (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 03, 2017	Jun. 03, 2017
Expenses incurred	$ 5,634	$ 15,802
Americas Adhesives [Member]
Expenses incurred	39	1,765
EIMEA [Member]
Expenses incurred	1,266	6,055
Asia Pacific [Member]
Expenses incurred	35	1,887
Construction Products [Member]
Expenses incurred	4,209	5,458
Engineering Adhesives [Member]
Expenses incurred	$ 85	$ 637

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Note 3 - Restructuring Actions - Restructuring Reserve (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 03, 2017	Jun. 03, 2017
Balance
Expenses incurred	$ 5,634	15,802
Non-cash charges		(4,291)
Cash payments		(7,118)
Foreign currency translation		261
Balance	4,654	4,654
Employee Related [Member]
Balance
Expenses incurred		9,898
Non-cash charges
Cash payments		(5,810)
Foreign currency translation		261
Balance	4,349	4,349
Asset Related [Member]
Balance
Expenses incurred		5,094
Non-cash charges		(4,291)
Cash payments		(803)
Foreign currency translation
Balance
Other Restructuring [Member]
Balance
Expenses incurred		810
Non-cash charges
Cash payments		(505)
Foreign currency translation
Balance	$ 305	$ 305

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Note 4 - Inventories - Inventories (Details) - USD ($) $ in Thousands	Jun. 03, 2017	Dec. 03, 2016
Raw materials	$ 149,629	$ 116,200
Finished goods	165,028	142,397
LIFO reserve	(12,321)	(11,198)
Total inventories	$ 302,336	$ 247,399

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Note 5 - Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Amortization of Intangible Assets	$ 7,874	$ 6,788	$ 15,229	$ 13,486
Indefinite Lived Trademarks and Trade Names	$ 571		$ 571

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Note 5 - Goodwill and Other Intangible Assets - Goodwill by Segment (Details) $ in Thousands	6 Months Ended
	Jun. 03, 2017 USD ($)
Goodwill	$ 366,248
Acquisitions	60,557
Currency impact	7,405
Goodwill	434,210
Americas Adhesives [Member]
Goodwill	59,821
Acquisitions	60,557	[1]
Currency impact	(646)
Goodwill	119,732
EIMEA [Member]
Goodwill	98,876
Acquisitions
Currency impact	4,844
Goodwill	103,720
Asia Pacific [Member]
Goodwill	17,481
Acquisitions
Currency impact	339
Goodwill	17,820
Construction Products [Member]
Goodwill	21,901
Acquisitions
Currency impact	22
Goodwill	21,923
Engineering Adhesives [Member]
Goodwill	168,169
Acquisitions
Currency impact	2,846
Goodwill	$ 171,015

[1] Preliminary goodwill balance as of June 3, 2017.

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Note 5 - Goodwill and Other Intangible Assets - Amortizable Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 03, 2017	Dec. 03, 2016
Original cost	$ 425,182	$ 372,949
Accumulated amortization	(186,335)	(168,057)
Net identifiable intangibles	238,847	204,892
Purchased Technology And Patents [Member]
Original cost	70,651	70,504
Accumulated amortization	(29,189)	(21,448)
Net identifiable intangibles	41,462	49,056
Customer Relationships [Member]
Original cost	289,181	251,329
Accumulated amortization	(123,054)	(116,411)
Net identifiable intangibles	166,127	134,918
Other Intangible Assets [Member]
Original cost	65,350	51,116
Accumulated amortization	(34,092)	(30,198)
Net identifiable intangibles	$ 31,258	$ 20,918

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Note 5 - Goodwill and Other Intangible Assets - Estimated Aggregate Amortization Expense (Details) $ in Thousands	Jun. 03, 2017 USD ($)
2016	$ 16,751
2017	32,398
2018	30,224
2019	27,843
2020	26,372
Thereafter	$ 105,259

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Note 6 - Long-term Debt (Details Textual) - USD ($) $ in Thousands			6 Months Ended
	Apr. 12, 2017	Feb. 14, 2017	Jun. 03, 2017
Reclassification of an Asset to a Direct Deduction on Debt [Member] | December 3, 2016 [Member]
Prior Period Reclassification Adjustment			$ 2,386
Interest Rate Swap Related to Series E Private Placement Note [Member]
Derivative, Amount of Hedged Item			$ 125,000
Interest Rate Swap Related to Public Notes [Member]
Derivative, Amount of Hedged Item		$ 150,000
London Interbank Offered Rate (LIBOR) [Member] | Interest Rate Swap Related to Series E Private Placement Note [Member]
Derivative, Basis Spread on Variable Rate			2.22%
London Interbank Offered Rate (LIBOR) [Member] | Interest Rate Swap [Member]
Derivative, Basis Spread on Variable Rate		1.86%
Term Loan [Member]
Long-term Debt	$ 100,000
Repayments of Debt		$ 158,750
Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	1.25%
Public Notes [Member]
Debt Instrument, Face Amount		$ 300,000
Debt Instrument, Term		10 years
Debt Instrument, Interest Rate, Stated Percentage		4.00%
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 400,000
Line of Credit Facility, Commitment Fee Percentage	0.15%
Repayments of Lines of Credit		$ 138,000
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	1.10%

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Note 7 - Redeemable Non-controlling Interest (Details Textual) € in Thousands	6 Months Ended
	Jun. 03, 2017 EUR (€)
Noncontrolling Interest, Increase in Ownership Percentage Per Year	1.00%
Noncontrolling Interest, Number of Years Ownership can Be Increased	5 years
Noncontrolling Interest, Maximum Ownership Percentage by Noncontrolling Shareholder	13.00%
Redeemable Noncontrolling Interest, Equity, Minimum Redemption Value	€ 3,500
Tonsan Adhesive [Member]
Business Combination, Agreement to Purchase Remaining Equity	€ 4,206

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Note 7 - Redeemable Non-controlling Interest - Redeemable Non-controlling Interests (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 03, 2017	Dec. 03, 2016
Balance at beginning of period	$ 4,277
Net income attributed to redeemable non-controlling interest	39	$ 239
Purchase of redeemable non-controlling interest	(4,468)
Foreign currency translation adjustment	152
Balance at end of period		$ 4,277

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Note 8 - Accounting for Share-based Compensation (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Allocated Share-based Compensation Expense	$ 3,811	$ 2,701	$ 8,843	$ 6,968
Excess Tax Benefit from Share-based Compensation, Operating Activities	300	933	1,353	592
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	10,198		10,198
Fair Value Options Granted During Period Value Share-based Compensation	373	324	7,757	6,462
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value	2,204	7,265	6,624	7,276
Proceeds from Issuance of Shares under Incentive and Share-based Compensation Plans, Including Stock Options	5,377	$ 7,051	13,926	$ 7,083
Total Fair Value of Nonvested Restricted Stock	$ 21,214		$ 21,214
Repurchased Restricted Stock Shares	3,122	1,106	53,809	67,533
Employees [Member]
Deferred Compensation Plan, Matching Percentage			10.00%
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term			1 year 146 days
Restricted Stock Units (RSUs) [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 16,463		$ 16,463
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition			1 year 182 days
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value	$ 432	$ 179	$ 7,402	$ 6,012

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Note 8 - Accounting for Share-based Compensation - Fair Value of Options Granted (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Expected life (Year)	4 years 273 days	4 years 273 days	4 years 273 days	4 years 273 days
Weighted-average expected volatility	24.32%	28.55%	24.85%	29.01%
Expected volatility
Risk-free interest rate	1.81%	1.25%	1.89%	1.43%
Expected dividend yield	1.11%	1.27%	1.12%	1.55%
Weighted-average fair value of grants (in dollars per share)	$ 10.90	$ 9.81	$ 10.81	$ 7.72
Minimum [Member]
Expected volatility	24.31%	28.00%	24.31%	28.00%
Maximum [Member]
Expected volatility	24.33%	29.20%	24.88%	29.23%

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Note 8 - Accounting for Share-based Compensation - Stock Option Activity (Details)	6 Months Ended
	Jun. 03, 2017 $ / shares shares
Outstanding Options (in shares) | shares	2,986,481
Outstanding Options (in dollars per share) | $ / shares	$ 34.92
Granted (in shares) | shares	717,596
Granted (in dollars per share) | $ / shares	$ 50.04
Exercised (in shares) | shares	(407,288)
Exercised (in dollars per share) | $ / shares	$ 34.19
Forfeited or cancelled (in shares) | shares	(74,113)
Forfeited or cancelled (in dollars per share) | $ / shares	$ 36.84
Outstanding Options (in shares) | shares	3,222,676
Outstanding Options (in dollars per share) | $ / shares	$ 38.34

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Note 8 - Accounting for Share-based Compensation - Nonvested Restricted Stock Activity (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 03, 2017	Dec. 03, 2016
Nonvested at December 3, 2016 (in shares)	389,697
Nonvested at December 3, 2016 (in dollars per share)	$ 38.36
Nonvested at June 3, 2017 (in dollars per share)	$ 44.68	$ 38.36
Nonvested at December 3, 2016 (Year)	1 year 182 days	1 year
Granted (in shares)	281,507
Granted (in dollars per share)	$ 51.31
Granted (Year)	1 year 255 days
Vested (in shares)	(186,048)
Vested (in dollars per share)	$ 39.79
Forfeited (in shares)	(17,400)
Forfeited (in dollars per share)	$ 37.86
Forfeited (Year)	1 year 182 days
Nonvested at June 3, 2017 (in shares)	467,756	389,697
Restricted Stock Units (RSUs) [Member]
Nonvested at December 3, 2016 (in shares)	352,744
Granted (in shares)	281,507
Vested (in shares)	(149,095)
Forfeited (in shares)	(17,400)
Nonvested at June 3, 2017 (in shares)	467,756	352,744
Restricted Stock [Member]
Nonvested at December 3, 2016 (in shares)	36,953
Granted (in shares)
Vested (in shares)	(36,953)
Forfeited (in shares)
Nonvested at June 3, 2017 (in shares)		36,953

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Note 8 - Accounting for Share-based Compensation - Deferred Compensation Units (Details)	6 Months Ended
	Jun. 03, 2017 shares
Units outstanding (in shares)	465,435
Participant contributions (in shares)	12,955
Company match contributions (in shares)	1,295
Payouts (in shares)	(21,855)
Units outstanding (in shares)	457,830
Non Employee Directors [Member]
Units outstanding (in shares)	424,319
Participant contributions (in shares)	8,373
Company match contributions (in shares)	837
Payouts (in shares)	(14,143)
Units outstanding (in shares)	419,386
Employees [Member]
Units outstanding (in shares)	41,116
Participant contributions (in shares)	4,582
Company match contributions (in shares)	458
Payouts (in shares)	(7,712)
Units outstanding (in shares)	38,444

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Note 9 - Components of Net Periodic Cost (Benefit) Related to Pension and Other Postretirement Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Pension Plan [Member] | UNITED STATES
Actuarial loss	$ 1,307	$ 1,293	$ 2,614	$ 2,586
Net periodic (benefit) cost	(1,419)	(982)	(2,838)	(1,965)
Service cost	28	27	56	54
Interest cost	3,603	3,768	7,206	7,535
Expected return on assets	(6,364)	(6,077)	(12,728)	(12,154)
Prior service cost	7	7	14	14
Pension Plan [Member] | Foreign Plan [Member]
Actuarial loss	846	753	1,688	1,505
Net periodic (benefit) cost	104	116	206	232
Service cost	512	481	1,020	961
Interest cost	1,147	1,366	2,291	2,733
Expected return on assets	(2,400)	(2,483)	(4,791)	(4,965)
Prior service cost	(1)	(1)	(2)	(2)
Other Postretirement Benefits Plan [Member]
Actuarial loss	253	532	506	1,064
Net periodic (benefit) cost	(744)	(256)	(1,488)	(512)
Service cost	52	84	104	168
Interest cost	398	480	796	960
Expected return on assets	(1,447)	(1,342)	(2,894)	(2,684)
Prior service cost		$ (10)		$ (20)

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Note 10 - Accumulated Other Comprehensive Income (Loss) - Comprehensive Income (Loss) Information (Details) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
		Jun. 03, 2017		May 28, 2016		Jun. 03, 2017	May 28, 2016
Other comprehensive income (loss)		$ 20,087		$ 1,697		$ 11,302	$ 3,676
Other comprehensive income (loss), non-controlling interests		6		5		1
Comprehensive income (loss)		45,954		35,028		51,964	55,925
Comprehensive income (loss), non-controlling interests		3		64		34	108
Net income attributable to H.B. Fuller		25,867		33,331		40,662	52,249
Net income including non-controlling interests		(3)		59		33	108
Foreign currency translation adjustment¹, pretax	[1]	18,507		1,437		7,993	492
Foreign currency translation adjustment¹, tax	[1]
Foreign currency translation adjustment¹	[1]	18,507		1,437		7,993	492
Foreign currency translation adjustment¹, non-controlling interests	[1]	6		5		1
Defined benefit pension plans adjustment², pretax		2,412	[2]	1,173	[2]	4,820	5,170	[2]
Defined benefit pension plans adjustment², tax	[2]	(819)		(483)		(1,637)	(1,815)
Defined benefit pension plans adjustment²	[2]	1,593		690		3,183	3,355
Interest rate swap³, pretax	[3]	16		16		32	29
Interest rate swap³, tax	[3]	(6)		(6)		(12)	(9)
Interest rate swap³	[3]	10		10		20	20
Cash-flow hedges³, pretax	[3]	(37)		(711)		171	(308)
Cash-flow hedges³, tax	[3]	14		271		(65)	117
Cash-flow hedges³	[3]	(23)		(440)		106	(191)
Other comprehensive income (loss), pretax		20,898		1,915		13,016	5,383
Other comprehensive income (loss), tax		$ (811)		$ (218)		$ (1,714)	$ (1,707)

[1] Income taxes are not provided for foreign currency translation relating to permanent investments in international subsidiaries. As discussed in Note 1, the foreign currency translation adjustment for the six months ended June 3, 2017 includes the impact of the change in functional currency for our subsidiaries in Latin America.

[2] Loss reclassified from accumulated other comprehensive income ("AOCI") into earnings as part of net periodic cost related to pension and other postretirement benefit plans is reported in cost of sales, SG&A expense and special charges, net.

[3] Loss reclassified from AOCI into earnings is reported in other income (expense), net.

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Note 10 - Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	Jun. 03, 2017	Dec. 03, 2016
Accumulated other comprehensive loss	$ (251,427)	$ (262,729)
AOCI Including Portion Attributable to Noncontrolling Interest [Member]
Accumulated other comprehensive loss	(251,492)	(262,795)
Foreign currency translation adjustment	(77,453)	(85,447)
Defined benefit pension plans adjustment, net of taxes	(172,918)	(176,101)
Interest rate swap, net of taxes	48	28
Cash-flow hedges, net of taxes	(1,169)	(1,275)
AOCI Attributable to Parent [Member]
Accumulated other comprehensive loss	(251,427)	(262,729)
Foreign currency translation adjustment	(77,388)	(85,381)
Defined benefit pension plans adjustment, net of taxes	(172,918)	(176,101)
Interest rate swap, net of taxes	48	28
Cash-flow hedges, net of taxes	(1,169)	(1,275)
AOCI Attributable to Noncontrolling Interest [Member]
Accumulated other comprehensive loss	(65)	(66)
Foreign currency translation adjustment	(65)	(66)
Defined benefit pension plans adjustment, net of taxes
Interest rate swap, net of taxes
Cash-flow hedges, net of taxes

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Note 10 - Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Details) (Parentheticals) - USD ($) $ in Thousands	Jun. 03, 2017	Dec. 03, 2016
AOCI Including Portion Attributable to Noncontrolling Interest [Member]
Tax on cash flow hedges	$ 720	$ 785
Tax on defined benefit pension plans adjustment	89,097	90,734
Tax on interest rate swap	(30)	(17)
AOCI Attributable to Parent [Member]
Tax on cash flow hedges	720	785
Tax on defined benefit pension plans adjustment	89,097	90,734
Tax on interest rate swap	$ (30)	$ (17)

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Note 11 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Jun. 03, 2017	Dec. 03, 2016
Unrecognized Tax Benefits	$ 4,508	$ 4,165
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	717
Unrecognized Tax Benefits, Period Increase (Decrease)	$ 154

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Note 12 - Earnings Per Share (Details Textual) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	6,857	406,028	132,560	950,516
Antidilutive Weighted Average Share Price Excluded from Computation of Earnings Per Share Amount	$ 52.75	$ 48.59	$ 50.17	$ 44.10

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Note 12 - Earnings Per Share - Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Basic (in shares)	50,496	50,145	50,369	50,052
Equivalent shares from share-based compensations plans (in shares)	1,190	1,108	1,204	1,072
Weighted-average common and common equivalent shares - diluted (in shares)	51,686	51,253	51,573	51,124

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Note 13 - Financial Instruments (Details Textual) € in Thousands, $ in Thousands	6 Months Ended
	Jun. 03, 2017 USD ($)	May 28, 2016 USD ($)	Jun. 03, 2017 EUR (€)	Feb. 24, 2017 EUR (€)	Feb. 14, 2017 USD ($)	Dec. 03, 2016 USD ($)	Oct. 07, 2015 EUR (€)
Foreign Currency Cash Flow Hedge Asset at Fair Value	$ 5,054					$ 4,654
Interest Rate Fair Value Hedge Asset at Fair Value	$ 3,224					1,579
Senior Notes Series C [Member]
Debt Instrument, Interest Rate, Stated Percentage	5.61%		5.61%
Public Notes [Member]
Debt Instrument, Face Amount					$ 300,000
Debt Instrument, Interest Rate, Stated Percentage					4.00%
Interest Rate Fair Value Hedge Asset at Fair Value	$ 1,007
Cross Currency Interest Rate Contract [Member]
Derivative, Notional Amount | €			€ 177,336	€ 42,600			€ 134,736
Foreign Currency Cash Flow Hedge Asset at Fair Value	5,054
Gain (Loss) on Foreign Currency Cash Flow Hedge Ineffectiveness	7
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax	1,169
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months	719
Foreign Exchange Forward [Member]
Gain (Loss) on Foreign Currency Derivatives Recorded in Earnings, Net	328
Interest Rate Swap Related to Series E Private Placement Note [Member]
Derivative, Amount of Hedged Item	125,000
Interest Rate Swap Related to Series E Private Placement Note [Member] | Other Assets [Member]
Interest Rate Fair Value Hedge Asset at Fair Value	$ 993
Interest Rate Swap Related to Series E Private Placement Note [Member] | London Interbank Offered Rate (LIBOR) [Member]
Derivative, Basis Spread on Variable Rate	2.22%		2.22%
Interest Rate Swap Related to Public Notes [Member]
Derivative, Amount of Hedged Item					$ 150,000
Interest Rate Swap Related to Public Notes [Member] | London Interbank Offered Rate (LIBOR) [Member]
Derivative, Variable Interest Rate					1.86%
Interest Rate Swaps Related to Senior Notes Issued in November 2009 [Member]
Derivative, Amount of Hedged Item	$ 75,000
Interest Rate Swap Related to Series C Private Placement Note [Member]
Derivative, Amount of Hedged Item	25,000
Interest Rate Fair Value Hedge Liability at Fair Value	$ 1,160
Interest Rate Swap Related to Series C Private Placement Note [Member] | London Interbank Offered Rate (LIBOR) [Member]
Derivative, Basis Spread on Variable Rate	1.78%		1.78%
Interest Rate Swap [Member]
Interest Rate Fair Value Hedge Asset at Fair Value	$ 1,224					$ 1,579
Derivative, Net Hedge Ineffectiveness Gain (Loss)	$ (91)	$ (48)
Interest Rate Swap [Member] | London Interbank Offered Rate (LIBOR) [Member]
Derivative, Basis Spread on Variable Rate					1.86%

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Note 13 - Financial Instruments - Swaps Outstanding (Details) - Cross Currency Interest Rate Contract [Member] - EUR (€) € in Thousands	6 Months Ended
	Jun. 03, 2017	Feb. 24, 2017	Oct. 07, 2015
Derivative, Notional Amount	€ 177,336	€ 42,600	€ 134,736
Fair Value	(5,054)
Currency Swap 1 [Member]
Derivative, Notional Amount	44,912
Fair Value	€ (378)
Interest rate maximum	3.9145%
Fiscal Year of Expiration	2017
Interest rate minimum	3.05%
Currency Swap 2 [Member]
Derivative, Notional Amount	€ 44,912
Fair Value	€ (847)
Interest rate maximum	4.5374%
Fiscal Year of Expiration	2018
Interest rate minimum	3.45%
Currency Swap 3 [Member]
Derivative, Notional Amount	€ 44,912
Fair Value	€ (1,248)
Interest rate maximum	5.053%
Fiscal Year of Expiration	2019
Interest rate minimum	3.80%
Currency Swap 4 [Member]
Derivative, Notional Amount	€ 42,600
Fair Value	€ (2,581)
Interest rate maximum	4.30375%
Fiscal Year of Expiration	2020
Interest rate minimum	1.95%

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Note 14 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Jun. 29, 2017	Jun. 03, 2017	May 28, 2016	Dec. 03, 2016
Long-term Debt, Fair Value		$ 791,936		$ 693,283
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability		$ (3,603)	$ (891)
Subsequent Event [Member]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	$ 1,100

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Note 14 - Fair Value Measurements - Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 03, 2017	Dec. 03, 2016
Foreign exchange contract assets	$ 2,359	$ 11,697
Interest Rate Fair Value Hedge Asset at Fair Value	3,224	1,579
Liabilities:
Foreign exchange contract liabilities	2,031	6,925
Contingent consideration liability	1,082	4,720
Foreign Currency Cash Flow Hedge Asset at Fair Value	5,054	4,654
Assets:
Marketable securities	2,763	1,020
Fair Value, Inputs, Level 1 [Member]
Assets:
Marketable securities	2,763	1,020
Fair Value, Inputs, Level 2 [Member]
Foreign exchange contract assets	2,359	11,697
Interest Rate Fair Value Hedge Asset at Fair Value	3,224	1,579
Liabilities:
Foreign exchange contract liabilities	2,031	6,925
Foreign Currency Cash Flow Hedge Asset at Fair Value	5,054	4,654
Fair Value, Inputs, Level 3 [Member]
Liabilities:
Contingent consideration liability	$ 1,082	$ 4,720

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Note 14 - Fair Value Measurements - Schedule of Contingent Consideration Liabilities (Details) - Fair Value, Inputs, Level 3 [Member] $ in Thousands	6 Months Ended
	Jun. 03, 2017 USD ($)
Balance at December 3, 2016	$ 4,720
Mark to market adjustment	(3,603)
Foreign currency translation adjustment	(35)
Balance at June 3, 2017	$ 1,082

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Note 15 - Share Repurchase Program (Details Textual) - USD ($) shares in Thousands, $ in Thousands		6 Months Ended		12 Months Ended
	Apr. 06, 2017	Jun. 03, 2017	May 28, 2016	Dec. 03, 2016
Stock Repurchased During Period, Value		$ 8,872		$ 23,228
The 2017 Share Repurchase Program [Member]
Stock Repurchase Program, Authorized Amount	$ 200,000
Stock Repurchase Program, Period in Force	5 years
Stock Repurchased and Retired During Period, Shares		0
2010 Share Repurchase Program [Member]
Decreased Value of Additional Paid in Capital for Shares Repurchased		$ 6,159	$ 4,085
Stock Repurchased During Period, Value		6,284	4,210
Decreased Value of Common Stock Shares Repurchased		$ 125	$ 125

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Note 16 - Commitments and Contingencies - Asbestos Related Lawsuits and Claims (Details) - Asbestos Related Lawsuits And Claims [Member] $ in Thousands	6 Months Ended		36 Months Ended
	Jun. 03, 2017 USD ($)	May 28, 2016 USD ($)	Dec. 03, 2016 USD ($)
Lawsuits and claims settled	7	4	33
Settlement amounts	$ 1,423	$ 343	$ 3,061
Insurance payments received or expected to be received	$ 1,132	$ 251	$ 2,253

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Note 17 - Operating Segments - Reportable Operating Segment Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Trade Revenue	$ 561,651	$ 532,514	$ 1,064,974	$ 1,006,840
Segment Operating Income	43,268	54,572	69,349	92,410
Operating Segments [Member]
Trade Revenue	561,651	532,514	1,064,974	1,006,840
Segment Operating Income	43,268	54,572	69,349	92,410
Operating Segments [Member] | Americas Adhesives [Member]
Trade Revenue	229,622	206,147	422,784	389,466
Segment Operating Income	26,455	35,884	47,488	62,143
Operating Segments [Member] | EIMEA [Member]
Trade Revenue	135,226	139,897	259,265	264,188
Segment Operating Income	8,083	11,027	9,880	17,190
Operating Segments [Member] | Asia Pacific [Member]
Trade Revenue	64,466	60,119	127,112	113,979
Segment Operating Income	4,751	3,036	6,630	6,789
Operating Segments [Member] | Construction Products [Member]
Trade Revenue	63,754	67,634	120,800	127,708
Segment Operating Income	(1,853)	2,534	(2,536)	3,319
Operating Segments [Member] | Engineering Adhesives [Member]
Trade Revenue	68,583	58,717	135,013	111,499
Segment Operating Income	5,832	2,091	7,887	2,969
Intersegment Eliminations [Member]
Trade Revenue
Intersegment Eliminations [Member] | Americas Adhesives [Member]
Trade Revenue	4,048	4,095	7,857	7,725
Intersegment Eliminations [Member] | EIMEA [Member]
Trade Revenue	4,452	4,494	7,899	9,765
Intersegment Eliminations [Member] | Asia Pacific [Member]
Trade Revenue	1,416	1,309	2,503	2,261
Intersegment Eliminations [Member] | Construction Products [Member]
Trade Revenue		51		155
Intersegment Eliminations [Member] | Engineering Adhesives [Member]
Trade Revenue

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Note 17 - Operating Segments - Reconciliation of Segment Operating Income to Income From Continuing Operations Before Income Taxes and Income From Equity Method Investments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 03, 2017	May 28, 2016	Jun. 03, 2017	May 28, 2016
Segment operating income	$ 43,268	$ 54,572	$ 69,349	$ 92,410
Special charges, net		(370)		(783)
Other income (expense), net	(110)	(1,565)	511	(6,647)
Interest expense	(8,148)	(6,597)	(16,528)	(12,905)
Income before income taxes and income from equity method investments	$ 35,010	$ 46,040	$ 53,332	$ 72,075