Significant Accounting Policies (Policies)

12 Months Ended

Dec. 01, 2018

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The Consolidated Financial Statements include the accounts of H.B. Fuller Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated. Investments in affiliated companies in which we exercise significant influence, but which we do

not

control, are accounted for in the Consolidated Financial Statements under the equity method of accounting. As such, consolidated net income includes our equity portion in current earnings of such companies, after elimination of intercompany profits. Investments in which we do

not

exercise significant influence (generally less than a

percent ownership interest) are accounted for under the cost method.

Our

percent ownership in Sekisui-Fuller Company, Ltd., our Japan joint venture, is accounted under the equity method of accounting as we do

not

exercise control over the investee. In fiscal years

2018

and

2016,

this equity method investment was

not

significant as defined in Regulation S-

under the Securities Exchange Act of

1934.

As such, financial information as of

December 1, 2018

and

December 3, 2016

for Sekisui-Fuller Company, Ltd. is

not

required.

In fiscal year

2017,

this equity method investment was significant as defined in Regulation S-

under the Securities Exchange Act of

1934.

As such, financial information as of

December 2, 2017

for Sekisui-Fuller Company, Ltd. is as follows:

	As of December 2, 2017
Current assets	$	102,454
Non-current assets		27,732
Current liabilities		40,173
Non-current liabilities		1,583

	For the year ended December 2, 2017
Net revenue	$	171,302
Gross profit		50,607
Net income		17,735

Our fiscal year ends on the Saturday closest to

November 30.

Fiscal year-end dates were

December 1, 2018,

December 2, 2017

and

December 3, 2016

for

2018,

2017

and

2016,

respectively. Every

five

six

years we have a

week in our fiscal year. Fiscal

2016

was a

-week year.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

Preparation of the Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition, Sales of Goods [Policy Text Block]

Revenue Recognition

For shipments made to customers, title generally passes to the customer when all requirements of the sales arrangement have been completed, which is generally at the time of delivery. Revenue from product sales is recorded when title to the product transfers,

remaining performance obligations exist, the terms of the sale are fixed and collection is probable. Shipping terms include title transfer at either shipping point or destination. Stated terms in sale agreements also include payment terms and freight terms. Net revenues include shipping revenues as appropriate.

Provisions for sales returns are estimated based on historical experience, and are adjusted for known returns, if material. Customer incentive programs (primarily volume purchase rebates) and arrangements such as cooperative advertising, slotting fees and buy-downs are recorded as a reduction of net revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic

605

50,

Customer Payments and Incentives

. Customer incentives recorded in the Consolidated Statements of Income as a reduction of net revenue, were

$21,265,

$18,158

and

$16,465

2018,

2017

and

2016,

respectively.

For certain products, consigned inventory is maintained at customer locations. For this inventory, revenue is recognized in the period that the inventory is consumed. Sales to distributors require a distribution agreement or purchase order. As a normal practice, distributors do

not

have a right of return.

Cost of Sales, Policy [Policy Text Block]

Cost of Sales

Cost of sales includes raw materials, container costs, direct labor, manufacturing overhead, freight costs, and other less significant indirect costs related to the production of our products.

Selling, General and Administrative Expenses, Policy [Policy Text Block]

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses include sales and marketing, research and development, technical and customer service, finance, legal, human resources, general management and similar expenses. SG&A expenses also include the mark to market adjustment related to the contingent consideration liability.

Income Tax, Policy [Policy Text Block]

Income Taxes

The income tax provision is computed based on income before income from equity method investments included in the Consolidated Statement of Income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Enacted statutory tax rates applicable to future years are applied to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances reduce deferred tax assets when it is

not

more-likely-than-

not

that a tax benefit will be realized. See Note

for further information.

Business Combinations Policy [Policy Text Block]

Acquisition Accounting

As we enter into business combinations, we perform acquisition accounting requirements including the following:

	●	Identifying the acquirer,
	●	Determining the acquisition date,

	●	Recognizing and measuring the identifiable assets acquired and the liabilities assumed, and
	●	Recognizing and measuring goodwill or a gain from a bargain purchase

We complete valuation procedures and record the resulting fair value of the acquired assets and assumed liabilities based upon the valuation of the business enterprise and the tangible and intangible assets acquired. Enterprise value allocation methodology requires management to make assumptions and apply judgment to estimate the fair value of assets acquired and liabilities assumed. If estimates or assumptions used to complete the enterprise valuation and estimates of the fair value of the acquired assets and assumed liabilities significantly differed from assumptions made, the resulting difference could materially affect the fair value of net assets.

The calculation of the fair value of the tangible assets, including property, plant and equipment, utilizes the cost approach, which computes the cost to replace the asset, less accrued depreciation resulting from physical deterioration, functional obsolescence and external obsolescence. The calculation of the fair value of the identified intangible assets are determined using cash flow models following the income approach or a discounted market-based methodology approach. Significant inputs include estimated revenue growth rates, gross margins, operating expenses and estimated attrition, royalty and discount rates. Goodwill is recorded as the difference in the fair value of the acquired assets and assumed liabilities and the purchase price.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash Equivalents

Cash equivalents are highly liquid instruments with an original maturity of

three

months or less. We review cash and cash equivalent balances on a bank by bank basis to identify book overdrafts. Book overdrafts occur when the amount of outstanding checks exceed the cash deposited at a given bank. Book overdrafts, if any, are included in trade payables in our Consolidated Balance Sheets and in operating activities in our Consolidated Statements of Cash Flows.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restrictions on Cash

There were

restrictions on cash as of

December 1, 2018.

There are

contractual or regulatory restrictions on the ability of consolidated and unconsolidated subsidiaries to transfer funds to us, except for typical statutory restrictions which prohibit distributions in excess of net capital or similar tests. The majority of our cash in non-U.S. locations is considered indefinitely reinvested.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Trade Receivable and Allowances

Trade receivables are recorded at the invoiced amount and do

not

bear interest. Allowances are maintained for doubtful accounts, credits related to pricing or quantities shipped and early payment discounts. The allowance for doubtful accounts includes an estimate of future uncollectible receivables based on the aging of the receivable balance and our collection experience. The allowance also includes specific customer accounts when it is probable that the full amount of the receivable will

not

be collected. See Note

for further information.

Inventory, Policy [Policy Text Block]

Inventories

Prior to the

fourth

quarter of

2018,

certain inventories in the United States within the Company’s Americas Adhesives and Construction Adhesives segments were recorded at cost (

not

in excess of net realizable value) as determined by the last-in,

first

-out method (“LIFO”), which represented approximately

25.7

percent of consolidated inventories. During the

fourth

quarter of

2018,

we changed our method of costing for these inventories from LIFO to the weighted-average cost method. This change in accounting principle is preferable because the weighted-average cost method better measures the current value of our inventories and conforms the inventory costing methodology for inventory in the United States within the Company’s Americas Adhesives and Construction Adhesives segments to the weighted-average cost method used for the majority of our inventories. The impact of this change in accounting principle on the Consolidated Financial Statements for each period presented is further explained in the Change in Accounting Principle section below.

Investment, Policy [Policy Text Block]

Investments

Investments with a value of

$5,048

and

$5,062

represent the cash surrender value of life insurance contracts as of

December 1, 2018

and

December 2, 2017,

respectively. These assets are held to primarily support supplemental pension plans and are recorded in other assets in the Consolidated Balance Sheets. The corresponding gain or loss associated with these contracts is reported in earnings each period as a component of other income (expense), net.

Cost Method Investments, Policy [Policy Text Block]

Cost Method Investments

Investments in an entity where we own less than

20%

of the voting stock of the entity and do

not

exercise significant influence over operating and financial policies of the entity are accounted for using the cost method. We have a policy in place to review our investments at least annually, to evaluate the accounting method and carrying value of our investments in unconsolidated investees. Our cost method investments are evaluated, on at least a quarterly basis, for potential other-than-temporary impairment, or when an event or change in circumstances has occurred that

may

have a significant adverse effect on the fair value of the investments. If we believe that the carrying value of an investment is in excess of its estimated fair value, it is our policy to record an impairment charge to adjust the carrying value to the estimated fair value, if the impairment is considered other-than-temporary. We did

not

have any impairment of our cost method investments for the years ended

December 1, 2018,

December 2, 2017

and

December 3, 2016.

The book value of the cost method investments was

$1,669

as of

December 1, 2018

and

December 2, 2017.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment

Property, plant and equipment are carried at cost and depreciated over the useful lives of the assets using the straight-line method. Estimated useful lives range from

years for buildings and improvements,

years for machinery and equipment, and the shorter of the lease or expected life for leasehold improvements. Fully depreciated assets are retained in property and accumulated depreciation accounts until removed from service. Upon disposal, assets and related accumulated depreciation are removed. Upon sale of an asset, the difference between the proceeds and remaining net book value is charged or credited to other income (expense), net on the Consolidated Statements of Income. Expenditures that add value or extend the life of the respective assets are capitalized, while expenditures that are typical recurring repairs and maintenance are expensed as incurred. Interest costs associated with construction and implementation of property, plant and equipment of

$285,

$306

and

$752

were capitalized in

2018,

2017

and

2016,

respectively.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

We evaluate our goodwill for impairment annually as of the end of our

third

quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization. The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit. The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill. In performing the impairment test, we determined the fair value of our reporting units by using discounted cash flow (“DCF”) analyses. Determining fair value requires the Company to make judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the DCF analysis for each reporting unit are based on the reporting unit's budget, long-term business plan, and recent operating performance. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to

not

be impaired. If the carrying value exceeds estimated fair value, an impairment charge is recorded for any excess of the carrying value over the estimated fair value. Based on the analysis performed for our fiscal

2018

annual impairment test, there were

indications of impairment for any of our reporting units. See Note

for further information.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets

Intangible assets include patents, customer lists, technology, trademarks and other intangible assets acquired from independent parties and are amortized on a straight-line basis with estimated useful lives ranging from

years. The straight-line method of amortization of these assets reflects an appropriate allocation of the costs of the intangible assets to earnings in proportion to the amount of economic benefits obtained in each reporting period.

Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

Our long-lived assets are tested for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group)

may

not

be recoverable. An impairment loss would be measured and recognized when the carrying amount of an asset (asset group) exceeds the estimated undiscounted future cash flows expected to result from the use of the asset (asset group) and its eventual disposition. The impairment loss to be recorded would be the excess of the asset's carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis or other valuation technique. Costs related to internally developed intangible assets are expensed as incurred.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

Assets and liabilities of non-U.S. functional currency entities are translated to U.S. dollars at period-end exchange rates, and the resulting gains and losses arising from the translation of those net assets are recorded as a cumulative translation adjustment, a component of accumulated other comprehensive income (loss) in stockholders' equity. Revenues and expenses are translated using average exchange rates during the year. Foreign currency transaction gains and losses are included in other income (expense), net in the Consolidated Statements of Income.

We consider a subsidiary’s sales price drivers, currency denomination of sales transactions and inventory purchases to be the primary indicators in determining a foreign subsidiary’s functional currency. Our subsidiaries in certain European countries have a functional currency different than their local currency. All other foreign subsidiaries, which are located in North America, Europe and Asia, have the same local and functional currency.

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. 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 (loss) for the year ended

December 2, 2017.

Postemployment Benefit Plans, Policy [Policy Text Block]

Pension and Other Postretirement Benefits

We sponsor defined-benefit pension plans in both the U.S. and non-U.S. entities. Also in the U.S., we sponsor other postretirement plans for health care and life insurance benefits. Expenses and liabilities for the pension plans and other postretirement plans are actuarially calculated. These calculations are based on our assumptions related to the discount rate, expected return on assets, projected salary increases, health care cost trend rates and mortality rates. The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan. The approach identifies a broad population of corporate bonds that meet the quality and size criteria for the particular plan. We use this approach rather than a specific index that has a certain set of bonds that

may

not

be representative of the characteristics of our particular plan. Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of

percent equities and

percent fixed-income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward-looking observations. The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the impact of active management of the plan’s assets. Note

includes disclosure of assumptions employed in these measurements for both the non-U.S. and U.S. plans.

Asset Retirement Obligation [Policy Text Block]

Asset Retirement Obligations

We recognize asset retirement obligations (AROs) in the period in which we have an existing legal obligation associated with the retirement of a tangible long-lived asset, and the amount can be reasonably estimated. The ARO is recognized at fair value when the liability is incurred. Upon initial recognition of a liability, that cost is capitalized as part of the related long-lived asset and depreciated on a straight-line basis over the remaining estimated useful life of the related asset. We have recognized a liability related to special handling of asbestos related materials in certain facilities for which we have plans or expectation of plans to undertake a major renovation or demolition project that would require the removal of asbestos or have plans or expectation of plans to exit a facility. In addition, we have determined that we have facilities with some level of asbestos that will require abatement action in the future. Once the probability and timeframe of an action are determined, we apply certain assumptions to determine the related liability and asset. These assumptions include the use of inflation rates, the use of credit adjusted risk-free discount rates and the estimation of costs to handle asbestos related materials. The recorded liability is required to be adjusted for changes resulting from the passage of time and/or revisions to the timing or the amount of the original estimate. The asset retirement obligation liability was

$3,646

and

$2,129

December 1, 2018

and

December 2, 2017,

respectively.

Environmental Costs, Policy [Policy Text Block]

Environmental Costs

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do

not

contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments are made, or remedial efforts are probable, and the costs can be reasonably estimated. The timing of these accruals is generally

later than the completion of feasibility studies.

Commitments and Contingencies, Policy [Policy Text Block]

Contingent Consideration Liability

Concurrent with a business acquisition, we entered into an agreement that requires us to pay the sellers a certain amount based upon a formula related to the entity’s gross profit in

2018.

The change in fair value of the contingent consideration liability each reporting period is recorded in SG&A expenses in the Consolidated Statements of Income.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Share-based Compensation

We have various share-based compensation programs which provide for equity awards, including non-qualified stock options, incentive stock options, restricted stock shares, restricted stock units, performance awards and deferred compensation. We use the straight-line attribution method to recognize compensation expense associated with share-based awards based on the fair value on the date of grant, net of the estimated forfeiture rate. Expense is recognized over the requisite service period related to each award, which is the period between the grant date and the earlier of the award’s stated vesting term or the date the employee is eligible for early retirement based on the terms of the plan. The fair value of stock options is estimated using the Black-Scholes option pricing model. All of our stock compensation expense is recorded in SG&A expenses in the Consolidated Statements of Income.

See Note

for additional information.

Earnings Per Share, Policy [Policy Text Block]

Earnings per Share

Basic earnings per share is calculated by dividing net income attributable to H.B. Fuller by the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per share is based upon the weighted-average number of common and common equivalent shares outstanding during the applicable period. The difference between basic and diluted earnings per share is attributable to share-based compensation awards. We use the treasury stock method to calculate the effect of outstanding awards, which computes total employee proceeds as the sum of (a) the amount the employee must pay upon exercise of the award and (b) the amount of unearned share-based compensation costs attributed to future services. Share-based compensation awards for which total employee proceeds exceed the average market price over the applicable period have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share. The computations for basic and diluted earnings per share are as follows:

(in thousands, except per share data)	2018		2017		2016
Net income attributable to H.B. Fuller	$	171,208	$	59,418	$	121,663

Weighted-average common shares – basic		50,591		50,370		50,136
Equivalent shares from share-based compensation plans		1,384		1,249		1,134
Weighted-average common and common equivalent shares – diluted		51,975		51,619		51,270

Basic earnings per share	$	3.38	$	1.18	$	2.43
Diluted earnings per share	$	3.29	$	1.15	$	2.37

Share-based compensation awards for

1,905,411,

163,140

and

657,439

shares for

2018,

2017

and

2016,

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

Derivatives, Policy [Policy Text Block]

Financial Instruments and Derivatives

As a part of our ongoing operations, we are exposed to market risks such as changes in foreign currency exchange rates and interest rates. To manage these risks, we

may

enter into derivative transactions pursuant to our established policies.

Our objective is to balance, where possible, non-functional currency denominated assets to non-functional currency denominated liabilities to have a natural hedge and minimize foreign exchange impacts. We minimize risks from foreign currency exchange rate fluctuations through normal operating and financing activities and, when deemed appropriate, through the use of derivative instruments. Derivatives consisted primarily of forward currency contracts used to manage foreign currency denominated assets and liabilities. For derivative instruments outstanding that were

not

designated as hedges for accounting purposes, the gains and losses related to mark-to-market adjustments were recognized as other income or expense in the income statement during the periods the derivative instruments were outstanding. To manage exposure to currency rate movements on expected cash flows, the company

may

enter into cross-currency swap agreements.

The company manages interest expense using a mix of fixed and floating rate debt. To manage exposure to interest rate movements and to reduce borrowing costs, the company

may

enter into interest rate swap agreements.

Changes in the fair values of derivatives are recorded in net earnings or other comprehensive income, based on the type of derivative, and whether the instrument is designated and effective as a hedge transaction. Gains or losses on derivative instruments reported in accumulated other comprehensive income (loss) are reclassified to earnings in the period the hedged item affects earnings. Any ineffectiveness is recognized in earnings in the current period. We maintain master netting arrangements that allow us to net settle contracts with the same counterparties; we do

not

elect to offset amounts in our Consolidated Balance Sheet. These arrangements generally do

not

call for collateral. We do

not

enter into any speculative positions with regard to derivative instruments. See Note

for further information regarding our financial instruments.

Purchase of Company Common Stock [Policy Text Block]

Purchase of Company Common Stock

Under the Minnesota Business Corporation Act, repurchased stock is included in authorized shares, but is

not

included in shares outstanding. The excess of the repurchase cost over par value is charged to additional paid-in capital. When additional paid-in capital is exhausted, the excess reduces retained earnings. We repurchased

71,181,

56,230

and

67,807

shares of common stock in

2018,

2017

and

2016,

respectively, in connection with the statutory minimum for the tax withholdings related to vesting of restricted shares.

Change in Accounting Principle [Policy Text Block]

Change in Accounting Principle

As described above, in the

fourth

quarter of

2018,

we elected to change our method of accounting for certain inventories in the United States within the Company’s Americas Adhesives and Construction Adhesives segments from LIFO to weighted-average cost. We have retrospectively adjusted the Consolidated Financial Statements for all periods presented to reflect this change. As a result of the retrospective adjustment for the change in accounting principle, certain amounts in our Consolidated Statements of Income for the years ended

December 2, 2017

and

December 3, 2016

were adjusted as follows:

For the fiscal years ended:
	December 2, 2017									December 3, 2016
	As reported			Impact of change to weighted- average cost			As adjusted			As reported			Impact of change to weighted- average cost			As adjusted

Cost of sales	$	(1,702,873	)	$	1,900		$	(1,700,973	)	$	(1,484,802	)	$	(3,981	)	$	(1,488,783	)
Gross profit		603,170			1,900			605,070			609,803			(3,981	)		605,822
Income taxes		(9,086	)		(724	)		(9,810	)		(50,436	)		1,516			(48,920	)

Net income including non-controlling interests		58,290			1,176			59,466			124,382			(2,465	)		121,917

Net income attributable to H. B. Fuller		58,242			1,176			59,418			124,128			(2,465	)		121,663

Earnings per share attributable to H.B. Fuller common stockholders:
Basic	$	1.16		$	0.02		$	1.18		$	2.48		$	(0.05	)	$	2.43
Diluted		1.13			0.02			1.15			2.42			(0.05	)		2.37

The Consolidated Statements of Comprehensive Income (Loss) for the years ended

December 2, 2017

and

December 3, 2016

were adjusted as follows:

For the fiscal years ended:
	December 2, 2017						December 3, 2016
	As reported		Impact of change to weighted- average cost		As adjusted		As reported		Impact of change to weighted- average cost			As adjusted
Net income including non-controlling interests	$	58,290	$	1,176	$	59,466	$	124,382	$	(2,465	)	$	121,917
Comprehensive income		120,355		1,176		121,531		88,909		(2,465	)		86,444
Comprehensive income attributable to H.B. Fuller		120,316		1,176		121,492		88,683		(2,465	)		86,218

The Consolidated Balance Sheet as of

December 2, 2017

was adjusted as follows:

	As reported		Impact of change to weighted- average cost		As adjusted
Inventories	$	359,505	$	12,597	$	372,102
Other liabilities		341,581		4,800		346,381
Retained earnings		1,119,231		7,797		1,127,028

The Consolidated Statements of Cash Flows for the years ended

December 2, 2017

and

December 3, 2016

were adjusted as follows:

For the fiscal years ended:
	December 2, 2017									December 3, 2016
	As reported			Impact of change to weighted- average cost			As adjusted			As reported			Impact of change to weighted- average cost			As adjusted
Net income including non-controlling interests	$	58,290		$	1,176		$	59,466		$	124,382		$	(2,465	)	$	121,917

Adjustments to reconcile net income including non-controlling interests to net cash provided by operating activities:
Deferred income taxes		(20,936	)		(724	)		(21,660	)		5,344			1,516			6,860

Change in assets and liabilities, net of effects of acquisitions:
Inventories		(10,560	)		1,900			(8,660	)		(3,495	)		(3,981	)		(7,476	)

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements

August 2018,

the FASB issued ASU

No.

2018

15,

Intangibles - Goodwill and Other - Internal-Use Software (Subtopic

350

): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force).

This ASU requires entities that are customers in cloud computing arrangements to defer implementation costs if they would be capitalized by the entity in software licensing arrangements under the internal-use software guidance. The guidance

may

be applied retrospectively or prospectively to implementation costs incurred after the date of adoption. Our effective date for adoption of this guidance is our fiscal year beginning

November 29, 2020

with early adoption permitted. We will early adopt this guidance during the

first

quarter of

2019

on a prospective basis.

August 2018,

the FASB issued ASU

No.

2018

14,

Compensation – Retirement Benefits – Defined Benefit Plans – General (Topic

715

): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.

This ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The ASU removes the requirements to disclose: amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount and timing of plan assets expected to be returned to the employer; and the effects of a

one

-percentage point change in assumed health care cost trend rates. The ASU requires disclosure of an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. Our effective date for adoption of this guidance is our fiscal year beginning

November 28, 2021

with early adoption permitted. We elected to early adopt the guidance during the

fourth

quarter of

2018.

The only impact of the adoption of this guidance was the changes to the disclosures as discussed above.

August 2018,

the FASB issued ASU

No.

2018

13,

Fair Value Measurement (Topic

820

): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.

This ASU modifies the disclosure requirements on fair value measurements. The ASU removes the requirement to disclose: the amount of and reasons for transfers between Level

and Level

of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level

fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level

fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level

fair value measurements. Our effective date for adoption of this guidance is our fiscal year beginning

November 29, 2020

with early adoption permitted. 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.

July 2018,

the FASB issued ASU

No.

2018

11,

Leases (Topic

842

): Targeted Improvements.

This ASU allows entities to

not

recast comparative periods in transition to ASC

842

and instead report the comparative periods presented in the period of adoption under ASC

840.

The ASU also includes a practical expedient for lessors to

not

separate the lease and nonlease components of a contract. The amendments in this ASU are effective in the same timeframe as ASU

No.

2016

as discussed below. We are incorporating this ASU into our assessment and adoption of ASU

No.

2016

02.

July 2018,

the FASB issued ASU

No.

2018

10,

Codification Improvements to Topic

842,

Leases.

This ASU includes certain clarifications to address potential narrow-scope implementation issues which we are incorporating into our assessment and adoption of ASU

No.

2016

02.

The amendments in this ASU are effective in the same timeframe as ASU

No.

2016

as discussed below.

February 2018,

the FASB issued ASU

No.

2018

02,

Income Statement – Reporting Comprehensive Income (Topic

220

): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

The ASU addresses the stranded income tax effects in accumulated other comprehensive income resulting from the “Tax Cuts and Jobs Act”, hereafter referred to as “U.S. Tax Reform”. In accordance with ASC Topic

740,

the effect of the reduced corporate income tax rate on deferred tax assets and liabilities is included in net income attributable to H.B. Fuller in our Consolidated Statement of Income for the year ending

December 1, 2018.

Tax effects on items within accumulated other comprehensive income were left stranded at the historical tax rate. This guidance allows entities to reclassify the stranded income tax effects from accumulated other comprehensive income to retained earnings. Our effective date for adoption of ASU

No.

2018

is our fiscal year beginning

December 1, 2019,

with early adoption permitted. We elected to early adopt the guidance during the

first

quarter of

2018

using the security-by-security approach. The adoption of this ASU resulted in an

$18,341

reclassification from accumulated other comprehensive income (loss) to retained earnings due to the change in the federal corporate tax rate.

May 2017,

the FASB issued 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.

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 classification requirements of this standard are applied on a retrospective basis. The ASU also stipulates that only the service cost component of net benefit cost is eligible for capitalization on a prospective basis. Our effective date for adoption of this guidance is our fiscal year beginning

December 2, 2018

with early adoption permitted. The components of our net periodic defined benefit pension and postretirement benefit costs are presented in Note

10.

The components other than service cost will be presented as nonoperating expenses upon adoption. Service cost will remain in operating expenses.

February 2017,

the FASB issued ASU

No.

2017

05,

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

610

): 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.

January 2017,

the FASB issued ASU

No.

2017

04,

Intangibles—Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment,

which removes Step

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 elected to early adopt the guidance for fiscal

2018.

We applied this guidance to applicable impairment tests upon adoption.

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.

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 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.

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.

Adoption of this guidance will have a presentation impact only and will result in a retrospective reclassification of debt prepayment and extinguishment costs within the Consolidated Statement of Cash Flows from operating to financing cash outflows.

June 2016,

the FASB ASU

No.

2016

, 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. In

November 2018,

the FASB also issued ASU

No.

2018

19,

Codification Improvements to Topic

326,

Financial Instruments – Credit Losses.

This ASU clarifies that receivables arising from operating leases are within the scope of Topic

842,

Leases

. The amendments in this ASU affect the guidance in ASU

No.

2016

and are effective in the same timeframe as ASU

No.

2016

13.

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.

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. We adopted this guidance during the

first

quarter of

2018.

As a result of adoption, excess tax benefits/deficiencies are now recorded as income tax expense and are dependent upon market prices and the volume of stock option exercises and restricted stock vestings during the reporting period. Excess tax benefits of

$1,047

were recorded as a reduction to income tax expense within the Condensed Consolidated Statement of Income during the year ended

December 1, 2018.

Excess tax benefits/deficiencies are now also classified as operating activities within the statement of cash flows and are excluded from the calculation of assumed proceeds available to repurchase shares under the treasury stock method. Cash payments to tax authorities for withheld shares in net-settlement features are classified as financing activities. These changes are applied prospectively, with the exception of the classification of cash payments to tax authorities in the statement of cash flows, which were already classified as financing activities. Therefore,

prior period adjustments were made as a result of the adoption of this guidance. We are continuing our existing practice of estimating the number of awards that will be forfeited in accordance with this ASU.

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

and are effective in the same timeframe as ASU

No.

2014

as discussed below.

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. In

December 2018,

the FASB also issued ASU

No.

2018

20,

Leases (Topic

842

): Narrow-Scope Improvements for Lessors

, which clarifies the accounting for lessors for variable payments that relate to both a lease component and a nonlease component and is effective in the same timeframe as ASU

2016

02.

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 have begun implementing lease accounting software and are currently evaluating the impact that the new guidance will have on our Consolidated Financial Statements.

January 2016,

the FASB issued ASU

No.

2016

01,

Financial Instruments - Overall (Subtopic

825

): 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.

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. The new standard is effective for fiscal years and interim periods beginning after

December 15, 2017 (

as stated in ASU

No.

2015

which defers the effective date and was issued in

August 2015)

and is now effective for our fiscal year beginning

December 2, 2018.

The standard permits the use of either the retrospective or cumulative effect transition method. We intend to adopt this guidance using the modified retrospective method. We have completed contract reviews and have determined there are

significant impacts, as our revenue transactions are

not

accounted for under industry-specific guidance superseded by the ASU and generally consist of a single performance obligation to transfer promised goods or services. In addition to assessing the impact on the Consolidated Financial Statements, we have completed our analysis of the impact of the new standard on our business processes, systems and controls to support recognition and disclosure requirements under this ASU.