10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended November 27, 2021

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)

Registrant’s telephone number, including area code: (651) 236-5900

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00	FUL	New York Stock Exchange

Securities registered pursuant to Section 12(b) of the Act: none

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

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 ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

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

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

The aggregate market value of the Common Stock, par value $1.00 per share, held by non-affiliates of the registrant as of May 28, 2021 was approximately $3,602,301,720 (based on the closing price of such stock as quoted on the New York Stock Exchange of$69.12 on such date).

The number of shares outstanding of the Registrant’s Common Stock, par value $1.00 per share, was 52,828,288 

as of January 20, 2022.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information by reference to portions of the registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 7, 2022.

1

H.B. FULLER COMPANY

2021 Annual Report on Form 10-K

Table of Contents

PART I
Item 1.	Business	3
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	9
Item 2.	Properties	10
Item 3.	Legal Proceedings	11
Item 4.	Mine Safety Disclosures	11
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	11
Item 6.	Selected Financial Data	12
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 8.	Financial Statements and Supplementary Data	25
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	62
Item 9A.	Controls and Procedures	62
Item 9B.	Other Information	62
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	62
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	63
Item 11.	Executive Compensation	63
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	63
Item 13.	Certain Relationships and Related Transactions and Director Independence	63
Item 14.	Principal Accountant Fees and Services	63
PART IV
Item 15.	Exhibits and Financial Statement Schedules	64
Item 16.	Form 10-K Summary	68
	Signatures	69

2

PART I

Item 1. Business

H.B. Fuller Company was founded in 1887 and incorporated as a Minnesota corporation in 1915. Our stock is traded on the New York Stock Exchange (“NYSE”) under the ticker symbol FUL. As used herein, “H.B. Fuller”, “we”, “us”, “our”, “management” or “company” includes H.B. Fuller and its subsidiaries unless otherwise indicated. Where we refer to 2021, 2020 and 2019 herein, the reference is to our fiscal years ended November 27, 2021, November 28, 2020, and November 30, 2019, respectively.

We are a leading worldwide formulator, manufacturer and marketer of adhesives, sealants and other specialty chemical products. Sales operations span 35 countries in North America, Europe, Latin America, the Asia Pacific region, India, the Middle East and Africa. Industrial adhesives represent our core product offering. Customers use our adhesives products in manufacturing common consumer and industrial goods, including food and beverage containers, disposable diapers, medical products, windows, doors, flooring, roofing, appliances, sportswear, footwear, multi-wall bags, water filtration products, insulation, textiles, automobiles, recreational vehicles, buses, trucks and trailers, marine products, solar energy systems, electronics and products for the aerospace and defense industries. Our adhesives help improve the performance of our customers’ products or improve their manufacturing processes. We also provide our customers with technical support and unique solutions designed to address their specific needs. In addition, we have established a variety of product offerings for residential and commercial construction markets, such as tile-setting adhesives, grouts, sealants and related products.

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. See Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) in Item 7 of this Annual Report for a description of our segment operating results.

Non-U.S. Operations

The principal markets, products and methods of distribution outside the United States vary with each of our regional operations generally maintaining integrated business units that contain dedicated supplier networks, manufacturing, logistics and sales organizations. The vast majority of the products sold within any region are produced within the region, and the respective regions do not import significant amounts of product from other regions. As of November 27, 2021, we had sales offices and manufacturing plants in 21 countries outside the United States and satellite sales offices in another 13 countries.

We have a Code of Business Conduct and detailed Core Policies that we apply across all of our operations around the world. These policies represent a set of common values that apply to all employees and all of our business dealings. We have adopted policies and processes, and conduct employee training, intended to ensure compliance with various economic sanctions and export controls, including the regulations of the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). We do not conduct any business in the following countries that are subject to U.S. economic sanctions: Cuba; Iran; North Korea; Syria and the Crimea region of the Ukraine. 

Competition

Many of our markets are highly competitive. However, we compete effectively due to the quality and breadth of our adhesives, sealants and specialty chemical portfolio and the experience and expertise of our commercial organizations. Within the adhesives and other specialty chemical markets, we believe few suppliers have comparable global reach and corresponding ability to deliver quality and consistency to multinational customers. Our competition is made up generally of two types of companies: (1) similar multinational suppliers and (2) regional or specialty suppliers that typically compete in only one region or within a narrow geographic area within a region. The multinational competitors typically maintain a broad product offering and range of technology, while regional or specialty companies tend to have limited or more focused product ranges and technology.

Principal competitive factors in the sale of adhesives and other specialty chemicals are product performance, supply assurance, technical service, quality, price and customer service.

Customers

We have cultivated strong, integrated relationships with a diverse set of customers worldwide. Our customers are among the technology and market leaders in consumer goods, construction and industrial markets. We pride ourselves on long-term, collaborative customer relationships and a diverse portfolio of customers in which no single customer accounted for more than 10 percent of consolidated net revenue.

Our leading customers include manufacturers of food and beverages, hygiene products, clothing, major appliances, electronics, automobiles, aerospace and defense products, solar energy systems, filters, construction materials, wood flooring, furniture, cabinetry, windows, doors, tissue and towel, corrugation, tube winding, packaging, labels and tapes.

Our products are delivered directly to customers primarily from our manufacturing and distribution facilities, with additional deliveries made through distributors and retailers.

Human Capital Resources and Management

Employees and Labor Relations

As of November 27, 2021, we have approximately 6,500 employees in 45 countries, including approximately 2,500 employees based in the U.S. Approximately 450 U.S. employees are subject to collective bargaining agreements with various unions. Approximately 750 employees in foreign countries are subject to collective bargaining agreements. Overall, we consider our employee relations to be good.

Health and Safety

We care about our colleagues and anyone who enters our workplace and we believe that nothing we do is worth getting hurt for. We have a strong environmental, health and safety program that focuses on implementing policies and training programs, as well as performing self-audits to enhance work safety. Importantly during 2021, our experience and continuing focus on workplace safety have enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues and workplace visitors safe during the COVID-19 pandemic.

3

Competitive Pay and Benefits

Our primary compensation strategy is “Pay for Performance”, which supports a culture of accountability and performance. Our compensation guiding principles are to structure compensation that is simple, aligned and balanced. We believe that these principles are strongly aligned with the strategic priorities of our business and our objective to deliver value for our shareholders.

We are committed to fair pay and strive to be externally competitive while ensuring internal equity across our organization. We conduct global pay equity assessments and compensation reviews, and when necessary, we take action to address areas of concern.

Quality, affordable health care is the foundation of the comprehensive benefits package we offer our employees. It is one of the tools we use to recruit and retain, and it is seen as the preferred benefit by most employees. Employees in the United States earning below $52,000 each year have 100% of their individual health care costs covered by the Company in the form of a medical premium reimbursement. 

Results-Driven, Collaborative Culture

Our purpose is connecting what matters for all stakeholders and we go about this by winning the right way through our core values. We expect employees to act with integrity and hold each other accountable for our actions. We value our global team’s diverse perspectives, backgrounds and experiences. We make daily, conscious choices to excel, by always bringing passion and creativity to our work, and by striving for innovation ethically and fairly. Our worldwide network of culture champions supports our focus on being At Our Best. Our communication on goals, targets and performance is frequent and transparent. We continue to leverage flexible work options available to employees who don't need our facilities to perform their jobs and this continues to enhance connections across the company, as well as with customers and external partners. This supports our desire to be first and fastest in finding solutions for customers and improving our overall effectiveness. Finally, we continue to take great pride in our focus on giving back to the communities in which we operate through the giving efforts of the H.B. Fuller Foundation and the thousands of employee volunteer hours each year.

Inclusion and Diversity

As a global company, we currently have employees present in over 40 countries around the world. We place strong value on collaboration and we believe that working together leads to better outcomes for our customers. This extends to the way we treat each other as team members. We strive to create an environment where innovative ideas can flourish by demonstrating respect for each other and valuing the diverse opinions, background and viewpoints of employees. We believe that diversity in our teams leads to new ideas, helps us solve problems and allows us to better connect with our global customer base.

We are taking specific actions to foster inclusion and diversity into our culture. Learning resources have been implemented to support greater awareness and understanding of the behaviors expected from employees. We have introduced employee networking groups, an expanded and enhanced mentoring program and focused development programs with the goal of creating meaningful opportunities for employees. We have adjusted our recruiting practices to ensure we are getting the right level of exposure to diverse candidates.

Talent Development

We recognize how important it is for our colleagues to develop and progress in their careers. We provide a variety of resources to help our colleagues grow in their current roles and build new skills, including online development resources focused on specific business imperatives with access to hundreds of online courses in our learning management system. We have implemented an innovative delivery method for leadership training to drive experiential learning and to increase access to leaders around the world. Individual development planning is a part of our annual goal setting process and people managers are expected to have regular discussions with employees to measure progress and make needed adjustments. We focus on getting employees into roles with greater responsibility and opportunities for advancement that are also aligned with their career path to facilitate development and maximize potential. Finally, we provide ambitious employees with short-term opportunities in unique assignments in addition to their current roles. These assignments support the employees’ development while also supporting company initiatives that are required to be resourced with talented employees.

Raw Materials

We use several principal raw materials in our manufacturing processes, including tackifying resins, polymers, synthetic rubbers, vinyl acetate monomer and plasticizers. We generally avoid sole source supplier arrangements for raw materials.

The majority of our raw materials are petroleum/natural gas based derivatives. Under normal conditions, raw materials are available on the open market. Prices and availability are subject to supply and demand market mechanisms. Raw material costs are primarily determined by the balance of supply against the aggregate demand from the adhesives industry and other industries that use the same raw material streams. The cost of crude oil and natural gas, the primary feedstocks for our raw materials, can also impact the cost of our raw materials.

See Item 1A. Risk Factors for a discussion of the effects of the COVID-19 pandemic on raw material cost and availability.

Patents, Trademarks and Licenses

Much of the technology we use in our products and manufacturing processes is available in the public domain. For technology not available in the public domain, we rely on trade secrets and patents when appropriate to protect our competitive position. We also license some patented technology from other sources. Our business is not materially dependent upon licenses or similar rights or on any single patent or group of related patents.

We enter into agreements with many employees to protect rights to technology and intellectual property. Confidentiality commitments also are routinely obtained from customers, suppliers and others to safeguard proprietary information.

We own numerous trademarks and service marks in various countries. Trademarks, such as H.B. Fuller®, Swift®, Advantra®, Clarity®, Sesame®, TEC®, Foster®, Rakoll®, Rapidex®, Full-Care®, Thermonex®, Silaprene®, Eternabond®, Cilbond®, and TONSAN® are important in marketing products. Many of our trademarks and service marks are registered. U.S. trademark registrations are for a term of ten years and are renewable every ten years as long as the trademarks are used in the regular course of trade.

4

Research and Development

Our investment in research and development creates new and innovative adhesive technology platforms, enhances product performance, ensures a competitive cost structure and leverages available raw materials. New product development is a key research and development outcome, providing higher-value solutions to existing customers or meeting new customers’ needs. Projects are developed in local laboratories in each region, where we understand our customer base the best. Platform developments are coordinated globally through our network of laboratories.

Through designing and developing new polymers and new formulations, we expect to continue to grow in our current markets. We also develop new applications for existing products and technologies, and improve manufacturing processes to enhance productivity and product quality. Research and development efforts are closely aligned to customer needs. We foster open innovation, seek supplier-driven new technology and use relationships with academic and other institutions to enhance our capabilities.

As climate change and other sustainability concerns become more prevalent, governmental and non-governmental organizations, customers and investors are increasingly focusing on these issues. We continue to monitor our markets to ensure we are developing the adhesives and sealants to support our customers’ responses to changing consumer demand, new product designs and upcoming regulatory and sustainability efforts. We invest significantly in innovation, research and expertise, which are crucial for the continuous extraction of value from our business strategy. This also facilitates the creation of new high-performance solutions that enable customers to improve their products and processes to better achieve their sustainability programs.

Regulatory Compliance

We comply with applicable federal, state, local and foreign laws and regulations relating to environmental protection and workers' safety, including those required by the U.S. Environmental Protection Agency (the “EPA”) and the EU’s Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”) regulation. This includes regular review of and upgrades to environmental, health and safety policies, practices and procedures as well as improved production methods to minimize our facilities’ outgoing waste, based on evolving societal standards and increased environmental understanding. Expenditures to comply with environmental regulations over the next two years are estimated to be approximately $24.2 million, including approximately $3.7 million of capital expenditures. See additional disclosure under Item 3. Legal Proceedings.

Various legislation, regulations and international accords pertaining to climate change have been implemented or are being considered for implementation, particularly as they relate to the reduction of greenhouse gas emissions. We have not determined that any of these laws directly impact the Company at this time; however, we continue to monitor the development and implementation of such legislation and regulation. We also continue to regularly report our sustainability efforts and metrics under the Global Reporting Initiative (“GRI”) framework and report our goals and progress in our annual Sustainability Report.

The Foreign Corrupt Practices Act (the “FCPA”) prohibits bribery of government officials to benefit business interests. We operate and sell our products in countries that are rated as high-risk for corruption, which creates the risk of unauthorized conduct by our employees, customs brokers, distributors or other third party intermediaries that could be in violation of the FCPA or similar local regulations. We comply with the FCPA’s requirements to make and keep accurate books and records that accurately and fairly reflect our transactions and to devise and maintain an adequate system of internal accounting controls.

We are also subject to and comply with increasingly complex privacy and data protection laws and regulations in the United States and other jurisdictions. This includes the European Union’s General Data Protection Regulation (“GDPR”), which enforces rules relating to the protection of processing and movement of personal data. The interpretation and enforcement of such regulations are continuously evolving and there may be uncertainty with respect to how to comply with them. Noncompliance with GDPR and other data protection laws could result in damage to our reputation and payment of monetary penalties.

Seasonality

Our operating segments have historically had lower net revenue in winter months, which is primarily our first fiscal quarter, mainly due to international holidays and the seasonal decline in construction and consumer spending activities.

Information About Our Executive Officers

The following table shows the name, age and business experience for the past five years of the executive officers as of January 5, 2022. Unless otherwise noted, the positions described are positions with the company or its subsidiaries.

Name	Age	Positions	Period Served
James J. Owens	57	President and Chief Executive Officer	November 2010 - Present
Zhiwei Cai	59	Executive Vice President, Engineering Adhesives	August 2019 - Present
		Senior Vice President, Engineering Adhesives	February 2016 - August 2019
Heather A. Campe	48	Senior Vice President, International Growth	December 2021 - Present
		Senior Vice President, Global Hygiene, Health and Consumable Adhesives	August 2019 - November 2021
		Senior Vice President, Americas Adhesives	October 2016 - August 2019
Theodore M. Clark	68	Executive Vice President and Chief Operating Officer	August 2019 - Present
		Senior Vice President, Royal Adhesives	October 2017 - August 2019
		President and CEO, Royal Adhesives and Sealants, LLC	2003 - 2017
John J. Corkrean	56	Executive Vice President and Chief Financial Officer	May 2016 - Present
James J. East	57	Senior Vice President, Hygiene, Health and Consumable Adhesives	October 2021 - Present
		Vice President, Engineering Adhesives Americas and Global Director Automotive	April 2018 - October 2021
		Global Business Director, General Industries and Business Director, Cyberbond LLC	June 2016 - March 2018

5

Traci L. Jensen	55	Vice President, Global Business Process Improvement	December 2019 - Present
		Senior Vice President, Construction Products	July 2016 - December 2019
Timothy J. Keenan	64	Vice President, General Counsel and Corporate Secretary	December 2006 - Present
M. Shahbaz Malik	54	Senior Vice President, Construction Adhesives	December 2019 - Present
		Vice President and Business Leader, North America Distribution, Masonite International Corporation (global residential doors business)	2018 - 2019
		Senior Vice President, Sales, Marketing and Supply Chain, Continental Building Products, Inc. (North America manufacturer of wallboard and joint compound materials)	2014 - 2018
Nathanial D. Weaver	46	Vice President, Human Resources	March 2020 - Present
		Director, Human Resources	2017 - March 2020
		Vice President, Global Hygiene	2013 - 2017

The Board of Directors elects the executive officers annually.

Available Information

For more information about us, visit our website at: www.hbfuller.com.

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”) via EDGAR. Our SEC filings are available free of charge to the public on the SEC website at www.sec.gov and on our website as soon as reasonably practicable after they have been filed with or furnished to the SEC.

Item 1A. Risk Factors

As a global manufacturer of adhesives, sealants and other specialty chemical products, we operate in a business environment that is subject to various risks and uncertainties. Below are the most significant factors that could adversely affect our business, financial condition and results of operations.

Strategic and Operational Risks

The COVID-19 pandemic has affected and will continue to affect our operations and financial results.

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China, which became a global pandemic. Throughout fiscal year 2021, the COVID-19 pandemic continued to have a significant disruptive impact on global economies, supply chains and industrial production. We have effectively managed our global operations throughout the pandemic, implementing rigorous protocols focused on the health and safety of our employees and ensuring business continuity across our supplier, manufacturing and distribution networks. These actions enabled us to meet our customers’ increased demands for adhesive solutions, effectively allocate our resources and manage expenses, and deliver strong financial results, while maintaining a safe workplace for employees. Concerns remain that there could be a prolonged resurgence of cases triggering additional government mandated lockdowns or similar restrictions, for example due to the emergence of new variants against which existing vaccines are not as effective or which may be more easily transmitted.

Due to the evolving and highly uncertain nature of the pandemic, it is currently not possible to estimate any additional direct or indirect impacts this outbreak may have on our business. Any disruption of the manufacturing of our products, commerce and related activity caused by the COVID-19 pandemic, including ongoing labor shortages and supply chain constraints, could materially and adversely affect our results of operations and financial condition.

Increases in prices and declines in the availability of raw materials have adversely affected, and could continue to erode, our profit margins, and could negatively impact our operating results.

In 2021, raw material costs made up approximately 75 percent of our cost of sales. Based on 2021 financial results, a hypothetical one percent change in our raw material costs would have resulted in a change in net income of approximately $13.2 million or $0.24 per diluted share.  Accordingly, changes in the cost of raw materials, due to scarcity, supplier disruptions, inflation and for other reasons, can significantly impact our earnings. Raw materials needed to manufacture products are obtained from a number of suppliers and many of the raw materials are petroleum and natural gas based derivatives. Under normal market conditions, these raw materials are generally available on the open market from a variety of producers. While alternate supplies of most key raw materials are available, supplier production outages may lead to strained supply-demand situations for certain raw materials. The substitution of key raw materials requires us to identify new supply sources, reformulate and re-test and may require seeking re-approval from our customers using those products. From time to time, the prices and availability of these raw materials may fluctuate, which could impair our ability to procure necessary materials, or increase the cost of manufacturing products. If the prices of raw materials increase in a short period of time, we may be unable to pass these increases on to our customers in a timely manner and could experience reductions to our profit margins.

The COVID-19 pandemic has had a significant impact on raw material prices, which could continue in the future. Further, the COVID-19 pandemic and responses to it have significantly limited or prevented the movement of goods and services worldwide, which has resulted in and could continue to result in disruptions in our supply chain and our difficulty in procuring or inability to procure raw materials necessary for the manufacturing of our products. The impact of the COVID-19 pandemic and responses to it has increased and could continue to increase the costs of making and distributing our products or result in delays in delivering, or an inability to deliver, them to our customers.

We experience substantial competition in each of the operating segments and geographic areas in which we operate.

Our wide variety of products are sold in numerous markets, each of which is highly competitive. Our competitive position in markets is, in part, subject to external factors. For example, supply and demand for certain of our products is driven by end-use markets and worldwide capacities which, in turn, impact demand for and pricing of our products. Many of our direct competitors are part of large multinational companies and may have more resources than we do. Any increase in competition may result in lost market share or reduced prices, which could result in reduced profit margins. This may impair the ability to grow or even to maintain current levels of revenues and earnings. While we have an extensive customer base, loss of certain top customers could adversely affect our financial condition and results of operations until such business is replaced, and no assurances can be made that we would be able to regain or replace any lost customers.

6

Failure to develop new products and protect our intellectual property could negatively impact our future performance and growth. 

Ongoing innovation and product development are important factors in our competitiveness. Failure to create new products and generate new ideas could negatively impact our ability to grow and deliver strong financial results. We continually apply for and obtain U.S. and foreign patents to protect the results of our research for use in our operations and licensing. We are party to a number of patent licenses and other technology agreements. We rely on patents, confidentiality agreements and internal security measures to protect our intellectual property. Failure to protect this intellectual property could negatively affect our future performance and growth.

A failure in our information technology systems could negatively impact our business. 

We rely on information technology to record and process transactions, manage our business and maintain the financial accuracy of our records. Our computer systems are subject to damage or interruption from various sources, including power outages, computer and telecommunications failures, computer viruses, security breaches, vandalism, catastrophic events and human error. Interruptions of our computer systems could disrupt our business, for example by leading to plant downtime and/or power outages, and could result in the loss of business and cause us to incur additional expense.

Information technology security threats are increasing in frequency and sophistication. Our information technology systems could be breached by unauthorized outside parties or misused by employees or other insiders intent on extracting sensitive information, corrupting information or disrupting business processes. Such unauthorized access and a failure to effectively recover from breaches could compromise confidential information, disrupt our business, harm our reputation, result in the loss of assets including trade secrets and other intellectual property, customer confidence and business, result in regulatory proceedings and legal claims, and have a negative impact on our financial results.

We are in the process of implementing a global Enterprise Resource Planning (“ERP”) system that we refer to as Project ONE, which will upgrade and standardize our information system. Implementation of Project ONE began in our North America adhesives business in 2014 and, through 2021, we completed implementation of this system in various parts of our business including Latin America (except Brazil), Australia and various other businesses in North America and EIMEA. During 2022 and beyond, we will continue implementation in North America, EIMEA and Asia Pacific.

Any delays or other failure to achieve our implementation goals may adversely impact our financial results. In addition, the failure to either deliver the application on time or anticipate the necessary readiness and training needs could lead to business disruption and loss of business. Failure or abandonment of any part of the ERP system could result in a write-off of part or all of the costs that have been capitalized on the project.

Risks associated with acquisitions could have an adverse effect on us and the inability to execute organizational restructuring may affect our results.

As part of our growth strategy, from time to time, we have made acquisitions of complementary businesses or products. The ability to grow through acquisitions depends upon our ability to identify, negotiate, complete and integrate suitable acquisitions. If we fail to successfully integrate acquisitions into our existing business, our results of operations and our cash flows could be adversely affected. Our acquisition strategy also involves other risks and uncertainties, including distraction of management from current operations, greater than expected liabilities and expenses, inadequate return on capital, unidentified issues not discovered in our investigations and evaluations of those strategies and acquisitions, and difficulties implementing and maintaining consistent standards, controls, procedures, policies and systems. Future acquisitions could result in additional debt and other liabilities, and increased interest expense, restructuring charges and amortization expense related to intangible assets.

In addition, our profitability is dependent on our ability to drive sustainable productivity improvements such as cost savings through organizational restructuring. Delays or unexpected costs may prevent us from realizing the full operational and financial benefits of such restructuring initiatives and may potentially disrupt our operations.

Legal and Regulatory Risks

The impact of changing laws or regulations or the manner of interpretation or enforcement of existing laws or regulations could adversely impact our financial performance and restrict our ability to operate our business or execute our strategies.

New laws or regulations, or changes in existing laws or regulations or the manner of their interpretation or enforcement, could increase our cost of doing business and restrict our ability to operate our business or execute our strategies. In addition, compliance with laws and regulations is complicated by our substantial global footprint, which will require significant and additional resources to ensure compliance with applicable laws and regulations in the various countries where we conduct business.

Our global operations expose us to trade and economic sanctions and other restrictions imposed by the U.S., the EU and other governments and organizations. The U.S. Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the FCPA and other federal statutes and regulations, including those established by the OFAC. Under these laws and regulations, as well as other anti-corruption laws, anti-money-laundering laws, export control laws, customs laws, sanctions laws and other laws governing our operations, various government agencies may require export licenses, may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries or with sanctioned persons or entities and modifications to compliance programs, which may increase compliance costs, and may subject us to fines, penalties and other sanctions. A violation of these laws, regulations, policies or procedures could adversely impact our business, results of operations and financial condition.

Although we have implemented policies and procedures in these areas, we cannot assure that our policies and procedures are sufficient or that directors, officers, employees, representatives, manufacturers, suppliers and agents have not engaged and will not engage in conduct in violation of such policies and procedures.

Costs and expenses resulting from compliance with environmental laws and regulations may negatively impact our operations and financial results. 

We are subject to numerous environmental laws and regulations that impose various environmental controls on us or otherwise relate to environmental protection, the sale and export of certain chemicals or hazardous materials, and various health and safety matters. The costs of complying with these laws and regulations can be significant and may increase as applicable requirements and their enforcement become more stringent and new rules are implemented. Adverse developments and/or periodic settlements could negatively impact our results of operations and cash flows. See Item 3. Legal Proceedings for a discussion of current environmental matters.

7

Climate change, or legal, regulatory or market measures to address climate change, may materially adversely affect our financial condition and business operations.

Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our future operations from natural disasters and extreme weather conditions, such as hurricanes, tornadoes, earthquakes, wildfires or flooding. Such extreme weather conditions could pose physical risks to our facilities and disrupt operation of our supply chain and may increase operational costs. The impacts of climate change on global water resources may result in water scarcity, which could in the future impact our ability to access sufficient quantities of water in certain locations and result in increased costs. Concern over climate change could result in new legal or regulatory requirements designed to mitigate the effects of climate change on the environment. If such laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased compliance burdens and costs to meet the regulatory obligations and may adversely affect raw material sourcing, manufacturing operations and the distribution of our products.

 We have lawsuits and claims against us with uncertain outcomes.

Our operations from time to time are parties to or targets of lawsuits, claims, investigations and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which are handled and defended in the ordinary course of business. The results of any future litigation or settlement of such lawsuits and claims are inherently unpredictable, but such outcomes could be adverse and material in amount. See Item 3. Legal Proceedings for a discussion of current litigation.

The Company’s effective tax rate could be volatile and materially change as a result of the adoption of new tax legislation and other factors.

A change in tax laws is one of many factors that impact the Company’s effective tax rate. The U.S. Congress and other government agencies in jurisdictions where the Company does business have had an extended focus on issues related to the taxation of multinational corporations. As a result, the tax laws in the U.S. and other countries in which the Company does business could change, and any such changes could adversely impact our effective tax rate, financial condition and results of operations.

The Organization for Economic Co-operation and Development ("OECD"), an international association of 38 countries including the United States, has proposed changes to numerous long-standing tax principles. These proposals, if finalized and adopted by the associated countries, will likely increase tax uncertainty and may adversely affect our provision for income taxes.

The current U.S. presidential administration could enact changes in tax laws that could negatively impact the Company’s effective tax rate. Prior to the U.S. presidential election, President Biden proposed an increase in the U.S. corporate income tax rate from 21% to 28%, doubling the rate of tax on certain earnings of foreign subsidiaries, the creation of a 10% penalty on certain imports and a 15% minimum tax on worldwide book income. Additionally, the proposed changes include significant provisions related to the deductibility of interest. If any or all of these (or similar) proposals are ultimately enacted into law, in whole or in part, they could have a negative impact to the Company’s effective tax rate.

Additional income tax expense or exposure to additional income tax liabilities could have a negative impact on our financial results. 

We are subject to income tax laws and regulations in the United States and various foreign jurisdictions. Significant judgment is required in evaluating and estimating our provision and accruals for these taxes. Our income tax liabilities are dependent upon the location of earnings among these different jurisdictions. Our income tax provision and income tax liabilities could be adversely affected by the jurisdictional mix of earnings, changes in valuation of deferred tax assets and liabilities and changes in tax laws and regulations. In the ordinary course of our business, we are also subject to continuous examinations of our income tax returns by tax authorities. Although we believe our tax estimates are reasonable, the final results of any tax examination or related litigation could be materially different from our related historical income tax provisions and accruals. Adverse developments in an audit, examination or litigation related to previously filed tax returns, or in the relevant jurisdiction’s tax laws, regulations, administrative practices, principles and interpretations could have a material effect on our results of operations and cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods.

Financial Risks

We may be required to record impairment charges on our goodwill or long-lived assets. 

Weak demand may cause underutilization of our manufacturing capacity or elimination of product lines; contract terminations or customer shutdowns may force sale or abandonment of facilities and equipment; or other events associated with weak economic conditions or specific product or customer events may require us to record an impairment on tangible assets, such as facilities and equipment, as well as intangible assets, such as intellectual property or goodwill, which would have a negative impact on our financial results.

Our current indebtedness could have a negative impact on our liquidity or restrict our activities.

Our current indebtedness contains various covenants that limit our ability to engage in specified types of transactions. Our overall leverage and the terms of our financing arrangements could:

● limit our ability to obtain additional financing in the future for working capital, capital expenditures and acquisitions;

● make it more difficult to satisfy our obligations under the terms of our indebtedness;

● limit our ability to refinance our indebtedness on terms acceptable to us or at all;

● limit our flexibility to plan for and adjust to changing business and market conditions in the industries in which we operate and increase our vulnerability to general adverse economic and industry conditions;

● require us to dedicate a substantial portion of our cash flow to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund future acquisitions, working capital, business activities, and other general corporate requirements;

● limit our ability to obtain additional financing for working capital, to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity, particularly if any ratings assigned to our debt securities by rating organizations were revised downward; and

● subject us to higher levels of indebtedness than our competitors, which may cause a competitive disadvantage and may reduce our flexibility in responding to increased competition.

8

In addition, the restrictive covenants require us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet those financial ratios and tests will depend on our ongoing financial and operating performance, which, in turn, will be subject to economic conditions and to financial, market and competitive factors, many of which are beyond our control. A breach of any of these covenants could result in a default under the instruments governing our indebtedness.

The interest rates of our term loans are priced using a spread over LIBOR.

LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate or index in our term loans such that the interest due to our creditors pursuant to a term loan extended to us is calculated using LIBOR. Most of our term loan agreements contain a stated minimum value for LIBOR.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates the entity that calculates LIBOR, announced that LIBOR should be phased out by the end of 2021. Subsequently, on March 5, 2021, LIBOR’s administrator announced that publication of overnight, one-month, three-month, six-month and 12-month U.S. dollar LIBOR would cease immediately following publication of such interest rates on June 30, 2023, and that publication of all other currency and tenor variants would cease immediately following publication on December 31, 2021.

The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions and other market participants, is considering replacing U.S. dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by Treasury securities (“SOFR”). Whether or not SOFR attains market traction as a LIBOR replacement tool remains in question. SOFR is observed and backward looking, which stands in contrast with LIBOR under the current methodology, which can be an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members. Given that SOFR is a secured rate backed by government securities, it will be a rate that does not take into account bank credit risk (as is the case with LIBOR). The SOFR rate is therefore likely to be lower than LIBOR rates and is less likely to correlate with the funding costs of financial institutions.

If LIBOR ceases to exist prior to the maturity of our contracts, we will be required to substitute an index such as the Prime Rate or renegotiate our credit agreements that utilize LIBOR as the reference rate, and substitute an index to replace LIBOR with the new standard that is established. If we borrow under the Prime Rate, we will see increased borrowing costs until the agreements are amended or renegotiated to incorporate the new SOFR borrowing rate or another substitute index.

MacroeconomicRisks

Uncertainties in foreign economic, political, regulatory and social conditions and fluctuations in foreign currency may adversely affect our results. 

Approximately 57 percent, or $1.9 billion, of our net revenue was generated outside the United States in 2021. International operations could be adversely affected by changes in economic, political, regulatory, and social conditions, especially in Brazil, Russia, China, the Middle East, including Turkey and Egypt, and other developing or emerging markets where we do business. An economic downturn in the businesses or geographic areas in which we sell our products could reduce demand for these products and result in a decrease in sales volume that could have a negative impact on our results of operations. Product demand often depends on end-use markets. Economic conditions that reduce consumer confidence or discretionary spending may reduce product demand. Challenging economic conditions may also impair the ability of our customers to pay for products they have purchased, and as a result, our reserves for doubtful accounts and write-offs of accounts receivable may increase. In addition, trade protection measures, anti-bribery and anti-corruption regulations, restrictions on repatriation of earnings, differing intellectual property rights and changes in legal and regulatory requirements that restrict the sales of products or increase costs could adversely affect our results of operations.

Fluctuations in exchange rates between the U.S. dollar and other currencies could potentially result in increases or decreases in net revenue, cost of raw materials and earnings and may adversely affect the value of our assets outside the United States. In 2021, the change in foreign currencies positively impacted our net revenue by approximately $64.0 million. In 2021, we spent approximately $1.8 billion for raw materials worldwide of which approximately $996.7 million was purchased outside the United States. Based on 2021 financial results, 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 of approximately $9.4 million or $0.17 per diluted share. Although we utilize risk management tools, including hedging, as appropriate, to mitigate market fluctuations in foreign currencies, any changes in strategy in regard to risk management tools can also affect revenue, expenses and results of operations and there can be no assurance that such measures will result in cost savings or that all market fluctuation exposure will be eliminated.

Distressed financial markets may result in dramatic deflation of financial asset valuations and a general disruption in capital markets. 

Adverse equity market conditions and volatility in the credit markets could have a negative impact on the value of our pension trust assets, our future estimated pension liabilities and other postretirement benefit plans. In addition, we could be required to provide increased pension plan funding. As a result, our financial results could be negatively impacted. Reduced access to capital markets may affect our ability to invest in strategic growth initiatives such as acquisitions. In addition, the reduced credit availability could limit our customers’ ability to invest in their businesses, refinance maturing debt obligations, or meet their ongoing working capital needs. If these customers do not have sufficient access to the financial markets, demand for our products may decline.

Catastrophic events could disrupt our operations or the operations of our suppliers or customers, having a negative impact on our financial results.

Unexpected events, including global pandemics, natural disasters and severe weather events, fires or explosions at our facilities or those of our suppliers, acts of war or terrorism, supply disruptions or breaches of security of our information technology systems could increase the cost of doing business or otherwise harm our operations, our customers and our suppliers. Such events could reduce demand for our products or make it difficult or impossible for us to receive raw materials from suppliers and deliver products to our customers.

Item 1B. Unresolved Staff Comments

None.

9

Item 2. Properties

Principal executive offices and central research facilities are located in the St. Paul, Minnesota area. These facilities are company-owned. Manufacturing operations are carried out at 34 plants located throughout the United States and at 35 plants located in 21 other countries. In addition, numerous sales and service offices are located throughout the world. We believe that the properties owned or leased are suitable and adequate for our business. Operating capacity varies by product line, but additional production capacity is available for most product lines by increasing the number of shifts worked. The following is a list of our manufacturing plants as of November 27, 2021 (each of the listed properties are owned by us, unless otherwise specified):

Segment			Segment
Hygiene, Health and Consumable Adhesives			Engineering Adhesives
Argentina	Buenos Aires		France	Surbourg
Australia	Dandenong South		Germany	Wunstorf
Australia	Sydney1		Germany	Nienburg
Brazil	Sorocaba2		Germany	Langelsheim1
Brazil	Curitiba1		Germany	Pirmasens
Brazil	Guarulhos		Italy	Pianezze
Chile	Maipu, Santiago		People's Republic of China	Beijing
Colombia	Rionegro		People's Republic of China	Nanjing - ShanXu Road
Egypt	6th of October City	`	People's Republic of China	Nanjing - Xinjinhu Road1
France	Blois		People's Republic of China	Suzhou
Germany	Lueneburg		People's Republic of China	Yantai
Greece	Lamia		Portugal	Mindelo
India	Pune		United Kingdom	Preston1
Indonesia	Mojokerto		United States	California - Irvine1
Kenya	Nairobi1		United States	California - Wilmington1
Malaysia	Selangor		United States	Georgia - Norcross1
New Zealand	Auckland1		United States	Georgia - Ball Ground1
People's Republic of China	Guangzhou		United States	Illinois - Frankfort - Corsair
Philippines	Manila		United States	Illinois - Frankfort - West Drive
United Kingdom	Dukinfield		United States	Indiana - South Bend
United States	Georgia - Covington		United States	Ohio - Bellevue1
United States	Georgia - Tucker		United States	Massachusetts - Peabody1
United States	Illinois - Seneca		United States	Michigan - Grand Rapids
United States	Illinois - Elgin2		United States	Minnesota - Fridley
United States	Kentucky - Paducah		United States	New Hampshire - Raymond1
United States	Ohio - Blue Ash		United States	New Jersey - Wayne2
United States	Minnesota - Vadnais Heights
United States	New York - Syracuse1		Construction Adhesives
United States	South Carolina - Simpsonville		Canada	Ontario1
United States	Texas - Mesquite		United States	California - La Mirada
United States	California - Roseville		United States	Florida - Gainesville
United States	Washington - Vancouver		United States	Georgia - Dalton
Vietnam	Binh Duong1		United States	Illinois - Aurora
			United States	Michigan - Michigan Center
			United States	New Jersey - Edison
			United States	Ohio - Chagrin Falls
			United States	Texas - Houston
			United States	Texas - Mansfield

1 Leased Property

2 Idle Property

10

Item 3. 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. Also, from time to time, we are identified as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and/or similar state laws that impose liability for costs relating to the clean up of contamination resulting from past spills, disposal or other release of hazardous substances. We are also subject to similar laws in some of the countries where current and former facilities are located. Our environmental, health and safety department monitors compliance with applicable laws on a global basis. 

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.

We are also engaged in environmental remediation and monitoring efforts at a number of current and former operating facilities. To the extent we can reasonably estimate the amount of our probable liabilities for environmental matters, we establish a financial provision. It is reasonably possible that we may have additional liabilities related to these known environmental matters. However, the full extent of our future liability for environmental matters is difficult to predict because of uncertainty as to the cost of investigation and clean up of the sites, our responsibility for such hazardous substances and the number of and financial condition of other potentially responsible parties.

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 asbestos, 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.

For additional information regarding environmental matters and other legal proceedings, see Note 14 to our Consolidated Financial Statements.

Item 4. Mine Safety Disclosures

Not applicable.

Part II.

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the New York Stock Exchangeunder the symbol FUL. As of January 20, 2022, there were 1,396 common shareholders of record for our common stock.

Issuer Purchases of Equity Securities

Information on our purchases of equity securities during the fourth quarter of 2021 is as follows:

					(c)		(d)
					Total Number of		Approximate Dollar
	(a)				Shares		Value of Shares that
	Total		(b)		Purchased as		may yet be
	Number of		Average		Part of a Publicly		Purchased Under the
	Shares		Price Paid		Announced Plan		Plan or Program
Period	Purchased		per Share		or Program		(thousands)
August 29, 2021 - October 2, 2021		103	$	66.01		-	$	187,170
October 3, 2021 - October 30, 2021		-	$	-		-	$	187,170
October 31, 2021 - November 27, 2021		100	$	72.09		-	$	187,170

On April 6, 2017, the Board of Directors authorized a share repurchase program of up to $200.0 million of our outstanding common shares for a period of up to five years. Under the program, we are authorized to repurchase shares for cash on the open market, from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. The timing of such repurchases is dependent on price, market conditions and applicable regulatory requirements. Upon repurchase of the shares, we 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.

11

Total Shareholder Return Graph

The line graph below compares the cumulative total shareholder return on our common stock for the last five fiscal years with cumulative total return on the S&P Small Cap 600 Index and Dow Jones U.S. Specialty Chemicals Index. This graph assumes a $100 investment in each of H.B. Fuller, the S&P Small Cap 600 Index and the Dow Jones U.S. Specialty Chemicals Index at the close of trading on December 3, 2016, and also assumes the reinvestment of all dividends.

Item 6. Selected Financial Data

Reserved.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

H.B. Fuller Company is a global formulator, manufacturer and marketer of adhesives and other specialty chemical products. We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. 

The Hygiene, Health and Consumable Adhesives operating segment manufactures and supplies adhesives products in the assembly, packaging, converting, nonwoven and hygiene, health and beauty, flexible packaging, graphic arts and envelope markets. The Engineering Adhesives operating segment provides high-performance adhesives to the transportation, electronics, medical, clean energy, aerospace and defense, performance wood, insulating glass, textile, appliance and heavy machinery markets. The Construction Adhesives operating segment manufactures and provides specialty adhesives, sealants, tapes, mortars, grouts, and application devices for commercial building roofing systems, heavy infrastructure projects, road/highway/airport transportation applications, telecom/5G utilities, industrial LNG plants, building envelope applications, HVAC insulation systems, and for both residential and commercial flooring underlayment solutions.

Total Company

When reviewing our financial statements, it is important to understand how certain external factors impact us. These factors include:

● Changes in the prices of our raw materials that are primarily derived from refining crude oil and natural gas,

● Global supply of and demand for raw materials,

● Economic growth rates, and

● Currency exchange rates compared to the U.S. dollar

We purchase thousands of raw materials, the majority of which are petroleum/natural gas derivatives. The price of these derivatives impacts the cost of our raw materials. However, the supply of and demand for key raw materials has a greater impact on our costs. As demand increases in high-growth areas, the supply of key raw materials may tighten, resulting in certain materials being put on allocation. Natural disasters, such as hurricanes, also can have an impact as key raw material producers are shut down for extended periods of time. We continually monitor capacity utilization figures, market supply and demand conditions, feedstock costs and inventory levels, as well as derivative and intermediate prices, which affect our raw materials. With approximately 75 percent of our cost of sales accounted for by raw materials, our financial results are extremely sensitive to changing costs in this area.

12

The pace of economic growth directly impacts certain industries to which we supply products. For example, adhesives-related revenues from durable goods customers in areas such as appliances, furniture and other woodworking applications tend to fluctuate with the overall economic activity. In business components such as Construction Adhesives and insulating glass in Engineering Adhesives, revenues tend to move with more specific economic indicators such as housing starts and other construction-related activity.

The movement of foreign currency exchange rates as compared to the U.S. dollar impacts the translation of the foreign entities’ financial statements into U.S. dollars. As foreign currencies weaken against the U.S. dollar, our revenues and costs decrease as the foreign currency-denominated financial statements translate into fewer U.S. dollars. The fluctuations of the Euro and the Chinese renminbi against the U.S. dollar have the largest impact on our financial results as compared to all other currencies. In 2021, currency fluctuations had a positive impact on net revenue of approximately $64.0 million as compared to 2020.

Key financial results andtransactions for 2021 included the following:

● Net revenue increased 17.5 percent from 2020 primarily driven by a 9.6 percent increase in sales volume, a 5.6 percent increase in product pricing and a 2.3 percent increase due to currency fluctuations.

● Gross profit margin decreased to 25.8 percent from 27.1 percent in 2020 primarily due to higher raw material costs partially offset by higher net revenue.

● Cash flow generated by operating activities was $213.3 million in 2021 as compared to $331.6 million in 2020.

Our total year organic sales growth, which we define as the combined variances from sales volume and product pricing, increased 15.2 percent for 2021 compared to 2020.

In 2021, our diluted earnings per share was $2.97 compared to $2.36 in 2020. The higher earnings per share in 2021 compared to 2020 was primarily due to higher net revenue, higher other income, net and lower interest expense, partially offset by higher raw material and operating costs and higher income tax expense. 

Changes in Accounting Principles

In the first quarter of 2021, we adopted new accounting standards related to the measurement of credit losses on financial statements requiring financial assets measured at amortized cost basis be presented at the net amount expected to be collected. Prior periods were not restated for this adoption.

In the first quarter of 2020, we adopted new accounting standards related to the accounting for leases which requires us 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. Prior periods were not restated for this adoption.

Project ONE

In December 2012, our Board of Directors approved a multi-year project to replace and enhance our existing core information technology platforms. The scope for this project includes most of the basic transaction processing for the company including customer orders, procurement, manufacturing and financial reporting. The project envisions harmonized business processes for all of our operating segments supported with one standard software configuration. The execution of this project, which we refer to as Project ONE, is being supported by internal resources and consulting services. Implementation of Project ONE began in our North America adhesives business in 2014 and, through 2021, we completed implementation of this system in various parts of our business including Latin America (except Brazil), Australia, and various other businesses in North America and EIMEA. During 2022 and beyond, we will continue implementation in North America, EIMEA and Asia Pacific.

Total expenditures for Project ONE are estimated to be $170 to $185 million, of which 55-60% is expected to be capital expenditures. Our total project-to-date expenditures are approximately $133 million, of which approximately $73 million are capital expenditures. Given the complexity of the implementation, the total investment to complete the project may exceed our estimate.

Restructuring Plan

During the fourth quarter of 2019, we approved a restructuring plan related to organizational changes and other actions to optimize operations in connection with the realignment of the Company into three global business units (“2020 Restructuring Plan”). We have incurred costs of $18.6 million under this plan as of November 27, 2021. We expect to incur total costs of approximately $20.0 million ($15.8 million after-tax), which includes cash expenditures for severance and related employee costs globally, costs related to streamlining of processes, and other restructuring-related costs. The 2020 Restructuring Plan was implemented in the fourth quarter of 2019 and is currently expected to be completed in fiscal 2022.

13

Critical Accounting Policies and Significant Estimates

Management’s discussion and analysis of our results of operations and financial condition are based upon the Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We believe the critical accounting policies and areas that require the most significant judgments and estimates to be used in the preparation of the Consolidated Financial Statements relate to goodwill impairment; pension and other postretirement plans; long-lived assets recoverability; valuation of product, environmental and other litigation liabilities; valuation of deferred tax assets and accuracy of tax contingencies; and valuation of acquired assets and liabilities.

Goodwill

Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a purchase business combination. Goodwill is allocated to our reporting units, which are our operating segments or one level below our operating segments (the component level). Reporting units are determined by the discrete financial information available for the component and whether it is regularly reviewed by segment management. Components are aggregated into a single reporting unit if they share similar economic characteristics. Our reporting units are as follows: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.

We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization. The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit. The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill. In performing the impairment test, we determined the fair value of our reporting units through the income approach by using discounted cash flow (“DCF”) analyses. Determining fair value requires the Company to make judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the DCF analysis for each reporting unit are based on the reporting unit's budget, long-term business plan and recent operating performance. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. Given the inherent uncertainty in determining the assumptions underlying a DCF analysis, actual results may differ from those used in our valuations. In assessing the reasonableness of the determined fair values, we also reconciled the aggregate determined fair value of the Company to the Company's market capitalization, which, at the date of our 2021 impairment test, included a 28 percent control premium.

For the 2021 impairment test, the fair value of the reporting units exceeded the respective carrying values by 38 percent to 129 percent ("headroom"). Significant assumptions used in the DCF analysis included discount rates that ranged from 8.2 percent to 9.1 percent and long-term revenue growth rates.  

See Note 5 to the Consolidated Financial Statements for further information regarding goodwill.

Pension and Other Postretirement Plan Assumptions

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 and health care cost trend rates. Note 10 to the Consolidated Financial Statements includes disclosure of assumptions employed in these measurements for both the non-U.S. and U.S. plans.

The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan. The approach identifies a broad population of corporate bonds that meet the quality and size criteria for the particular plan. We use this approach rather than a specific index that has a certain set of bonds that may or may not be representative of the characteristics of our particular plan. A higher discount rate reduces the present value of the pension obligations. The discount rate for the U.S. pension plan was 2.76 percent at November 27, 2021, 2.53 percent at November 28, 2020 and 3.19 percent at November 30, 2019. Net periodic pension cost for a given fiscal year is based on assumptions developed at the end of the previous fiscal year. A discount rate change of 0.5 percentage points at November 27, 2021 would impact U.S. pension and other postretirement plan (income) expense by approximately $0.1 million (pre-tax) in fiscal 2021. Discount rates for non-U.S. plans are determined in a manner consistent with the U.S. plans.

The expected long-term rate of return on plan assets assumption for the U.S. pension plan was 7.25 percent in 2021 and 7.50 in 2020 and 2019. Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 60 percent equities and 40 percent fixed-income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward looking observations. For 2021, the expected long-term rate of return on the target equities allocation was 8.00 percent and the expected long-term rate of return on the target fixed-income allocation was 3.90 percent. The total plan rate of return assumption included an estimate of the effect of diversification and the plan expense. A change of 0.5 percentage points for the expected return on assets assumption would impact U.S. net pension and other postretirement plan expense by approximately $2.7 million (pre-tax).

Management, in conjunction with our external financial advisors, uses the actual historical rates of return of the asset categories to assess the reasonableness of the expected long-term rate of return on plan assets. The most recent 10-year and 20-year historical equity returns are shown in the table below. Our expected rate of return on our total portfolio is consistent with the historical patterns observed over longer time frames.

	Total						Fixed
U.S. Pension Plan Historical Actual Rates of Return	Portfolio			Equities			Income
10-year period		9.5	%		9.0	%		6.7	%
20-year period		7.2	%		7.3	%		7.9	%*

* Beginning in 2006, our target allocation migrated from 100 percent equities to our current allocation of 60 percent equities and 40 percent fixed-income. The historical actual rate of return for the fixed income of 8.2 percent is since inception (15 years, 11 months).

14

The expected long-term rate of return on plan assets assumption for non-U.S. pension plans was a weighted-average of 6.15 percent in 2021 compared to 6.23 percent in 2020 and 6.21 percent in 2019. The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the effect of active management of the plan’s assets. Our largest non-U.S. pension plans are in the United Kingdom and Germany. The expected long-term rate of return on plan assets for the United Kingdom was 6.75 percent and the expected long-term rate of return on plan assets for Germany was 5.50 percent. Management, in conjunction with our external financial advisors, uses actual historical returns of the asset portfolio to assess the reasonableness of the expected rate of return for each plan.

The projected salary increase assumption is based on historic trends and comparisons to the external market. Higher rates of increase result in higher pension expenses. As this rate is also a long-term expected rate, it is less likely to change on an annual basis. Under the U.S. pension plan, the compensation amount was locked-in as of May 31, 2011 and thus the benefit no longer includes compensation increases. The 4.50 percent rate for 2020 and 2019 is for the supplemental executive retirement plan only; for 2021, there is no compensation increase as subsequent to November 27, 2021, there were no active employees in the supplemental executive retirement plan. Projected salary increase assumptions for non-U.S. plans are determined in a manner consistent with the U.S. plans.

Recoverability of Long-Lived Assets

The assessment of the recoverability of long-lived assets reflects our assumptions and estimates. Factors that we must estimate when performing impairment tests include sales volume, prices, inflation, currency exchange rates, tax rates and capital spending. Significant judgment is involved in estimating these factors, and they include inherent uncertainties. The measurement of the recoverability of these assets is dependent upon the accuracy of the assumptions used in making these estimates and how the estimates compare to the eventual future operating performance of the specific businesses to which the assets are attributed.

Judgments made by us include the expected useful lives of long-lived assets. The ability to realize undiscounted cash flows in excess of the carrying amounts of such assets is affected by factors such as the ongoing maintenance and improvement of the assets, changes in economic conditions and changes in operating performance.

Product, Environmental and Other Litigation Liabilities

As disclosed in Item 3. Legal Proceedings and in Note 1 and Note 14 to the Consolidated Financial Statements, we are subject to various claims, lawsuits and other legal proceedings. Reserves for loss contingencies associated with these matters are established when it is determined that a liability is probable and the amount can be reasonably estimated. The assessment of the probable liabilities is based on the facts and circumstances known at the time that the financial statements are being prepared. For cases in which it is determined that a liability is probable but only a range for the potential loss exists, the minimum amount of the range is recorded and subsequently adjusted as better information becomes available.

For cases in which insurance coverage is available, the gross amount of the estimated liabilities is accrued, and a receivable is recorded for any probable estimated insurance recoveries. A discussion of environmental, product and other litigation liabilities is disclosed in Item 3. Legal Proceedings and Note 14 to the Consolidated Financial Statements.

Based upon currently available facts, we do not believe that the ultimate resolution of any pending legal proceeding, individually or in the aggregate, will have a material adverse effect on our long-term financial condition. However, adverse developments and/or periodic settlements could negatively affect our results of operations or cash flows in one or more future quarters.

Income Tax Accounting

As part of the process of preparing the Consolidated Financial Statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. The process involves estimating actual current tax expense along with assessing temporary differences resulting from differing treatment of items for book and tax purposes. These temporary differences result in deferred tax assets and liabilities, which are included in the Consolidated Balance Sheets. We record a valuation allowance to reduce our deferred tax assets to the amount that is more-likely-than-not to be realized. We have considered future taxable income and ongoing tax planning strategies in assessing the need for the valuation allowance. Increases in the valuation allowance result in additional expense to be reflected within the tax provision in the Consolidated Statements of Income. As of November 27, 2021, the valuation allowance to reduce deferred tax assets totaled $11.3 million.

We recognize tax benefits for tax positions for which it is more-likely-than-not that the tax position will be sustained by the applicable tax authority at the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement. We do not recognize a financial statement benefit for a tax position that does not meet the more-likely-than-not threshold. We believe that our liabilities for income taxes reflect the most likely outcome. It is difficult to predict the final outcome or the timing of the resolution of any particular tax position. Future changes in judgment related to the resolution of tax positions will impact earnings in the quarter of such change. We adjust our income tax liabilities related to tax positions in light of changing facts and circumstances. Settlement with respect to a tax position would usually require cash. Based upon our analysis of tax positions taken on prior year returns and expected tax positions to be taken for the current year tax returns, we have identified gross uncertain tax positions of $13.3 million as of November 27, 2021.

We have not recorded U.S. deferred income taxes for certain of our non-U.S. subsidiaries undistributed earnings as such amounts are intended to be indefinitely reinvested outside of the U.S. Should we change our business strategies related to these non-U.S. subsidiaries, additional U.S. tax liabilities could be incurred. It is not practical to estimate the amount of these additional tax liabilities. See Note 11 to the Consolidated Financial Statements for further information on income tax accounting.

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

15

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.

Results of Operations

Net revenue

($ in millions)	2021		2020		2021 vs 2020
Net revenue	$	3,278.0	$	2,790.3		17.5	%

We review variances in net revenue in terms of changes related to sales volume and product pricing (referred to as organic revenue growth), business acquisitions and divestitures (M&A) and changes in foreign currency exchange rates. The following table shows the net revenue variance analysis for fiscal 2021 compared to fiscal 2020:

	2021 vs 2020
Organic revenue growth		15.2	%
Currency		2.3	%
Net revenue growth		17.5	%

Organic revenue growth was a positive 15.2 percent in 2021 compared to 2020 driven by a 22.2 percent increase in Engineering Adhesives, a 16.1 percent increase in Construction Adhesives and a 9.2 percent increase in Hygiene, Health and Consumable Adhesives. The positive 2.3 percent currency impact was primarily driven by a stronger Euro and Chinese renminbi partially offset by a weaker Brazilian real, Turkish lira and Argentinian peso compared to the U.S. dollar.

Cost of sales

($ in millions)	2021			2020			2021 vs 2020
Raw materials	$	1,810.0		$	1,476.4			22.6	%
Other manufacturing costs		622.7			557.2			11.7	%
Cost of sales	$	2,432.7		$	2,033.6			19.6	%
Percent of net revenue		74.2	%		72.9	%

Cost of sales in 2021 compared to 2020 increased 130 basis points as a percentage of net revenue. Raw material cost as a percentage of net revenue increased 230 basis points in 2021 compared to 2020 due to higher raw material costs. Other manufacturing costs as a percentage of net revenue decreased 100 basis points in 2021 compared to 2020 due to higher net revenue.

Gross profit

($ in millions)	2021			2020			2021 vs 2020
Gross profit	$	845.3		$	756.7			11.7	%
Percent of net revenue		25.8	%		27.1	%

Gross profit in 2021 increased 11.7 percent and gross profit margin decreased 130 basis points compared to 2020. The decrease in gross profit margin was primarily due to higher raw material costs partially offset by higher net revenue.

Selling, general and administrative (SG&A) expenses

($ in millions)	2021			2020			2021 vs 2020
SG&A	$	592.7		$	538.3			10.1	%
Percent of net revenue		18.1	%		19.3	%

SG&A expenses for 2021 increased $54.4 million, or 10.1 percent, compared to 2020. The increase is primarily due to higher discretionary spending and compensation costs compared to the prior year and unfavorable impact of foreign currency exchange rates on spending outside the U.S. SG&A expenses as a percent of revenue decreased by 120 basis points compared with the prior year.

Other income, net

($ in millions)	2021		2020
Other income, net	$	32.9	$	15.4

Other income, net includes foreign transaction losses of $6.0 million and $3.1 million in 2021 and 2020, respectively. Loss on disposal of assets were $0.6 million and $0.1 million in 2021 and 2020, respectively. Defined benefit pension benefit was $32.1 million and $17.9 million in 2021 and 2020, respectively. Other income of $7.4 million and $0.7 million was also included in 2021 and 2020, respectively. Other income in 2021 includes gains related to legal entity mergers and a transactional tax legal settlement in Brazil.

16

Interest expense

($ in millions)	2021		2020
Interest expense	$	78.1	$	86.8

Interest expense was $78.1 million and $86.8 million in 2021 and 2020, respectively. The decrease in interest expense is due to lower U.S. debt balances and lower interest rates. We capitalized $0.9 million and $0.6 million of interest expense in 2021 and 2020, respectively.

Interest income

($ in millions)	2021		2020
Interest income	$	9.5	$	11.4

Interest income in 2021 and 2020 was $9.5 million and $11.4 million, respectively. The decrease in interest income in 2021 compared to 2020 is due to lower interest rates and lower cash balances.

Income tax expense: 

($ in millions)	2021			2020
Income tax expense	$	63.0		$	41.9
Effective tax rate		29.1	%		26.5	%

Income tax expense of $63.0 million in 2021 includes $4.3 million of discrete tax expense, primarily related to the revaluation of cross-currency swap agreements due to depreciation of the Euro versus the U.S. dollar, changes in valuation allowances and several foreign discrete items. Excluding the discrete tax expense of $4.3 million, the overall effective tax rate was 27.1 percent.

Income tax expense of $41.9 million in 2020 includes $1.1 million of discrete tax expense, primarily related to tax expense for uncertain tax positions and several foreign discrete items, offset by U.S. benefits for state deferred rate changes and a benefit related to the revaluation of cross-currency swap agreements due to appreciation of the Euro versus U.S. dollar. Excluding the discrete tax expense of $1.1 million, the overall effective tax rate was 25.8 percent. 

The increase in the overall effective tax rate for 2021 compared to 2020, excluding the impact of discrete items, is primarily due to the change in the foreign rate differential resulting from a change in mix of earnings across jurisdictions.

Income from equity method investments

($ in millions)	2021		2020
Income from equity method investments	$	7.7	$	7.4

The income from equity method investments relates to our 50 percent ownership of the Sekisui-Fuller joint venture in Japan. The higher income for 2021 compared to 2020 relates to higher net income in our joint venture.

Net income attributable to H.B. Fuller

($ in millions)	2021			2020			2021 vs 2020
Net income attributable to H.B. Fuller	$	161.4		$	123.7			30.5	%
Percent of net revenue		4.9	%		4.4	%

Net income attributable to H.B. Fuller was $161.4 million in 2021 compared to $123.7 million in 2020. Diluted earnings per share were $2.97 per share in 2021 and $2.36 per share in 2020.

Operating Segment Results

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 defined as gross profit less SG&A expenses. Inter-segment revenues are recorded at cost plus a markup for administrative costs. Corporate expenses, other than those included in Corporate Unallocated, are allocated to each operating segment.

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. The tables below provide certain information regarding the net revenue and segment operating income of each of our operating segments. Corporate Unallocated includes business acquisition and integration-related charges, organizational restructuring-related charges, the results of business divestitures and costs related to the implementation of Project ONE.

Net Revenue by Segment

	2021					2020
	Net		% of			Net		% of
($ in millions)	Revenue		Total			Revenue		Total
Hygiene, Health and Consumable Adhesives	$	1,472.7		45	%	$	1,332.8		48	%
Engineering Adhesives		1,371.8		42	%		1,088.3		39	%
Construction Adhesives		433.5		13	%		369.2		13	%
Segment total		3,278.0		100	%		2,790.3		100	%
Corporate Unallocated		-		0	%		-		0	%
Total	$	3,278.0		100	%	$	2,790.3		100	%

17

Segment Operating Income (Loss)

	2021						2020
	Operating			% of			Operating			% of
($ in millions)	Income (Loss)			Total			Income (Loss)			Total
Hygiene, Health and Consumable Adhesives	$	138.4			55	%	$	130.8			60	%
Engineering Adhesives		135.9			54	%		104.0			48	%
Construction Adhesives		14.1			5	%		11.1			5	%
Segment total		288.4			114	%		245.9			113	%
Corporate Unallocated		(35.8	)		(14	)%		(27.6	)		(13	)%
Total	$	252.6			100	%	$	218.3			100	%

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

($ in millions)	2021			2020
Segment operating income	$	252.6		$	218.3
Other income, net		32.9			15.4
Interest expense		(78.1	)		(86.8	)
Interest income		9.5			11.4
Income before income taxes and income from equity method investments	$	216.9		$	158.3

Hygiene, Health and Consumable Adhesives

($ in millions)	2021			2020			2021 vs 2020
Net revenue	$	1,472.7		$	1,332.8			10.5	%
Segment operating income	$	138.4		$	130.8			5.8	%
Segment profit margin %		9.4	%		9.8	%

The following tables provide details of Hygiene, Health and Consumable Adhesives net revenue variances:

	2021 vs 2020
Organic revenue growth		9.2	%
Currency		1.3	%
Net revenue growth		10.5	%

Net revenue increased 10.5 percent in 2021 compared to 2020. The 9.2 percent increase in organic growth was attributable to an increase in sales volume and favorable product pricing. The positive currency effect was due to the stronger Euro and Chinese renminbi partially offset by a weaker Brazilian real, Argentinian peso and Turkish lira compared to the U.S. dollar. As a percentage of net revenue, raw material costs increased 160 basis points due to higher raw material costs partially offset by higher net revenue. Other manufacturing costs as a percentage of net revenue decreased 90 basis points due to higher net revenue. SG&A expenses as a percentage of net revenue decreased 30 basis points in 2021 as compared to 2020. Segment operating income increased 5.8 percent and segment operating margin as a percentage of net revenue decreased 40 basis points in 2021 as compared to 2020.

Engineering Adhesives

($ in millions)	2021			2020			2021 vs 2020
Net revenue	$	1,371.8		$	1,088.3			26.1	%
Segment operating income	$	135.9		$	104.0			30.7	%
Segment profit margin %		9.9	%		9.6	%

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

	2021 vs 2020
Organic revenue growth		22.2	%
Currency		3.9	%
Net revenue growth		26.1	%

Net revenue increased 26.1 percent in 2021 compared to 2020. The 22.2 percent increase in organic growth was attributable to higher sales volume and favorable product pricing. The positive currency effect was due to a stronger Euro and Chinese renminbi partially offset by a weaker Brazilian real, Turkish lira and Argentinian peso compared to the U.S. dollar. Raw material costs as a percentage of net revenue increased 320 basis points due to higher raw material costs partially offset by higher net revenue. Other manufacturing costs as a percentage of net revenue decreased 110 basis points due to higher net revenue. SG&A expense as a percentage of net revenue decreased 240 basis points due to higher net revenue. Segment operating income increased 30.7 percent and segment operating margin increased 30 basis points compared to 2020.

Construction Adhesives

($ in millions)	2021			2020			2021 vs 2020
Net revenue	$	433.5		$	369.2			17.4	%
Segment operating income (loss)	$	14.1		$	11.1			26.9	%
Segment profit margin %		3.3	%		3.0	%

18

The following tables provide details of Construction Adhesives net revenue variances:

	2021 vs 2020
Organic revenue growth		16.1	%
Currency		1.3	%
Net revenue growth		17.4	%

Net revenue increased 17.4 percent in 2021 compared to 2020. The 16.1 percent increase in organic growth was attributable to higher sales volume and favorable product pricing. The positive currency effect was due to the stronger Australian dollar, Canadian dollar and Euro compared to the U.S. dollar. Raw material costs as a percentage of net revenue increased 360 basis points due to higher raw material costs partially offset by higher net revenue. Other manufacturing costs as a percentage of net revenue decreased 220 basis points primarily due to higher net revenue. SG&A expenses as a percentage of net revenue decreased 170 basis points also due to higher net revenue. Segment operating income increased 26.9 percent and segment operating margin increased 30 basis points compared to 2020.

Corporate Unallocated

($ in millions)	2021			2020			2021 vs 2020
Net revenue	$	-		$	-		NMP
Segment operating loss	$	(35.8	)	$	(27.6	)		29.8	%
Segment profit margin %	NMP			NMP

NMP = Non-meaningful percentage

Corporate Unallocated includes acquisition and integration-related charges, restructuring-related charges, the results of business divestitures and costs related to the implementation of Project ONE.

Segment operating loss increased 29.8 percent in 2021 reflecting increased organizational realignment costs compared to 2020. 

Financial Condition, Liquidity and Capital Resources

Total cash and cash equivalents as of November 27, 2021 were $61.8 million compared to $100.5 million as of November 28, 2020. Total long and short-term debt was $1,616.5 million as of November 27, 2021 and $1,773.9 million as of November 28, 2020.

We believe that cash flows from operating activities will be adequate to meet our short-term and long-term 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, 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.

Our credit 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 November 27, 2021, we were in compliance with all covenants of our contractual obligations as shown in the following table:

Covenant	Debt Instrument	Measurement	Result as of November 27, 2021
Total Indebtedness / TTM EBITDA	Term Loan B Credit Agreement	Not greater than 5.9	2.2
Total Indebtedness / TTM EBITDA	Revolving Credit Agreement	Not greater than 5.9	2.2
TTM EBITDA / Consolidated Interest Expense	Revolving Credit Agreement	Not less than 2.0	5.8

● TTM = trailing 12 months

● EBITDA for Term Loan B covenant purposes is defined as consolidated net income, plus interest expense, expense for taxes paid or accrued, depreciation and amortization, certain non-cash impairment losses, extraordinary non-cash losses incurred other than in the ordinary course of business, nonrecurring extraordinary non-cash restructuring charges and the non-cash impact of purchase accounting, expenses related to the Royal Adhesives acquisition not to exceed $40.0 million, expenses relating to the integration of Royal Adhesives during the fiscal years ending in 2017, 2018 and 2019 not exceeding $30 million in aggregate, restructuring expenses that began prior to the Royal Adhesives acquisition incurred in fiscal years ending in 2017 and 2018 not exceeding $28 million in aggregate, and non-capitalized charges relating to the SAP implementation during fiscal years ending in 2017 through 2021 not exceeding $13 million in any single fiscal year, minus extraordinary non-cash gains. 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. The full definition is set forth in the Term Loan B Credit Agreement and can be found in the Company’s 8-K filing dated October 20, 2017.

● EBITDA for Revolving Credit Facility covenant purposes is defined as consolidated net income, plus interest expense, expense for taxes paid or accrued, depreciation and amortization, non-cash impairment losses related to long-lived assets, intangible assets or goodwill, nonrecurring or unusual non-cash losses incurred other than in the ordinary course of business, nonrecurring or unusual non-cash restructuring charges and the non-cash impact of purchase accounting, fees, premiums, expenses and other transaction costs incurred or paid by the borrower or any of its Subsidiaries on the effective date in connection with the transactions, this agreement and the other loan documents, the 2020 supplemental indenture and the transactions contemplated hereby and thereby, one-time, non-capitalized charges and expenses relating to the Company’s SAP implementation during fiscal years ending in 2017 through 2024, in an amount not exceeding $15.0 million in any single fiscal year of the Company, charges and expenses relating to the ASP Royal Acquisition, including but not limited to advisory and financing costs, during the Company’s fiscal years ending in 2020 and 2021, in an aggregate amount (as to such years combined) not exceeding $40.0 million, charges and expenses related to the reorganization of the Company and its subsidiaries from five business units to three business units to reduce costs during the Company’s fiscal years ending in 2020 and 2021 in an aggregate amount (as to such years combined) not exceeding $24.0 million, and charges and expenses related to the Company’s manufacturing and operations project to improve delivery, implement cost savings and reduce inventory during the Company’s fiscal years ending in 2020, 2021 and 2022 in an aggregate amount (as to such years combined) not exceeding $15.5 million.

● Consolidated Interest Expense for the Revolving Credit Facility is defined as the interest expense (including without limitation the portion of capital lease obligations that constitutes imputed interest in accordance with GAAP) of the Company and its subsidiaries calculated on a consolidated basis for such period with respect to all outstanding indebtedness of the Company and its subsidiaries allocable to such period in accordance with GAAP.

19

We believe we have the ability to meet all of our contractual obligations and commitments in fiscal 2022.

Net Financial Assets (Liabilities)

($ in millions)	2021			2020
Financial assets:
Cash and cash equivalents	$	61.8		$	100.5
Foreign exchange contracts		5.7			2.3
Cash flow hedges		14.5			2.5
Financial liabilities:
Notes payable		(25.0	)		(16.9	)
Long-term debt		(1,591.5	)		(1,757.0	)
Foreign exchange contracts		(6.1	)		(5.3	)
Interest rate swaps		(22.9	)		(33.0	)
Net financial liabilities	$	(1,563.5	)	$	(1,706.9	)

Of the $61.8 million in cash and cash equivalents as of November 27, 2021, $58.4 million was held outside the U.S. Of the $58.4 million of cash held outside the U.S., earnings on $56.0 million are indefinitely reinvested outside of the U.S. It is not practical for us to determine the U.S. tax implications of the repatriation of these funds.

There are no contractual or regulatory restrictions on the ability of consolidated and unconsolidated subsidiaries to transfer funds in the form of cash dividends, loans or advances to us, except for: 1) a credit facility limitation restricting investments, loans, advances or capital contributions from Loan Parties to non-Loan Parties in excess of $100.0 million, 2) a credit facility limitation that provides total investments, loans, advances or guarantees not otherwise permitted in the credit agreement for all subsidiaries shall not exceed $125.0 million in the aggregate, 3) a credit facility limitation that provides total investments, dividends, and distributions shall not exceed the Available Amount defined in these agreements, all three of which do not apply once our secured leverage ratio drops below 4.0x and 4) typical statutory restrictions, which prohibit distributions in excess of net capital or similar tests. The Royal Adhesives acquisition and any investments, loans, and advances established to consummate the Royal Adhesives acquisition, are excluded from the credit facility limitations described above. Additionally, we have taken the income tax position that the majority of our cash in non-U.S. locations is indefinitely reinvested.

Debt Outstanding and Debt Capacity

Notes Payable

Notes payable were $25.0 million at November 27, 2021 and $16.9 million at November 28, 2020. These amounts primarily represented various foreign subsidiaries’ short-term borrowings that were not part of committed lines. The weighted-average interest rates on these short-term borrowings were 8.1 percent in 2021 and 2020.

Long-Term Debt

Long-term debt consisted of a secured term loan (“Term Loan B”) and two unsecured public notes (“Public Notes”). The Term Loan B has a principal amount of $1,001.2 million and bears a floating interest rate at LIBOR plus 2.00 percent (2.09 percent at November 27, 2021) and matures in fiscal year 2024. The 10-year Public Notes have a principal amount of $300.0 million, bear fixed interest at 4.00 percent and mature in 2027. We are subject to a par call of 1.00 percent except within three months of the maturity date. The 8-year Public Notes have a principal amount of $300.0 million, bear fixed interest at 4.25 percent and mature in 2028. We are subject to a par call plus 50 percent of coupon in year 4, plus 25 percent of coupon in year 5 and at par thereafter.  We currently have no intention to prepay the Public Notes. Additional details on the Public Notes and the Term Loan B Credit Agreement can be found in Form 8-K dated February 9, 2017, Form 8-K dated October 20, 2017 and Form 8-K dated October 20, 2020, respectively. Interest payable on our long-term debt totaled $3.4 million as of November 27, 2021.

We executed interest rate swap agreements for the purpose of obtaining a fixed interest rate on $800.0 million of the $2,150.0 million Term Loan B. We have designated forecasted interest payments resulting from the variability of 1-month LIBOR in relation to $800.0 million of the Term Loan B as the hedged item in cash flow hedges. The combined fair value of the interest rate swaps in total was a liability of $12.3 million at November 27, 2021 and was included in other liabilities in the Consolidated Balance Sheets. We are applying the hypothetical derivative method to assess hedge effectiveness for these interest rate swaps. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $800.0 million variable rate Term Loan B are compared with the change in the fair value of the swaps.

We entered into interest rate swap agreements to convert our $300.0 million Public Notes that were issued on October 20, 2020 to a variable interest rate of 1-month LIBOR plus 3.28 percent. We entered into interest rate swap agreements to convert $150.0 million of our $300.0 million Public Notes that were issued on February 14, 2017 to a variable interest rate of 1-month LIBOR plus 1.86 percent. See Note 7 to the Consolidated Financial Statements for further discussion on the issuance of our Public Notes. The swaps were designated for hedge accounting treatment as fair value hedges. We applied the hypothetical derivative method to assess hedge effectiveness for this interest rate swap. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our fixed rate Public Notes are compared with the change in the fair value of the swaps. On May 1, 2020, we terminated the swap agreement. Upon termination, we received $15.8 million in cash. The remaining swap liability will be accounted for as a discount on long-term debt and will be amortized to interest expense over the remaining life of the Public Notes of seven years.

Lines of Credit

We have a revolving credit agreement with a consortium of financial institutions at November 27, 2021. This credit agreement creates a secured multi-currency revolving credit facility that we can draw upon to repay existing indebtedness, finance working capital needs, finance acquisitions, and for general corporate purposes up to a maximum of $400.0 million. Interest on the revolving credit facility is payable at LIBOR plus 1.50 percent (1.59 percent at November 27, 2021). A facility fee of 0.25 percent of the unused commitment under the revolving credit facility is payable quarterly. The interest rate and the facility fee are based on a leverage grid. The credit facility expires on July 22, 2024. As of November 27, 2021, our lines of credit were undrawn. Additional details on the revolving credit agreement can be found in Form 8-K dated October 20, 2020. For further information related to debt outstanding and debt capacity, see Note 7 to the Consolidated Financial Statements.

Uncertainty relating to the LIBOR phase out at the end of 2021 may adversely impact the value of, and our obligations under, our Term Loan B, Public Notes and revolving credit facility. See the applicable discussion under Item 1A. Risk Factors.

20

Goodwill and Other Intangible Assets

As of November 27, 2021, goodwill totaled $1,298.8 million (30.4 percent of total assets) and other intangible assets, net of accumulated amortization, totaled $687.1 million (16.1 percent of total assets).

The components of goodwill and other identifiable intangible assets, net of amortization, by segment at November 27, 2021 are as follows:

	2021
	Hygiene, Health
	and Consumable		Engineering		Construction
($ in millions)	Adhesives		Adhesives		Adhesives		Total
Goodwill	$	325.4	$	662.0	$	311.4	$	1,298.8
Purchased technology and patents		7.0		36.4		10.2		53.6
Customer relationships		108.0		253.9		235.6		597.5
Tradenames		4.6		16.5		8.7		29.8
Other finite-lived intangible assets		2.3		0.2		3.2		5.7
Indefinite-lived intangible assets		-		0.5		-		0.5

	2020
	Hygiene, Health
	and Consumable		Engineering		Construction
($ in millions)	Adhesives		Adhesives		Adhesives		Total
Goodwill	$	332.9	$	667.9	$	311.2	$	1,312.0
Purchased technology and patents		9.1		40.2		11.2		60.5
Customer relationships		120.0		276.7		257.7		654.4
Tradenames		5.3		18.7		9.9		33.9
Other finite-lived intangible assets		2.8		0.3		3.5		6.6
Indefinite-lived intangible assets		-		0.5		-		0.5

Selected Metrics of Liquidity and Capital Resources

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

	November 27,			November 28,
	2021			2020
Net working capital as a percentage of annualized net revenue1		15.7	%		16.8	%
Trade receivables DSO (in days)2		62			60
Inventory days on hand (in days)3		65			55
Free cash flow after dividends4	$	82.3		$	210.8
Debt capitalization ratio5		50.2	%		56.1	%

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 4).

² Trade receivables net of allowance for doubtful accounts multiplied by 91 (13 weeks) and divided by the net revenue for the quarter.

³ Total inventory multiplied by 91 and divided by cost of sales (excluding delivery costs) for the quarter.

⁴ Net cash provided by operating activities less purchased property, plant and equipment and dividends paid. See reconciliation to net cash provided by operating activities to free cash flow after dividends below.

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

Free cash flow after dividends, a non-GAAP financial measure, is defined as net cash provided by operating activities less purchased property, plant and equipment and dividends paid. Free cash flow after dividends is an integral financial measure used by the Company to assess its ability to generate cash in excess of its operating needs, therefore, the Company believes this financial measure provides useful information to investors. The following table reflects the manner in which free cash flow after dividends is determined and provides a reconciliation of free cash flow after dividends to net cash provided by operating activities, the most directly comparable financial measure calculated and reported in accordance with U.S. GAAP.

Reconciliation of “Net cash provided by operating activities” to "Free cash flow after dividends"

($ in millions)	2021		2020
Net cash provided by operating activities	$	213.3	$	331.6
Less: Purchased property, plant and equipment		96.1		87.3
Less: Dividends paid		34.9		33.5
Free cash flow after dividends	$	82.3	$	210.8

21

Summary of Cash Flows

Cash Flows from Operating Activities

($ in millions)	2021		2020
Net cash provided by operating activities	$	213.3	$	331.6

Net income including non-controlling interest was $161.5 million in 2021 and $123.8 million in 2020. Depreciation and amortization expense totaled $143.2 million in 2021 compared to $138.8 million in 2020. Depreciation and amortization expense in  2021 and 2020 reflect assets acquired in our business acquisitions.

Changes in net working capital (trade receivables, inventory and trade payables) accounted for a use of cash of $83.9 million and a source of cash of $24.0 million in 2021 and 2020, respectively. Following is an assessment of each of the net working capital components:

● Trade Receivables, net – Changes in trade receivables resulted in a $124.8 million use of cash in 2021 compared to a $14.8 million use of cash in 2020. The higher use of cash in 2021 compared to 2020 was related to higher net revenue compared to the prior year. The DSO was 62 days at November 27, 2021 and 60 days at November 28, 2020.

● Inventory – Changes in inventory resulted in a $135.4 million use of cash in 2021 compared to a $15.7 million source of cash in 2020. The use of cash in 2021 compared to the source of cash in  2020 was due to increasing inventory levels and higher raw materials costs in 2021 compared to 2020. Inventory days on hand were 65 days at the end of 2021 compared to 55 days at the end of 2020.

● Trade Payables – Changes in trade payables resulted in a $176.3 million and $23.1 million source of cash in 2021and 2020, respectively. The increase in the source of cash was primarily related to the timing of payments and extension of payment terms globally.

Contributions to our pension and other postretirement benefit plans were $3.8 million and $5.5 million in 2021 and 2020, respectively. Income taxes payable resulted in a $4.1 million use of cash and a $5.5 million source of cash in 2021 and 2020, respectively. Other assets resulted in a $79.1 million use of cash and a $38.4 million source of cash in 2021 and 2020, respectively. The use of cash in 2021 is primarily driven by an increase in pension and post-retirement assets related to year-end pension valuation and an increase in derivative assets. Accrued compensation was a $27.7 million source of cash compared to a $2.6 million source of cash in 2021 and 2020, respectively, relating to higher accruals for our employee incentive plans. Other operating activity was a $108.6 million source of cash in 2021 and a $15.7 million use of cash in 2020. Other operating activity in 2021 includes equity adjustments of approximately $55.0 million related to year-end pension valuations.

Cash Flows Used In Investing Activities

($ in millions)	2021			2020
Net cash used in investing activities	$	(94.7	)	$	(109.5	)

Purchases of property, plant and equipment were $96.1 million in 2021 compared to $87.3 million in 2020. The higher purchases in 2021 reflect the timing of capital projects and expenditures related to growth initiatives. Proceeds from the sale of property, plant and equipment were $3.0 million in 2021 compared to $1.5 million in 2020. 

In 2021, we acquired STR Holdings, Inc. for $5.4 million. In 2020, we acquired D.H.M Adhesives, Inc. for $9.5 million and also purchased other business assets for $5.6 million. See Note 2 to the Consolidated Financial Statements for further information on acquisitions. In 2021, we received payment of a government grant related to the building of a plant in China of $5.8 million and in 2021 and 2020, we expended cash related to the building of this plant of $1.8 million and $8.6 million, respectively.

Cash Flows Used In Financing Activities

($ in millions)	2021			2020
Net cash used in financing activities	$	(154.1	)	$	(239.2	)

In 2021 and 2020, we repaid $156.5 million and $518.0 million of long-term debt, respectively, and in 2020, we issued $300.0 million of unsecured public notes. See Note 7 to the Consolidated Financial Statements for further discussion of debt borrowings and repayments. Cash paid for dividends were $34.9 million and $33.5 million in 2021 and 2020, respectively. Cash generated from the exercise of stock options was $32.3 million and $12.3 million in 2021 and 2020, respectively. Repurchases of common stock related to statutory minimum tax withholding upon vesting of restricted stock were $2.7 million in 2021 compared to $3.4 million in 2020. There were no repurchases from our share repurchase program in 2021 and 2020.

We are subject to mandatory prepayments in the first quarter of each fiscal year equal to 50% of Excess Cash Flow, as defined in the Term Loan B Credit Agreement, of the prior fiscal year less any voluntary prepayments made during that fiscal year. The Excess Cash Flow Percentage shall be reduced to 25% when our Secured Leverage Ratio is below 4.25:1.00 and to 0% when our Secured Leverage Ratio is below 3.75:1.00. The prepayment for the 2021 measurement period was satisfied through amounts prepaid during 2021. We have estimated the 2022 prepayment to be zero.

We expect 2022 capital expenditures to be between $100.0 million and $110.0 million.

22

Forward-Looking Statements and Risk Factors

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. This Annual Report on Form 10-K 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, Item 1A. Risk Factors identifies some of the important factors that could cause our actual results to differ materially from those in any such forward-looking statements. 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. These factors should be considered, together with any similar risk factors or other cautionary language that may be made elsewhere in this Annual Report on Form 10-K.

The list of important factors in Item 1A. Risk Factors does not necessarily present the risk factors in order of importance. 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 SEC or in our press releases) on related subjects.

Item 7A. 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 may be negatively affected by unfavorable economic conditions. 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 a 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 results 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, net of interest rate swap derivatives as of November 27, 2021, would have resulted in a change in net income of approximately $0.1 million or $0.0 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. Our operating results and financial condition are subject to both currency translation and currency transaction risk. Approximately 57 percent of net revenue was generated outside of the United States in 2021. 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.

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. 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.

In the event a natural hedge is not available, 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 2021 financial results, 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 $9.4 million or $0.17 per diluted share. Based on 2021 financial results and foreign currency balance sheet positions as of November 27, 2021, a hypothetical overall 10 percent change in the U.S. dollar would have resulted in a change in net income of approximately $15.8 million or $0.29 per diluted share.

23

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.

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 2021 financial results, a hypothetical one percent change in our raw material costs would have resulted in a change in net income of approximately $13.2 million or $0.24 per diluted share.

See Item 1A. Risk Factors for a discussion of the effects of the COVID-19 pandemic on raw material cost and availability.

Recently Issued Accounting Pronouncements

See Note 1 to the Consolidated Financial Statements for information concerning new accounting standards and the impact of the implementation of these standards on our financial statements.

24

Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of H.B. Fuller Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of H.B. Fuller Company and subsidiaries (the Company) as of November 27, 2021 and November 28, 2020, the related consolidated statements of income, comprehensive income, total equity and cash flows for each of the two years ended November 27, 2021 and November 28, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at November 27, 2021 and November 28, 2020, and the results of its operations and its cash flows for each of the two years ended November 27, 2021 and November 28, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of November 27, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated January 25, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter 

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Valuation of Goodwill for the Construction Adhesives reporting unit

Description of the Matter

At November 27, 2021, the Company had goodwill of approximately $311 million related to the Construction Adhesive reporting unit. As discussed in Notes 1 and 5 of the consolidated financial statements, the Company performs goodwill impairment testing on an annual basis as of the beginning of the fourth quarter, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Auditing management’s goodwill impairment test for the Construction Adhesives reporting unit was complex and judgmental due to the significant estimation required in determining the fair value of the reporting unit. In particular, the Company estimates fair value using the income approach which is sensitive to certain assumptions, such as forecasted revenue and related revenue growth rate, the earnings before interest, taxes, depreciation and amortization (EBITDA) margins rate, the weighted average cost of capital and the tax rate which are affected by management’s business plans and expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's goodwill impairment review process, including controls over management’s review of the significant assumptions described above.

To test the estimated fair value of the Construction Adhesive reporting unit, we performed audit procedures that included, among others, assessing the valuation methodology used by management and testing the significant assumptions discussed above, as well as the underlying data used by the Company in its analysis. For example, we compared the significant assumptions used by management in the prospective financial information to current industry, market and economic trends as well as other relevant factors. We assessed the reasonableness of the forecasted future revenue growth rate and EBITDA margins rate by comparing the forecasts to historical results. We involved our valuation specialists to assist in our evaluation of the valuation models, methodologies and significant assumptions used by the Company, specifically the weighted average cost of capital. We compared the projected tax rates with current enacted rates and assessed the reasonableness of the forecasted profits and losses by jurisdiction by comparing to historical results.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2019.

Minneapolis, Minnesota

January 25, 2022

25

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of H.B. Fuller Company

Opinion on Internal Control Over Financial Reporting

We have audited H.B. Fuller Company and subsidiaries’ internal control over financial reporting as of November 27, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, H.B. Fuller Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of November 27, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of November 27, 2021 and November 28, 2020, the related consolidated statements of income, comprehensive income, total equity and cash flows for each of the two years ended November 27, 2021 and November 28, 2020, and the related notes and our report dated January 25, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Minneapolis, Minnesota

January 25, 2022

26

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

H.B. Fuller Company

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of income, comprehensive income, total equity, and cash flows of H.B. Fuller Company and subsidiaries (the Company), for the fiscal year ended November 30, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the fiscal year ended November 30, 2019, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ KPMG LLP

We served as the Company’s auditor from 2003 to 2020.

Minneapolis, Minnesota
January 24, 2020, except for Note 15, as to which the date is June 29, 2021

27

CONSOLIDATED STATEMENTS OF INCOME

H.B. Fuller Company and Subsidiaries

(In thousands, except per share amounts)

	Fiscal Years
	November 27,			November 28,			November 30,
	2021			2020			2019
Net revenue	$	3,278,031		$	2,790,269		$	2,897,000
Cost of sales		(2,432,709	)		(2,033,620	)		(2,090,078	)
Gross profit		845,322			756,649			806,922
Selling, general and administrative expenses		(592,710	)		(538,332	)		(580,928	)
Other income, net		32,855			15,398			37,943
Interest expense		(78,092	)		(86,776	)		(103,287	)
Interest income		9,476			11,417			12,178
Income before income taxes and income from equity method investments		216,851			158,356			172,828
Income tax expense		(63,033	)		(41,921	)		(49,408	)
Income from equity method investments		7,657			7,353			7,424
Net income including non-controlling interest		161,475			123,788			130,844
Net income attributable to non-controlling interest		(82	)		(69	)		(27	)
Net income attributable to H.B. Fuller	$	161,393		$	123,719		$	130,817
Earnings per share attributable to H.B. Fuller common stockholders:
Basic	$	3.05		$	2.38		$	2.57
Diluted	$	2.97		$	2.36		$	2.52
Weighted-average common shares outstanding:
Basic		52,887			52,039			50,920
Diluted		54,315			52,520			51,983
Dividends declared per common share	$	0.665		$	0.648		$	0.635

See accompanying Notes to Consolidated Financial Statements.

28

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

H.B. Fuller Company and Subsidiaries

(In thousands)

	Fiscal Years
	November 27,			November 28,			November 30,
	2021			2020			2019
Net income including non-controlling interest	$	161,475		$	123,788		$	130,844
Other comprehensive income (loss)
Foreign currency translation		(26,294	)		41,742			(20,395	)
Defined benefit pension plans adjustment, net of tax		48,181			4,588			(21,828	)
Interest rate swaps, net of tax		15,179			(11,765	)		(35,031	)
Cash-flow hedges, net of tax		(4,486	)		6,206			13,820
Other comprehensive income (loss)		32,580			40,771			(63,434	)
Comprehensive income		194,055			164,559			67,410
Less: Comprehensive income attributable to non-controlling interest		50			99			41
Comprehensive income attributable to H.B. Fuller	$	194,005		$	164,460		$	67,369

See accompanying Notes to Consolidated Financial Statements.

29

CONSOLIDATED BALANCE SHEETS

H.B. Fuller Company and Subsidiaries

(In thousands, except share and per share amounts)

	November 27,			November 28,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	61,786		$	100,534
Trade receivables, net		614,645			514,916
Inventories		448,404			323,213
Other current assets		96,335			81,113
Total current assets		1,221,170			1,019,776
Property, plant and equipment, net		695,367			670,744
Goodwill		1,298,845			1,312,003
Other intangibles, net		687,075			755,968
Other assets		372,073			278,213
Total assets	$	4,274,530		$	4,036,704
Liabilities, non-controlling interest and total equity
Current liabilities:
Notes payable	$	24,983		$	16,925
Current maturities of long-term debt		-			-
Trade payables		500,321			316,460
Accrued compensation		109,542			83,598
Income taxes payable		15,943			29,173
Other accrued expenses		86,061			83,976
Total current liabilities		736,850			530,132
Long-term debt, net of current maturities		1,591,479			1,756,985
Accrued pension liabilities		71,651			88,806
Other liabilities		277,190			278,919
Total liabilities		2,677,170			2,654,842
Commitments and contingencies (Note 14)
Equity:
H.B. Fuller stockholders' equity:
Preferred stock (no shares outstanding) Shares authorized – 10,045,900		-			-
Common stock, par value $1.00 per share, Shares authorized – 160,000,000, Shares outstanding – 52,777,753 and 51,906,663 for 2021 and 2020, respectively		52,778			51,907
Additional paid-in capital		213,637			157,867
Retained earnings		1,600,601			1,474,406
Accumulated other comprehensive loss		(270,247	)		(302,859	)
Total H.B. Fuller stockholders' equity		1,596,769			1,381,321
Non-controlling interest		591			541
Total equity		1,597,360			1,381,862
Total liabilities, non-controlling interest and total equity	$	4,274,530		$	4,036,704

See accompanying Notes to Consolidated Financial Statements.

30

CONSOLIDATED STATEMENTS OF TOTAL EQUITY

H.B. Fuller Company and Subsidiaries

(In thousands)

	H.B. Fuller Company Shareholders
										Accumulated
				Additional						Other			Non-
	Common			Paid-in			Retained			Comprehensive			Controlling
	Stock			Capital			Earnings			Income (Loss)			Interest		Total
Balance at December 1, 2018, as previously reported	$	50,733		$	95,940		$	1,285,246		$	(280,152	)	$	401	$	1,152,168
Change in accounting principles		-			-			1,043			-			-		1,043
Balance at December 1, 2018, as adjusted	$	50,733		$	95,940		$	1,286,289		$	(280,152	)	$	401	$	1,153,211
Comprehensive income (loss)		-			-			130,817			(63,448	)		41		67,410
Dividends		-			-			(32,695	)		-			-		(32,695	)
Stock option exercises		373			10,506			-			-			-		10,879
Share-based compensation plans other, net		200			26,810			-			-			-		27,010
Repurchases of common stock		(65	)		(2,961	)		-			-			-		(3,026	)
Balance at November 30, 2019	$	51,241		$	130,295		$	1,384,411		$	(343,600	)	$	442	$	1,222,789
Comprehensive income (loss)		-			-			123,719			40,741			99		164,559
Dividends		-			-			(33,724	)		-			-		(33,724	)
Stock option exercises		397			11,924			-			-			-		12,321
Share-based compensation plans other, net		341			19,008			-			-			-		19,349
Repurchases of common stock		(72	)		(3,360	)		-			-			-		(3,432	)
Balance at November 28, 2020	$	51,907		$	157,867		$	1,474,406		$	(302,859	)	$	541	$	1,381,862
Comprehensive income		-			-			161,393			32,612			50		194,055
Dividends		-			-			(35,198	)		-			-		(35,198	)
Stock option exercises		741			31,584			-			-			-		32,325
Share-based compensation plans other, net		181			26,817			-			-			-		26,998
Repurchases of common stock		(51	)		(2,631	)		-			-			-		(2,682	)
Balance at November 27, 2021	$	52,778		$	213,637		$	1,600,601		$	(270,247	)	$	591	$	1,597,360

31

CONSOLIDATED STATEMENTS of CASH FLOWS

H.B. Fuller Company and Subsidiaries

(In thousands)

	Fiscal Years
	November 27,			November 28,			November 30,
	2021			2020			2019
Cash flows from operating activities:
Net income including non-controlling interest	$	161,475		$	123,788		$	130,844
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Depreciation		72,106			68,226			67,115
Amortization		71,068			70,591			74,091
Deferred income taxes		16,192			(24,730	)		(29,028	)
Income from equity method investments, net of dividends received		2,776			375			(39	)
Loss (gain) on sale of assets		648			86			(24,104	)
Share-based compensation		22,366			16,914			24,003
Pension and other postretirement benefit plan contributions		(3,840	)		(5,479	)		(8,063	)
Pension and other postretirement benefit plan income		(28,662	)		(14,763	)		(11,300	)
Mark to market adjustment related to contingent consideration liabilities		2,300			800			-
Change in assets and liabilities, net of effects of acquisitions:
Trade receivables, net		(124,849	)		(14,842	)		(25,632	)
Inventories		(135,351	)		15,708			19,584
Other assets		(79,097	)		38,412			(18,316	)
Trade payables		176,337			23,130			11,553
Accrued compensation		27,741			2,588			1,342
Other accrued expenses		1,186			16,361			(1,882	)
Income taxes payable		(4,137	)		5,511			21,043
Other liabilities		(73,508	)		24,566			448
Other		108,566			(15,683	)		37,518
Net cash provided by operating activities		213,317			331,559			269,177
Cash flows from investing activities:
Purchased property, plant and equipment		(96,089	)		(87,288	)		(61,982	)
Purchased businesses, net of cash acquired		(5,445	)		(9,500	)		(8,292	)
Purchased business assets		-			(5,623	)		-
Purchased business remaining equity		-			-			(9,870	)
Proceeds from sale of property, plant and equipment		2,896			1,506			11,133
Proceeds from sale of business		-			-			70,293
Cash received from government grant		5,800			-			8,881
Cash outflow related to government grant		(1,822	)		(8,555	)		(2,758	)
Net cash (used in) provided by investing activities		(94,660	)		(109,460	)		7,405
Cash flows from financing activities:
Proceeds from issuance of long-term debt		-			300,000			-
Repayment of long-term debt		(156,500	)		(518,000	)		(288,600	)
Net proceeds from notes payable		9,346			4,128			1,662
Dividends paid		(34,859	)		(33,461	)		(32,357	)
Contingent consideration payment		(1,700	)		(767	)		(3,610	)
Proceeds from stock options exercised		32,325			12,321			10,885
Repurchases of common stock		(2,682	)		(3,432	)		(3,026	)
Net cash used in financing activities		(154,070	)		(239,211	)		(315,046	)
Effect of exchange rate changes on cash and cash equivalents		(3,335	)		5,455			(138	)
Net change in cash and cash equivalents		(38,748	)		(11,657	)		(38,602	)
Cash and cash equivalents at beginning of year		100,534			112,191			150,793
Cash and cash equivalents at end of year	$	61,786		$	100,534		$	112,191
Supplemental disclosure of cash flow information:
Dividends paid with company stock	$	339		$	263		$	338
Cash paid for interest, net of amount capitalized of $905, $565, and $416 for the years ended November 27, 2021, November 28, 2020 and November 30, 2019, respectively	$	62,753		$	69,452		$	107,088
Cash paid for income taxes, net of refunds	$	72,955		$	49,986		$	37,232

See accompanying Notes to Consolidated Financial Statements.

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

H.B. Fuller Company and Subsidiaries

(In thousands, except share and per share amounts)

Note 1: Nature of Business and Summary of Significant Accounting Policies

Nature of Business

H.B. Fuller Company and our subsidiaries formulate, manufacture and market specialty adhesives, sealants, coatings, polymers, tapes, encapsulants, additives and other specialty chemical products globally, with sales operations in 35 countries in North America, Europe, Latin America, the Asia Pacific region, India, the Middle East and Africa.

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. In 2021, as a percentage of total net revenue by operating segment, Hygiene, Health and Consumable Adhesives accounted for 45 percent, Engineering Adhesives 42 percent and Construction Adhesives 13 percent.

Our Hygiene, Health and Consumable Adhesives operating segment produces and supplies a full range of specialty industrial adhesives such as thermoplastic, thermoset, reactive, water-based and solvent-based products for applications in various markets, including packaging (food and beverage containers, flexible packaging, consumer goods, package integrity and re-enforcement, and non-durable goods), converting (corrugation, folding carton, tape and label, paper converting, envelopes, books, multi-wall bags, sacks, and tissue and towel), nonwoven and hygiene (disposable diapers, feminine care and medical garments) and health and beauty.

Our Engineering Adhesives operating segment produces and supplies high performance industrial adhesives such as reactive, light cure, two-part liquids, polyurethane, silicone, film and fast cure products to the durable assembly (appliances and filters), performance wood (windows, doors and wood flooring) and textile (footwear and sportswear), transportation, electronics, medical, clean energy, aerospace and defense, appliance, heavy machinery and insulating glass markets.

Our Construction Adhesives operating segment includes products used for tile setting (adhesives, grouts, mortars, sealers and levelers), the commercial roofing industry (pressure-sensitive adhesives, tapes and sealants) and heating, ventilation and air conditioning and insulation applications (duct sealants, weather barriers and fungicidal coatings and block fillers). This operating segment also includes caulks and sealants for the consumer market and professional trade, sold through retailers, primarily in Australia.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of H.B. Fuller Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated. Investments in affiliated companies in which we exercise significant influence, but which we do not control, are accounted for in the Consolidated Financial Statements under the equity method of accounting. As such, consolidated net income includes our equity portion in current earnings of such companies, after elimination of intercompany profits. Investments in which we do not exercise significant influence (generally less than a 20 percent ownership interest) are accounted for using the measurement alternative.

Our 50 percent ownership in Sekisui-Fuller Company, Ltd., our Japan joint venture, is accounted for under the equity method of accounting as we do not exercise control over the investee. In fiscal years 2021, 2020 and 2019, this equity method investment was not significant as defined in Regulation S-X under the Securities Exchange Act of 1934. As such, financial information as of  November 27, 2021, November 28, 2020, and November 30, 2019 for Sekisui-Fuller Company, Ltd. is not required.

Our fiscal year ends on the Saturday closest to November 30. Fiscal year-end dates were  November 27, 2021, November 28, 2020, and November 30, 2019 for 2021, 2020 and 2019, respectively.

Use of Estimates

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

Revenue Recognition

We sell a variety of adhesives, sealants and other specialty chemical products to a diverse customer base. The vast majority of our arrangements contain a single performance obligation to transfer manufactured goods to the customer as governed by an individual purchase order.

We recognize revenue at the amount of consideration to which we expect to be entitled in exchange for transferring the promised goods to the customer. The transaction price includes an estimation of any variable amounts of consideration to which we will be entitled. The most common forms of variable consideration within our arrangements are customer rebates, which are recorded as a reduction to revenue at the time of the initial sale using the expected value method. The expected value method is the sum of probability-weighted amounts in a range of possible consideration amounts and is based on a consideration of historical, current and forecast information. Changes in estimates are updated each reporting period. There are no material instances where variable consideration is constrained and not recorded at the initial time of sale. Product returns are recorded as a reduction to revenue based on historical experience and anticipated sales returns that occur in the normal course of business. We primarily have assurance-type warranties that do not result in separate performance obligations. We have elected to present revenue net of sales and other similar taxes.

We recognize revenue when control of goods is transferred to the customer. For the vast majority of our arrangements, control transfers at a point in time either upon shipment or upon delivery of the goods to the customer. The timing of transfer of control is determined considering the timing of the transfer of legal title, physical possession, and risks and rewards of goods to the customer.

33

 

We record shipping and handling revenue in net revenue and outbound shipping and handling costs in cost of goods sold. The majority of our shipping and handling activities are performed prior to transfer of control of the goods to the customer. For those arrangements where we provide shipping and handling services after control of the goods has transferred to the customer, we have elected the practical expedient allowed under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 606 to account for these activities as a fulfillment cost rather than as a separate performance obligation.

Provisions for sales returns are estimated based on historical experience and are adjusted for known returns, if material. Customer incentive programs (primarily volume purchase rebates) and arrangements such as cooperative advertising, slotting fees and buy-downs are recorded as a reduction of net revenue in accordance with ASC 606. Customer incentives recorded in the Consolidated Statements of Income as a reduction of net revenue were $33,441, $34,860 and $22,795 in 2021, 2020 and 2019, respectively.

For certain products, consigned inventory is maintained at customer locations. For this inventory, revenue is recognized in the period that the inventory is consumed. Sales to distributors require a distribution agreement or purchase order. As a normal practice, distributors do not have a right of return.

Cost of Sales

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

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses include sales and marketing, research and development, technical and customer service, finance, legal, human resources, general management and similar expenses.

Income Taxes

The income tax provision is computed based on income before income from equity method investments included in the Consolidated Statement of Income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Enacted statutory tax rates applicable to future years are applied to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances reduce deferred tax assets when it is not more-likely-than-not that a tax benefit will be realized. See Note 11 for further information.

Acquisition Accounting

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

● Identifying the acquirer,

● Determining the acquisition date,

● Recognizing and measuring the identifiable assets acquired and the liabilities assumed, and

● Recognizing and measuring goodwill or a gain from a bargain purchase

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

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

Cash Equivalents

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

Restrictions on Cash

There were no restrictions on cash as of November 27, 2021 or November 28, 2020. There are no contractual or regulatory restrictions on the ability of consolidated and unconsolidated subsidiaries to transfer funds to us, except for typical statutory restrictions which prohibit distributions in excess of net capital or similar tests. The majority of our cash in non-U.S. locations is considered indefinitely reinvested.

Trade Receivables and Allowances

Trade receivables are recorded at the invoiced amount and do not bear interest. Allowances are maintained for doubtful accounts, credits related to pricing or quantities shipped and early payment discounts. The allowance for doubtful accounts includes an estimate of future uncollectible receivables based on the aging of the receivable balance and our collection experience. The allowance also includes specific customer accounts when it is probable that the full amount of the receivable will not be collected. Current expectations of future credit losses using market and industry data are considered in the specific customer accounts. See Note 4 for further information.

34

 

Inventories

Inventories are recorded at cost (not in excess of net realizable value) as determined by the weighted-average cost method and are valued at the lower of cost or net realizable value.

Investments

Investments with a value of $9,584 and $9,006 represent the cash surrender value of life insurance contracts as of November 27, 2021 and November 28, 2020, respectively. These assets are held to primarily support supplemental pension plans and are recorded in other assets in the Consolidated Balance Sheets. The corresponding gain or loss associated with these contracts is reported in earnings each period as a component of selling, general and administrative expenses.

Equity Investments

Investments in an entity where we own less than 20% of the voting stock of the entity and do not exercise significant influence over operating and financial policies of the entity are accounted for using the measurement alternative at cost less impairment plus or minus observable price changes in orderly transactions. We have a policy in place to review our investments at least annually, to evaluate the accounting method and identify observable price changes that could indicate impairment. If we believe that an impairment exists, it is our policy to calculate the fair value of the investment and recognize as impairment any amount by which the carrying value exceeds the fair value of the investment. We did not have any impairment of our equity investments for the years ended November 27, 2021, November 28, 2020, and November 30, 2019. The book value of the equity investments was $1,667 as of  November 27, 2021 and $1,669 as of November 28, 2020.

Property, Plant and Equipment

Property, plant and equipment are carried at cost and depreciated over the useful lives of the assets using the straight-line method. Estimated useful lives range from 20 to 40 years for buildings and improvements, 3 to 20 years for machinery and equipment, and the shorter of the lease or expected life for leasehold improvements. Fully depreciated assets are retained in property and accumulated depreciation accounts until removed from service. Upon disposal, assets and related accumulated depreciation are removed. Upon sale of an asset, the difference between the proceeds and remaining net book value is charged or credited to other income, net on the Consolidated Statements of Income. Expenditures that add value or extend the life of the respective assets are capitalized, while expenditures that are typical recurring repairs and maintenance are expensed as incurred. Interest costs associated with construction and implementation of property, plant and equipment of $905, $565 and $416 were capitalized in 2021, 2020 and 2019, respectively.

Goodwill

We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows or ongoing declines in market capitalization. The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit. The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill. In performing the impairment test, we determined the fair value of our reporting units through the income approach by using discounted cash flow (“DCF”) analyses. Determining fair value requires the company to make judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the DCF analysis for each reporting unit are based on the reporting unit's budget, long-term business plan and recent operating performance. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, an impairment charge is recorded for any excess of the carrying value over the estimated fair value. Based on the analysis performed for our fiscal 2021 annual impairment test, there were no indications of impairment for any of our reporting units. See Note 5 for further information.

Intangible Assets

Intangible assets include patents, customer lists, technology, trademarks and other intangible assets acquired from independent parties and are amortized on a straight-line basis with estimated useful lives ranging from 3 to 20 years. The straight-line method of amortization of these assets reflects an appropriate allocation of the costs of the intangible assets to earnings in proportion to the amount of economic benefits obtained in each reporting period.

Impairment of Long-Lived Assets

Our long-lived assets are tested for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. An impairment loss would be measured and recognized when the carrying amount of an asset (asset group) exceeds the estimated undiscounted future cash flows expected to result from the use of the asset (asset group) and its eventual disposition. The impairment loss to be recorded would be the excess of the asset's carrying value over its fair value. Fair value is generally determined using a DCF analysis or other valuation technique. Costs related to internally developed intangible assets are expensed as incurred.

Foreign Currency Translation

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

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

35

 

Pension and Other Postretirement Benefits

We sponsor defined-benefit pension plans in both the U.S. and non-U.S. entities. Also in the U.S., we sponsor other postretirement plans for health care and life insurance benefits. Expenses and liabilities for the pension plans and other postretirement plans are actuarially calculated. These calculations are based on our assumptions related to the discount rate, expected return on assets, projected salary increases, health care cost trend rates and mortality rates. The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan. The approach identifies a broad population of corporate bonds that meet the quality and size criteria for the particular plan. We use this approach rather than a specific index that has a certain set of bonds that may or may not be representative of the characteristics of our particular plan. Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 60 percent equities and 40 percent fixed income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward-looking observations. The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the impact of active management of the plan’s assets. Note 10 includes disclosure of assumptions employed in these measurements for both the non-U.S. and U.S. plans.

Asset Retirement Obligations

We recognize asset retirement obligations ("ARO") in the period in which we have an existing legal obligation associated with the retirement of a tangible long-lived asset, and the amount can be reasonably estimated. The ARO is recognized at fair value when the liability is incurred. Upon initial recognition of a liability, that cost is capitalized as part of the related long-lived asset and depreciated on a straight-line basis over the remaining estimated useful life of the related asset. We have recognized a liability related to special handling of asbestos related materials in certain facilities for which we have plans or expectation of plans to undertake a major renovation or demolition project that would require the removal of asbestos or have plans or expectation of plans to exit a facility. In addition, we have determined that we have facilities with some level of asbestos that will require abatement action in the future. Once the probability and timeframe of an action are determined, we apply certain assumptions to determine the related liability and asset. These assumptions include the use of inflation rates, the use of credit adjusted risk-free discount rates and the estimation of costs to handle asbestos related materials. The recorded liability is required to be adjusted for changes resulting from the passage of time and/or revisions to the timing or the amount of the original estimate. The asset retirement obligation liability was $2,917 and $2,948 at November 27, 2021 and November 28, 2020, respectively.

Environmental Costs

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments are made, or remedial efforts are probable, and the costs can be reasonably estimated. The timing of these accruals is generally no later than the completion of feasibility studies.

Contingent Consideration Liability

Concurrent with business acquisitions, we enter into agreements that require us to pay the sellers a certain amount based upon a formula related to the entity’s financial results. The change in fair value of the contingent consideration liability is recorded in SG&A expenses in the Consolidated Statements of Income.

Share-based Compensation

We have various share-based compensation programs which provide for equity awards, including non-qualified stock options, incentive stock options, restricted stock units, performance awards and deferred compensation. We use the straight-line attribution method to recognize compensation expense associated with share-based awards based on the fair value on the date of grant, net of the estimated forfeiture rate. Expense is recognized over the requisite service period related to each award, which is the period between the grant date and the earlier of the award’s stated vesting term or the date the employee is eligible for early retirement based on the terms of the plan. The fair value of stock options is estimated using the Black-Scholes option pricing model. All of our stock compensation expense is recorded in SG&A expenses in the Consolidated Statements of Income. See Note 9 for additional information.

Earnings per Share

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

(in thousands, except per share data)	2021		2020		2019
Net income attributable to H.B. Fuller	$	161,393	$	123,719	$	130,817
Weighted-average common shares – basic		52,887		52,039		50,920
Equivalent shares from share-based compensation plans		1,428		481		1,063
Weighted-average common and common equivalent shares – diluted		54,315		52,520		51,983
Basic earnings per share	$	3.05	$	2.38	$	2.57
Diluted earnings per share	$	2.97	$	2.36	$	2.52

Share-based compensation awards for 1,535,503, 3,982,275 and 2,951,697 shares for 2021, 2020 and 2019, respectively, were excluded from the diluted earnings per share calculation because they were antidilutive.

36

 

Financial Instruments and Derivatives

As a part of our ongoing operations, we are exposed to market risks such as changes in foreign currency exchange rates and interest rates. To manage these risks, we may enter into derivative transactions pursuant to our established policies.

Our objective is to balance, where possible, non-functional currency denominated assets to non-functional currency denominated liabilities to have a natural hedge and minimize foreign exchange impacts. We minimize risks from foreign currency exchange rate fluctuations through normal operating and financing activities and, when deemed appropriate, through the use of derivative instruments. Derivatives consisted primarily of forward currency contracts used to manage foreign currency denominated assets and liabilities. For derivative instruments outstanding that were not designated as hedges for accounting purposes, the gains and losses related to mark-to-market adjustments were recognized as other income or expense in the income statement during the periods the derivative instruments were outstanding. To manage exposure to currency rate movements on expected cash flows, the company may enter into cross-currency swap agreements. 

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

Changes in the fair values of derivatives are recorded in net earnings or other comprehensive income, based on the type of derivative, and whether the instrument is designated and effective as a hedge transaction. Gains or losses on derivative instruments reported in accumulated other comprehensive income (loss) are reclassified to earnings in the period the hedged item affects earnings. Any ineffectiveness is recognized in earnings in the current period. We maintain master netting arrangements that allow us to net settle contracts with the same counterparties; we do not elect to offset amounts in our Consolidated Balance Sheet.  These arrangements generally do not call for collateral. We do not enter into any speculative positions with regard to derivative instruments. See Note 12 for further information regarding our financial instruments.

Purchase of Company Common Stock

Under the Minnesota Business Corporation Act, repurchased stock is included in authorized shares, but is not included in shares outstanding. The excess of the repurchase cost over par value is charged to additional paid-in capital. When additional paid-in capital is exhausted, the excess reduces retained earnings. We repurchased 47,481, 72,000 and 73,043 shares of common stock in 2021, 2020 and 2019, respectively, in connection with the statutory minimum tax withholding related to vesting of restricted stock.

Change in Accounting Principle - Credit Losses

In June 2016, the FASB issued 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. The FASB also issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, in November 2018, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments, in April 2019 and ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments, in November 2019. ASU No. 2018-19 clarifies that receivables arising from operating leases are within the scope of Topic 842, Leases. ASU No. 2019-04 and ASU No. 2019-11 clarify various scoping and other issues arising from ASU No. 2016-13. The amendments in these ASUs affect the guidance in ASU No. 2016-13 and are effective in the same timeframe as ASU No. 2016-13. We adopted these ASUs and related standards during the first quarter ended February 27, 2021. Based on the conducted analyses on the change in accounting principle, the ASUs did not have a material impact on the Consolidated Statements of Income or the Consolidated Balance Sheets. Therefore, a modified retrospective adjustment was not required. The trade receivables and allowances significant accounting policy has been changed in accordance with these ASUs.

Change in Accounting Principle – Revenue Recognition

In May 2014, 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. We adopted this ASU during the quarter ended March 2, 2019 using the modified retrospective method of adoption. As a result of the adoption of this ASU, we recorded an increase to opening retained earnings of $1,776 as of December 1, 2018 related to accelerated recognition for arrangements where we provide shipping and handling services after control of the goods has transferred to the customer. Prior periods were not restated. We have included the disclosures required by this ASU in Note 15.

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 were adopted during the quarter ended March 2, 2019 with ASU No. 2014-09 as discussed above.

37

 

Change in Accounting Principle – Income Tax Impact of Intra-Entity Transfers of Assets Other Than Inventory

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. We adopted this ASU during the quarter ended  March 2, 2019. We recorded a decrease to opening retained earnings of $733 as of  December 1, 2018 as a result of the adoption of this ASU.

New Accounting Pronouncements

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This ASU requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958-605. Our effective date for adoption of this ASU is our fiscal year beginning December 4, 2022 with early adoption permitted. We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and determined it will not have a material impact.

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

Note 2: Acquisitions

STR Holdings, Inc.

On January 13, 2021, we acquired certain assets of STR Holdings, Inc. ("STR") for a base purchase price of $5,445 which was funded through existing cash. The agreement requires us to pay an additional $800 on the first anniversary of the acquisition and contingent consideration of up to $1,700 based on certain agreement provisions. STR, headquartered in Enfield, Connecticut, is a manufacturer of encapsulant products used in the solar industry. The acquisition fair value measurement, which includes intangible assets of $6,700 and other net assets of $1,245, was final as of November 27, 2021. As of November 27, 2021, the agreement provisions for the contingent consideration were met, and as a result, the $1,700 was paid. See Note 13 for the fair value and payment of this contingent consideration. We recorded no goodwill in our accounting for this acquisition. STR is reported in our Engineering Adhesives ("EA") operating segment. The STR acquisition does not represent a material business combination and therefore pro forma financial information is not provided. 

D.H.M. Adhesives, Inc.

On February 3, 2020, we acquired certain assets of D.H.M. Adhesives, Inc. (“D.H.M.”) for approximately $9,500 which was funded through existing cash. In addition, the agreement requires us to pay contingent consideration of up to approximately $8,100 based upon a formula related to revenue during the fiscal years ended November 27, 2021 and December 3, 2022. D.H.M., headquartered in Calhoun, Georgia, is a provider of hotmelt adhesives. The acquisition fair value measurement was final as of May 30, 2020 and includes goodwill of $1,063 and customer relationship intangible of $11,900. The fair value of the contingent consideration liability as of the date of acquisition was $5,000 resulting in a final purchase price of $14,500. See Note 13 for further discussion of the fair value of the contingent consideration liability. Goodwill is deductible for tax purposes. D.H.M. and the related goodwill are reported in our Hygiene, Health and Consumable Adhesives operating segment. The D.H.M. acquisition does not represent a material business combination and therefore pro forma financial information is not provided.

Ramapo Sales and Marketing, Inc.

On May 17, 2019, we acquired certain assets from a window and insulating glass sealants sales and distribution company, Ramapo Sales and Marketing, Inc. (“Ramapo”), headquartered in Charleston, South Carolina. This acquisition supports the integration of the insulating glass business that we acquired as part of the Royal Adhesives acquisition. The purchase price of $8,292 was funded through existing cash. In addition, we were required to pay up to $3,400 in contingent consideration based upon financial results for the twelve months ended December 31, 2019. Existing receivables of $2,166 from Ramapo were effectively settled as a result of the acquisition. The acquisition fair value measurement was final as of May 30, 2020 and includes goodwill of $165, customer relationship intangible of $8,800, and additional acquired assets of $4,148. The fair value of the contingent consideration liability as of the date of the acquisition was $2,654, resulting in a final purchase price of $10,947. During the second quarter of 2020, the contingent consideration liability was finalized and adjusted to a final balance of $767. Ramapo and the related goodwill are reported in our Engineering Adhesives operating segment.

Dalton Holdings, LLC

On July 1, 2019, we completed the sale of Dalton Holdings, LLC (“Dalton Holdings”), which primarily manufactures surfactants and thickeners, within the Americas Adhesives segment. The sale resulted in a pre-tax gain on sale of $18,764, which is recorded in other income, net in the Consolidated Statements of Income for the year ended November 30, 2019.

Note 3: Restructuring Actions

The company has approved restructuring plans consisting of consolidation plans, organizational changes and other actions related to the reorganization of our business into three segments, the integration of the operations of Royal Adhesives with the operations of the company and other actions to optimize operations. The following table summarizes the pre-tax distribution of charges under these restructuring plans by income statement classification:

	November 27, 2021			November 28, 2020		November 30, 2019
Cost of sales	$	(188	)	$	1,013	$	2,082
Selling, general and administrative		975			3,567		12,453
	$	787		$	4,580	$	14,535

The restructuring charges are all recorded in Corporate Unallocated for segment reporting purposes.

38

 

A summary of the restructuring liability is presented below:

	Employee-
	Related			Other			Total
Balance at end November 30, 2019	$	9,830		$	924		$	10,754
Expense incurred		2,898			1,681			4,579
Cash payments		(7,051	)		(2,357	)		(9,408	)
Foreign currency translation		157			-			157
Balance at end November 28, 2020	$	5,834		$	248		$	6,082
Expense incurred		(807	)		1,594			787
Non-cash charges		-			(135	)		(135	)
Cash payments		(3,917	)		(1,707	)		(5,624	)
Foreign currency translation		(15	)		-			(15	)
Balance at end November 27, 2021	$	1,095		$	-		$	1,095

Non-cash charges include accelerated depreciation resulting from the cessation of use of certain long-lived assets. Restructuring liabilities have been classified as a component of other accrued expenses on the Consolidated Balance Sheets.

Note 4: Supplemental Financial Statement Information

Statement of Income Information

Additional details of income statement amounts for 2021, 2020 and 2019 are as follows:

	2021			2020			2019
Foreign currency transaction losses, net	$	(5,962	)	$	(3,078	)	$	(1,156	)
(Loss) gain on disposal of assets		(648	)		(86	)		24,304
Net periodic pension benefit		32,070			17,902			13,661
Other, net		7,395			660			1,134
Total other income, net	$	32,855		$	15,398		$	37,943
Research and development expenses (included in SG&A expenses)	$	39,344		$	36,969		$	36,624

39

 

Balance Sheet Information

Additional details of balance sheet amounts as of  November 27, 2021 and November 28, 2020 are as follows:

	2021			2020
Inventories
Raw materials	$	226,723		$	151,026
Finished goods		221,681			172,187
Total inventories	$	448,404		$	323,213
Other current assets
Other receivables	$	28,874		$	18,666
Prepaid income taxes		13,359			22,137
Prepaid taxes other than income taxes		26,929			20,270
Prepaid expenses		25,889			19,212
Assets held for sale		1,284			828
Total other current assets	$	96,335		$	81,113
Property, plant and equipment
Land	$	84,492		$	87,403
Buildings and improvements		395,849			393,175
Machinery and equipment		915,914			876,858
Construction in progress		104,734			70,747
Total, at cost		1,500,989			1,428,183
Accumulated depreciation		(805,622	)		(757,439	)
Net property, plant and equipment	$	695,367		$	670,744
Other assets
Investments and company owned life insurance	$	9,584		$	9,006
Equity method investments		49,333			53,863
Equity investments		1,667			1,669
Long-term deferred income taxes		37,116			37,376
Prepaid pension costs		90,946			43,206
Postretirement other than pension asset		107,323			73,137
Operating lease right-of-use assets		32,744			28,445
Other long-term receivables		23,661			16,760
Other long-term assets		19,699			14,751
Total other assets	$	372,073		$	278,213
Other accrued expenses
Taxes other than income taxes	$	14,280		$	16,893
Miscellaneous services		5,626			5,691
Customer rebates		20,743			15,008
Interest		2,964			4,901
Insurance		329			184
Product liability		432			501
Contingent consideration liability		8,100			5,800
Current operating lease liabilities		8,921			8,706
Accrued expenses		24,666			26,292
Total other accrued expenses	$	86,061		$	83,976
Other liabilities
Asset retirement obligations	$	2,917		$	2,948
Long-term deferred income taxes		179,401			165,877
Long-term income tax liability		14,364			18,089
Long-term deferred compensation		9,665			8,510
Postretirement other than pension		2,657			2,930
Noncurrent operating lease liabilities		24,061			19,498
Long-term accrued payroll tax		4,215			7,216
Environmental liabilities		3,521			3,639
Other long-term liabilities		36,389			50,212
Total other liabilities	$	277,190		$	278,919

40

 

Additional details on the trade receivables allowance for doubtful accounts, credits related to pricing or quantities shipped and early payment discounts for 2021, 2020 and 2019 are as follows:

	2021			2020			2019
Balance at beginning of year	$	12,905		$	10,682		$	14,017
Charged to expenses and other adjustments		(546	)		8,313			2,678
Write-offs		(2,278	)		(6,158	)		(5,947	)
Foreign currency translation effect		(146	)		68			(66	)
Balance at end of year	$	9,935		$	12,905		$	10,682

Statement of Comprehensive Income Information

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

	November 27, 2021
										Non-controlling
	H.B. Fuller Stockholders									Interest
	Pretax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interests		-			-		$	161,393		$	82
Other comprehensive income (loss)
Foreign currency translation adjustment1	$	(26,262	)		-			(26,262	)		(32	)
Defined benefit pension plans adjustment2		64,912			(16,731	)		48,181			-
Interest rate swap3		20,109			(4,930	)		15,179			-
Other cash flow hedges3		(4,554	)		68			(4,486	)		-
Other comprehensive income (loss)	$	54,205		$	(21,593	)		32,612			(32	)
Comprehensive income							$	194,005		$	50

	November 28, 2020
										Non-controlling
	H.B. Fuller Stockholders									Interest
	Pretax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interests		-			-		$	123,719		$	69
Other comprehensive income (loss)
Foreign currency translation adjustment1	$	41,712			-			41,712			30
Defined benefit pension plans adjustment2		5,823			(1,235	)		4,588			-
Interest rate swap3		(15,618	)		3,853			(11,765	)		-
Other cash flow hedges3		6,307			(101	)		6,206			-
Other comprehensive income	$	38,224		$	2,517			40,741			30
Comprehensive income							$	164,460		$	99

	November 30, 2019
										Non-controlling
	H.B. Fuller Stockholders									Interest
	Pretax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interests		-			-		$	130,817		$	27
Other comprehensive income (loss)
Foreign currency translation adjustment1	$	(20,409	)		-			(20,409	)		14
Defined benefit pension plans adjustment2		(28,635	)		6,807			(21,828	)		-
Interest rate swap3		(46,254	)		11,223			(35,031	)		-
Other cash flow hedges3		14,429			(609	)		13,820			-
Other comprehensive (loss) income	$	(80,869	)	$	17,421			(63,448	)		14
Comprehensive income							$	67,369		$	41

¹ Income taxes are not provided for foreign currency translation relating to indefinite investments in international subsidiaries.

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

³ Loss reclassified from accumulated other comprehensive income (loss) into earnings is reported in other income, net.

41

 

Statement of Total Equity Information

Components of accumulated other comprehensive income (loss) are as follows:

	November 27, 2021
							Non-
				H.B. Fuller			controlling
	Total			Stockholders			Interests
Foreign currency translation adjustment	$	(132,370	)	$	(132,267	)	$	(103	)
Interest rate swap, net of taxes of $3,224		(9,924	)		(9,924	)		-
Cash flow hedges, net of taxes of ($53)		3,483			3,483			-
Defined benefit pension plans adjustment, net of taxes of $63,925		(113,198	)		(113,198	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Total accumulated other comprehensive loss	$	(270,350	)	$	(270,247	)	$	(103	)

	November 28, 2020
							Non-
				H.B. Fuller			controlling
	Total			Stockholders			Interests
Foreign currency translation adjustment	$	(106,140	)	$	(106,005	)	$	(135	)
Interest rate swap, net of taxes of $8,153		(25,103	)		(25,103	)		-
Cash flow hedges, net of taxes of ($121)		7,969			7,969			-
Defined benefit pension plans adjustment, net of taxes of $80,656		(161,379	)		(161,379	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Total accumulated other comprehensive loss	$	(302,994	)	$	(302,859	)	$	(135	)

	November 30, 2019
							Non-
				H.B. Fuller			controlling
	Total			Stockholders			Interests
Foreign currency translation adjustment	$	(147,821	)	$	(147,716	)	$	(105	)
Interest rate swap, net of taxes of ($4,300)		(13,338	)		(13,338	)		-
Cash flow hedges, net of taxes of $21		1,763			1,763			-
Defined benefit pension plans adjustment, net of taxes of $81,891		(165,968	)		(165,968	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Total accumulated other comprehensive loss	$	(343,705	)	$	(343,600	)	$	(105	)

Note 5: Goodwill and Other Intangible Assets

Goodwill balances by reportable segment as of  November 27, 2021 and November 28, 2020 consisted of the following:

	2021		2020
Hygiene, Health and Consumable Adhesives	$	325,470	$	332,909
Engineering Adhesives		662,021		667,863
Construction Adhesives		311,354		311,231
Total	$	1,298,845	$	1,312,003

Additional details related to goodwill for 2021 and 2020 are as follows:

	2021			2020
Balance at beginning of year	$	1,312,003		$	1,281,808
Ramapo acquisition		-			(746	)
D.H.M acquisition		-			1,063
Foreign currency translation effect		(13,158	)		29,878
Balance at end of year	$	1,298,845		$	1,312,003

We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization. The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit. The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill. In performing the impairment test, we determined the fair value of our reporting units through the income approach by using DCF analyses. Determining fair value requires the company to make judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the DCF analysis for each reporting unit are based on the reporting unit's budget, long-term business plan, and recent operating performance. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. Based on the analysis performed during the fourth quarter of 2021, there were no indications of impairment for any of our reporting units.

42

 

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

	Purchased
	Technology			Customer
Amortizable Intangible Assets	and Patents			Relationships			Tradename			All Other			Total
As of November 27, 2021
Original cost	$	115,980		$	932,644		$	63,543		$	11,343		$	1,123,510
Accumulated amortization		(62,364	)		(335,143	)		(33,786	)		(5,635	)		(436,928	)
Net identifiable intangibles	$	53,616		$	597,501		$	29,757		$	5,708		$	686,582
Weighted-average useful lives (in years)		13			17			14			12			17
As of November 28, 2020
Original cost	$	113,775		$	933,943		$	63,266		$	11,410		$	1,122,394
Accumulated amortization		(53,216	)		(279,586	)		(29,368	)		(4,775	)	$	(366,945	)
Net identifiable intangibles	$	60,559		$	654,357		$	33,898		$	6,635		$	755,449
Weighted-average useful lives (in years)		13			17			14			12			17

Amortization expense with respect to amortizable intangible assets was $71,068, $70,591 and $74,091 in 2021, 2020 and 2019, respectively.

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

Fiscal Year	2022		2023		2024		2025		2026		Thereafter
Amortization Expense	$	68,879	$	66,056	$	61,146	$	58,578	$	51,773	$	380,150

The above amortization expense forecast is an estimate. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, potential impairment, accelerated amortization or other events.

Non-amortizable intangible assets as of  November 27, 2021 and November 28, 2020 were $493 and $519, respectively, and relate to trademarks and trade names. The change in non-amortizable assets in 2021 compared to 2020 was due to changes in foreign currency exchange rates.

Note 6: Leases

We adopted ASU No. 2016-02 and related standards (collectively, “ASC 842”), which replaced previous lease accounting guidance, during the first quarter ended February 29, 2020 using the modified retrospective method of adoption. As a result of electing this transition method, prior periods have not been restated. The adoption of ASC 842 resulted in the recording of right-of-use assets and associated lease liabilities of approximately $28,254 each as of the first day of the quarter ended February 29, 2020. ASC 842 did not have a material impact on our Consolidated Statement of Income. We elected the package of practical expedients permitted under the transition guidance within ASC 842, which includes not reassessing lease classification of existing leases. We did not elect the hindsight practical expedient.

As a lessee, the company leases office, manufacturing and warehouse space, and equipment. Certain lease agreements include rental payments adjusted annually based on changes in an inflation index. Our leases do not contain material residual value guarantees or material restrictive covenants. Lease expense is recognized on a straight-line basis over the lease term. We determine if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used.

Operating lease and finance lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the company’s incremental borrowing rate. We determine the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region.

Certain leases include one or more options to renew, with terms that can extend the lease term up to five years. We include options to renew the lease as part of the right-of-use lease asset and liability when it is reasonably certain we will exercise the option. In addition, certain leases contain termination options with an associated penalty. In general, the company is not reasonably certain to exercise such options.

For the measurement and classification of lease agreements, we group lease and non-lease components into a single lease component for all underlying asset classes. Variable lease payments primarily include payments for non-lease components, such as maintenance costs, payments for leased assets used beyond their non-cancelable lease term as adjusted for contractual options to terminate or renew, and payments for non-components such as sales tax. Certain leases contain immaterial variable lease payments based on usage.

43

 

The components of lease expense are as follows:

	November 27, 2021		November 28, 2020
Operating lease cost	$	11,958	$	12,581
Finance lease cost:
Amortization of assets1		673
Interest on lease liabilities1		110
Variable lease cost		5,990		4,024
Total net lease cost	$	18,731	$	16,605

¹ In 2020, finance leases were not material for disclosure.

Supplemental balance sheet information related to leases is as follows:

	Location on
	Balance Sheet	November 27, 2021		November 28, 2020
Operating leases:
Operating lease right-of-use assets	Other assets	$	32,744	$	28,445
Current operating lease liabilities	Other accrued expenses		8,921		8,706
Noncurrent operating lease liabilities	Other liabilities		24,061		19,498
Total operating lease liabilities		$	32,982	$	28,204
Finance leases:
Equipment right-of-use assets1	Property, plant and equipment	$	9,455
Current obligations of finance leases1	Other accrued expenses	$	1,109
Finance leases, net of current obligations1	Other liabilities		7,548
Total finance lease liabilities		$	8,657

¹ In 2020, finance leases were not material for disclosure.

As of November 27, 2021, the weighted average remaining lease term is 7.2 years and the weighted average discount rate is 3.3% for the company's operating lease agreements. The weighted average remaining lease term is 10.1 years and the weighted average discount rate is 2.9% for the company's finance lease agreements.

Supplemental information related to leases is as follows:

	November 27, 2021		November 28, 2020
Cash paid amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,251	$	13,216
Operating cash flows from finance leases1		110
Financing cash flows from finance leases1		546
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	20,030	$	13,166
Finance leases1		7,630

¹ In 2020, finance leases were not material for disclosure.

Maturities of lease liabilities are as follows:

	November 27, 2021
Fiscal Year	Finance Leases			Operating Leases
2022	$	1,352		$	9,292
2023		1,254			7,500
2024		1,174			5,313
2025		1,171			4,009
2026		1,165			2,360
2027 and beyond		3,841			7,888
Total		9,957			36,362
Less: amounts representing interest		(1,300	)		(3,380	)
Present value of future minimum payments		8,657			32,982
Less: current obligations		(1,109	)		(8,921	)
Noncurrent lease liabilities	$	7,548		$	24,061

44

 

Rent expense for all operating leases, which includes minimum lease payments and other charges such as common area maintenance fees, was $19,618 in 2019.

Note 7: Notes Payable, Long-Term Debt and Lines of Credit

Notes Payable

Notes payable were $24,983 and $16,925 at November 27, 2021 and November 28, 2020, respectively. This amount primarily represents various foreign subsidiaries’ other short-term borrowings that were not part of committed lines. The weighted-average interest rates on short-term borrowings were 8.1 percent in 2021 and 2020 and 8.9 percent in 2019. Fair values of these short-term obligations approximate their carrying values due to their short maturity. There were no funds drawn from the short-term committed lines at November 27, 2021.

Long-Term Debt

	Weighted-Average			Fiscal Year		Balance at			Balance at
	Interest Rate at			Maturity		November 27,			November 28,
Long-Term Debt	November 27, 2021			Date		2021			2020
Revolving credit facility		1.59	%		2024	$	-		$	-
Term Loan B1		3.64	%		2024		1,001,150			1,157,650
Public Notes2		4.00	%		2027		300,000			300,000
Public Notes3		4.25	%		2028		300,000			300,000
Other, including debt issuance cost and discount							(9,671	)		(665	)
Total debt						$	1,591,479		$	1,756,985
Less: current maturities							-			-
Total long-term debt, excluding current maturities						$	1,591,479		$	1,756,985

¹ Term Loan B, due on October 20, 2024, $2,150,000 variable rate at the London Interbank Offered Rate (LIBOR) plus 2.00 percent (2.09 percent at November 27, 2021); $800,000 swapped to various fixed rates as detailed below.

² Public Notes, due February 15, 2027, $300,000 4.00 percent fixed.

³ Public Notes, due October 15, 2028, $300,000 4.25 percent fixed; swapped to a floating rate as detailed below.

Term Loans

On October 20, 2017, we entered into a secured term loan credit agreement (“Term Loan B Credit Agreement”) with a consortium of financial institutions under which we established a $2,150,000 term loan (“Term Loan B”) that we used to repay existing indebtedness, finance working capital needs, finance acquisitions and for general corporate purposes. The Term Loan B Credit Agreement is secured by a security interest in substantially all of the personal property assets of the company and each Guarantor, including 100% of the equity interests in certain domestic subsidiaries and 65% of the equity interests of first-tier foreign subsidiaries together with certain domestic material real property. At November 27, 2021, a balance of $1,001,150 was drawn on the Term Loan B. The interest rate on the Term Loan B is payable at the LIBOR rate plus 2.00 percent (2.09 percent at November 27, 2021). The interest rate is based on a leverage grid. The Term Loan B Credit Agreement expires on October 20, 2024. 

On February 27, 2018, we entered into an interest rate swap agreement to convert $200,000 of our Term Loan B to a fixed rate of 4.589 percent. During the second quarter of 2021, we settled a portion of this interest rate swap as the debt underlying this swap was less than the swap value due to debt paydown. We settled the ineffective portion of the interest rate swap by making a cash payment of $378 and recorded that payment to interest expense in our Consolidated Statements of Income during the second quarter of 2021. On October 20, 2017, we entered into interest rate swap agreements to convert $1,050,000, which was amortized down to $800,000 on October 20, 2021, of our Term Loan B to a fixed interest rate of 4.0275%. See Note 12 for further discussion of these interest rate swaps.

We are subject to mandatory prepayments in the first quarter of each fiscal year equal to 50% of Excess Cash Flow, as defined in the Term Loan B Credit Agreement, of the prior fiscal year less any voluntary prepayments made during that fiscal year. The Excess Cash Flow Percentage shall be reduced to 25% when our Secured Leverage Ratio is below 4.25:1.00 and to 0% when our Secured Leverage Ratio is below 3.75:1.00. The prepayment for the 2021 measurement period was satisfied through amounts prepaid during 2021. We have estimated the 2022 prepayment to be zero.

Public Notes

On February 14, 2017, we issued $300,000 aggregate principal of 10-year unsecured public notes (“10-year Public Notes”) due February 15, 2027 with a fixed coupon of 4.00 percent. Proceeds from this debt issuance were used to repay $138,000 outstanding under the revolving credit facility at that time and prepay $158,750 of our Term Loan A. On February 14, 2017, we entered into an interest rate swap agreement to convert $150,000 of the 10-year Public Notes to a variable interest rate of 1-month LIBOR plus 1.86 percent and on May 1, 2020, we terminated the swap. See Note 12 for further discussion of this interest rate swap.

45

 

On October 20, 2020, we issued $300,000 aggregate principal of 8-year unsecured public notes (“8-year Public Notes”) due October 15, 2028 with a fixed coupon of 4.25 percent. Proceeds from this debt issuance were used to prepay $300,000 of our Term Loan B. On February 12, 2021, we entered into interest rate swap agreements to convert our 8-year Public Notes to a variable interest rate of 1-month LIBOR plus 3.28 percent.

The Public Notes are senior unsecured obligations of the company and will rank equally with the company’s other unsecured and unsubordinated debt from time to time outstanding.

Fair Value of Long-Term Debt

Long-term debt had an estimated fair value of $1,618,291 and $1,811,562 as of November 27, 2021 and November 28, 2020, respectively. The fair value of long-term debt is based on quoted market prices for the same or similar issues or on the current rates offered for debt of similar maturities. The estimated fair value of these long-term obligations is not necessarily indicative of the amount that would be realized in a current market exchange.

Long-term Debt Maturities

Maturities of long-term debt for the next five fiscal years are as follows:

Fiscal Year	2022		2023		2024		2025		2026		Thereafter
Long-term debt obligations	$	-	$	-	$	1,001,150	$	-	$	-	$	600,000

Revolving Credit Facility

On October 20, 2020, we amended and restated our revolving credit facility. The revolving credit facility is secured along with the Term Loan B Credit Agreement, by a first-priority security interest in substantially all of the personal property assets of the company and each Guarantor, including 100% of the equity interests in certain domestic subsidiaries and 65% of the equity interests of first-tier foreign subsidiaries. Interest on the revolving credit facility is payable at the LIBOR plus 1.50 percent (1.59 percent at November 27, 2021). A facility fee of 0.25 percent of the unused commitment under the revolving credit facility is payable quarterly. The interest rates and the facility fee are based on a leverage grid. The revolving credit facility matures on July 22, 2024.

As of November 27, 2021, amounts related to our revolving credit facility was as follows:

	Committed		Drawn		Unused
Revolving credit facility	$	400,000	$	-	$	391,286

The secured, multi-currency revolving credit facility can be drawn upon for general corporate purposes up to a maximum of $400,000, less issued letters of credit. At November 27, 2021, letters of credit reduced the available amount under the revolving credit facility by $8,714.

Covenants

The secured Term Loan B Credit Agreement and secured revolving credit facility are subject to certain covenants and restrictions. Restrictive covenants include, but are not limited to, limitations on secured and unsecured borrowings, interest coverage, intercompany transfers and investments, third party investments, dispositions of assets, leases, liens, dividends and distributions, and contains a maximum secured debt to trailing twelve months EBITDA requirement.  Certain covenants become less restrictive after meeting leverage or other financial ratios. In addition, we cannot be a member of any consolidated group as defined for income tax purposes other than with our subsidiaries. At November 27, 2021 and November 28, 2020, all financial covenants were met.

The Indenture under which the Public Notes have been issued contains covenants imposing certain limitations on the ability of the company to incur liens or enter into sales and leaseback transactions. It also provides for customary events of default (subject in certain cases to customary grace and cure periods), which include among other things nonpayment, breach of covenants in the Indenture and certain events of bankruptcy and insolvency. If an event of default occurs and is continuing with respect to the Public Notes, the Trustee or holders of at least 25% in principal amount outstanding of the Public Notes may declare the principal and the accrued and unpaid interest, if any, on all of the outstanding Public Notes to be due and payable. These covenants and events of default are subject to a number of important qualifications, limitations and exceptions that are described in the Indenture.

Note 8: Stockholders' Equity

Preferred Stock

The Board of Directors is authorized to issue up to 10,045,900 shares of preferred stock that may be issued in one or more series and with such stated value and terms as the Board of Directors may determine.

Common Stock

There were 160,000,000 shares of common stock with a par value of $1.00 authorized and 52,777,753 and 51,906,663 shares issued and outstanding at November 27, 2021 and November 28, 2020, respectively.

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 of up to five years. Under the program, we are authorized to repurchase shares for cash on the open market, from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. The timing of such repurchases is dependent on price, market conditions and applicable regulatory requirements. Upon repurchase of the shares, we reduce our common stock for the par value of the shares with the excess being applied against additional paid-in capital. This authorization replaces the September 30, 2010 authorization to repurchase shares. We did not repurchase any shares during 2021, 2020 and 2019 under our share repurchase program. Up to $187,170 of our outstanding common shares may still be repurchased under the current share repurchase program.

46

 

Common Shares Outstanding	2021			2020			2019
Beginning balance		51,906,663			51,241,190			50,732,796
Stock options exercised		740,731			397,456			378,734
Deferred compensation paid		19,895			118,742			5,354
Restricted units vested		157,945			221,275			197,349
Shares withheld for taxes		(47,481	)		(72,000	)		(73,043	)
Ending balance		52,777,753			51,906,663			51,241,190

Note 9: Accounting for Share-Based Compensation

Overview

We have various share-based compensation programs, which provide for equity awards including non-qualified stock options, incentive stock options, restricted stock units, performance awards and deferred compensation. These equity awards fall under several plans and are described below.

Share-based Compensation Plans

We currently grant stock options and restricted stock units under equity compensation and deferred compensation plans.

Stock options are granted to officers and key employees at prices not less than the fair market value at the date of grant. Non-qualified stock options are generally exercisable beginning one year from the date of grant in cumulative yearly amounts of 33.3 percent. Incentive stock options are based on certain performance-based criteria and are generally exercisable at a stated date when the performance criteria is measured. Stock options generally have a contractual term of 10 years. Options exercised represent newly issued shares.

Restricted stock awards are nonvested stock-based awards that include grants of restricted stock units. Restricted stock awards are independent of option grants and are subject to forfeiture if employment terminates prior to the release of the restrictions. Such awards generally vest beginning one year from the date of grant or 33.3 percent per year for three years, depending on the grant. During the vesting period, ownership of the shares cannot be transferred.

Restricted stock units have dividend equivalent rights equal to the cash dividend paid on restricted stock shares. However, restricted stock units do not have voting rights of common stock and are not considered issued and outstanding upon grant. Restricted stock units become newly issued shares when vested. The dividend equivalent rights for restricted stock units are forfeitable.

We expense the cost, which is the grant date fair market value, of the restricted stock units ratably over the period during which the restrictions lapse. The grant date fair value is our closing stock price on the date of grant.

We are required to recognize compensation expense when an employee is eligible to retire. We consider employees eligible to retire at age 55 and after 10 years of service. Awards granted to retirement-eligible employees are forfeited if the retirement-eligible employees retire prior to 180 days after the grant. Accordingly, the related compensation expense is recognized during the 180 day period for awards granted to retirement-eligible employees or over the period from the grant date to the date retirement eligibility is achieved, if less than the stated vesting period.

2020 Master Incentive Plan

This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock and restricted stock units; (d) performance awards; (e) dividend equivalents; (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan. There were 2,253,157 common shares available for grant as of November 27, 2021.

2018 Master Incentive Plan

This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock and restricted stock units; (d) performance awards; (e) dividend equivalents; (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan.

Year 2016 Master Incentive Plan

This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock awards; (d) performance awards; (e) dividend equivalents; and (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan.

2009 Directors’ Stock Incentive Plan

This plan permits granting of (a) shares for amounts non-employee directors defer under the Directors’ Deferred Compensation Plan and (b) discretionary grants of restricted stock, stock options, stock appreciation rights, performance awards and other stock awards.      

Directors' Deferred Compensation Plan

This plan allows non-employee directors to defer all or a portion of their retainer and meeting fees in a number of investment choices, including units representing shares of our common stock. We provide a 10 percent match on deferred compensation invested in these units. These units are required to be paid out in our common stock.

47

 

Key Employee Deferred Compensation Plan

This plan allows key employees to defer a portion of their eligible compensation in a number of investment choices, including units representing shares of company common stock. We provide a 10 percent match on deferred compensation invested in these units.

Grant-Date Fair Value

We use the Black-Scholes option-pricing model to calculate the grant-date fair value of stock option awards. The fair value of options granted during 2021, 2020 and 2019 were calculated using the following assumptions:

	2021			2020			2019
Expected life (in years)		5.00			5.00			4.75
Weighted-average expected volatility		32.50	%		24.32	%		24.26	%
Expected volatility range		32.48% - 32.94%			24.18% - 30.99%			23.88% - 24.76%
Risk-free interest rate		0.39% - 1.20%			0.21% - 1.51%			1.34% - 2.55%
Weighted-average expected dividend		1.26	%		1.38	%		1.40	%
Expected dividend yield range		0.92% - 1.27%			1.35% - 2.53%			1.25% - 1.45%
Weighted-average fair value of grants	$	13.29		$	9.63		$	9.76

Expected life – We use historical employee exercise and option expiration data to estimate the expected life assumption for the Black-Scholes grant-date valuation. We believe that this historical data is currently the best estimate of the expected term of a new option. We use a weighted-average expected life for all awards.

Expected volatility – Volatility is calculated using our stock’s historical volatility for the same period of time as the expected life. We have no reason to believe that its future volatility will differ from the past.

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

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

Expense

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

Total share-based compensation expense was $22,366, $16,914 and $24,003 for 2021, 2020 and 2019, respectively. All share-based compensation was recorded as SG&A expense.

As of November 27, 2021, $7,510 of unrecognized compensation costs related to unvested stock option awards is expected to be recognized over a weighted-average period of 0.9 years. Unrecognized compensation costs related to unvested restricted stock units was $10,205 which is expected to be recognized over a weighted-average period of 0.9 years.

Stock Option Activity

The stock option activity for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 is summarized below:

				Weighted-
				Average
	Options			Exercise Price
Outstanding at December 1, 2018		4,466,106		$	44.72
Granted		1,020,246			45.53
Exercised		(378,734	)		28.74
Forfeited or cancelled		(47,308	)		48.90
Outstanding at November 30, 2019		5,060,310		$	46.04
Granted		1,052,968			47.70
Exercised		(397,456	)		31.00
Forfeited or cancelled		(169,907	)		49.11
Outstanding at November 28, 2020		5,545,915		$	47.34
Granted		1,237,094			53.33
Exercised		(740,731	)		43.64
Forfeited or cancelled		(1,069,886	)		56.33
Outstanding at November 27, 2021		4,972,392		$	47.45

The fair value of options granted during 2021, 2020 and 2019 was $17,250, $10,132 and $9,956, respectively. Total intrinsic value of options exercised during 2021, 2020 and 2019 was $15,261, $6,563 and $7,590, respectively. For options outstanding at November 27, 2021, the weighted-average remaining contractual life was 6.5 years and the aggregate intrinsic value was $131,515. There were 3,072,786 options exercisable at November 27, 2021, with a weighted-average remaining contractual life of 5.2 years and an aggregate intrinsic value of $85,685. Intrinsic value is the difference between our closing stock price on the respective trading day and the exercise price, multiplied by the number of options exercised. Proceeds received from option exercises during the year ended  November 27, 2021, November 28, 2020, and November 30, 2019 were $32,325, $12,321 and $10,885, respectively. The company’s actual tax benefits realized for the tax deductions related to the exercise of stock options for 2021, 2020 and 2019 was $3,874, $1,278 and $1,298, respectively.

48

 

Restricted Stock Activity

The nonvested restricted stock activity for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 is summarized below:

						Weighted-
				Weighted-		Average
				Average		Remaining
				Grant		Contractual
				Date Fair		Life
	Units			Value		(in Years)
Nonvested at December 1, 2018		414,353		$	47.45		1.0
Granted		302,132			44.29		2.2
Vested		(197,349	)		45.45		-
Forfeited		(31,139	)		43.37		0.4
Nonvested at November 30, 2019		487,997		$	46.56		0.8
Granted		216,293			46.39		3.4
Vested		(221,275	)		46.83		-
Forfeited		(50,666	)		47.55		0.1
Nonvested at November 28, 2020		432,349		$	46.22		0.8
Granted		356,779			54.49		3.2
Vested		(157,945	)		48.69		-
Forfeited		(78,818	)		47.79		0.8
Nonvested at November 27, 2021		552,365		$	50.63		1.9

Total fair value of restricted stock vested during 2021, 2020, and 2019 was $7,691, $10,362 and $8,970, respectively. The total fair value of nonvested restricted stock at  November 27, 2021 was $27,966.

We repurchased 50,799, 70,380 and 73,043 shares during 2021, 2020 and 2019, respectively, in connection with the statutory minimum tax withholding related to vesting of restricted stock. The company’s actual tax benefits realized for the tax deductions related to the restricted stock vested for 2021, 2020 and 2019 was $1,439, $2,136 and $1,574, respectively.

Deferred Compensation Activity

Deferred compensation units are fully vested at the date of contribution. The deferred compensation units outstanding for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 is summarized below:

	Non-employee
	Directors			Employees			Total
Units outstanding December 1, 2018		479,787			29,735			509,522
Participant contributions		22,153			11,166			33,319
Company match contributions1		23,720			1,117			24,837
Payouts		-			(5,354	)		(5,354	)
Units outstanding November 30, 2019		525,660			36,664			562,324
Participant contributions		18,008			13,814			31,822
Company match contributions1		23,033			1,381			24,414
Payouts		(111,436	)		(7,306	)		(118,742	)
Units outstanding November 28, 2020		455,265			44,553			499,818
Participant contributions		13,036			10,487			23,523
Company match contributions1		20,118			1,049			21,167
Payouts		(19,895	)		(7,728	)		(27,623	)
Units outstanding November 27, 2021		468,524			48,361			516,885

¹ The non-employee directors’ company match includes 18,814, 21,323 and 21,504 deferred compensation units paid as discretionary awards to all non-employee directors in 2021, 2020 and 2019, respectively.

The fair value of non-employee directors’ company matches for 2021, 2020 and 2019 was $163, $128 and $167, respectively. The fair value of the non-employee directors’ discretionary award was $1,215, $920, $1,035 for 2021, 2020 and 2019, respectively. The fair value of employee company matches was $61, $56 and $41 for 2021, 2020 and 2019, respectively.

Note 10: Pension and Postretirement Benefits

Defined Contribution Plan

All U.S. employees have the option of contributing up to 75 percent of their pre-tax earnings to a 401(k) plan, subject to IRS limitations. We match up to the first 4 percent of each employee's pre-tax earnings, based on the employee’s contributions. All U.S. employees are eligible for a separate annual non-discretionary retirement contribution to the 401(k) plan of 1 percent of pay, that is invested based on the election of the individual participant. The 1 percent contribution is in addition to our 4 percent matching contribution described above and is in lieu of participation in our defined benefit pension plan. The total contribution to the 401(k) plan for 2021 was $12,488 which included the cost of the 4 percent company match of $8,698 and the additional 1 percent contribution of $3,790. The total contributions to the 401(k) plan were $10,764 and $10,784 in 2020 and 2019, respectively.

49

 

All U.S. employees are eligible to receive an annual discretionary non-elective contribution to the 401(k) plan of up to 3 percent based on achieving the company’s earnings per share target. This discretionary contribution is in addition to the contributions described above. A discretionary non-elective contribution of $5,205 was made for 2021 and no such contribution was made for 2020.

The defined contribution plan liability recorded in the Consolidated Balance Sheets was $10,494 and $9,819 in 2021 and 2020, respectively, for the U.S. Plan and several statutorily required non-U.S. Plans.

Defined Benefit Plans

Noncontributory defined benefit pension plans cover all U.S. employees employed prior to January 1, 2007. Benefits for these plans are based primarily on each employee’s years of service and average compensation. During 2011, we made significant changes to our U.S. pension plan. The changes included: benefits under the plan were locked-in using service and salary as of May 31, 2011, participants no longer earn benefits for future service and salary as they had in the past, affected participants receive a three percent increase to the locked-in benefit for every year they continue to work for us and we are making a retirement contribution of three percent of eligible compensation to the 401(k) Plan for those participants.  The funding policy is consistent with the funding requirements of federal law and regulations. Plan assets consist principally of listed equity securities and bonds. During 2020, we amended the U.S. pension plan to add a program for eligible employees to take a lump sum distribution. A total of $6,673 and $10,939 was paid during 2021 and 2020, respectively, as distributions under this program. Other U.S. postretirement benefits are funded through a Voluntary Employees' Beneficiaries Association Trust.

Health care and life insurance benefits are provided for eligible retired employees and their eligible dependents. These benefits are provided through various insurance companies and health care providers. Costs are accrued during the years the employee renders the necessary service.

Certain non-U.S. subsidiaries provide pension benefits for their employees consistent with local practices and regulations. These plans are primarily defined benefit plans covering substantially all employees upon completion of a specified period of service. Benefits for these plans are generally based on years of service and annual compensation.

Following is a reconciliation of the beginning and ending balances of the benefit obligation and fair value of plan assets as of November 27, 2021 and November 28, 2020:

	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2021			2020			2021			2020			2021			2020
Change in projected benefit obligation
Benefit obligation at beginning of year	$	388,530		$	380,388		$	250,561		$	234,542		$	39,075		$	39,256
Service cost		-			-			3,280			2,950			21			73
Interest cost		9,299			11,738			2,941			3,158			822			1,135
Participant contributions		-			-			-			-			365			226
Actuarial (gain)/loss1		(9,177	)		27,377			(3,630	)		4,350			(6,115	)		1,327
Other		-			-			-			-			-			-
Curtailments		-			-			-			14			-			-
Settlement payments		(6,673	)		(10,939	)		996			(273	)		-			-
Benefits paid		(20,767	)		(20,034	)		(8,578	)		(8,628	)		(2,906	)		(2,942	)
Foreign currency translation effect		-			-			(7,170	)		14,448			-			-
Benefit obligation at end of year		361,212			388,530			238,400			250,561			31,262			39,075
Change in plan assets
Fair value of plan assets at beginning of year		398,403			383,527			202,242			185,331			109,056			94,474
Actual return on plan assets		37,466			44,365			25,204			13,155			28,716			15,673
Employer contributions		1,382			1,677			1,989			2,177			470			1,625
Participant contributions		-			-			-			-			365			226
Other		-			-			996			-			-			-
Settlement payments		(6,673	)		(10,939	)		-			-			-			-
Benefits paid2		(20,767	)		(20,227	)		(8,578	)		(8,628	)		(2,906	)		(2,942	)
Foreign currency translation effect		-			-			(5,230	)		10,207			-			-
Fair value of plan assets at end of year		409,811			398,403			216,623			202,242			135,701			109,056
Plan assets in excess of (less than) benefit obligation as of year end	$	48,599		$	9,873		$	(21,776	)	$	(48,688	)	$	104,439		$	69,981

¹ Actuarial loss in 2021 and actuarial loss in 2020 for the U.S. Plans is primarily due to assumption changes. Actuarial loss in 2021 and actuarial loss in 2020 for the Non-U.S. Plans are due to both assumption changes and plan experience.

² Amount excludes benefit payments made from sources other than plan assets.

Amounts in accumulated other comprehensive income (loss) that have not been recognized as components of net periodic benefit cost	Pension Benefits										Other Postretirement
	U.S. Plans						Non-U.S. Plans				Benefits
	2021			2020			2021		2020		2021			2020
Unrecognized actuarial loss	$	129,198		$	147,917		$	64,782	$	87,368	$	(30,278	)	$	(4,318	)
Unrecognized prior service (benefit) cost		(3	)		(6	)		1,390		1,453		-			-
Ending balance	$	129,195		$	147,911		$	66,172	$	88,821	$	(30,278	)	$	(4,318	)

50

 

	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2021			2020			2021			2020			2021			2020
Statement of financial position as of fiscal year-end
Non-current assets	$	66,157		$	30,672		$	24,772		$	12,534		$	107,323		$	73,137
Accrued benefit cost
Current liabilities		(1,342	)		(1,467	)		(1,795	)		(1,701	)		(227	)		(226	)
Non-current liabilities		(16,216	)		(19,332	)		(44,753	)		(59,521	)		(2,657	)		(2,930	)
Ending balance	$	48,599		$	9,873		$	(21,776	)	$	(48,688	)	$	104,439		$	69,981

The accumulated benefit obligation of the U.S. pension and other postretirement plans was $384,124 at  November 27, 2021 and $418,019 at November 28, 2020. The accumulated benefit obligation of the non-U.S. pension plans was $228,713 at  November 27, 2021 and $239,572 at November 28, 2020.

The following amounts relate to pension plans with accumulated benefit obligations in excess of plan assets as of November 27, 2021 and November 28, 2020:

	Pension Benefits and Other Postretirement Benefits
	U.S. Plans				Non-U.S. Plans
	2021		2020		2021		2020
Accumulated benefit obligation	$	17,558	$	26,241	$	48,912	$	134,472
Fair value of plan assets		-		5,441		11,350		84,239

The following amounts relate to pension plans with projected benefit obligations in excess of plan assets as of November 27, 2021 and November 28, 2020:

	Pension Benefits and Other Postretirement Benefits
	U.S. Plans				Non-U.S. Plans
	2021		2020		2021		2020
Projected benefit obligation	$	17,558	$	26,241	$	131,174	$	145,461
Fair value of plan assets		-		5,441	$	84,626		84,239

Information about the expected cash flows is as follows:

	Pension Benefits				Other
			Non-U.S.		Postretirement
	U.S. Plans		Plans		Benefits
Employer contributions
2022	$	-	$	34	$	-
Expected benefit payments
2022		21,131		8,704		2,982
2023		21,280		7,933		2,851
2024		21,283		8,285		2,730
2025		21,391		8,457		2,607
2026-2031		125,388		54,038		12,948

The components of our net period defined benefit pension and postretirement benefit costs other than service cost are presented as non-operating expenses and service cost is presented in operating expenses.

Components of net periodic benefit cost and other supplemental information for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 are as follows:

	Pension Benefits																		Other
	U.S. Plans									Non-U.S. Plans									Postretirement Benefits
Net periodic cost (benefit)	2021			2020			2019			2021			2020			2019			2021			2020			2019
Service cost	$	-		$	-		$	4		$	3,280		$	2,950		$	2,237		$	21		$	73		$	98
Interest cost		9,299			11,738			14,691			2,941			3,158			4,678			822			1,135			1,550
Expected return on assets		(31,123	)		(25,758	)		(25,305	)		(12,348	)		(11,312	)		(10,224	)		(8,945	)		(7,976	)		(7,013	)
Amortization:
Prior service cost (benefit)		(3	)		(3	)		13			69			64			64			-			-			-
Actuarial loss		3,198			7,195			4,677			4,053			3,829			3,114			73			62			33
Curtailment loss		-			-			-			-			14			83			-			-			-
Settlement charge		-			-			-			-			67			-			-			-			-
Net periodic (benefit) cost	$	(18,629	)	$	(6,828	)	$	(5,920	)	$	(2,005	)	$	(1,230	)	$	(48	)	$	(8,029	)	$	(6,706	)	$	(5,332	)

51

 

	Pension Benefits																		Other
	U.S. Plans									Non-U.S. Plans									Postretirement Benefits
Weighted-average assumptions used to determine benefit obligations	2021			2020			2019			2021			2020			2019			2021			2020			2019
Discount rate		2.75	%		2.50	%		3.17	%		1.27	%		1.16	%		1.35	%		2.51	%		2.19	%		3.00	%
Rate of compensation increase1		0.00	%		4.50	%		4.50	%		1.48	%		1.74	%		1.71	%		N/A			N/A			N/A

Weighted-average assumptions used to determine net costs for years ended	2021			2020			2019			2021			2020			2019			2021			2020			2019
Discount rate		2.50	%		3.17	%		4.50	%		1.19	%		1.34	%		2.30	%		2.19	%		3.00	%		4.37	%
Expected return on plan assets		7.24	%		7.49	%		7.49	%		6.15	%		6.23	%		6.21	%		8.25	%		8.50	%		8.50	%
Rate of compensation increase1		0.00	%		4.50	%		4.50	%		1.67	%		1.74	%		1.71	%		0.00	%		N/A			N/A

¹ Under the U.S. pension plan, the compensation amount was locked-in as of May 31, 2011 and thus the benefit no longer includes compensation increases. The 4.50 percent rate for 2020 and 2019 is for the supplemental executive retirement plan only; for 2021, there is no compensation increase as subsequent to November 27, 2021, there were no active employees in the supplemental executive retirement plan.

The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan. The approach identifies a broad population of corporate bonds that meet the quality and size criteria for the particular plan. We use this approach rather than a specific index that has a certain set of bonds that may or may not be representative of the characteristics of our particular plan. A higher discount rate reduces the present value of the pension obligations. The discount rate for the U.S. pension plan was 2.76 percent at November 27, 2021, 2.53 percent at  November 28, 2020 and 3.19 percent at November 30, 2019. Net periodic pension cost for a given fiscal year is based on assumptions developed at the end of the previous fiscal year. A discount rate change of 0.5 percentage points at  November 27, 2021 would impact U.S. pension and other postretirement plan (income) expense by approximately $63 (pre-tax) in fiscal 2021. Discount rates for non-U.S. plans are determined in a manner consistent with the U.S. plans.

For the U.S. pension plan, we adopted the Adjusted Pri-2012 base mortality table projected generationally using scale MP-2021.

The expected long-term rate of return on plan assets assumption for the U.S. pension plan was 7.25 percent in 2021 and 7.50 percent in 2020 and 2019. Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 60 percent equities and 40 percent fixed-income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward-looking observations. For 2021, the expected long-term rate of return on the target equities allocation was 8.00 percent and the expected long-term rate of return on the target fixed-income allocation was 3.90 percent. The total plan rate of return assumption included an estimate of the effect of diversification and the plan expense. A change of 0.5 percentage points for the expected return on assets assumption would impact U.S. net pension and other postretirement plan expense by approximately $2,728 (pre-tax).

Management, in conjunction with our external financial advisors, uses the actual historical rates of return of the asset categories to assess the reasonableness of the expected long-term rate of return on plan assets.

The expected long-term rate of return on plan assets assumption for non-U.S. pension plans was a weighted-average of 6.15 percent in 2021 compared to 6.23 percent in 2020 and 6.21 percent in 2019. The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the effect of active management of the plan’s assets. Our largest non-U.S. pension plans are in the United Kingdom and Germany. The expected long-term rate of return on plan assets for the United Kingdom was 6.75 percent and the expected long-term rate of return on plan assets for Germany was 5.50 percent. Management, in conjunction with our external financial advisors, uses actual historical returns of the asset portfolio to assess the reasonableness of the expected rate of return for each plan.

Assumed health care trend rates	2021			2020			2019
Health care cost trend rate assumed for next year		6.50	%		6.75	%		7.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		5.00	%		5.00	%		0.25	%
Fiscal year that the rate reaches the ultimate trend rate	2028			2028			2028

The asset allocation for the company’s U.S. and non-U.S. pension plans at the end of 2021 and 2020 follows.

	U.S. Pension Plans									Non-U.S. Pension Plans									Other Postretirement Plans
				Percentage of									Percentage of									Percentage of
				Plan Assets at									Plan Assets at									Plan Assets at
	Target			Year-End						Target			Year-End						Target			Year-End
Asset Category	2021			2021			2020			2021			2021			2020			2021			2021			2020
Equities		60.0	%		57.7	%		55.4	%		21.2	%		21.3	%		48.8	%		0.0	%		0.0	%		0.0	%
Fixed income		40.0	%		40.1	%		36.2	%		77.3	%		67.0	%		51.0	%		0.0	%		0.0	%		0.0	%
Insurance		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		100.0	%		99.8	%		99.4	%
Cash1		0.0	%		2.2	%		8.4	%		1.5	%		11.7	%		0.2	%		0.0	%		0.2	%		0.6	%
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

¹ Negative cash for 2020 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.

52

 

Plan Asset Management

Plan assets are held in trust and invested in mutual funds, separately managed accounts and other commingled investment vehicles holding U.S. and non-U.S. equity securities, fixed income securities and other investment classes. We employ a total return approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Futures and options may also be used to enhance risk-adjusted long-term returns while improving portfolio diversification and duration. Risk management is accomplished through diversification across asset classes, utilization of multiple investment managers and general plan-specific investment policies. Risk tolerance is established through careful consideration of the plan liabilities, plan funded status and our assessment of our overall liquidity position. This asset allocation policy mix is reviewed annually and actual versus target allocations are monitored regularly and rebalanced on an as-needed basis. Plan assets are invested using a combination of active and passive investment strategies. Passive, or “indexed” strategies, attempt to mimic rather than exceed the investment performance of a market benchmark. The plans’ active investment strategies employ multiple investment management firms which in aggregate cover a range of investment styles and approaches. Performance is monitored and compared to relevant benchmarks on a regular basis.

The U.S. pension plans consist of two plans: a pension plan and a supplemental executive retirement plan (“SERP”). There were no assets in the SERP in 2021 and 2020. Consequently, all of the data disclosed in the asset allocation table for the U.S. pension plans pertain to our U.S. pension plan.

During 2021, we maintained our assets within the allowed ranges of the target asset allocation mix of 60 percent equities and 40 percent fixed income plus or minus 5 percent and continued our focus to reduce volatility of plan assets in future periods and to more closely match the duration of the assets with the duration of the liabilities of the plan.

The non-U.S. pension plans consist of all the pension plans administered by us outside the U.S., principally consisting of plans in Germany, the United Kingdom, France and Canada. During 2021, we maintained our assets for the non-U.S. pension plans at the specific target asset allocation mix determined for each plan plus or minus the allowed rate and continued our focus to reduce volatility of plan assets in future periods and to more closely match the duration of the assets with the duration of the liabilities of the individual plans. We plan to maintain the portfolios at their respective target asset allocations in 2021.

Other postretirement benefits plans consist of two U.S. plans: a retiree medical health care plan and a group term life insurance plan. There were no assets in the group term life insurance plan for 2021 and 2020. Consequently, all of the data disclosed in the asset allocation table for other postretirement plans pertain to our retiree medical health care plan. Our investment strategy for other postretirement benefit plans is to own insurance policies that maintain an asset allocation nearly completely in equities. These equities are invested in a passive portfolio indexed to the S&P 500.

Fair Value of Plan Assets

The following table presents plan assets categorized within a three-level fair value hierarchy as described in Note 13.

	November 27, 2021
U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	-	$	236,557	$	-	$	236,557
Fixed income		-		164,133		186		164,319
Cash		8,935		-		-		8,935
Total categorized in the fair value hierarchy	$	8,935	$	400,690	$	186	$	409,811

Non-U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	35,117	$	-	$	-	$	35,117
Fixed income		48,243		5,285		749		54,277
Cash		4,399		-		-		4,399
Total categorized in the fair value hierarchy		87,759		5,285		749		93,793
Other investments measured at NAV1								122,830
Total	$	87,759	$	5,285	$	749	$	216,623

Other Postretirement Benefits	Level 1		Level 2		Level 3		Total Assets
Insurance	$	-	$	-	$	135,484	$	135,484
Cash		217		-		-		217
Total	$	217	$	-	$	135,484	$	135,701

	November 28, 2020
U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	3,421	$	217,151	$	-	$	220,572
Fixed income		1,524		142,317		205		144,046
Cash		33,391		-		-		33,391
Total categorized in the fair value hierarchy		38,336		359,468		205		398,009
Other investments measured at NAV1								394
Total	$	38,336	$	359,468	$	205	$	398,403

53

 

Non-U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	33,478	$	1,368	$	-	$	34,846
Fixed income		49,813		7,182		770		57,765
Cash		352		-		-		352
Total categorized in the fair value hierarchy		83,643		8,550		770		92,963
Other investments measured at NAV1								109,279
Total	$	83,643	$	8,550	$	770	$	202,242

Other Postretirement Benefits	Level 1		Level 2		Level 3		Total Assets
Insurance	$	-	$	-	$	108,406	$	108,406
Cash		650		-		-		650
Total	$	650	$	-	$	108,406	$	109,056

¹ In accordance with ASC Topic 820-10, Fair Value Measurement, certain investments that are measured at NAV (Net Asset Value per share) (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts represented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

² Negative cash for 2020 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.

The definitions of fair values of our pension and other postretirement benefit plan assets at  November 27, 2021 and November 28, 2020 by asset category are as follows:

Equities—Primarily publicly traded common stock for purposes of total return and to maintain equity exposure consistent with policy allocations. Investments include: (i) U.S. and non-U.S. equity securities and mutual funds valued at closing prices from national exchanges; and (ii) commingled funds valued at unit values or net asset values provided by the investment managers, which are based on the fair value of the underlying investments. Funds valued at net asset value have various investment strategies including seeking maximum total returns consistent with prudent investment management, seeking current income consistent with preservation of capital and daily liquidity and seeking to approximate the risk and return characterized by a specific index fund. There are no restrictions for redeeming holdings out of these funds and the funds have no unfunded commitments.

Fixed income—Primarily corporate and government debt securities for purposes of total return and managing fixed income exposure to policy allocations. Investments include (i) mutual funds valued at closing prices from national exchanges, (ii) corporate and government debt securities valued at closing prices from national exchanges, (iii) commingled funds valued at unit values or net asset value provided by the investment managers, which are based on the fair value of the underlying investments, and (iv) an annuity contract, the value of which is determined by the provider and represents the amount the plan would receive if the contract were cashed out at year-end.

Insurance—Insurance contracts for purposes of funding postretirement medical benefits. Fair values are the cash surrender values as determined by the providers which are the amounts the plans would receive if the contracts were cashed out at year end.

Cash–Cash balances on hand, accrued income and pending settlements of transactions for purposes of handling plan payments. Fair values are the cash balances as reported by the Trustees of the plans.

The following is a roll forward of the Level 3 investments of our pension and postretirement benefit plan assets during the years ended November 27, 2021 and November 28, 2020:

	Fixed Income
U.S. Pension Plans	2021			2020
Level 3 balance at beginning of year	$	205		$	219
Purchases, sales, issuances and settlements, net		(19	)		(14	)
Level 3 balance at end of year	$	186		$	205

	Fixed Income
Non-U.S. Pension Plans	2021			2020
Level 3 balance at beginning of year	$	770		$	675
Net transfers into / (out of) level 3		64			43
Net gains		(43	)		(8	)
Currency change effect		(42	)		60
Level 3 balance at end of year	$	749		$	770

	Insurance
Other Postretirement Benefits	2021			2020
Level 3 balance at beginning of year	$	108,406		$	94,082
Net transfers into / (out of) level 3		(1,658	)		(831	)
Purchases, sales, issuances and settlements, net		(1,093	)		(822	)
Net gains		29,829			15,977
Level 3 balance at end of year	$	135,484		$	108,406

54

 

Note 11: Income Taxes

Income before income taxes and income from equity method investments	2021		2020		2019
United States	$	14,989	$	20,328	$	31,796
Non-U.S.		201,861		138,028		141,032
Total	$	216,850	$	158,356	$	172,828

Components of the provision for income tax expense (benefit)	2021			2020			2019
Current:
U.S. federal	$	10,310		$	5,243		$	9,122
State		2,265			1,320			3,294
Non-U.S.		57,801			56,542			47,848
		70,376			63,105			60,264
Deferred:
U.S. federal		(6,891	)		(4,709	)		(432	)
State		(350	)		(4,111	)		125
Non-U.S.		(102	)		(12,364	)		(10,549	)
		(7,343	)		(21,184	)		(10,856	)
Total	$	63,033		$	41,921		$	49,408

Reconciliation of effective income tax	2021			2020			2019
Tax at statutory U.S. federal income tax rate	$	45,539		$	33,255		$	36,294
State income taxes, net of federal benefit		1,444			(2,104	)		2,785
Foreign dividend repatriation		1,104			900			825
Foreign operations		19,673			(563	)		8,712
Executive compensation over $1.0 million		2,507			1,420			1,661
Non-U.S. stock option expense		575			358			425
Change in valuation allowance		(9,572	)		5,925			1,097
Research and development tax credit		(993	)		(906	)		(802	)
Foreign-derived intangible income		(2,617	)		(1,396	)		(2,240	)
Global intangible low-taxed income		2,334			1,932			2,029
Provision to return		1,122			1,704			(3,271	)
Cross currency swap		3,931			(6,748	)		2,677
Contingency reserve		(2,139	)		8,287			(957	)
Other		125			(143	)		173
Total income tax expense	$	63,033		$	41,921		$	49,408

Deferred income tax balances at each year-end related to:	2021			2020
Deferred tax assets:
Pension and other post-retirement benefit plans	$	12,118		$	16,385
Employee benefit costs		26,799			24,538
Foreign tax credit carryforward		7,309			6,905
Tax loss carryforwards		24,071			31,495
Leases		8,590			7,133
Hedging activity		2,623			12,906
Interest deduction limitation		12,428			6,343
Other		27,410			30,178
Gross deferred tax assets		121,348			135,883
Less: valuation allowance		(11,341	)		(21,843	)
Total net deferred tax assets		110,007			114,040
Deferred tax liability:
Depreciation and amortization		(207,726	)		(220,379	)
Pension and other post-retirement benefit plans		(36,042	)		(14,968	)
Leases		(8,524	)		(7,194	)
Total deferred tax liability		(252,292	)		(242,541	)
Net deferred tax liability	$	(142,285	)	$	(128,501	)

The difference between the change in the deferred tax assets in the balance sheet and the deferred tax provision is primarily due to the defined benefit pension plan adjustment and floating-to-fixed hedges recorded in accumulated other comprehensive income (loss).

Valuation allowances primarily relate to foreign net operating loss carryforwards and branch foreign tax credit carryforwards where the future potential benefits do not meet the more-likely-than-not realization test. The decrease in the valuation allowance is primarily related to a decrease in foreign net operating losses for which the Company does not expect to receive a full tax benefit.

55

 

Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those deferred tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more-likely-than-not to be realized. We believe it is more-likely-than-not that reversal of deferred tax liabilities and forecasted income will be sufficient to fully recover the net deferred tax assets not already offset by a valuation allowance. In the event that all or part of the gross deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made.

U.S. income taxes have not been provided on approximately $1,044,206 of undistributed earnings of non-U.S. subsidiaries. We intend to indefinitely reinvest these undistributed earnings. Cash available in the United States has historically been sufficient and we expect it will continue to be sufficient to fund U.S. cash flow requirements. In the event these earnings are later distributed to the U.S., such distributions would likely result in additional U.S. tax.

While non-U.S. operations have been profitable overall, there are cumulative tax losses of $85,273 in various countries. These tax losses can be carried forward to offset the income tax liabilities on future income in these countries. Cumulative tax losses of $63,592 can be carried forward indefinitely, while the remaining $21,680 of tax losses must be utilized during 2022 to 2039.

The U.S. has a branch foreign tax credit carryforward of $3,994. A valuation allowance has been recorded against this foreign tax credit carryforward to reflect that this amount is not more-likely-than-not to be realized.

The table below sets forth the changes to our gross unrecognized tax benefit as a result of uncertain tax positions, excluding accrued interest.  We do not anticipate that the total unrecognized tax benefits will change significantly within the next twelve months.

	2021			2020
Balance at beginning of year	$	14,569		$	8,946
Tax positions related to the current year:
Additions		401			579
Tax positions related to prior years:
Additions		1,323			7,400
Reductions		(950	)		(283	)
Settlements		(161	)		(747	)
Lapses in applicable statutes of limitation		(1,901	)		(1,326	)
Balance at end of year	$	13,281		$	14,569

Included in the balance of unrecognized tax benefits as of  November 27, 2021 and November 28, 2020 are potential benefits of $8,888 and $9,125 respectively, that, if recognized, would affect the effective tax rate.

We report accrued interest and penalties related to unrecognized tax benefits in income tax expense. For the year ended November 27, 2021, we recognized a net benefit for interest and penalties of $703 relating to unrecognized tax benefits and had net accumulated accrued interest and penalties of $2,817 as of November 27, 2021. For the year ended November 28, 2020, we recognized a net benefit for interest and penalties of $2,378 relating to unrecognized tax benefits and had net accumulated accrued interest and penalties of $3,520 as of November 28, 2020.

We are subject to U.S. federal income tax as well as income tax in numerous state and foreign jurisdictions. We are no longer subject to U.S. federal tax examination for years prior to 2018 or Swiss income tax examination for years prior to 2018. During the second quarter of 2016, H.B. Fuller (China) Adhesives, Ltd. was notified of a transfer pricing audit covering the calendar years 2005 through 2014. We are in various stages of examination and appeal in other foreign jurisdictions. Although the final outcomes of these examinations cannot currently be determined, we believe that we have recorded adequate liabilities with respect to these examinations.

Note 12: 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 Consolidated Statement of Cash Flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings.

We are exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. We select investment-grade multinational banks and financial institutions as counterparties for derivative transactions and monitor the credit quality of each of these banks on a periodic basis as warranted. We do not anticipate nonperformance by any of these counterparties, and valuation allowances, if any, are de minimis.

56

 

Cash Flow Hedges

As of November 27, 2021, we had cash flow hedges of four cross-currency swap agreements effective October 20, 2017 to convert a notional amount of $267,860 of foreign currency denominated intercompany loans into U.S. dollars, which mature in 2022. As of November 27, 2021, the combined fair value of the swaps was an asset of $14,496 and was included in other assets in the 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 Consolidated Balance Sheets and in other net cash provided by operating activities in the Consolidated Statement of Cash Flows. The differences 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, net in the 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 amount in accumulated other comprehensive income (loss) related to cross-currency swaps was a gain of $3,483 as of November 27, 2021. The estimated net amount of the existing gain that is reported in accumulated other comprehensive income (loss) as of  November 27, 2021 that is expected to be reclassified into earnings within the next twelve months is $3,843. As of November 27, 2021, 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 November 27, 2021:

	Fiscal Year of
	Expiration	Interest Rate			Notional Value		Fair Value
Pay EUR	2022		3.00	%	$	267,860	$	14,496
Receive USD			5.1803	%

On February 27, 2018, we entered into an interest rate swap agreement to convert $200,000 of our $2,150,000 Term Loan B to a fixed interest rate of 4.589 percent. During the second quarter of 2021, we settled a portion of this interest rate swap as the debt underlying this swap was less than the swap value due to debt paydown. We settled the ineffective portion of the interest rate swap by making a cash payment of $378 and recorded that payment to interest expense in our Consolidated Statements of Income during the second quarter of 2021. On October 20, 2017, we entered into interest rate swap agreements to convert $1,050,000, which amortized down to $800,000 on October 20, 2021, of our $2,150,000 Term Loan B to a fixed interest rate of 4.0275 percent. See Note 7 for further discussion on the issuance of our Term Loan B. The combined fair value of the interest rate swaps was a liability of $12,366 at  November 27, 2021 and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as cash flow hedges. We are applying the hypothetical derivative method to assess hedge effectiveness for these interest rate swaps. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $1,125,000 variable rate Term Loan B are compared with the change in the fair value of the swaps.

On April 23, 2018, we amended our Term Loan B Credit Agreement to reduce the interest rate from LIBOR plus 2.25 percent to LIBOR plus 2.00 percent. Fixed interest rates related to swap agreements disclosed have been updated to reflect the amendment.

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

	November 27, 2021			November 28, 2020			November 30, 2019
Cross-currency swap contracts	$	(4,556	)	$	6,307		$	14,429
Interest rate swap contracts	$	20,109		$	(15,618	)	$	(46,254	)

Fair Value Hedges

On February 12, 2021, we entered into interest rate swap agreements to convert our $300,000 Public Notes that were issued on October 20, 2020 to a variable interest rate of 1-month LIBOR plus 3.28 percent. See Note 7 for further discussion on the issuance of our Public Notes. The combined fair value of the interest rate swaps was a liability of $10,539 at  November 27, 2021, and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. We apply the short cut method and assume hedge effectiveness. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $300,000 fixed rate Public Notes are compared with the change in the fair value of the swaps. On February 14, 2017, we entered into interest rate swap agreements to convert $150,000 of our $300,000 Public Notes that were issued on February 14, 2017 to a variable interest rate of 1-month LIBOR plus 1.86 percent. The swap was designated for hedge accounting treatment as fair value hedges. We applied the hypothetical derivative method to assess hedge effectiveness for this interest rate swap. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $150,000 fixed rate Public Notes are compared with the change in the fair value of the swaps. On May 1, 2020, we terminated the swap agreement. Upon termination, we received $15,808 in cash. The remaining swap liability will be accounted for as a discount on long-term debt and will be amortized to interest expense over the remaining life of the Public Notes of seven years.

Derivatives Not Designated As Hedging Instruments

The company uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries that are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Foreign currency forward contracts are recorded as assets and liabilities on the balance sheet at fair value. Changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities. See Note 13 for fair value amounts of these derivative instruments.

As of November 27, 2021, we had forward foreign currency contracts maturing between November 29, 2021 and September 13, 2022. The mark-to-market effect associated with these contracts was largely offset by the underlying transaction gains and losses resulting from the foreign currency exposures for which these contracts relate.

The amounts of pretax gains (losses) recognized in other income, net related to derivative instruments not designated as hedging instruments are as follows:

	November 27, 2021			November 28, 2020			November 30, 2019
Foreign currency forward contracts	$	(357	)	$	(2,908	)	$	(573	)

57

 

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities in the customer base and their dispersion across many different industries and countries. As of November 27, 2021, there were no significant concentrations of credit risk.

Note 13: Fair Value Measurements

Overview

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

● Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

● Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

● Level 3: Unobservable inputs that reflect management’s assumptions, and include situations where there is little, if any, market activity for the asset or liability.

Balances Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of November 27, 2021 and November 28, 2020, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

			Fair Value Measurements
			Using:
	November 27,
Description	2021		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,079	$	2,079	$	-	$	-
Foreign exchange contract assets		5,725		-		5,725		-
Cross-currency cash flow hedge assets		14,496		-		14,496		-
Liabilities:
Foreign exchange contract liabilities	$	6,082	$	-	$	6,082	$	-
Interest rate swaps, cash flow hedge liabilities		12,366		-		12,366		-
Interest rate swaps, fair value hedge liabilities		10,539		-		10,539		-
Contingent consideration liability		8,100		-		-		8,100

			Fair Value Measurements
			Using:
	November 28,
Description	2020		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	22,560	$	22,560	$	-	$	-
Foreign exchange contract assets		2,320		-		2,320		-
Cross-currency cash flow hedge assets		2,823		-		2,823		-
Liabilities:
Foreign exchange contract liabilities	$	5,251	$	-	$	5,251	$	-
Cross-currency cash flow hedge liabilities		280		-		280		-
Interest rate swaps, cash flow hedge liabilities		33,256		-		33,256		-
Contingent consideration liability		5,800		-		-		5,800

See Note 7 for discussion regarding the fair value of debt.

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, 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 valuation of our contingent consideration liability related to the acquisition of D.H.M. resulted in a fair value of $8,100 as of November 27, 2021. Adjustments to the fair value of contingent consideration are recorded to selling, general and administrative expenses in the Statement of Income. See Note 2 for further discussion regarding our acquisitions.

Contingent consideration liability	2021
Level 3 balance at beginning of year	$	5,800
Acquisition		1,700
Payment of contingent consideration		(1,700	)
Mark to market adjustment		2,300
Level 3 balance at end of year	$	8,100

58

Note 14: Commitments and Contingencies

Environmental Matters 

From time to time, we become aware of compliance matters relating to, or receive notices from, federal, state or local entities regarding possible or alleged violations of environmental, health or safety laws and regulations. We review the circumstances of each individual site, considering the number of parties involved, the level of potential liability or our contribution relative to the other parties, the nature and magnitude of the hazardous substances involved, the method and extent of remediation, the estimated legal and consulting expense with respect to each site and the time period over which any costs would likely be incurred. Also, from time to time, we are identified as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and/or similar state laws that impose liability for costs relating to the clean up of contamination resulting from past spills, disposal or other release of hazardous substances. We are also subject to similar laws in some of the countries where current and former facilities are located. Our environmental, health and safety department monitors compliance with applicable laws on a global basis. To the extent we can reasonably estimate the amount of our probable liabilities for environmental matters, we establish an undiscounted financial provision. We recorded liabilities of $6,603 and $8,099 as of November 27, 2021 and November 28, 2020, respectively, for probable and reasonably estimable environmental remediation costs. Of the amount reserved, $3,333 and $3,703 as of November 27, 2021 and November 28, 2020, respectively, is attributable to a facility we own in Simpsonville, South Carolina as a result of our Royal Adhesives acquisition that is a designated site under CERCLA.

Currently we are involved in various environmental investigations, clean up activities and administrative proceedings and lawsuits. In particular, we are currently deemed a PRP in conjunction with numerous other parties, in a number of government enforcement actions associated with landfills and/or hazardous waste sites. As a PRP, we may be required to pay a share of the costs of investigation and clean up of these sites. In addition, we are engaged in environmental remediation and monitoring efforts at a number of current and former operating facilities. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, will not have a material adverse effect on our results of operations, financial condition or cash flow.

Other Legal Proceedings 

From time to time and in the ordinary course of business, we are a party to, or a target of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, contract, patent and intellectual property, environmental, health and safety, tax and employment matters. While we are unable to predict the outcome of these matters, we have concluded, based upon currently available information, that the ultimate resolution of any pending matter, individually or in the aggregate, including the asbestos litigation described in the following paragraphs, will not have a material adverse effect on our results of operations, financial condition or cash flow.

We have been named as a defendant in lawsuits in which plaintiffs have alleged injury due to products containing asbestos manufactured more than 35 years ago. The plaintiffs generally bring these lawsuits against multiple defendants and seek damages (both actual and punitive) in very large amounts. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable injuries or that the injuries suffered were the result of exposure to products manufactured by us. We are typically dismissed as a defendant in such cases without payment. If the plaintiff presents evidence indicating that compensable injury occurred as a result of exposure to our products, the case is generally settled for an amount that reflects the seriousness of the injury, the length, intensity and character of exposure to products containing asbestos, the number and solvency of other defendants in the case, and the jurisdiction in which the case has been brought.

A significant portion of the defense costs and settlements in asbestos-related litigation is paid by third parties, including indemnification pursuant to the provisions of a 1976 agreement under which we acquired a business from a third party. Currently, this third party is defending and paying settlement amounts, under a reservation of rights, in most of the asbestos cases tendered to the third party.

In addition to the indemnification arrangements with third parties, we have insurance policies that generally provide coverage for asbestos liabilities, including defense costs. Historically, insurers have paid a significant portion of our defense costs and settlements in asbestos-related litigation. However, certain of our insurers are insolvent.  We have entered into cost-sharing agreements with our insurers that provide for the allocation of defense costs and settlements and judgments in asbestos-related lawsuits. These agreements require, among other things, that we fund a share of settlements and judgments allocable to years in which the responsible insurer is insolvent.

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

	Year Ended		Year Ended		Year Ended
	November 27,		November 28,		November 30,
	2021		2020		2019
Lawsuits and claims settled		2		4		8
Settlement amounts	$	85	$	130	$	424
Insurance payments received or expected to be received	$	55	$	88	$	291

59

 

We do not believe that it would be meaningful to disclose the aggregate number of asbestos-related lawsuits filed against us because relatively few of these lawsuits are known to involve exposure to asbestos-containing products that we manufactured. Rather, we believe it is more meaningful to disclose the number of lawsuits that are settled and result in a payment to the plaintiff. To the extent we can reasonably estimate the amount of our probable liabilities for pending asbestos-related claims, we establish a financial provision and a corresponding receivable for insurance recoveries. 

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

Note 15: Segments

We are required to report segment information in the same way that we internally organize our business for assessing performance and making decisions regarding allocation of resources. Revenue and operating income of each of our segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance. Segment operating income is identified as gross profit less SG&A expenses. Corporate expenses, other than those included in Corporate Unallocated, are allocated to each operating segment. Consistent with our internal management reporting, Corporate Unallocated amounts include business acquisition and integration costs, organizational restructuring charges and project costs associated with our implementation of Project ONE. Corporate assets are not allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs.

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.  The business components within each operating segment are managed to maximize the results of the overall operating segment rather than the results of any individual business component of the operating segment. Results of individual components of each operating segment are subject to numerous allocations of segment-wide costs that may or may not have been focused on that particular component for a particular reporting period. The costs for these allocated resources are not tracked on a “where-used” basis as financial performance is assessed at the total operating segment level.

Reportable operating segment financial information for all periods presented is as follows:

	2021			2020			2019
Net revenue
Hygiene, Health and Consumable Adhesives	$	1,472,756		$	1,332,786		$	1,328,286
Engineering Adhesives		1,371,756			1,088,313			1,158,403
Construction Adhesives		433,519			369,170			396,580
Corporate Unallocated1		-			-			13,731
Total	$	3,278,031		$	2,790,269		$	2,897,000
Segment operating income
Hygiene, Health and Consumable Adhesives	$	138,366		$	130,789		$	115,961
Engineering Adhesives		135,913			103,974			136,299
Construction Adhesives		14,148			11,148			16,657
Total segment		288,427			245,911			268,917
Corporate Unallocated1		(35,815	)		(27,594	)		(42,923	)
Total	$	252,612		$	218,317		$	225,994
Depreciation and amortization
Hygiene, Health and Consumable Adhesives	$	45,919		$	44,329		$	45,448
Engineering Adhesives		61,082			58,102			57,175
Construction Adhesives		35,002			35,811			35,851
Corporate Unallocated1		1,171			575			2,732
Total	$	143,174		$	138,817		$	141,206
Total assets2
Hygiene, Health and Consumable Adhesives	$	1,370,924		$	1,268,236
Engineering Adhesives		1,710,000			1,515,302
Construction Adhesives		810,824			934,397
Corporate		382,782			318,769
Total	$	4,274,530		$	4,036,704
Capital expenditures
Hygiene, Health and Consumable Adhesives	$	60,164		$	57,416
Engineering Adhesives		8,815			18,212
Construction Adhesives		3,591			7,635
Corporate		23,519			12,580
Total	$	96,089		$	95,843

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

² Segment assets include primarily inventory, accounts receivable, property, plant and equipment, goodwill, intangible assets and other miscellaneous assets. Corporate assets include primarily corporate property, plant and equipment, deferred tax assets, certain investments and other assets.

60

 

Reconciliation of segment operating income to income before income taxes and income from equity method investments:

	2021			2020			2019
Segment operating income	$	252,612		$	218,317		$	225,994
Other income, net		32,855			15,398			37,943
Interest expense		(78,092	)		(86,776	)		(103,287	)
Interest income		9,476			11,417			12,178
Income before income taxes and income from equity method investments	$	216,851		$	158,356		$	172,828

Financial information about geographic areas

	Net Revenue
	2021		2020		2019
United States	$	1,421,623	$	1,248,495	$	1,309,056
China		433,998		351,204		347,304
Germany		409,193		330,755		-
Countries with more than 10 percent of total		2,264,814		1,930,454		1,656,360
All other countries with less than 10 percent of total		1,013,217		859,815		1,240,640
Total	$	3,278,031	$	2,790,269	$	2,897,000

	Property, Plant and Equipment, net
	2021		2020		2019
United States	$	331,864	$	297,046	$	287,372
Germany		120,548		131,879		127,497
China		96,300		99,513		80,606
All other countries with less than 10 percent of total		146,655		142,306		134,338
Total	$	695,367	$	670,744	$	629,813

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

	November 27, 2021
	Hygiene, Health and		Engineering		Construction		Corporate
	Consumable Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	826,172	$	504,626	$	384,576	$	-	$	1,715,374
EIMEA		425,324		470,466		22,156		-		917,946
Asia Pacific		221,260		396,664		26,787		-		644,711
	$	1,472,756	$	1,371,756	$	433,519	$	-	$	3,278,031

	November 28, 2020
	Hygiene, Health and		Engineering		Construction		Corporate
	Consumable Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	736,681	$	430,866	$	325,622	$	-	$	1,493,169
EIMEA		388,271		347,417		20,506		-		756,194
Asia Pacific		207,834		310,030		23,042		-		540,906
	$	1,332,786	$	1,088,313	$	369,170	$	-	$	2,790,269

	November 30, 2019
	Hygiene, Health and		Engineering		Construction		Corporate
	Consumable Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	733,125	$	469,764	$	351,924	$	13,731	$	1,568,544
EIMEA		392,497		380,673		20,767		-		793,937
Asia Pacific		202,664		307,966		23,889		-		534,519
	$	1,328,286	$	1,158,403	$	396,580	$	13,731	$	2,897,000

61

Note 16: Subsequent Events

Acquisitions

On January 11, 2022, we completed the acquisition of Fourny NV for a base purchase price of approximately $18,200. Fourny NV, headquartered in Willebroek, Belgium, is a manufacturer of construction and automotive adhesives supplying customers in Europe and China. The acquisition will be included in our Construction Adhesives operating segment.

On November 30, 2021, we completed the acquisition of certain assets of Tissue Seal, LLC for a base purchase price of $24,750. Tissue Seal, LLC, headquartered in Ann Arbor, Michigan, is a manufacturer of topical tissue adhesives and sutures. The acquisition will be included in our Hygiene, Health and Consumable Adhesives operating segment.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, management 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”)). Based on its evaluation, our management concluded that, as of November 27, 2021, our disclosure controls and procedures were effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) to ensure that information require to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.  

Our management assessed the effectiveness of our internal control over financial reporting as of November 27, 2021. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). Based on its assessment, management concluded that, as of November 27, 2021, the Company’s internal control over financial reporting was effective. Ernst and Young LLP, an independent registered public accounting firm, has issued an auditors’ report on our internal control over financial reporting as of November 27, 2021, which is included elsewhere in this Form 10-K.

Changes in Internal Control over Financial Reporting

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

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

None.

62

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information under the headings “Proposal 1 - Election of Directors”, “Delinquent Section 16(a) Reports” and “Corporate Governance - Audit Committee” contained in the company's Proxy Statement for the Annual Meeting of Shareholders to be held on April 7, 2022 (the “2022 Proxy Statement”) is incorporated herein by reference.

The information contained at the end of Item 1. hereof under the heading “Information About Our Executive Officers” is incorporated herein by reference.

Since the date of our 2021 Proxy Statement, there have been no material changes to the procedures by which shareholders may recommend nominees to our Board of Directors.

The company has a code of business conduct applicable to all of its directors and employees, including its principal executive officer, principal financial officer, principal accounting officer, controller and other employees performing similar functions. A copy of the code of business conduct is available under the Investor Relations section of the company’s website at www.hbfuller.com. The company intends to disclose on its website information with respect to any amendment to or waiver from a provision of its code of business conduct that applies to its principal executive officer, principal financial officer, principal accounting officer, controller and other employees performing similar functions within four business days following the date of such amendment or waiver.

Item 11. Executive Compensation

The information under the headings “Executive Compensation,” “Director Compensation” and “CEO Pay Ratio Disclosure” contained in the 2022 Proxy Statement is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information under the heading “Security Ownership of Certain Beneficial Owners and Management” contained in the 2022 Proxy Statement is incorporated herein by reference.

Equity Compensation Plan Information

							(c)
	(a)			(b)			Number of
	Number of			Weighted-			securities remaining
	securities to be			average			available for future
	issued upon			exercise price			issuance under
	exercise of			of outstanding			equity compensation
	outstanding			options,			plans (excluding
	options, warrants			warrants and			securities reflected
Period	and rights			rights			in column (a))
Equity compensation plans approved by security holders		5,524,757	1	$	47.77	2		2,253,157	3
Equity compensation plans not approved by security holders		-			N/A			-
Total		5,524,757		$	47.77			2,253,157

¹ Consists of outstanding stock options to acquire 4,972,392 shares of common stock, 358,126 outstanding time-based restricted stock units and 194,239 outstanding performance-based restricted stock units granted under the Company's equity compensation plans.

² Consists of the weighted average exercise price of stock options granted under the Company's equity compensation plans.

³ Number of shares of common stock remaining available for future issuance under the Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan.

Item 13. Certain Relationships and Related Transactions and Director Independence

The information under the headings “Certain Relationships and Related Transactions” and “Corporate Governance - Director Independence” contained in the 2022 Proxy Statement is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services 

The information under the heading “Fees Paid to Independent Registered Public Accounting Firms” contained in the 2022 Proxy Statement is incorporated herein by reference.

63

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) Documents filed as part of this report:

1.	Consolidated Financial Statements
	Consolidated Statements of Income for the fiscal years ended November 27, 2021, November 28, 2020, and November 30, 2019.
	Consolidated Statements of Comprehensive Income for the fiscal years ended November 27, 2021, November 28, 2020, and November 30, 2019.
	Consolidated Balance Sheets as of November 27, 2021 and November 28, 2020.
	Consolidated Statements of Total Equity for the fiscal years ended November 27, 2021, November 28, 2020, and November 30, 2019.
	Consolidated Statements of Cash Flows for the fiscal years ended November 27, 2021, November 28, 2020, and November 30, 2019.
	Notes to Consolidated Financial Statements
	Report of Independent Registered Public Accounting Firm

2.	Financial Statement Schedules
	All financial statement schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.

64

3. Exhibits

	Item	Incorporation by Reference
3.1	Restated Articles of Incorporation of H.B. Fuller Company, as amended	Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarter ended September 2, 2006 and Exhibit 3.1 to the Current Report on Form 8-K dated October 12, 2016.
3.2	By-Laws of H.B. Fuller Company	Exhibit 3.1 to the Current Report on Form 8-K dated December 2, 2015.
4.1	Form of Certificate for common stock, par value $1.00 per share	Exhibit 4.1 to the Annual Report on Form 10-K, as amended, for the year ended November 28, 2009.
4.2	Indenture, dated February 14, 2017, between H.B. Fuller Company and U.S. Bank National Association, as Trustee	Exhibit 4.1 to the Current Report on Form 8-K dated February 9, 2017.
4.3	First Supplemental Indenture, dated February 14, 2017, between H.B. Fuller Company and U.S. Bank National Association, as Trustee, relating to the 4.0000% Notes due 2027	Exhibit 4.2 to the Current Report on Form 8-K dated February 9, 2017.
4.4	Amendment No. 1 to First Supplemental Indenture, dated February 14, 2017 between H.B. Fuller Company and U.S. Bank National Association, as Trustee, relating to the 4.0000% Notes due 2027	Exhibit 4.6 to the Current Report on Form 10-K dated January 31, 2018.
4.5	Second Supplemental Indenture, dated October 20, 2020, between H.B. Fuller Company and U.S. Bank National Association, as Trustee, relating to the 4.250% Notes due 2028.	Exhibit 4.1 to the Current Report on Form 8-K dated October 20, 2020.
4.6	Form of Global Note representing the 4.000% Notes due 2027 (included in Exhibit 4.3)	Exhibit 4.2 to the Current Report on Form 8-K dated February 9, 2017.
4.7	Form of Global Note representing the 4.250% Notes due 2028 (included in Exhibit 4.5)	Exhibit 4.2 to the Current Report on Form 8-K dated October 20, 2020.
4.8	Description of Securities	Exhibit 4.8 to the Annual Report on Form 10-K dated January 24, 2020.

10.1	Credit Agreement, dated October 31, 2014, by and among JP Morgan Chase Bank, N.A., as administrative agent, U.S. Bank National Association, Citibank, N.A. and Morgan Stanley MUFG Loan Partners, LLC, as co-syndication agents, and various financial institutions	Exhibit 1.1 to the Current Report on Form 8-K dated October 31, 2014.
10.2	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 (vi) various other financial institutions party thereto as Lenders, as amended	Exhibit 10.1 to the Current Report on Form 8-K dated April 12, 2017, Exhibit 10.1 to the Current Report on Form 8-K dated September 29, 2017, and Exhibit 10.1 to the Current Report on Form 8-K dated November 17, 2017.
10.3	Amended and Restated Credit Agreement, dated October 20, 2020, among H.B. Fuller Company and JPMorgan Chase Bank, N.A., as administrative agent and the various other parties named thereto.	Exhibit 10.1 to the Current Report on Form 8-K dated October 20, 2020.
10.4	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	Exhibit 10.2 to the Current Report on Form 8-K dated April 12, 2017.
10.5	Term Loan Credit Agreement, dated as of October 20, 2017, by and among H.B. Fuller Company, Morgan Stanley Senior Funding, Inc., as administrative agent, and various other financial institutions party thereto as lenders, as amended	Exhibit 10.1 to the Current Report on Form 8-K dated October 20, 2017 and Exhibit 10.1 to the Current Report on Form 10-Q dated September 28, 2018.

10.6	Commitment Letter, dated as of September 2, 2017, by and among H.B. Fuller Company and Morgan Stanley Senior Funding, Inc.	Exhibit 10.1 to the Current Report on Form 8-K dated September 2, 2017.
*10.7	Amended and Restated H.B. Fuller Company Year 2000 Stock Incentive Plan	Exhibit 10.1 to the Current Report on Form 8-K dated April 5, 2006.

65

*10.8	H.B. Fuller Company Supplemental Executive Retirement Plan II – 2008, as amended	Exhibit 10.2 to the Current Report on Form 8-K dated December 19, 2007, Exhibit 10.5 to the Annual Report on Form 10-K for the year ended November 29, 2008 and Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended May 28, 2011.
*10.9	Third Declaration of Amendment of the H.B. Fuller Company Supplemental Executive Retirement Plan II - 2008
*10.10	H.B. Fuller Company Executive Benefit Trust dated October 25, 1993 between H.B. Fuller Company and U.S. Bank, National Association, as Trustee, as amended, relating to the H.B. Fuller Company Supplemental Executive Retirement Plan	Exhibit 10(k) to the Annual Report on Form 10-K for the year ended November 29, 1997, Exhibit 10(k) to the Annual Report on Form 10-K405 for the year ended November 28, 1998, Exhibit 10.3 to the Current Report on Form 8-K dated December 19, 2007 and Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended May 30, 2009.

*10.11	H.B.Fuller Company Key Employee Deferred Compensation Plan (2021 Restatement)
*10.12	Form of Change in Control Agreement between H.B. Fuller Company and each of its executive officers	Exhibit 10.11 to the Annual Report on Form 10-K for the year ended November 29, 2008.
*10.13	Form of Change-in-Control Agreement between H.B. Fuller Company and each of its executive officers for agreements entered into after January 24, 2019	Exhibit 10.9 to the Current Report on Form 8-K dated January 24, 2019.
*10.14	Form of Severance Agreement between H.B. Fuller Company and each of its executive officers	Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended May 31, 2008.
*10.15	Form of Non-Qualified Stock Option Agreement under the Amended and Restated H.B. Fuller Company Year 2000 Stock Incentive Plan for awards made on or after January 20, 2011	Exhibit 10.1 to the Current Report on Form 8-K dated January 20, 2011.
*10.16	Form of Non-Qualified Stock Option Agreement under the Amended and Restated H.B. Fuller Company Year 2000 Stock Incentive Plan for awards made on or after January 26, 2012	Exhibit 10.1 to the Current Report on Form 8-K dated January 26, 2012
*10.17	Form of Non-Qualified Stock Option Agreement under the Amended and Restated H.B. Fuller Company Year 2000 Stock Incentive Plan for awards made on or after January 24, 2013	Exhibit 10.1 to the Current Report on Form 8-K dated January 24, 2013.
*10.18	Form of Non-Qualified Stock Option Agreement under the H.B. Fuller Company 2013 Master Incentive Plan for awards made on or after January 23, 2014	Exhibit 10.2 to the Current Report on Form 8-K dated January 23, 2014.
*10.19	Form of Non-Qualified Stock Option Agreement under the H.B. Fuller Company 2016 Master Incentive Plan for awards made on or after April 7, 2016	Exhibit 10.1 to the Current Report on Form 8-K dated April 6, 2016.

*10.20	Form of Non-Qualified Stock Option Agreement under the H.B. Fuller Company 2016 Master Incentive Plan for awards made on or after October 20, 2017	Exhibit 10.2 to the Current Report on Form 8-K dated October 20, 2017.
*10.21	Form of Non-Qualified Stock Option Agreement under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after April 12, 2018	Exhibit 10.1 to the Current Report on Form 8-K dated April 18, 2018.

66

*10.22	Form of Restricted Stock Unit Agreement under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after April 12, 2018	Exhibit 10.2 to the Current Report on Form 8-K dated April 18, 2018.
*10.23	Form of Restricted Stock Unit Award Agreement for the CEO under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after April 12, 2018	Exhibit 10.3 to the Current Report on Form 8-K dated April 18, 2018.
*10.24	Form of Performance Share Award Agreement under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after April 12, 2018	Exhibit 10.4 to the Current Report on Form 8-K dated April 18, 2018.
*10.25	Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after April 12, 2018	Exhibit 10.5 to the Current Report on Form 8-K dated April 18, 2018.
*10.26	Form of Non-Qualified Stock Option Agreement under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after January 24, 2019	Exhibit 10.1 to the Current Report on Form 8-K dated January 24, 2019.
*10.27	Form of Performance-Based Non-Qualified Stock Option Agreement under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after January 24, 2019	Exhibit 10.2 to the Current Report on Form 8-K dated January 24, 2019.
*10.28	Form of Restricted Stock Unit Agreement under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after January 24, 2019	Exhibit 10.3 to the Current Report on Form 8-K dated January 24, 2019.
*10.29	Form of Restricted Stock Unit Agreement for the CEO under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after January 24, 2019	Exhibit 10.4 to the Current Report on Form 8-K dated January 24, 2019.
*10.30	Form of Performance Share Award Agreement under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after January 24, 2019	Exhibit 10.5 to the Current Report on Form 8-K dated January 24, 2019.

*10.31	Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the H.B. Fuller Company 2018 Master Incentive Plan for awards made on or after January 24, 2019	Exhibit 10.6 to the Current Report on Form 8-K dated January 24, 2019.
*10.32	Form of Non-Qualified Stock Option Agreement under the H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after April 2, 2020	Exhibit 10.1 to the Current Report on Form 8-K dated April 2, 2020.
*10.33	Form of Restricted Stock Unit Award Agreement under the H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after April 2, 2020	Exhibit 10.2 to the Current Report on Form 8-K dated April 2, 2020.
*10.34	Form of Restricted Stock Unit Award Agreement for the CEO under the H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after April 2, 2020	Exhibit 10.3 to the Current Report on Form 8-K dated April 2, 2020.
*10.35	Form of Performance Share Award Agreement under the H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after April 2, 2020	Exhibit 10.4 to the Current Report on Form 8-K dated April 2, 2020.

*10.36	Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the H.B. Fuller Company 2020 Master Incentive Plan for awards made on or after April 2, 2020	Exhibit 10.5 to the Current Report on Form 8-K dated April 2, 2020.
*10.37	Form of Restricted Stock Unit (CEO) Award Agreement under the H.B. Fuller Company 2020 Master Incentive Plan	Exhibit 10.1 to the Current Report on Form 8-K dated January 27, 2021.
*10.38	Form of Performance-Based Non-Qualified Stock Option (CEO, TSR) Award Agreement under the H.B. Fuller Company 2020 Master Incentive Plan	Exhibit 10.2 to the Current Report on Form 8-K dated January 27, 2021.
*10.39	H.B. Fuller Company Defined Contribution Restoration Plan (As Amended and Restated Effective January 1, 2008), as amended	Exhibit 10.4 to the Current Report on Form 8-K dated December 19, 2007 and Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended May 31, 2008. Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended March 2, 2019, Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended June 1, 2019, and Exhibit 10.43 to the Annual Report on Form 10-K for the year ended November 28, 2020.

67

*10.40	Fifth Amendment to the H.B. Fuller Company Defined Contribution Restoration Plan (As Amended and Restated Effective January 1, 2008), as amended
*10.41	H.B. Fuller Company Directors’ Deferred Compensation Plan (2008 Amendment and Restatement), as amended	Exhibit 10.22 to the Annual Report on Form 10-K for the year ended November 29, 2008 and Exhibit 10.23 to the Annual Report on Form 10-K for the year ended November 29, 2008.
*10.42	H.B. Fuller Company 2009 Director Stock Incentive Plan	Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended May 30, 2009.

*10.43	H.B. Fuller Company Management Short-Term Incentive Plan for Executive Officers	Exhibit 10.7 to the Current Report on Form 8-K dated January 24, 2019.
*10.44	H.B. Fuller Company Management Short-Term Incentive Plan for Executive Officers	Exhibit 10.1 to the Current Report on Form 8-K dated January 15, 2020.
*10.45	H.B. Fuller Company Management Long-Term Incentive Plan	Exhibit 10.8 to the Current Report on Form 8-K dated January 24, 2019.
*10.46	Amended and Restated H.B. Fuller Company Annual and Long-Term Incentive Plan	Exhibit 10.1 to the Current Report on Form 8-K dated April 3, 2008
*10.47	H.B. Fuller Company 2013 Master Incentive Plan	Annex B to the H.B. Fuller Company Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on February 27, 2013.
*10.48	H.B. Fuller Company 2016 Master Incentive Plan	Annex B to the H.B. Fuller Company Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on February 24, 2016.
*10.49	H.B. Fuller Company 2018 Master Incentive Plan	Annex B to the H.B. Fuller Company Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on February 28, 2018.
*10.50	Amended and Restated H.B. Fuller Company 2020 Master Incentive Plan	Annex B to the H.B. Fuller Company Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on February 24, 2021.
21	List of Subsidiaries
23.1	Consent of Ernst & Young LLP
23.2	Consent of KPMG LLP
24	Power of Attorney
31.1	302 Certification – James J. Owens
31.2	302 Certification – John J. Corkrean
32.1	906 Certification – James J. Owens
32.2	906 Certification – John J. Corkrean
101	The following materials from the H.B. Fuller Company Annual Report on Form 10-K for the fiscal year ended November 27, 2021 formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Total Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
	* Asterisked items are management contracts or compensatory plans or arrangements required to be filed.

(b) See Exhibit Index and Exhibits attached to this Form 10-K.

Item 16. Form 10-K Summary

None

68

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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
	By:	/s/ James J. Owens
Dated: January 25, 2022		JAMES J. OWENS
		President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Title
/s/ James J. Owens	President and Chief Executive Officer and Director
JAMES J. OWENS	(Principal Executive Officer)
/s/ John J. Corkrean	Executive Vice President, Chief Financial Officer
JOHN J. CORKREAN	(Principal Financial Officer)
/s/ Robert J. Martsching	Vice President, Controller
ROBERT J. MARTSCHING	(Principal Accounting Officer)
*	Director
DANIEL L. FLORNESS
*	Director
THOMAS W. HANDLEY
*	Director
MICHAEL J. HAPPE
*	Director
RUTH S. KIMMELSHUE
*	Director
LEE R. MITAU
*	Director
DANTE C. PARRINI
*	Director
TERESA J. RASMUSSEN
*	Director
JOHN C. VAN RODEN, JR.
* by /s/ Timothy J. Keenan	Director
TIMOTHY J. KEENAN, Attorney in Fact
Dated: January 25, 2022

69

EX-10.9

Exhibit 10.9

H.B. FULLER COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II—2008

Third Declaration of Amendment

Pursuant to Section 6.10 of the H.B. Fuller Company Supplemental Executive Retirement Plan II—2008 (the “Plan”), the Company hereby amends the Plan effective October 1, 2021, as follows:

1. Section 5.1 is amended in its entirety to read as follows:

5.1.         Administrator.

A.         Subject to Section 5.1B, the Compensation Committee of the Board of Directors of the Company (or such other committee of such board that is, at any relevant time, performing the functions of the Compensation Committee) shall be the Administrator of the Plan. The Committee may delegate any of its administrative functions to another person, subject to revocation of such delegation at any time.

B.         The provisions of this Section 5.1B shall not apply unless and until a Change in Control has occurred. For purposes of this Plan, upon a Change in Control, the Benefit Plans Committee shall be the Administrator at all times following the occurrence of a Change in Control. The Benefit Plans Committee referred to in this Plan shall be comprised of the individuals who, immediately prior to the Change in Control, are then serving on the Company’s Benefit Plans Committee, or if there is no such committee, it shall be comprised of the individuals then serving as the Company’s chief financial officer, senior human resources officer, treasurer and vice president of corporate financial strategy (or equivalent positions, regardless of title). If one or more of the individuals serving on the Benefit Plans Committee is unable or unwilling to serve on the Benefit Plans Committee, the number of individuals serving on the Benefit Plans Committee may be reduced. In the event none of the aforementioned individuals is able or willing to serve, the individual serving as Chief Executive Officer of the Company immediately prior to the Change in Control will serve as the Benefit Plans Committee. The Benefit Plans Committee shall have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and any trust under Section 4.2, including, but not limited to, benefit entitlement determinations. Upon and after the occurrence of a Change in Control, the Company (or successor thereto) must: (1) pay all reasonable administrative expenses incurred by the Benefit Plans Committee; (2) indemnify the Benefit Plans Committee members against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of the Benefit Plans Committee hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of a Benefit Plans Committee member; and (3) supply full and timely information to the Benefit Plans Committee on all matters relating to the Plan, any trust, the Participants and their beneficiaries, the Accounts of the Participants, and such other pertinent information as the Benefit Plans Committee may reasonably require. Upon and after a Change in Control, the members of the Benefit Plans Committee may not be removed by the Company (or successor thereto), and the Benefit Plans Committee may not be terminated by the Company (or successor thereto).

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer.

Dated: September 30, 2021                                    

H.B. FULLER COMPANY

/s/ James J. Owens

President and Chief Executive Officer

ATTEST:

Timothy J. Keenan

Secretary or Assistant Secretary

EX-10.11

Exhibit 10.11

H.B. FULLER COMPANY

KEY EMPLOYEE DEFERRED COMPENSATION PLAN

(2021 Restatement)

H.B. FULLER COMPANY
KEY EMPLOYEE DEFERRED COMPENSATION PLAN
(2021 Restatement)


TABLE OF CONTENTS

SECTION 1.	INTRODUCTION AND DEFINITIONS			1
	1.1.	Introduction
		1.1.1.	Rules That Apply to Pre‑2005 Credits
		1.1.2.	Rules That Apply to 2005 and 2006 Credits
		1.1.3.	Rules That Apply to Post‑2006 Credits
		1.1.4.	Scope of First Amendment of 2005 Amendment and Restatement
	1.2.	Definitions
		1.2.1.	Account or Accounts
		1.2.2.	Affiliate
		1.2.3.	Beneficiary
		1.2.4.	Benefit Plans Committee
		1.2.5.	Change in Control
		1.2.6.	Code
		1.2.7.	Compensation Committee
		1.2.8.	Common Stock
		1.2.9.	Company
		1.2.10.	Disability
		1.2.11.	Distribution Event
		1.2.12.	Effective Date
		1.2.13.	Eligible Compensation
		1.2.14.	Employers
		1.2.15.	ERISA
		1.2.16.	LTIP Award
		1.2.17.	Measuring Options
		1.2.18.	Participant
		1.2.19.	Plan
		1.2.20.	Plan Statement
		1.2.21.	Separation from Service
		1.2.22.	STIP Award
		1.2.23.	Unforeseeable Emergency
		1.2.24	Valuation Date
SECTION 2.	PARTICIPATION			7
SECTION 3.	ELECTIONS			8
	3.1.	Compensation Subject to Elective Deferral

-i-

	3.2.	Eligible Compensation
		3.2.1.	Timing and Contents
		3.2.2.	Matching Credits Attributable to Deferrals
		3.2.3.	Duration
	3.3.	STIP/LTIP Awards
		3.3.1.	Timing and Contents
		3.3.2.	Matching Credits Attributable to Deferrals
		3.3.3.	Duration
	3.4.	Discretionary Credits
	3.5.	Irrevocability
	3.6.	Subsequent Changes in Distribution Elections
	3.7.	Maximum/Minimum Deferral Amounts
		3.7.1.	Eligible Compensation
		3.7.2.	STIP and LTIP Awards
	3.8.	Suspension of Eligibility
SECTION 4.	CREDITS TO ACCOUNTS			12
	4.1.	Deferral Credits
	4.2.	Matching Credits
	4.3.	Discretionary Credits
SECTION 5.	ADJUSTMENT OF ACCOUNTS			13
	5.1.	Establishment of Accounts
	5.2.	Adjustment of Accounts
	5.3.	Investment Adjustments
	5.4.	Cash Dividends
	5.5.	Stock Dividends
	5.6.	Transfer Upon Change in Control
SECTION 6.	VESTING			14
SECTION 7.	DISTRIBUTIONS			15
	7.1.	Time of Distribution
	7.2.	Form of Distribution
	7.3.	Installment Amounts
	7.4.	Distributions in Cash or Stock
	7.5.	Special Rules
		7.5.1.	Unforeseeable Emergency
		7.5.2.	Lump Sum Distribution to Pay Taxes
	7.6.	Designation of Beneficiaries
		7.6.1.	Right to Designate
		7.6.2.	Failure of Designation
		7.6.3.	Disclaimers by Beneficiaries
		7.6.4.	Definitions

-ii-

		7.6.5.	Special Rules
	7.7.	No Spousal Rights
	7.8.	Death Prior to Full Payment
	7.9.	Facility of Payment
SECTION 8.	FUNDING OF PLAN			20
	8.1.	Unfunded Obligation
	8.2.	Corporate Obligation
SECTION 9.	AMENDMENT AND TERMINATION			21
	9.1.	Amendment of Plan
	9.2.	Termination of Plan
	9.3.	No Oral Amendments
SECTION 10.	DETERMINATIONS – RULES AND REGULATIONS			22
	10.1.	Determinations
	10.2.	Method of Executing Instruments
	10.3.	Claims Procedure
		10.3.1.	Initial Claim and Decision
		10.3.2.	Request for Review and Final Decision
	10.4.	Rules and Regulations
		10.4.1.	Adoption of Rules
		10.4.2.	Specific Rules
		10.4.3.	Limitations and Exhaustion
SECTION 11.	PLAN ADMINISTRATION			25
	11.1.	Authority
		11.1.1.	Company
		11.1.2.	Compensation Committee
		11.1.3.	Board of Directors
		11.1.4.	Benefit Plans Committee
	11.2.	Conflict of Interest
	11.3.	ERISA Administrator
	11.4.	Service of Process
SECTION 12.	CONSTRUCTION			27
	12.1.	ERISA Status
	12.2.	IRC Status
	12.3.	Effect on Other Plans
	12.4.	Disqualification
	12.5.	Rules of Document Construction
	12.6.	References to Laws
	12.7.	Choice of Law

-iii-

12.8.	Delegation
12.9.	Not an Employment Contract
12.10.	Tax Withholding
12.11.	Expenses
12.12.	Spendthrift Provision

APPENDIX A —	TRANSITIONAL RULES FOR 2005 AND 2006 CREDITS	A‑1
APPENDIX B —	RULES FOR PRE‑2005 DEFERRALS – “PRE‑2005 PLAN STATEMENT”)	B‑1

-iv-

H.B. FULLER COMPANY
KEY EMPLOYEE DEFERRED COMPENSATION PLAN
(2021 Restatement)

SECTION 1

INTRODUCTION AND DEFINITIONS

1.1.         Introduction. Effective October 14, 1999, H.B. Fuller Company (“H.B. Fuller”) and certain affiliated corporations (“Employers” or “Employer” as applicable) established a nonqualified, unfunded deferred compensation plan (the “Plan”) to assist in attracting key employees and encouraging their long term commitment to the Company’s success by offering them an opportunity to defer compensation and to share in increases in the value of H.B. Fuller. The Plan is currently embodied in a document titled “H.B. Fuller Company Key Employee Deferred Compensation Plan (2005 Amendment and Restatement),” as amended by three amendments. The Company desires to amend the Plan to add procedures regarding the administration of the Plan following a Change in Control. The Plan Statement is hereby amended and restated to incorporate such procedures.

1.1.1.    Rules That Apply to Pre‑2005 Credits. Amounts credited under the Plan which relate entirely to services performed before January 1, 2005, shall continue to be governed by the terms of the Plan Statement in effect prior to January 1, 2005, attached hereto as Appendix B (the “Pre‑2005 Plan Statement”), subject to the following exceptions: (i) effective with respect to any Participant who dies on or after January 1, 2007 (regardless whether the Participant designated a beneficiary before or after January 1, 2007), the rules in Section 8.3 of the Pre‑2005 Plan Statement related to beneficiaries shall be replaced by the rules in Section 7.6 of the Plan Statement, (ii) effective for any claims filed on or after January 1, 2007, the claims procedure in Section 11.3 of the Pre‑2005 Plan Statement shall be replaced by the claims procedure in Section 10 of the Plan Statement, and (iii) on and after a Change in Control, the administrative procedures under Article IX of the Pre‑2005 Plan Statement shall include the procedures in Section 11.1.4 of the Plan Statement.

1.1.2.    Rules That Apply to 2005 and 2006 Credits. Amounts credited under the Plan which relate all or in part to services performed on or after January 1, 2005, but before January 1, 2007, shall be governed by the terms of the Pre‑2005 Plan Statement subject to the transitional rules, attached hereto as Appendix A, which are intended to comply with the deferred compensation provisions in section 409A of the Code. Additionally, (i) effective with respect to any Participant who dies on or after January 1, 2007 (regardless whether the Participant designated a beneficiary before or after January 1, 2007), the rules in Section 8.3 of the Pre‑2005 Plan Statement related to beneficiaries shall be replaced by the rules in Section 7.6 of the Plan Statement, (ii) effective for any claims filed on or after January 1, 2007, the claims procedure in Section 11.3 of the Pre‑2005 Plan Statement shall be replaced by the claims procedure in Section 10 of the Plan Statement, and (iii) on and after a Change in Control, the administrative procedures under Article IX of the Pre‑2005 Plan Statement shall include the procedures in Section 11.1.4 of the Plan Statement.

1.1.3.    Rules That Apply to Post‑2006 Credits. Amounts credited under the Plan which relate all or in part to services performed on or after January 1, 2007, will be governed by the terms of this Plan Statement, the terms of which are intended to comply with the deferred compensation provisions in section 409A of the Code.

1.1.4.    Scope of First Amendment of 2005 Amendment and Restatement. The First Amendment of the Plan Statement adopted on January 24, 2008, shall apply to Section 1.2.4(b) of the Plan Statement and to Section 1.1(d)(ii) of the Pre‑2005 Plan Statement.

1.2.            Definitions. When the following terms are used herein with initial capital letters, they shall have the following meanings:

1.2.1.    Account or Accounts – the separate bookkeeping account or accounts representing the separate unfunded and unsecured general obligation of the Employers established with respect to each person who becomes a Participant in this Plan in accordance with Section 2 and to which is credited the amounts specified Sections 4 and 5 and from which are subtracted payments made pursuant to Section 7. The following Accounts (and such subaccounts as the Company may determine necessary or useful to the administration of this Plan) will be maintained under this Plan for Participants:

(a) Deferred Compensation Account – the Account maintained for each Participant to which is credited deferral amounts under Section 4.1 in accordance with the Participant’s allocation election. The value of the Deferred Compensation Account shall be measured by the Measuring Option(s) elected by the Participant from time to time as permitted by the Company. Credits in the Deferred Compensation Account cannot later be transferred to the Company Stock Account. Distributions from the Deferred Compensation Account shall be made in the form of cash.

(b) Company Stock Account – the Account maintained for each Participant to which is credited, (i) deferral amounts pursuant to Section 4.1 in accordance with the Participant’s allocation election, (ii) matching amounts pursuant to Section 4.2, and (iii) any discretionary amounts pursuant to Section 4.3. The value of the Company Stock Account is measured by the value of H.B. Fuller Common Stock. Except as provided in Section 5.6 following a Change in Control, credits in the Company Stock Account cannot later be transferred to the Deferred Compensation Account. Distributions from Company Stock Account shall be made in the form of H.B. Fuller Common Stock.

1.2.2.    Affiliate – a business entity that is treated as a single employer with H.B. Fuller Company under the rules of section 414(b) and (c) of the Code, including the eighty percent (80%) standard therein.

1.2.3.    Beneficiary – a person designated by a Participant (or automatically by operation of Section 7.6 to receive all or a part of the Participant’s Account in the event of the Participant’s death prior to full distribution thereof. A person so designated shall not be considered a Beneficiary until the death of the Participant.

-2

1.2.4.    Benefit Plans Committee – the administrative committee established in connection with a Change in Control as described in Section 11.1.4.

1.2.5.    Change in Control – any of the following events:

(a) a change in control of the Company of a nature that would be required to be reported in accordance with Regulation 14A promulgated under the Securities Exchange Act of 1934 (the Exchange Act”), whether or not the Company is then subject to such reporting requirement;

(b) a public announcement (which for purposes hereof, shall include, without limitation, a report filed pursuant to section 13(d) of the Exchange Act) that any individual, corporation, partnership, association, trust or other entity becomes a beneficial owner (as defined in Rules 13(d)(3) promulgated under the Exchange Act), directly or indirectly, of securities or the Company representing thirty percent (30%) or more of the Voting Power of the Company then outstanding;

(c) the individuals who, as of January 1, 2005, are members of the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (provided, however, that if the election or nomination for election by the Company’s shareholders of any new director was approved by a vote of at least a majority of the Incumbent Board, such a new director shall be considered to be a member of the Incumbent Board);

(d) the approval of the shareholders of the Company of (i) any consolidation, merger or statutory share exchange of the Company with any person in which the surviving entity would not have as its directors at least sixty percent (60%) of the Incumbent Board and as a result of which those persons who were shareholders of the Company immediately prior to such transaction would not hold, immediately after such transaction, at least sixty percent (60%) of the Voting Power of the Company then outstanding or the combined voting power of the surviving entity’s then outstanding voting securities; (ii) any sale, lease, exchange or other transfer in one transaction or series of related transactions substantially all of the assets of the Company; or (iii) the adoption of any plan or proposal for the complete or partial liquidation or dissolution of the Company; or

(e) a determination by a majority of the members of the Incumbent Board, in their sole and absolute discretion, that there has been a Change in Control of the Company.

1.2.6.    Code – the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, interpretations and rulings issued thereunder).

-3

1.2.7.    Compensation Committee – the Compensation Committee of the Board of Directors of H.B. Fuller (or any successor committee) or such other person or persons whom the Compensation Committee authorizes to act on its behalf to administer the Plan.

1.2.8.    Common Stock – common stock par value $1.00 per share, of H.B. Fuller Company as such stock may be reclassified, converted or exchanged by reorganization, merger of otherwise.

1.2.9.    Company – H.B. Fuller Company and any successor thereto.

1.2.10.    Disability – a medically determinable physical or mental impairment which (i) is expected to result in death or to last for a continuous period of at least twelve (12) months, (ii) renders the Participant incapable of any substantial gainful activity, and (iii) is evidenced by a certification to this effect by a doctor of medicine approved by the Company. Alternatively, a Participant will be considered disabled if the Participant is, by reason of any medically determinable physical or mental impairment which is expected to result in death or to last for a continuous period of at least twelve (12) months, receiving income replacement for a period of at least three (3) months under the Employer’s disability plan. A Participant who provides proof of a determination of disability by the Social Security Administration will be deemed disabled under this Plan. Disability shall be construed to be consistent with the meaning of that term in section 409A of the Code and regulations and guidance thereunder.

1.2.11.    Distribution Event – any of the occurrences described in Section 7.1 by reason of which a Participant or Beneficiary may become entitled to a distribution from this Plan.

1.2.12.    Effective Date – January 1, 2005.

1.2.13.    Eligible Compensation – compensation which is Eligible Earnings as defined under the H.B. Fuller Thrift Plan; provided, however, that Eligible Compensation (i) shall be determined without regard to limitations imposed under section 401(a)(17) of the Code, and, (ii) to the extent not already excluded from the definition of Eligible Earnings, Eligible Compensation, shall exclude: (A) any awards under the Short Term Incentive Plan or the Annual and Long Term Incentive Plan, and (B) the value of all stock options and stock appreciation rights (whether or not exercised).

1.2.14.    Employers – H.B. Fuller and each business entity affiliated with H.B. Fuller that employs persons who are designated by the Compensation Committee for participation in this Plan (collectively the “Employers” and separately the “Employer”).

1.2.15.    ERISA – the Employee Retirement Income Security Act of 1974, as amended (including, when the context requires, all regulations, interpretations and rulings issued thereunder).

1.2.16.    LTIP Award – a cash award paid pursuant to the H.B. Fuller Annual and Long Term Incentive Plan (or similar successor plan) which is performance‑based compensation as defined in section 409A of the Code.

-4

1.2.17.    Measuring Options – the investment options determined from time to time in the sole discretion of the Compensation Committee which may be elected by the Participant to measure the value of the Participant’s credits in the Deferred Compensation Account.

1.2.18.    Participant – an employee of an Employer who is designated as eligible to participate in this Plan and becomes a Participant in this Plan in accordance with the provisions of Section 2. An employee who has become a Participant shall be considered to continue as a Participant in this Plan until the date of the Participant’s death or, if earlier, the date when the Participant is no longer employed by an Employer or an Affiliate and upon which the Participant no longer has any Account under this Plan (that is, the Participant has received a distribution of all of the Participant’s Account).

1.2.19.    Plan – the nonqualified, income deferral program maintained by H.B. Fuller established for the benefit of Participants eligible to participate therein, as set forth in the Plan Statement. (As used herein, “Plan” does not refer to the documents pursuant to which this Plan is maintained. That document is referred to herein as the “Plan Statement”). The Plan shall be referred to as the H.B. Fuller Company Key Employee Deferred Compensation Plan.

1.2.20.    Plan Statement – this document entitled “H.B. Fuller Company Key Employee Deferred Compensation Plan (2005 Amendment and Restatement)” as adopted by the Board of Directors of H.B. Fuller, as the same may be amended from time to time thereafter.

1.2.21.    Separation from Service – a severance of an employee’s employment relationship with the Employers and all Affiliates for any reason other than the employee’s death.

(a) A transfer from employment with an Employer to employment with an Affiliate, or vice versa, shall not constitute a Separation from Service.

(b) Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that the Employer and employee reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the employee would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty‑six (36) month period (or the full period of services to the employer if the employee has been providing services to the employer for less than thirty‑six (36) months).

(c) Separation from Service shall not be deemed to occur while the employee is on military leave, sick leave or other bona fide leave of absence if the period does not exceed six (6) months or, if longer, so long as the employee retains a right to reemployment with the Employer or an Affiliate under an applicable statute or by contract. For this purpose, a leave is bona fide only if, and so long as, there is a reasonable expectation that the employee will return to perform services for the Employer or an Affiliate. Notwithstanding the foregoing, a twenty‑nine (29) month period of absence will be substituted for such six (6) month period if the leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of no less than six (6) months and that causes the employee to be unable to perform the duties of his or her position of employment.

-5

(d) Where as part of a sale or other disposition of assets by the Employer to an employer that is not an Affiliate, an employee providing services to the Employer immediately before the transaction and to the buyer immediately after the transaction (“Affected Employee”) would otherwise experience a Separation from Service from the Employer as a result of the transaction, the Employer and the buyer shall have the discretion to specify that the Affected Employee has not experienced a Separation from Service if (i) the transaction results from bona fide, arm’s length negotiations, (ii) all Affected Employees are treated consistently, and (iii) such treatment is specified in writing no later than the closing date of the transaction.

1.2.22.    STIP Award – a cash award paid pursuant to the H.B. Fuller Short Term Incentive Plan (or similar successor plan) which is performance‑based compensation as defined in section 409A of the Code.

1.2.23.    Unforeseeable Emergency – a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in section 152(a) of the Code) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Unforeseeable Emergency shall be construed to be consistent with the meaning of that term in section 409A of the Code and regulations and guidance thereunder.

1.2.24.    Valuation Date – the last business day of each month, and such other dates as may be established by the Compensation Committee from time to time.

-6

SECTION 2

PARTICIPATION

Each employee of an Employer shall become a Participant in the Plan upon the satisfaction of the following requirements:

(a) Employee is determined by the Compensation Committee to be classified at the pay grade of thirty‑two (32) or higher or to be a member of a select group of management or highly compensated employees (as that term is used in ERISA); and

(b) Employee is affirmatively selected by the Compensation Committee for participation in the Plan.

A Participant may defer compensation only as permitted under the timing rules in Section 3.

-7

SECTION 3

ELECTIONS

3.1.            Compensation Subject to Elective Deferral. A Participant may elect to defer all or a portion of the following compensation:

(a) Eligible Compensation;

(b) STIP Awards; and

(c) LTIP Awards;

provided, however, that deferrals of any STIP and LTIP Awards shall be permitted only if the Participant was employed by an Employer and covered under the STIP or LTIP, as applicable, on the first day of the performance period upon which the Award is based.

3.2.            Eligible Compensation.

3.2.1.    Timing and Contents. A Participant’s election to defer Eligible Compensation shall be made at the time and in the form and manner prescribed by the Company. A Participant’s deferral election shall apply only to Eligible Compensation for services performed during the calendar year beginning after the election is filed. The deferral election may also apply to Eligible Compensation included in the first paycheck of a calendar year for services performed in the prior year. Such election shall specify:

(a) the amount of the Participant’s Eligible Compensation to be deferred,

(b) the portions of such deferrals to be allocated to the Deferred Compensation Account and to the Company Stock Account,

(c) the Measuring Option(s) to be used to measure increase (or decreases) in the value of such deferrals allocated to Deferred Compensation Account,

(d) the form of distribution for such deferrals, and

(e) a specified date of distribution, if any, under Section 7.1(e) for such deferrals.

3.2.2.    Matching Credits Attributable to Deferrals. A Participant’s election of form of distribution and specified date for distribution, if any, with respect to deferrals of Eligible Compensation for a calendar year shall also apply to matching credits under Section 4.2 attributable to such deferrals.

3.2.3.    Duration. A Participant’s election to defer Eligible Compensation shall expire on the last day of the calendar year to which it relates and new elections must be made with respect to subsequent calendar years.

-8

3.3.            STIP/LTIP Awards.

3.3.1.    Timing and Contents. A Participant’s election to defer any STIP and LTIP Awards shall be made at the time and in the form and manner prescribed by the Plan Administrator. Such election shall be filed with the Company at least six (6) months before the end of the performance period upon which the Award is based and shall specify:

(a) the amount of the Award to be deferred,

(b) the portions of such deferrals to be allocated to the Deferred Compensation Account and to the Company Stock Account,

(c) the Measuring Option(s) to be used to measure increases (or decreases) in value of such deferrals allocated to Deferred Compensation Account,

(d) the form of distribution for such deferrals, and

(e) a specified date for distribution, if any, under Section 7.1(e) for such deferrals;

provided, however, that if the Participant has previously filed an election to defer Eligible Compensation during the calendar year in which an election under this Section 3.3.1 is filed, the Participant’s election of (i) allocation between Deferred Compensation Account and Company Stock Account, (ii) form of distribution, and (iii) specified date of distribution, if any, with respect to such Eligible Compensation shall also apply to the allocation and distribution of deferrals of the STIP/LTIP Awards.

3.3.2.    Matching Credits Attributable to Deferrals. A Participant’s election of form of distribution and specified date for distribution, if any, with respect to deferrals of STIP and LTIP Awards for a performance period shall also apply to matching credits under Section 4.2 attributable to such deferrals.

3.3.3.    Duration. A Participant’s election to defer STIP and LTIP Awards shall apply only to the Award for the performance period specified on the election forms and new elections must be made with respect to subsequent performance periods.

3.4.            Discretionary Credits. The Participant’s election of form of distribution and specified date, if any, with respect to Eligible Compensation during the calendar year shall apply to any discretionary credits made during such calendar year. If the Participant has not elected to defer Eligible Compensation during the calendar year in which discretionary credits are made, the Participant shall be deemed to have elected to receive distribution of such amounts in the form of a lump sum and not to have elected a specified date for distribution under Section 7.1(e).

3.5.            Irrevocability. An election to defer Eligible Compensation or any STIP/LTIP Awards that is accepted by the Compensation Committee shall be irrevocable for the calendar year or performance period (as applicable) to which it applies; provided, however, that in the event of an Unforeseeable Emergency or hardship distribution under section 401(k)‑1(d)(3) of the Code or disability, a Participant’s deferral elections shall be cancelled and further deferrals shall not be made during that period. For purposes of this Section 3.5, disability shall mean any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any substantially similar position, which can be expected to result in death or last for a continuous period of at least six (6) months. Cancellation in the event of disability shall occur as soon as administratively feasible after disability is determined but must occur by the fifteenth (15th) day of the third month following the date the disability occurs or, if later, by December 31 following the date the disability occurs.

-9

3.6.            Subsequent Changes in Distribution Elections. A Participant shall be permitted to change a prior election of the form of distribution or the specified date of distribution if such election change is made in the form and manner prescribed by the Company and only if the following conditions are satisfied:

(a) the election change shall not take effect until the date that is twelve (12) months after the date on which the Participant submits the election change;

(b) if the Participant changes the form of distribution, any distribution that occurs on account of Distribution Events in Section 7.1(a), (d) or (e) (i.e., age 65, Separation from Service, or specified date), distribution shall be delayed until the date that is five (5) years after the date the distribution would otherwise have been made; and

(c) if the Participant changes a specified date of distribution under Section 7.1(e), the election change (i) must be submitted at least twelve (12) months before the date previously specified by the Participant, and (ii) the new specified date shall be at least five (5) years after the date previously specified.

3.7.            Maximum/Minimum Deferral Amounts.

3.7.1.    Eligible Compensation. A Participant shall be permitted to elect to defer up to eighty percent (80%) of Eligible Compensation in one percent (1%) increments. In special circumstances a greater percentage may be determined by the Compensation Committee based on whether the compensation otherwise paid to the Participant would be fully deductible for federal or state income tax purposes under section 162(m) of the Code.

3.7.2.    STIP and LTIP Awards. A Participant shall be permitted to elect to defer up to one hundred percent (100%) of any STIP and LTIP Awards in one percent (1%) increments. Participant election shall be automatically reduced to the extent necessary to allow for full payment of all FICA, federal, state and/or local income taxes.

3.8.            Suspension of Eligibility. If the Compensation Committee, a court of competent jurisdiction, any representative of the U.S. Department of Labor or any other governmental, regulatory or similar body makes any direct or indirect, formal or informal determination that a Participant has ceased to be a member of a select group of management or highly compensated employees (as that term is used in ERISA), any election previously made by such individual to defer Eligible Compensation or STIP and LTIP Awards for the calendar year or performance period, as applicable, in which the determination is made shall remain in effect for such calendar year or performance period, but no further elective deferrals shall be permitted thereafter until such time as the individual is again determined by the Compensation Committee to be eligible to participate in the Plan. Furthermore, matching and discretionary credits for such individual under Sections 4.2 and 4.3 shall cease upon such determination until such time as the individual is again determined by the Compensation Committee to be eligible to participate in the Plan.

-10

SECTION 4

CREDITS TO ACCOUNTS

4.1.            Deferral Credits. On the date on which the compensation would otherwise have been paid to the Participant (or as soon as administratively practicable thereafter), the Company shall credit the Participant’s Deferred Compensation Account or Company Stock Account, according to the Participant’s allocation election, the amount the Participant elected to defer under Section 3. The amount that is allocated and credited to the Deferred Compensation Account shall be stated as a dollar amount. The amount that is allocated and credited to the Company Stock Account shall be stated as the number of units (including fractions thereof) of Common Stock that could have been purchased with such deferrals as of the close of business on the date such amounts would otherwise have been paid to the Participant.

4.2.            Matching Credits. At the same time as the Participant’s Company Stock Account is credited based on elective deferrals, the Company shall credit the Participant’s Company Stock Account with an additional number of units (including fractions thereof) of Common Stock that are equal to ten percent (10%) of the number of units (including fractions thereof) of Common Stock that were credited to the Participant’s Company Stock Account based on such elective deferrals. Any credits to this Plan based on limits on contributions under the Company’s 401(k) plan shall be discontinued effective December 31, 2006.

4.3.            Discretionary Credits. From time to time, the Company, in its sole discretion, may credit the Participant’s Company Stock Account with the number of units (including fractions thereof) of Common Stock as the Compensation Committee may determine in its sole discretion.

-11

SECTION 5

ADJUSTMENT OF ACCOUNTS

5.1.            Establishment of Accounts. There shall be established for each Participant unfunded, bookkeeping Accounts which shall be hypothetical in nature. Neither the Plan nor any of the Accounts shall hold or be required to hold any actual funds or assets.

5.2.            Adjustments of Accounts. From time to time, but not less frequently than each Valuation Date, the value of each Account or portion of an Account shall be increased (or decreased) for distributions, credits (including any earnings, gains or losses thereon) and any expenses charged to the Account.

5.3.            Investment Adjustments. The Compensation Committee shall have the sole discretion to designate from time to time the Measuring Options in which the Deferred Compensation Accounts may be deemed invested. The Compensation Committee shall, in its sole discretion, adopt rules specifying (i) the circumstances under which a particular Measuring Option may be elected (or automatically utilized), (ii) the minimum or maximum percentages which may be allocated to the Measuring Option, (iii) the procedures (if any) for Participants making or changing elections of Measuring Options (including when such elections and election changes shall be implemented after the election is accepted by the Compensation Committee), (iv) the extent (if any) to which beneficiaries of deceased Participants may change Measuring Options, and (v) the effect of a Participant’s or beneficiary’s failure to make an effective election with respect to a Measuring Option. Notwithstanding the foregoing, subsequent to a Change in Control, the Compensation Committee shall maintain the availability of those Measuring Options in place at the time of the Change in Control (or substantially equivalent Measuring Options).

5.4.            Cash Dividends. On each Common Stock dividend payment date, the Participant’s Company Stock Account shall be credited with the number of units (including fractions thereof) equal to the number of shares of Common Stock that could have been purchased with the amount the dividends paid by the Company on shares of Common Stock equal to the number of units credited to the Participant’s Company Stock Account as of the record date of such dividend.

5.5.            Stock Dividends. The number of units credited to a Participant’s Company Stock Account shall be adjusted to reflect any change in the outstanding Common Stock by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of share or similar corporate change.

5.6.            Transfer Upon Change in Control. Effective as of the close of business on the date of a Change in Control, each Participant’s Deferred Compensation Account shall be credited with an amount stated in dollars equal to the value of such Participant’s Company Stock Account based upon the fair market value of Common Stock at the close of business on such date, and the Participant’s Company Stock Account shall be closed, and the Participant shall have no further interest in the Company Stock Account.

-12

SECTION 6

VESTING

The Account of each Participant shall be fully (100%) vested and non-forfeitable at all times. Notwithstanding the foregoing, if the Company determines in its discretion that a Participant has improperly received a credit under this Plan for any reason (including, but not limited to, an erroneous calculation or other mistake of fact, or on account of a restatement of earnings), the Account shall be reduced by the amount of the improper credit.

-13

SECTION 7

DISTRIBUTIONS

7.1.            Time of Distribution. The value of the Participant’s Accounts shall be determined as of the last business day of the month in which the first of the following Distribution Events occurs and distribution to the Participant (or Beneficiary, if applicable) shall be made or commenced within sixty (60) days thereafter:

(a) Participant’s sixty‑fifth (65th) birthday;

(b) Participant Disability;

(c) Participant’s death;

(d) Participant’s Separation from Service; or

(e) such other date, if any, elected and specified by the Participant in accordance with Section 3;

provided, however, if the Distribution Event is the Participant’s Separation from Service under (d) above, determination of the value of the Participant’s Account shall be delayed until the last business day of the month in which occurs the six (6) month anniversary of the date following the date of the Participant’s Separation from Service (or if earlier, until the death of the Participant), and distribution shall be made or commenced within sixty (60) days thereafter.

If a Participant who receives a distribution on account of reaching age sixty‑five (65) (i.e., under (a) above) continues employment with the Employer after age sixty‑five (65), any subsequent distribution to such Participant shall be determined under this Plan without further regard to (a) above.

Distribution under (e) above shall apply only to the portion of the Participant’s Account, if any, with respect to which the Participant elected the specified distribution date.

Notwithstanding the foregoing, the time of any distribution shall be delayed in accordance with the rules in Section 3.6 related to subsequent changes in distribution elections.

7.2.            Form of Distribution. Distribution shall be made to the Participant (or Beneficiary, if applicable) in whichever of the following forms as the Participant shall have elected in accordance with Section 3 with respect to the Account:

(a) Lump sum; or

(b) Annual installments over a specified number of years not to exceed eleven (11) years.

Notwithstanding the foregoing, effective for any death occurring on or after January 1, 2009, distribution shall be made to a Beneficiary in a lump sum.

-14

7.3.            Installment Amounts. The amount of the annual installments shall be determined by dividing the value of the Account as of the last business day of the month following the Distribution Event and as of each anniversary of such day by the number of remaining installment payments to be made (including the payment being determined). If distribution is delayed under Section 7.1 until the date that is six (6) months after Separation from Service, the subsequent installments shall be determined as of each anniversary of such date.

7.4.            Distributions in Cash or Stock. Distributions from the Participant’s Company Stock Account shall be paid in shares of Common Stock (with any fractional unit being rounded to the next highest whole unit). Distributions from the Participant’s Deferred Compensation Account shall be paid in cash.

7.5.            Special Rules.

7.5.1.    Unforeseeable Emergency. A Participant who has not incurred a Distribution Event but who has incurred an Unforeseeable Emergency may request a withdrawal from such Participant’s Account. In the event that the Company, upon written petition of the Participant, determines in his or her sole discretion that the Participant has suffered an Unforeseeable Emergency, the Company shall distribute to the Participant as soon as reasonably practicable following such determination, an amount (not in excess of the value of the Participant’s Account) necessary to satisfy the emergency. Distribution shall be taken pro‑rata from the Participant’s Deferred Compensation Account and Company Stock Account starting with the most recent credits to the Accounts. Immediately upon the distribution, such Participant’s deferral elections shall be cancelled, and further deferrals shall not be made in accordance with Section 3.5 during that period.

7.5.2.    Lump Sum Distribution to Pay Taxes. Notwithstanding anything to the contrary in this Section 7, a lump sum shall be distributed to the Participant (i) to pay any employment taxes under FICA that may become due on compensation deferred under this Plan, (ii) to pay any income tax withholding related to the distribution of amounts to pay such FICA taxes, and (iii) to pay any amounts required to be included in the Participant’s income due to failure to comply with the requirements in section 409A of the Code.

7.6.            Designation of Beneficiaries.

7.6.1.    Right to Designate. Each Participant may designate, upon form to be furnished by and filed with the Company, one or more primary Beneficiaries or alternative Beneficiaries to receive all or a specified part of such Participant’s Account in the event of such Participant’s death. The Participant may chance or revoke any such designation from time to time without notice to or consent from any spouse, Beneficiary or any other person. No such designation, change or revocation shall be effective unless executed by the Participant and received by the Company during the Participant’s lifetime. The Company may establish rules for the use of electronic signatures.

7.6.2.    Failure of Designation. If a Participant:

(a) fails to designate a Beneficiary,

-15

(b) designates a Beneficiary and thereafter revokes such designation without naming another Beneficiary, or

(c) designates one or more Beneficiaries and all such Beneficiaries so designated fail to survive the Participant,

such Participant’s Account, or the part thereof as to which such Participant’s designation fails, as the case may be, shall be payable to the first class of the following classes of automatic Beneficiaries with a member surviving the Participant and (except in the case of surviving issue) in equal shares if there is more than one member in such class surviving the Participant:

Participant’s surviving spouse         
Participant’s surviving issue per stirpes and not per capita         
Participant’s surviving parents         
Participant’s surviving brothers and sisters         
Representative of Participant’s estate.

7.6.3.    Disclaimers by Beneficiaries. A Beneficiary entitled to a payment of all or a portion of a deceased Participant’s Account may disclaim an interest therein subject to the following requirements. To be eligible to disclaim, a Beneficiary must be a natural person, must not have received a payment of all or any portion of the Account at the time such disclaimer is executed and delivered, and must have attained at least age twenty‑one (21) years as of the date of the Participant’s death. Any disclaimer must be in writing and must be executed personally by the Beneficiary before a notary public. A disclaimer shall state that the Beneficiary’s entire interest in the unpaid Account is disclaimed or shall specify what portion thereof is disclaimed. To be effective, an original executed copy of the disclaimer must be both executed and actually delivered to the Company after the date of the Participant’s death but not later than nine (9) months after the date of the Participant’s death. A disclaimer shall be irrevocable when delivered to the Company. A disclaimer shall be considered to be delivered to the Company only when actually received by the Company. The Company shall be the sole judge of the content, interpretation and validity of a purported disclaimer. Upon the filing of a valid disclaimer, the Beneficiary shall be considered not to have survived the Participant as to the interest disclaimed. A disclaimer by a Beneficiary shall not be considered to be a transfer of an interest in violation of the provisions of Section 12.12 and shall not be considered to be an assignment or alienation of benefits in violation of federal law prohibiting the assignment or alienation of benefits under this Plan. No other form of attempted disclaimer shall be recognized by the Company.

7.6.4.    Definitions. When used herein and, unless the Participant has otherwise specified in the Participant’s Beneficiary designation, when used in a Beneficiary designation, the following definitions and rules shall be applied.

(a) “Issue” means all persons who are lineal descendants of the person whose issue are referred to, subject to the following:

(i) a legally adopted child and the adopted child’s lineal descendants always shall be lineal descendants of each adoptive parent (and of each adoptive parent’s lineal ancestors);

-16

(ii) a legally adopted child and the adopted child’s lineal descendants never shall be lineal descendants of any former parent whose parental rights were terminated by the adoption (or of that former parent’s lineal ancestors); except that if, after a child’s parent has died, the child is legally adopted by a stepparent who is the spouse of the child’s surviving parent, the child and the child’s lineal descendants shall remain lineal descendants of the deceased parent (and the deceased parent’s lineal ancestors);

(iii) if the person (or a lineal descendant of the person) whose issue are referred to is the parent of a child (or is treated as such under applicable law) but never received the child into that parent’s home and never openly held out the child as that parent’s child (unless doing so was precluded solely by death), then neither the child nor the child’s lineal descendants shall be issue of the person.

(b) “Child” means an issue of the first generation;

(c) “Per stirpes” means in equal shares among living children of the person whose issue are referred to and the issue (taken collectively) of each deceased child of such person, with such issue taking by right of representation of such deceased child; and

(d) “Survive” and “surviving” mean living after the death of the Participant.

7.6.5.    Special Rules. Unless the Participant has otherwise specified in the Participant’s Beneficiary designation, the following rules shall apply:

(a) If there is not sufficient evidence that a Beneficiary was living at the time of the death of the Participant, it shall be deemed that the Beneficiary was not living at the time of the death of the Participant.

(b) The automatic Beneficiaries specified in Section 7.6.2 and the Beneficiaries designated by the Participant shall become fixed at the time of the Participant’s death so that, if a Beneficiary survives the Participant but dies before the receipt of all payments due such Beneficiary hereunder, such remaining payments shall be payable to the representative of such Beneficiary’s estate.

(c) If the Participant designates as a Beneficiary the person who is the Participant’s spouse on the date of the designation, either by name or by relationship, or both, the dissolution, annulment or other legal termination of the marriage between the Participant and such person shall automatically revoke such designation. The foregoing shall not prevent the Participant from designating a former spouse as a Beneficiary on a form that is both executed by the Participant and received by the Company (i) after the date of the legal termination of the marriage between the Participant and such former spouse and (ii) during the Participant’s lifetime.

-17

(d) Any designation of a nonspouse Beneficiary by name that is accompanied by a description of relationship to the Participant shall be given effect without regard to whether the relationship to the Participant exists either then or at the Participant’s death.

(e) Any designation of a Beneficiary only by statement of relationship to the Participant shall be effective only to designate the person or persons standing in such relationship to the Participant at the Participant’s death.

(f) The Company shall be the sole judge of the content, interpretation and validity of a purported Beneficiary designation.

7.7.            No Spousal Rights. No spouse, former spouse, Beneficiary or other person shall have any rights or interest in the benefits credited under this Plan including, but not limited to, the right to be the sole Beneficiary or to consent to the designation of Beneficiaries (or the changing of designated Beneficiaries) by the Participant.

7.8.            Death Prior to Full Payment. If a Participant who is receiving installment payments dies before installments are completed, the remaining installments shall be made to the Beneficiary on the same dates payments would otherwise have been made to the Participant; provided, however, that if the Participant’s death occurs on or after January 1, 2009, the remaining installments shall be paid to the Beneficiary in a lump sum within sixty (60) days after the Participant’s death. If, at the death of the Participant, any payment to the Participant was due or otherwise pending but not actually paid, the amount of such payment shall be paid to the Beneficiary (and shall not be paid to the Participant’s estate).

7.9.            Facility of Payment. In case of the legal disability, including minority, of an individual entitled to receive any payment under this Plan, payment shall be made, if the Compensation Committee shall be advised of the existence of such condition:

(a) to the duly appointed guardian, conservator or other legal representative of such individual, or

(b) to a person or institution entrusted with the care or maintenance of the incompetent or disabled Participant or Beneficiary, provided such person or institution has satisfied the Compensation Committee that the payment will be used for the best interest and assist in the care of such individual, and provided further, that no prior claim for said payment has been made by a duly appointed guardian, conservator or other legal representative of such individual.

Any payment made in accordance with the foregoing provisions of this section shall constitute a complete discharge of any liability or obligation of Plan and the Company therefore.

-18

SECTION 8

FUNDING OF PLAN

8.1.            Unfunded Obligation. The obligation of the Employers to make payments under this Plan constitutes only the unsecured (but legally enforceable) promise of the Employers to make such payments. No Participant or Beneficiary shall have any lien, prior claim or other security interest in any property of the Employers. The Employers may, but shall have no obligation to, establish or maintain any fund, trust or account (other than a bookkeeping account or reserve) for the purpose of funding or paying the benefits promised under this Plan. If such a fund, trust or account is established, the property therein shall remain the sole and exclusive property of the Employer that established it. The Employers shall be obligated to pay the benefits of this Plan out of their general assets. If, as of the close of business on the date of a Change in Control, the aggregate value of the Participant Accounts exceeds the value of the assets held in a trust that has been established by an Employer, then within thirty (30) days of such Change in Control, such Employer that has established such a trust shall contribute to such trust assets having a value at least equal to the amount of such excess.

8.2.            Corporate Obligation. Neither Company, the Board of Directors of the Company, the Chief Executive Officer, the Compensation Committee, the Employers nor any of their directors, officers, agents or employees in any way secure or guarantee the payment of any benefit or amount which may become due and payable hereunder to or with respect to any Participant. Each person entitled or claiming to be entitled at any time to any benefit hereunder shall look solely to the assets of the Employers for such payments as unsecured general creditors. If, or to the extent that, Accounts have been paid to or with respect to a present or former Participant and that payment purports to be the payment of a benefit hereunder, such former Participant or other person or persons, as the case may be, shall have no further right or interest in the other assets of the Employers in connection with this Plan. No person shall be under any liability or responsibility for failure to effect any of the objectives or purposes of this Plan by reason of the insolvency of the Employers.

-19

SECTION 9

AMENDMENT AND TERMINATION

9.1.            Amendment of Plan. The Company reserves the power to alter, amend or wholly revise the Plan at any time and from time to time by action of the Board of Directors, and the interest of each Participant is subject to the powers so reserved; provided, however, that no amendment made subsequent to a Change in Control shall be effective to the extent that it would have a materially adverse impact on a Participant’s reasonably expected economic benefit attributable to compensation deferred by the Participant prior to the Change in Control. An amendment shall be authorized by the Board of Directors and shall be stated in an instrument in writing signed in the name of the Company by a person or persons authorized by the Board of Directors. After the instrument has been so executed, the Plan shall be deemed to have been amended in the manner therein set forth. No amendment to the Plan may alter, impair or reduce the benefits credited to any Accounts prior to the effective date of such amendment without the written consent of any affected Participant.

9.2.            Termination of Plan. The Company may terminate the Plan at any time by action of the Board of Directors. If there is a termination of the Plan with respect to all Participants, the Company shall have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to amend the Plan to provide for the distribution of all Accounts in a lump sum following such Plan termination to the extent permissible under Section 409A of the Code and related Treasury regulations and guidance.

9.3.            No Oral Amendments. No modification of the terms of the Plan Statement or termination of this Plan shall be effective unless it is approved by action of the Board of Directors. No oral representation concerning the interpretation or effect of the Plan Statement shall be effective to amend the Plan Statement.

-20

SECTION 10

DETERMINATIONS – RULES AND REGULATIONS

10.1.          Determinations. The Compensation Committee shall make such determinations as may be required from time to time in the administration of this Plan. The Compensation Committee shall have the discretionary authority and responsibility to interpret and construe the Plan Statement and all relevant documents and information, and to determine all factual and legal questions under this Plan, including but not limited to the entitlement of Participants and Beneficiaries, and the amounts of their respective interests.

10.2.          Method of Executing Instruments. Information to be supplied or written notices to be made or consents to be given by Company or any other person pursuant to any provision of the Plan Statement may be signed in the name of Company by any officer or other person who has been authorized to make such certification or to give such notices or consents.

10.3.          Claims Procedure. The claim and review procedures set forth in this Section shall be the mandatory claim and review procedures for the resolution of disputes and disposition of claims filed under the Plan. An application for a distribution shall be considered as a claim for the purposes of this Section.

10.3.1.    Initial Claim and Decision. An individual may, subject to any applicable deadline, file with the Compensation Committee a written claim for benefits under the Plan in a form and manner prescribed by the Compensation Committee. If the claim is denied in whole or in part, the Compensation Committee shall notify the claimant of the adverse benefit determination within ninety (90) days after receipt of the claim. The ninety (90) day period for making the claim determination may be extended for ninety (90) days if the Compensation Committee determines that special circumstances require an extension of time for determination of the claim, provided that the Compensation Committee notifies the claimant, prior to the expiration of the initial ninety (90) day period, of the special circumstances requiring an extension and the date by which a claim determination is expected to be made. The notice of adverse determination shall provide: (i) the specific reasons for the adverse determination; (ii) references to the specific provisions of the Plan Statement (or other applicable Plan document) on which the adverse determination is based; (iii) a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary; and (iv) a description of the claim and review procedures, including the time limits applicable to such procedure, and (v) a statement of the claimant’s right to bring a civil action under section 502(a) of the Code following an adverse determination on review.

10.3.2.    Request for Review and Final Decision. Within sixty (60) days after receipt of an initial adverse benefit determination notice, the claimant may file with the Compensation Committee a written request for a review of the adverse determination and may, in connection therewith submit written comments, documents, records and other information relating to the claim benefits. Any request for review of the initial adverse determination not filed within sixty (60) days after receipt of the initial adverse determination notice shall be untimely. If the claim, upon review, is denied in whole or in part, the Compensation Committee shall notify the claimant within sixty (60) days after receipt of the request for a review. Such sixty (60) day period may be extended for sixty (60) days if the Compensation Committee determines that special circumstances require an extension and notifies the claimant what special circumstances require the extension and the date by which the decision is expected. If the extension is due to the claimant’s failure to submit information necessary to decide the claim, the claimant shall have sixty (60) days to provide the necessary information and the period for making the decision shall be tolled from the date on which the extension notice is sent until the date the claimant responds to the information request or, if earlier, the expiration of sixty (60) days. The Compensation Committee’s review of a denied claim shall take into account all documents and other information submitted by the claimant, whether or not the information was submitted before the claim was initially decided. The notice of denial upon review shall set forth in a manner calculated to be understood by the claimant: (i) the specific reasons for the denial; (ii) references to the specific provisions of the Plan document on which the denial is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the claim; and (iv) a statement of the claimant’s right to bring a civil action under section 502(a) of the Code.

-21

10.4.          Rules and Regulations.

10.4.1.    Adoption of Rules. Any rule not in conflict or at variance with the provisions hereof may be adopted by the Company.

10.4.2.    Specific Rules.

(a) Any decision or determination to be made by the Company shall be made by the Compensation Committee unless delegated as provided for in the Plan, in which case references in this Section 10 to the Compensation Committee shall be treated as references to the Compensation Committee’s delegate. No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the established claim procedures. The Compensation Committee may require that any claim for benefits and any request for a review of a denied claim be filed on forms to be furnished by the Company upon request.

(b) Claimants may be represented by a lawyer or other representative at their own expense, but Committee reserves the right to require the claimant to furnish written authorization and establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a claimant. A claimant’s representative shall be entitled to copies of all notices given to the claimant.

(c) The decision on a claim and on a request for a review of a denied claim may be provided to the claimant in electronic form instead of in writing at the discretion of the Company.

(d) The time period within which a benefit determination will be made shall begin to run at the time a claim or request for review is filed in accordance with the claims procedures, without regard to whether all the information necessary to make a benefit determination accompanies the filing.

-22

(e) The claims and review procedures shall be administered with appropriate safeguards so that benefit claim determinations are made in accordance with governing plan documents and, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants.

(f) For the purpose of this Section, a document, record, or other information shall be considered “relevant” as defined in Labor Reg. §2560.503‑1(m)(8).

(g) The Compensation Committee may, in its discretion, rely on any applicable statute of limitation or deadline as a basis for denial of any claim.

10.4.3.    Limitations and Exhaustion.

(a) No claim shall be considered under these administrative procedures unless it is filed with the Company within one (1) year after the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the claim. Every untimely claim shall be denied by the Company without regard to the merits of the claim. No suit may be brought by or on behalf of any Participant or Beneficiary on any matter pertaining to this Plan unless the action is commenced in the proper forum before the earlier of: (i) three (3) years after the Participant knew (or reasonably should have known) of the general nature of the dispute giving rise to the action, or (ii) sixty (60) days after the Participant has exhausted these administrative procedures.

(b) These administrative procedures are the exclusive means for resolving any dispute arising under this Plan. No Participant or Beneficiary shall be permitted to litigate any such matter unless a timely claim has been filed under these administrative procedures and these administrative procedures have been exhausted, and determinations under these administrative procedures (including determinations as to whether the claim was timely filed) shall be afforded the maximum deference permitted by law.

(c) For the purpose of applying the deadlines to file a claim or a legal action, knowledge of all facts that a Participant knew or reasonably should have known shall be imputed to every claimant who is or claims to be a Beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.

-23

SECTION 11

PLAN ADMINISTRATION

11.1.          Authority.

11.1.1.    Company. Functions generally assigned to the Company shall be discharged by the Compensation Committee, except where delegated and allocated as provided herein.

11.1.2.    Compensation Committee. Except as hereinafter provided, the Compensation Committee may delegate or redelegate and allocate and reallocate to one or more persons or to a committee of persons jointly or severally, and whether or not such persons are directors, officers or employees, such functions assigned to the Compensation Committee or to the Company generally hereunder, as the Compensation Committee may from time to time deem advisable.

11.1.3.    Board of Directors. Notwithstanding the foregoing, the Board of Directors of the Company shall have the exclusive authority (which may not be delegated except to the Compensation Committee) to amend the Plan Statement and to terminate this Plan.

11.1.4.    Benefit Plans Committee. The provisions of this Section 11.1.4 shall not apply unless and until a Change in Control has occurred. For purposes of this Plan, upon a Change in Control, the Benefit Plans Committee shall be the “administrator” at all times following the occurrence of a Change in Control. The Benefit Plans Committee referred to in this Plan shall be comprised of the individuals who, immediately prior to the Change in Control, are then serving on the Company’s Benefit Plans Committee, or if there is no such committee, it shall be comprised of the individuals then serving as the Company’s chief financial officer, senior human resources officer, treasurer and vice president of corporate financial strategy (or equivalent positions, regardless of title). If one or more of the individuals serving on the Benefit Plans Committee is unable or unwilling to serve on the Benefit Plans Committee, the number of individuals serving on the Benefit Plans Committee may be reduced. In the event none of the aforementioned individuals is able or willing to serve, the individual serving as chief executive officer of the Company immediately prior to the Change in Control will serve as the Benefit Plans Committee. The Benefit Plans Committee shall have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and any trust under Section 8.1, including, but not limited to, benefit entitlement determinations. Upon and after the occurrence of a Change in Control, the Company (or successor thereto) must: (1) pay all reasonable administrative expenses incurred by the Benefit Plans Committee; (2) indemnify the Benefit Plans Committee members against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of the Benefit Plans Committee hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of a Benefit Plans Committee member; and (3) supply full and timely information to the Benefit Plans Committee on all matters relating to the Plan, any trust, the Participants and their Beneficiaries, the Accounts of the Participants, and such other pertinent information as the Benefit Plans Committee may reasonably require. Upon and after a Change in Control, the members of the Benefit Plans Committee may not be removed by the Company (or successor thereto), and the Benefit Plans Committee may not be terminated by the Company (or successor thereto).

-24

11.2.          Conflict of Interest. If any individual to whom authority has been delegated or redelegated hereunder shall also be a Participant in this Plan, such Participant shall have no authority with respect to any matter specially affecting such Participant’s individual interest hereunder or the interest of a person superior to him or her in the organization (as distinguished from the interests of all Participants and Beneficiaries or a broad class of Participants and Beneficiaries), all such authority being reserved exclusively to other individuals as the case may be, to the exclusion of such Participant, and such Participant shall act only in such Participant’s individual capacity in connection with any such matter.

11.3.          ERISA Administrator. The Company shall be the administrator of this Plan for purposes of section 3(16)(A) of the Code.

11.4.          Service of Process. The Secretary of the Company is designated as the appropriate and exclusive agent for the receipt of service of process directed to this Plan in any legal proceeding, including arbitration, involving this Plan.

-25

SECTION 12

CONSTRUCTION

12.1.          ERISA Status. This Plan is adopted with the understanding that it is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees as provided in section 201(2), section 301(3) and section 401(a)(1) of the Code. Each provision shall be interpreted and administered accordingly.

12.2.          IRC Status. This Plan is intended to be a nonqualified deferred compensation arrangement. The rules of section 401(a) et. seq. of the Code shall not apply to this Plan. The rules of section 3121(v) and section 3306(r)(2) of the Code shall apply to this Plan. The rules of section 409A of the Code shall apply to this Plan to the extent applicable and this Plan Statement shall be construed and administered accordingly. The Company has affirmatively determined that all amounts deferred under the Plan that were earned and vested before January 1, 2005 (i.e., amounts specified in Section 1.1.1), shall not be subject to 409A of the Code and this Plan Statement shall be construed accordingly. Notwithstanding the foregoing, neither the Company nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any Participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the Participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

12.3.          Effect on Other Plans. This Plan shall not alter, enlarge or diminish any person’s employment rights or obligations or rights or obligations under any other qualified or nonqualified plan. It is specifically contemplated that this Plan will, from time to time, be amended and possibly terminated.

12.4.          Disqualification. Notwithstanding any other provision of the Plan Statement or any election or designation made under this Plan, any individual who feloniously and intentionally kills a Participant shall be deemed for all purposes of this Plan and all elections and designations made under this Plan to have died before such Participant. A final judgment of conviction of felonious and intentional killing is conclusive for this purpose. In the absence of a conviction of felonious and intentional killing, the Company shall determine whether the killing was felonious and intentional for this purpose.

12.5.          Rules of Document Construction.

(a) An individual shall be considered to have attained a given age on such individual’s birthday for that age (and not on the day before). Individuals born on February 29 in a leap year shall be considered to have their birthdays on February 28 in each year that is not a leap year.

(b) Whenever appropriate, words used herein in the singular may be read in the plural, or words used herein in the plural may be read in the singular; the masculine may include the feminine; and the words “hereof,” “herein” or “hereunder” or other similar compounds of the word “here” shall mean and refer to the entire Plan Statement and not to any particular paragraph or Section of the Plan Statement unless the context clearly indicates to the contrary.

-26

(c) The titles given to the various Sections of the Plan Statement are inserted for convenience of reference only and are not part of the Plan Statement, and they shall not be considered in determining the purpose, meaning or intent of any provision hereof.

(d) Notwithstanding anything apparently to the contrary contained in the Plan Statement, the Plan Statement shall be construed and administered to prevent the duplication of benefits provided under this Plan and any other qualified or nonqualified plan maintained in whole or in part by the Employers.

12.6.          References to Laws. Any reference in the Plan Statement to a statute or regulation shall be considered also to mean and refer to any subsequent amendment or replacement of that statute or regulation unless, under the circumstances, it would be inappropriate to do so. The terms “spouse,” “nonspouse,” “married,” “surviving spouse,” and other similar terms shall be construed, interpreted and applied on a basis consistent with the federal statute known as the Defense of Marriage Act.

12.7.          Choice of Law. Except to the extent that federal law is controlling, this Plan Statement shall be construed and enforced in accordance with the laws of the State of Minnesota. All controversies, disputes, claims, or causes of actions arising under or related to the Plan or any other party with a relationship to the Plan (including any claims for benefits or any other claims brought under section 502 of the Code) must be brought in the United States District Court For The District Of Minnesota.

12.8.          Delegation. No person shall be liable for an act or omission of another person with regard to a responsibility that has been allocated to or delegated to such other person pursuant to the terms of the Plan Statement or pursuant to procedures set forth in the Plan Statement.

12.9.          Not an Employment Contract. This Plan is not and shall not be deemed to constitute a contract of employment between any Employer and any employee or other person, nor shall anything herein contained be deemed to give any employee or other person any right to be retained in any Employer’s employ or in any way limit or restrict any Employer’s right or power to discharge any employee or other person at any time and to treat him without regard to the effect which such treatment might have upon him as a Participant in this Plan.

12.10.        Tax Withholding. The Employers (or any other person legally obligated to do so) shall withhold the amount of any federal, state or local income tax, payroll tax or other tax required to be withheld under applicable law with respect to any amount payable under this Plan. All benefits otherwise due hereunder shall be reduced by the amount to be withheld.

12.11.        Expenses. All expenses of administering the benefits due under this Plan shall be borne by the Employers.

-27

12.12.        Spendthrift Provision. No Participant or Beneficiary shall have any interest in any Account which can be transferred nor shall any Participant or Beneficiary have any power to anticipate, alienate, dispose of, pledge or encumber the same while in the possession or control of the Employers. The Company shall not recognize any such effort to convey any interest under this Plan. No benefit payable under this Plan shall be subject to attachment, garnishment, execution following judgment, or other legal process before actual payment to such person.

The power to designate Beneficiaries to receive the Account of a Participant in the event of such Participant’s death shall not permit or be construed to permit such power or right to be exercised by the Participant so as thereby to anticipate, pledge, mortgage or encumber such Participant’s Account or any part thereof, and any attempt of a Participant so to exercise said power in violation of this provision shall be of no force and effect and shall be disregarded by the Employers.

This section shall not prevent the Company from exercising, in its discretion, any of the applicable powers and options granted to it upon a Distribution Event, as such powers may be conferred upon it by any applicable provision hereof.

Dated: September 30, 2021	H.B. FULLER COMPANY
	By:	/s/ James J. Owens
		Its: Chief Executive Officer

-28

APPENDIX A

(TRANSITIONAL RULES FOR 2005 AND 2006 CREDITS)

Amounts credited under the H.B. Fuller Company Key Employee Deferred Compensation Plan which relate all or in part to services performed on or after January 1, 2005, but before January 1, 2007, shall be governed by the terms of the Pre‑2005 Plan Statement (attached to the Plan Statement as Appendix B) subject to the exceptions specified in Section 1.1.2 of the Plan and to the transitional rules set forth in this Appendix A. The rules set forth in this Appendix A are intended to comply with section 409A of the Code.

A.1.           Eligibility and Participation. For purposes of Section 3.1 of the Pre‑2005 Plan Statement, an employee shall become a Participant in the Plan on the date the employee is determined eligible by the Compensation Committee.

A.2.           Elections to Defer Compensation. Deferral elections shall apply only to Eligible Compensation for services performed during the calendar year beginning after a Participant’s election is filed and, to the extent the Eligible Compensation is included in the first paycheck of the next calendar year, for services performed in the current year. Deferral elections with respect to STIP Awards and LTIP Awards shall be made prior to the calendar year in which the performance period on which the award is based ends but in no event less than six (6) months before the performance period ends. Deferral elections for purposes of this transitional rule shall include the election of a form of distribution and the election, if any, of a specified date under Section 6.1(g) of the Pre‑2005 Plan Statement.

A.3.           Distribution Events.

A.3.1.         For purposes of Section 6.1(b) of the Pre‑2005 Plan Statement, Disability has the meaning set forth in Section 1.2.9 of the Plan Statement.

A.3.2.         For purposes of Section 6.1(d) of the Pre‑2005 Plan Statement, the first date on which the Participant is no longer an employee of any Participating Employer shall be the date on which the Participant has had a Separation from Service as defined in Section 1.2.20 of the Plan Statement.

A.3.3.         Section 6.1(e) (distribution upon Plan termination) shall be deleted and have no effect.

A.3.4.         Section 6.1(f) (distribution upon termination for cause) shall be deleted and have no effect.

A.3.5.         Section 6.3 (early withdrawal with ten percent (10%) forfeiture) shall be deleted and have no effect.

A.3.6.         Section 6.4 (lump sum distribution to pay taxes) shall be replaced by the rule in Section 7.5.2 of the Plan Statement.

A-1

A.3.7.         Section 6.5 (parachute payment) shall be deleted and have no effect.

A.3.8.         Section 6.6 (delay of distribution upon termination for cause) shall be deleted and have no effect.

A.3.9.         Section 6.2 (distribution commencement date) shall be subject to the six (6) month delay rule in Section 7.1 of the Plan Statement for distributions that are made on account of a Separation from Service.

A.4.        Subsequent Election Changes. The third and fourth sentences in Section 6.2(c) of the Pre‑2005 Plan Statement related to changing an election of form of payment shall be replaced completely by the rules in Section 3.6 of the Plan Statement. Any change in an election of a specified date for distribution under Section 6.1(g) of the Pre‑2005 Plan Statement shall be governed under the rules in Section 3.6 of the Plan Statement.

A.5.           Reduction in Payment Period. The sixth sentence in Section 6.2(c) in the Pre‑2005 Plan Statement related to discretionary reduction in the period over which installment payments would have been made shall be deleted and have no effect.

A.6.           Plan Termination. The rules in Section 14.1 of the Pre‑2005 Plan Statement concerning Plan termination shall be replaced by the rules concerning Plan termination in Section 9.2 of the Plan Statement.

A-2

APPENDIX B

(RULES FOR PRE‑2005 DEFERRALS – “PRE‑2005 PLAN STATEMENT”)

B-1

H.B. FULLER COMPANY

KEY EMPLOYEE DEFERRED COMPENSATION PLAN

H.B. Fuller Company, a Minnesota corporation, hereby establishes the H.B. Fuller Company Key Employee Deferred Compensation Plan, effective as of October 14, 1999, in order to provide deferred compensation to certain key employees of H.B. Fuller Company. The purpose of the H.B. Fuller Key Employee Deferred Compensation Plan is to assist H.B. Fuller Company in retaining key employees, encouraging their long term commitment to the company’s success, and attracting key employees by offering them an opportunity to defer compensation and participate in the success of H.B. Fuller Company, and allowing them to share in increases in the value of H.B. Fuller Company.

ARTICLE I

DEFINITIONS

Section 1.1 – Definitions. When used in this document with initial capital letters, the following terms have the meanings indicated unless a different meaning is plainly required by the context:

(a)          “Account” or “Accounts” means the account or accounts established and maintained for a Participant pursuant to Article IV of the Plan. A Participant’s Accounts shall consist of the Participant’s Deferred Compensation Account, the Participant’s Company Stock Account and the Participant’s Company Matching Stock Account.

(b)         “Allocation Request Form” means such form or forms as may be approved by the Company from time to time for use by a Participant to request: (i) an allocation of certain deferred compensation and/or an allocation or reallocation of a Participant’s Deferred Compensation Account among available investment options pursuant to Section 7.2(c), and (ii) that certain deferred compensation be allocated to the Participant’s Company Stock Account pursuant to Section 7.1.

(c)            “Board of Directors” means the Board of Directors of H.B. Fuller Company.

(d)           “Change in Control” means:

(i) a change in the control of the Company of a nature that would be required to be reported in accordance with Regulation 14A promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement;

(ii) a public announcement (which, for purposes hereof, shall include, without limitation, a report filed pursuant to section 13(d) of the Exchange Act) that any individual, corporation, partnership, association, trust or other entity becomes the beneficial owner (as defined in Rule 13(d)(3) promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the Voting Power of the Company then outstanding;

B-2

(iii) the individuals who, as of the date of this Plan, are members of the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (provided, however, that if the election or nomination for election by the Company’s shareholders of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall be considered to be a member of the Incumbent Board);

(iv) the approval of the shareholders of the Company of (A) any consolidation, merger or statutory share exchange of the Company with any person in which the surviving entity would not have as its directors at least 60% of the Incumbent Board and as a result of which those persons who were shareholders of the Company immediately prior to such transaction would not hold, immediately after such transaction, at least 60% of the Voting Power of the Company then outstanding or the combined voting power of the surviving entity’s then outstanding voting securities; (B) any sale, lease, exchange or other transfer in one transaction or series of related transactions substantially all of the assets of the Company; or (C) the adoption of any plan or proposal for the complete or partial liquidation or dissolution of the Company; or

(v) a determination by a majority of the members of the Incumbent Board, in their sole and absolute discretion, that there has been a Change in Control of the Company.

For purposes of this definition, “Voting Power” when used with reference to the Company shall mean the voting power of all classes and series of capital stock of the Company now or hereafter authorized other than the voting power of any of the shares of Series A Preferred Stock outstanding as of the date of this Plan.

(e)         “Code” means the Internal Revenue Code of 1986, as amended.

(f)         “Common Stock” means the Common Stock, par value $1.00 per share, of H.B. Fuller Company as such stock may be reclassified, converted or exchanged by reorganization, merger or otherwise.

(g)         “Company” means the H.B. Fuller Company, a Minnesota corporation.

(h)         “Company Matching Stock Account” means the Account established and maintained for a Participant as a record of the matching units measured by the value of Company Common Stock credited to an Account for the Participant.

B-3

(i)         “Company Stock Account” means the Account established and maintained for a Participant as a record of the Participant’s hypothetical investments in units of Company Common Stock.

(j)         “Compensation Committee” means the Compensation Committee of the Board of Directors or such other person or persons as may be designated by the Board of Directors to act on behalf of the Board of Directors in the administration of the Plan.

(k)         “Deferral Election Form” means such form or forms as may be approved by the Compensation Committee from time to time for use by a Participant to elect to defer compensation under the Plan.

(l)         “Deferred Compensation Account” means the Account established and maintained for a Participant as a record of the amounts deferred by the Participant under the Plan and the Participant’s hypothetical investments in available investment options.

(m)      “Disability” means the total and permanent disability of a Participant which entitles the Participant to a disability benefit under a disability program sponsored or maintained by the Participant’s Participating Employer; provided, that if no such program is applicable to the Participant, then “Disability” with respect to such Participant means that, based on medical evidence reasonably satisfactory to the Compensation Committee, the Participant is totally and permanently unable to engage in any occupation or gainful employment for which the Participant is reasonably suited by background, training, education or experience.

(n)         “Discretionary Amounts” means the units measured by the value of Company Common Stock credited to a Participant’s Account pursuant to Section 4.4.

(o)         “Distributable Event” means an event identified as such in Section 6.1.

(p)         “Eligible Compensation”

(i) The “Eligible Compensation” of a Participant for any period means, except as provided in the succeeding paragraphs of this subsection, the sum of all remuneration paid to the Participant during such period for service as an employee of a Participating Employer as base salary and wages, overtime pay, shift differential premium, commissions, cash bonuses (other than vacation bonuses), sick pay and short‑term disability benefits, increased by the amount of pre‑tax contributions made on behalf of the Participant by a Participating Employer pursuant to the terms of the H.B. Fuller Company Thrift Plan for that period and by the net amount of compensation reductions experienced by the Participant during such period under any cafeteria plan described in section 125 of the Code maintained by the Participating Employer. Eligible Compensation will not include amounts deferred or paid under an agreement between the Participating Employer and the Participant that is not a plan qualified under section 401(a) of the Code except this Plan, any matching contributions made pursuant to the provisions of the H.B. Fuller Company Thrift Plan, contributions made or benefits (other than short‑term disability benefits) paid by the Participating Employer under any other employee benefit plan, expatriate premiums or amounts realized by the Participant upon the exercise of a nonqualified stock option, the lapse of restrictions applicable to restricted stock or any disposition of stock acquired under a qualified or incentive stock option.

B-4

(ii) A Participant’s Eligible Compensation for any year shall be determined without regard to section 401(a)(17) of the Code.

(iii) Notwithstanding the provisions of paragraph (i) above, a Participant’s Eligible Compensation will not include:

(A)         any remuneration not paid in cash;

(B)         the value of life insurance coverage included in the Participant’s wages under section 79 of the Code;

(C)         any car allowance or moving expense or mileage reimbursement;

(D)         severance pay;

(E)         payments under any plan of deferred compensation except this Plan;

(F)         any benefit under any qualified or nonqualified stock option or stock purchase plan; or

(G)         any awards under the Short‑Term Incentive Plan or the Performance Unit Plan.

(q)         “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(r)         “Participant” means an individual identified as such under Article III of the Plan.

(s)         “Participating Employer” means any employer participating in the Plan pursuant to Article II of the Plan.

(t)         “Performance Unit Plan” means the H.B. Fuller Company Performance Unit Plan, as amended.

(u)         “Plan” means the H.B. Fuller Company Key Employee Deferred Compensation Plan, as of its original effective date, including any amendments thereto, which is unfunded and maintained by H.B. Fuller Company and its affiliated companies primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees of H.B. Fuller Company.

B-5

(v)         “Short‑Term Incentive Plan” means the H.B. Fuller Company Short‑Term Incentive Plan providing annual cash incentive opportunities.

(w)         “Trust” means the Trust or Trusts described in Section 12.4. Any such Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan. Participants and their beneficiaries shall have no beneficial ownership interest in any assets of any such Trust.

(x)         “Trustee” means the corporation or person or persons selected by the Company to serve as Trustee for a Trust or Trusts.

(y)         “Vested” means an interest in the benefit described under the Plan which may be payable to or on behalf of the Participant in accordance with the terms of the Plan.

ARTICLE II

PARTICIPATING EMPLOYERS

Section 2.1 – Eligibility. To be eligible to adopt and participate in the Plan, an employer must be a member of the “controlled group” of corporations, which shall be based upon section 414 of the Code except that the phrase “at least 50 percent” shall be substituted for the phrase “at least 80 percent” each place it appears in sections 414 and 1563(a), that includes the Company.

Section 2.2 – Participation Requirements. The Company, the sponsor of the Plan, and any other affiliated company that is or becomes eligible to adopt the Plan and become a Participating Employer pursuant to Section 2.1 of the Plan may adopt the Plan and become a Participating Employer in the Plan provided that such affiliated company declares in writing to be subject to the terms and conditions of the Plan and files such declaration with the Compensation Committee. The date on which such eligible company may become a Participating Employer in the Plan shall be the date such declaration is filed with the Compensation Committee or such later date specified in the declaration. Each of the Participating Employers agrees to make payments of their allocable portion of the benefits provided under the Plan to their respective Participants. The respective benefit payment obligations of the Participating Employers are not secured in any way. Such obligations constitute no more than unfunded and unsecured promises of payment and performance. Each Participating Employer shall be responsible for, and shall have the obligation of, its allocable share of costs and expenses incurred with respect to the operation and administration of the Plan, and shall be responsible for, and have the obligation of, the payment of any benefits payable under the Plan with respect to any employees of such Participating Employer who are Participants in the Plan and eligible to receive benefits under the terms of the Plan.

Section 2.3 – Recordkeeping and Reporting. Each Participating Employer shall maintain records sufficient to determine the benefits (and the compensation sources of such benefits) which may become payable to or with respect to any employee of such Participating Employer who is a Participant in the Plan and to provide such Participants any reports which may be required under the terms of the Plan or by law.

B-6

Section 2.4 – Termination of Participation. A Participating Employer, other than the Company, may withdraw from participation in the Plan at any time by providing the Company with 30 days advance written notice of such withdrawal from participation and the effective date of such Participating Employer’s withdrawal, which 30‑day notice period may be waived by the Company. In addition, the Company may terminate a Participating Employer’s participation in the Plan by providing such Participating Employer with 30 days advance written notice, which 30‑day notice period may be waived by the Participating Employer. A Participating Employer which terminates its participation in the Plan shall remain obligated under the Plan with respect to deferrals made prior to such termination by its Participants (including subsequent investment performance adjustments), unless otherwise expressly agreed by the Company with the Company fully assuming such obligations.

Section 2.5 – Separate Accounting. The Company shall establish and maintain separate Accounts for each of the Participating Employers and their respective Participants. Such separate accounting is intended to comply with section 404(a)(5) of the Code and section 1.404(a)‑12 of the Treasury Regulations (which provide that an employer can deduct the amounts contributed to a nonqualified plan in the taxable year in which an amount attributable to the contribution is includable in the gross income of employees participating in the plan, but, in the case of a plan in which more than one employee participates only if separate accounts ·are maintained for each employee).

ARTICLE III

ELIGIBILITY AND PARTICIPATION

Section 3.1 – Eligibility. Each executive or key level employee of a Participating Employer who is paid at the pay grade of at least thirty‑two (32) shall be eligible to participate in the Plan effective as of the later of the effective date of the Plan or the date on which such individual first achieves the pay grade of at least thirty‑two (32); provided, however, that the Compensation Committee shall determine pay grade status and determine eligibility to participate in the Plan with respect to each such executive and key level employee. In addition, the Compensation Committee may by express action designate other management level or highly compensated employees of the Participating Employers as eligible to participate in the Plan. If the Compensation Committee designates a management level or highly compensated employee of a Participating Employer as eligible to become a Participant in the Plan, the Compensation Committee shall inform the employee in writing of such designation and the date on which the employee shall become a Participant in the Plan.

Section 3.2 – Participation. An individual eligible to participate in the Plan shall become a Participant upon the filing with the Compensation Committee of a completed Deferral Election Form and acceptance of such form by the Compensation Committee. The name of each individual eligible to participate in the Plan and the date on which such individual becomes a Participant in the Plan shall be recorded on Exhibit A, which exhibit is attached hereto and incorporated herein by reference and which shall be revised by the Compensation Committee from time to time to reflect the operation of the Plan. Once an individual becomes a Participant in the Plan, the individual shall remain a Participant until the benefits which may be payable to the individual under the Plan have been distributed to or on behalf of the individual.

B-7

Section 3.3 – Suspension of Eligibility. The Compensation Committee may in its discretion determine that a Participant will no longer be eligible to participate in the Plan and in such event, the Participant’s compensation deferral election made in accordance with Article IV will immediately terminate and no additional amounts shall be credited to his or her Accounts under Sections 7.1(a), (b), (c) and 7.2(a) until such time as the individual is again determined to be eligible to participate in the Plan by the Compensation Committee and makes a new election under Article IV. However, the Accounts of such Participant shall continue to be adjusted by the other provisions of Sections 7.1 and 7.2 until fully distributed.

ARTICLE IV

BENEFITS

Section 4.1 – Deferred Compensation. A Participant may elect to defer receipt of part or all of any one or more of the following items of compensation:

(a)         Eligible Compensation;

(b)         Short‑Term Incentive Plan awards; and

(c)         Performance Unit Plan awards.

A Participant may defer an item of compensation only to the extent that the Participant is entitled to receive such item of compensation. Upon such deferral, the Participant will have no further right to such deferred compensation other than as provided under the Plan. Such deferred compensation shall be the record of the value of such deferred compensation credited to a Participant’s Account and shall be used solely for accounting purposes.

Section 4.2 – Form and Effectiveness of Deferral Elections.

(a)         Each year a Participant may elect to defer up to 25%, or in special circumstances such greater percentage as determined by the Compensation Committee based upon whether the compensation paid to the Participant would be fully deductible for federal or state income tax purposes under Code section 162(m), of his or her Eligible Compensation for the following calendar year. The Participant is required to file his or her deferral election before December 31 specifying the portion of the Eligible Compensation to be earned in the succeeding calendar year that is to be deferred. For the first year of operation of the Plan, any deferral election must be made prior to January 1, 2000, the beginning of the period of service for which the compensation is payable.

B-8

(b)         An election by a Participant to defer a portion of his or her Eligible Compensation pursuant to subsection (a) must be made by the Participant for the calendar year beginning after the calendar year in which occurs the date of said election and the amounts so deferred shall be paid only as provided in this Plan. Such an election must be irrevocable and must be made in the form and manner prescribed by the Compensation Committee and shall not be effective unless accepted by the Compensation Committee. The Participant may change the amount of, or suspend, future deferrals with respect to Eligible Compensation otherwise payable to him or her for calendar years beginning after the date of change or suspension as he or she may specify by written notice to the Compensation Committee. If a Participant elects to change the amount of, or suspend, deferrals, the Participant may make a new deferral election provided that any new election to defer payment of Eligible Compensation must be made before the beginning of the period of service for which the Eligible Compensation is payable, which period is the calendar year. The election to defer shall be irrevocable as to the deferred Eligible Compensation for the period for which the election is made and shall not be effective unless accepted by the Compensation Committee.

(c)         In addition to amounts deferred by a Participant pursuant to subsections (a) and (b), each year a Participant may elect to defer all or a portion of any Short‑Term Incentive Plan award and all or a portion of any Performance Unit Plan award that would otherwise be payable to the Participant under those plans. An election by a Participant to defer any award that would otherwise be payable under either the Short‑Term Incentive Plan or the Performance Unit Plan must be made before the first day of the calendar year in which occurs the end of the fiscal year of the Participant’s Participating Employer for which such award is determined. Such a deferral election is irrevocable and must be made in the form and manner prescribed by the Compensation Committee and shall not be effective unless accepted by the Compensation Committee. The period of deferral and form of distribution of an award shall be determined in accordance with the elections made under this subsection (c) and in accordance with the provisions of this Plan.

(d)         Notwithstanding any provision herein to the contrary, if the Participant is eligible to participate in the H.B. Fuller Company Thrift Plan, the amount deferred by such Participant under this Section 4.2 of the Plan for any year shall be conditioned upon the Participant having made the maximum elective deferrals under section 402(g) of the Code or permitted under the terms of the H.B. Fuller Company Thrift Plan. If the Participant is eligible to participate in the H.B. Fuller Company Thrift Plan, to be eligible to make deferrals under the Plan for any calendar year, such Participant must have elected to make the maximum elective deferrals under section 402(g) of the Code or permitted under the terms of the H.B. Fuller Company Thrift Plan. The calculation of whether the Participant has made the required maximum contribution under the H.B. Fuller Company Thrift Plan will be made as of the beginning of the calendar year to which deferrals under the Plan are applicable. Once that determination has been made, the Participant may make deferrals under the Plan. No elective contribution or qualified employer matching contribution made with respect to the H.B. Fuller Company Thrift Plan will be deferred or contributed to the Plan or a Trust.

Section 4.3 – Matching Amounts. If for any year a Participant who is a participant in the H.B. Fuller Company Thrift Plan makes an election under Section 4.2 to defer Eligible Compensation or any Short‑Term Incentive Plan award or any Performance Unit Plan award pursuant to the provisions of Section 4.2, that Participant’s Participating Employer will credit the Participant’s Company Matching Stock Account with matching units which shall be measured by the value of Company Common Stock and which will be calculated for the year as follows:

B-9

(a)         three percent (3%) of such Participant’s Eligible Compensation for the portion of the year during which the Participant had deferred Eligible Compensation credited to his or her Account under the terms of the Plan, and such Participant’s Short‑Term Incentive Plan award and Performance Unit Plan award determined for the year;

(b)         the amount determined in subsection (a) of this Section 4.3 shall be reduced by the amount of the employer matching contribution actually made by the Participant’s Participating Employer to the H.B. Fuller Company Thrift :Plan on behalf of the Participant.

Section 4.4 – Discretionary Amounts. In addition to amounts deferred by a Participant under Section 4.2 and the matching amounts determined under Section 4.3, a Participating Employer may from time to time, in its sole discretion, credit a Participant’s Company Stock Account with additional amounts (denominated in units which shall be measured by the value of Company Common Stock). Such additional amounts shall be authorized for such purpose or purposes as the Participating Employer may deem appropriate, including, without limitation, as mirror employer matching contributions or contributions made by the Participating Employer with respect to the H.B. Fuller Company Thrift Plan.

Section 4.5 – Participant Accounts. A Company Stock Account, a Deferred Compensation Account and a Company Matching Stock Account shall be established and maintained for each Participant. The Company Stock Account and the Company Matching Stock Account shall be credited with units which shall be measured by the value of the shares of Common Stock. The Deferred Compensation Account shall be credited with amounts which shall be measured in dollars. The Company Stock Account shall be credited as described in Section 7.1 for deferred amounts attributable to (a) awards under the Short‑Term Incentive Plan, and the Performance Unit Plan as may be allocated to the Company Stock Account pursuant to Section 7.1, (b) Discretionary Amounts, and (c) such amounts of Eligible Compensation as may be allocated to the Company Stock Account pursuant to Section 7.1. The Company Matching Stock Account shall be credited as described in Section 7.1(c) for deferred amounts attributable to (a) the matching amounts determined under Section 4.3, and (b) the matching amounts determined under Section 7.1. The Deferred Compensation Account shall be credited as described in Section 7.2 .for any deferred amounts attributable to (a) such amounts of Eligible Compensation as may be allocated to the Deferred Compensation Account pursuant to Section 7.2, and (b) Short‑Term Incentive Plan awards and Performance Unit Plan awards as may be allocated to the Deferred Compensation Account pursuant to Section 7.2.

ARTICLE V

VESTING

Section 5.1 – Vested Benefit. A Participant shall be considered to be 100% Vested in the units and amounts credited to his or her Accounts under the Plan.

Section 5.2 – Limitation on Benefits. The benefits that may be payable to or on behalf of a Participant under the Plan shall not exceed a cash payment equal to the value of the amounts credited to the Participant’s Deferred Compensation Account and a distribution of that number of shares of Common Stock equal to the number of units credited to the Participant’s Company Stock Account (with any fractional unit being rounded to the next highest whole unit) and the Participant’s Company Matching Stock Account (with any fractional unit being rounded to the next highest whole unit).

B-10

ARTICLE VI

DISTRIBUTIONS

Section 6.1 – Distributable Events. A Participant’s Distributable Event shall be the first to occur of the following events:

(a) The Participant’s sixty‑fifth (65th) birthday;

(b) Disability (as defined in Section 1.1(m));

(c) The Participant’s death;

(d) The first date on which the Participant is no longer an employee of any Participating Employer;

(e) The effective date of the termination of the Plan pursuant to Section 14.1;

(f) Termination for cause subject to and in accordance with Section 6.6; or

(g) Such other date as elected and specified by the Participant in the Distribution of Benefits Form, which election is subject to approval by the Compensation Committee and which shall be made only at the time of the Participant’s initial elections on such form and if the election is approved, it shall be irrevocable.

Section 6.2 – Distribution of Benefits.

(a)         Distribution Commencement Date. Except any withdrawals made pursuant to Section 6.3 which shall be distributed in accordance with that section, distribution of a Participant’s Plan benefit shall commence as of the first day of the second calendar month immediately following the calendar month in which the Participant’s applicable Distributable Event occurs.

(b)         Form of Distribution. Benefits attributable to the value of the Deferred Compensation Account shall be delivered to the Participant in dollars. Benefits attributable to the Company Stock Account and the Company Matching Stock Account shall be delivered to the Participant in the form of shares of Common Stock subject to the approval of the Plan by the shareholders during the annual meeting of shareholders in April 2000. To the extent that the distribution is in the form of shares of Common Stock, such delivery shall be subject to all federal or state securities laws or other rules and regulations as determined by the Company to be applicable.

B-11

(c)         Payment Options. In the event a Participant becomes eligible to receive a payment of benefits under the Plan, the benefits payable to the Participant or, in the event of the Participant’s death, to the Participant’s designated beneficiary under the Plan shall be paid in accordance with one of the payment options available under the Plan as elected by the Participant on the Participant’s Deferral Election Form. The Participant may elect separate payment options with respect to the Deferred Compensation Account, the Company Stock Account and the Company Matching Stock Account. A Participant may change payment options by electing another payment option available under the Plan on a subsequent Deferral Election Form, but such change in payment option will not be effective until the lapse of a period of twelve (12) months following the date on which the Deferral Election Form was accepted by the Compensation Committee. Further, in no event will any such change in payment option be effective if such change is elected during the calendar year in which the Distributable Event occurs and no further elections may be made once a Distributable Event occurs. The payment options include installment payments over a period certain, a lump sum payment, and such other payment method as may be specified by the Participant and accepted by the Compensation Committee. The Compensation Committee may, in its sole discretion, reduce the payment period over which payments would have been made pursuant to the payment option elected by the Participant (including consolidation into a lump sum); provided, that in the event of a Change in Control, no reduction of a payment period may be made prior to the fifth anniversary of such Change in Control. Absent a payment option election, the Compensation Committee shall direct the payment of any benefits payable under the Plan to or on behalf of the Participant in eleven (11) substantially equal annual installment payments to the Participant, or in the event of the Participant’s death, to the Participant’s designated beneficiary under the Plan.

(d)         Application for Distribution. A Participant shall not be required to make application to receive payment. Distribution shall not be made to any beneficiary, however, until such beneficiary shall have filed a written application for benefits in a form acceptable to the Compensation Committee and such application shall have been approved by the Compensation Committee.

(e)         Code Section 162(m) Delay. If the Compensation Committee determines that delaying the time of the initial payments are made or commenced would increase the probability that such payments would be fully deductible for federal or state income tax purposes, the Company may unilaterally delay the time of the making or commencement of payments for up to twenty‑four (24) months after the date such payments would otherwise be payable.

Section 6.3 – Early Withdrawals. Notwithstanding any provision in this Plan to the contrary, a Participant may request, by providing a written request to the Compensation Committee, a withdrawal prior to the distribution date under the Plan of all or any portion of his or her benefits from any of his or her Accounts under the Plan in increments of 25% (of aggregate Account value). If such a request is approved by the Compensation Committee, which decision by the Compensation Committee shall be made in its sole discretion on a case by case basis, a distribution of such benefits may be made to the Participant subject to a penalty for such an early withdrawal at any point equal to a six‑month period of nonparticipation (during which no additional amounts will be credited to the Participant’s Accounts under Sections 7.1(a), (b), (c) and 7.2(a) of the Plan) for each 25% increment withdrawn. The nonparticipation period would begin as of the date on which the request made by the Participant is approved by the Compensation Committee. As a result, a Participant withdrawing his or her entire benefit from all of his or her Accounts would be excluded from eligibility to participate in the Plan for a 24‑month period beginning as of the date of such approval by the Compensation Committee. In addition, a penalty of 10% of the amount withdrawn will be imposed on any withdrawal made pursuant to this Section 6.3.

B-12

Section 6.4 – Distributions As a Result of Tax Determination. Notwithstanding any provision in this Plan to the contrary, if, at any time, a court or the Internal Revenue Service determines that any amounts or units credited to a Participant’s Accounts under the Plan or Trust are includable in the gross income of the Participant and subject to tax, the Compensation Committee may, in its sole discretion, permit a lump sum distribution of an amount equal to the amounts or units determined to be includable in the Participant’s gross income.

Section 6.5 – No Parachute Payment. An event described in Sections 6.1(d), (e), and (g) shall not constitute a Distributable Event if the Benefit Plans Committee in its reasonable discretion following consultation with appropriate tax and/or legal advisors reasonably determines that such distribution will likely constitute a parachute payment for purposes of section 280G of the Code. Furthermore, if such event occurs subsequent to a Change in Control, the Benefit Plans Committee shall, at the Company’s expense, promptly request a written opinion of the “independent auditor” with respect to the applicability of such section 280G and such event shall not constitute a Distributable Event unless and until the independent auditor delivers its written unqualified opinion, a copy of which shall be provided to the Participant, to the effect that a distribution of benefits as a result of such event will not constitute a parachute payment under section 280G of the Code. As used in this Section 6.5, the term “independent auditor” means the firm of certified public accountants which at the time of the Change in Control had been most recently engaged by the Company or such other comparable and nationally recognized firm of certified public accountants as may be selected by the Benefit Plans Committee in its reasonable discretion.

Section 6.6 – Distribution Upon Termination for Cause. In the event that a Participant is terminated for “cause” (as defined below), the Company may, in its discretion, treat such termination or any date subsequent thereto as a Distributable Event. For purposes of this Plan, termination for “cause” means termination based on any of the following:

(a)         The willful and continued failure by the Participant to substantially perform the Participant’s duties with a Participating Employer (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Participant specifically identifying the manner in which the Participant has not substantially performed the Participant’s duties;

(b)         The engaging by the Participant in willful misconduct which is demonstrably injurious to any one or more of the Participating Employers monetarily or otherwise; or

(c)         The conviction of the Participant of a felony.

B-13

ARTICLE VII

VALUATION OF BENEFITS

Section 7.1 – Company Stock Account and Company Matching Stock Account.

(a)         Deferred Amounts. If a Participant elects to defer compensation in accordance with Section 4.2, the Participant may make an irrevocable election pursuant to this Section 7.1(a) to have a portion or all of such deferred compensation allocated to the Company Stock Account and measured by the value of Company Common Stock. This irrevocable election must be made at the time the deferral elections are made under Section 4.2 in the form and manner prescribed by the Compensation Committee, and will not be effective unless accepted by the Compensation Committee. If the Participant makes an election pursuant to this Section 7.1(a) to have a portion or all of such deferred compensation allocated to the Company Stock Account and measured by the value of Common Stock, the Participant’s Company Stock Account shall be credited with the number of units (including fractions thereof) equal to the number of shares (including fractions thereof) of Common Stock that could have been purchased with the dollar amount of such deferred compensation determined as of the last business day of the month, based on the last sale price as reported on the Nasdaq National Market on such date, in which such compensation would have otherwise been paid to the Participant. Each unit credited to the Company Stock Account shall be measured by the value of one share of Common Stock and treated as though invested in a share of Common Stock. Subject to subsection (f) of this Section 7.1, the liability of a Participating Employer under the Plan with respect to the units credited to the Company Stock Account shall be satisfied only in shares of Company Common Stock, subject to the approval of the Plan by the shareholders during the annual meeting of shareholders in April 2000.

(b)         Discretionary Amount. When a Participant’s Company Stock Account is to be credited for a Discretionary Amount, it shall be credited with that number of units (including fractions thereof) of Common Stock equal to the number of such shares (including fractions thereof) that could have been purchased with the dollar amount of the Discretionary Amount based upon the value of such shares as of the last business day of the month during which such Discretionary Amount is determined by the Participating Employer.

(c)         Company Matching Stock Account.

(i) When a Participant’s Company Matching Stock Account is to be credited with matching units pursuant to Section 4.3, said Account shall be credited with that number of units (including fractions thereof) equal to the number of shares (including fractions thereof) of Common Stock that could have been purchased with the dollar amount of such deferred compensation determined as of the last business day of the month, based on the last sale price as reported on the Nasdaq National Market on such date, in which such compensation would have otherwise been paid to the Participant.

B-14

(ii) In addition to the matching units credited to the Company Matching Stock Account under paragraph (i) above, if a Participant makes an election under Section 7.1(a) to have deferred compensation allocated to the Company Stock Account and measured by the value of Company Common Stock, the Participant’s Participating Employer shall credit the Participant’s Company Matching Stock Account with that number of units (including fractions thereof) that shall be equal to ten percent (10%) of the number of units (including fractions thereof) that were credited to the Participant’s Company Stock Account under Section 7.1(a) determined as of the last business day of the month, based on the last sale price as reported on the Nasdaq National Market on such date, in which such compensation would have otherwise been paid to the Participant.

(iii) Each unit credited to the Company Matching Stock Account shall be measured by the value of one share of Common Stock and treated as though invested in a share of Common Stock. Subject to subsection (f) of this Section 7.1, the liability of a Participating Employer under the Plan with respect to the units credited to the Company Matching Stock Account shall be satisfied only in shares of Company Common Stock, subject to the approval of the Plan by the shareholders during the annual meeting of shareholders in April 2000.

(d)         Dividends. A Participant’s Company Stock Account and the Participant’s Company Matching Stock Account shall be credited on each Common Stock dividend payment date with that number of units equal to the number of shares which would have been acquired based upon the dividends paid by the Company on shares of Common Stock equal to the number of units credited to the Company Stock Account and the Company Matching Stock Account, respectively, as of the record date for such dividend.

(e)         Stock Dividends. The number of units credited to the Company Stock Account and the Company Matching Stock Account shall be adjusted to reflect any change in the outstanding Common Stock by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or other similar corporate change.

(f)         Transfer Upon Change in Control. In the event of a Change in Control, effective as of the close of business on the date of the Change in Control, each Participant’s Deferred Compensation Account shall be credited with an amount measured in dollars equal to the value of such Participant’s Company Stock Account and the Participant’s Company Matching Stock Account based upon the fair market value of the Company Common Stock on such date and the Participant’s Company Stock Account and the Participant’s Company Matching Stock Account shall be closed and the Participant shall have no further interest in the said Accounts.

B-15

Section 7.2 – Deferred Compensation Account.

(a)         Deferred Amounts. When a Participant’s Deferred Compensation Account is to be credited with a deferred amount, that amount measured in dollars equal to such deferred amount shall be credited to the Deferred Compensation Account as of the close of business on the date that such amount would have otherwise been paid to the Participant.

(b)         Interest. Subject to Section 7.2(c), as of the close of the last day of each calendar quarter, an additional amount shall be credited to each Participant’s Deferred Compensation Account equal to the product of (i) the average daily balance in such Deferred Compensation Account for the quarter, multiplied by (ii) one‑fourth of the annual prime rate for corporate borrowers quoted at the beginning of the quarter by the Wall Street Journal (or such other comparable interest rate as the Compensation Committee may designate from time to time).

(c)         Investment Options. The Compensation Committee may permit a Participant to allocate the Participant’s Deferred Compensation Account among one or more investment options for purposes of measuring the value of the benefit. To the extent that the Deferred Compensation Account is allocated to an investment option, it shall not be credited with interest under Section 7.2(b). That portion of the Deferred Compensation Account allocated to an investment option shall be deemed to be invested in such investment option and shall be valued as if so invested, reflecting all earnings, losses and other distributions or charges and changes in value which would have been incurred through such an investment. The determination of which investment options, if any to make available, and the continued availability of selected investment options rests in the Compensation Committee’s sole discretion; provided, that subsequent to a Change in Control, the Benefit Plans Committee shall maintain the availability of those investment options in place at the time of the Change in Control (or substantially equivalent investment options).

(d)         Participant Allocation Request. A Participant’s request to allocate or reallocate among investment options must be in writing on an Allocation Request Form in such increments as the Compensation Committee may require. All such requests are subject to acceptance by the Compensation Committee at its discretion. If accepted by the Compensation Committee, an allocation request will be effective as of the close of business on the allocation date (as defined in Section 7.4).

Section 7.3 – Hypothetical Accounts. The Accounts established under this Plan shall be hypothetical in nature and shall be maintained for bookkeeping purposes only. Neither the Plan nor any of the Accounts (or sub‑accounts) shall hold or be required to hold any actual funds or assets.

Section 7.4 – Allocation Date. Upon acceptance of an allocation request pursuant to Section 7.2, the Compensation Committee will process the request as soon as reasonably administratively practicable and the request shall be implemented and reflected in the Participant’s Account as of the close of business on such date as may be determined by the Compensation Committee in its reasonable discretion (the “allocation date”).

B-16

ARTICLE VIII

NONTRANSFERABILITY

Section 8.1 – Anti‑Alienation of Benefits. Any benefits which may be credited to a Participant’s Accounts under the Plan, and any rights or privileges pertaining thereto, may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subjected to any charge or legal process; and no interest or right to receive a benefit may be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

Section 8.2 – Incompetent Participants. If any person who may be eligible to receive a payment under the Plan has been legally declared incompetent and a conservator or other person legally charged with the care of such person or of his or her estate has been appointed, any payment under the Plan to which the person is eligible to receive shall be paid to such conservator or other person legally charged with the care of the person or his or her estate. Any such payment shall be a payment for the account of such person and a complete discharge of any liability of the Participating Employers and the Plan therefor.

Section 8.3 – Designated Beneficiary. In the event of a Participant’s death prior to the payment of all or a portion of any benefits which may be payable with respect to the Participant under the Plan, the payment of any benefits payable on behalf of the Participant under the Plan shall be made to the Participant’s beneficiary designated on a “Beneficiary Designation Form,” which form shall be approved by the Compensation Committee. If no such beneficiary has been designated, payment shall be made as required under the Participant’s will; or, in the event that there shall be no functioning will under applicable state law, then to such persons as, at the date of the Participant’s death, would be entitled to share in the distribution of such deceased Participant’s personal estate under the provisions of the applicable statute then in force governing the decedent’s intestate property, in the proportions specified in such statute.

ARTICLE IX

WITHHOLDING

Section 9.1 – Withholding. The amounts payable pursuant to the Plan may be reduced by the amount of any federal, state or local taxes required by law to be withheld with respect to such payments.

ARTICLE X

VOTING

Section 10.1 – Voting of Company Stock. No Participant shall be entitled to any voting rights with respect to any units credited to his or her Company Stock Account or his or her Company Matching Stock Account.

B-17

ARTICLE XI

ADMINISTRATION OF THE PLAN

Section 11.1 – Administrator. The administrator of the Plan shall be the Company. However, the Compensation Committee shall act on behalf of the Company with respect to the administration of the Plan and may delegate authority with respect to the administration of the Plan to such other committee, person or persons as it deems necessary or appropriate for the administration and operation of the Plan.

Section 11.2 – Authority of Administrator. The Company shall have the authority, duty and power to interpret and construe the provisions of the Plan as it deems appropriate, to adopt, establish and revise rules, procedures and regulations relating to the Plan, to determine the conditions subject to which any benefits may be payable, to resolve all questions concerning the status and rights of the Participants and others under the Plan, including, but not limited to, eligibility for benefits and to make any other determinations which it believes necessary or advisable for the administration of the Plan. The Company shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing payments hereunder. The determinations, interpretations, regulations and calculations of the Company shall be final and binding on all persons and parties concerned. The Secretary of the Company shall be the agent of the Plan for the service of legal process in accordance with section 502 of ERISA.

Section 11.3 – Operation of Plan and Claims Procedures. The Company shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof. The Company shall be responsible for the expenses incurred in the administration of the Plan. The Company shall also be responsible for determining eligibility for payments and the amounts payable pursuant to the Plan. The Company shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Company with respect to the Plan. The procedures for filing claims for payments under the Plan are described below. For claims procedures purposes, the “Claims Manager” shall be the Company.

(a)         Claims Forms. It is the intent of the Company to make payments under the Plan without the Participant having to complete or submit any claims forms. However, a Participant who believes he or she is entitled to a payment under the Plan may submit a claim for payments in writing to the Company. Any claim for payments under the Plan must be made by the Participant or his or her beneficiary in writing and state the claimant’s name and the nature of benefits payable under the Plan on a form acceptable to the Company. If for any reason a claim for payments under the Plan is denied by the Company, the Claims Manager shall deliver to the claimant a written explanation setting forth the specific reasons for the denial, specific references to the pertinent provisions of the Plan on which the denial is based, a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary, and information on the procedures to be followed by the claimant in obtaining a review of his or her claim, all written in a manner calculated to be understood by the claimant. For this purpose:

B-18

(i) The claimant’s claim shall be deemed to be filed when presented orally or in writing to the Claims Manager.

(ii) The Claims Manager’s explanation shall be in writing delivered to the claimant within 90 days of the date the claim is filed.

(b)         Review. The claimant shall have 60 days following his or her receipt of the denial of the claim to file with the Claims Manager a written request for review of the denial. For such review, the claimant or the claimant’s representative may review pertinent documents and submit written issues and comments.

(c)         Decision on Review. The Claims Manager shall decide the issue on review and furnish the claimant with a copy within 60 days of receipt of the claimant’s request for review of the claimant’s claim. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent provisions in the Plan on which the decision is based. If a copy of the decision is not so furnished to the claimant within such 60 days, the claim shall be deemed denied on review. In no event may a claimant commence legal action for benefits the claimant believes are due the claimant until the claimant has exhausted all of the remedies and procedures afforded the claimant by this Section 11.3.

(d)         Deadline to File Claim. To be considered timely under the Plan’s claim and review procedure, a claim must be filed with the Company within one (1) year after the claimant knew or reasonably should have known of the principal facts upon which the claim is based.

(e)         Exhaustion of Administrative Remedies. The exhaustion of the claim and review procedure is mandatory for resolving every claim and dispute arising under this Plan. As to such claims and disputes:

(i) no claimant shall be permitted to commence any legal action to recover Plan benefits or to enforce or clarify rights under the Plan under section 502 or section 510 of ERISA or under any other provision of law, whether or not statutory, until the claim and review procedure set forth herein have been exhausted in their entirety; and

(ii) in any such legal action all explicit and all implicit determinations by the Company (including, but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law.

(f)         Deadline to File Legal Action. No legal action to recover Plan benefits or to enforce or clarify rights under the Plan under section 502 or section 510 of ERISA or under any other provision of law, whether or not statutory, may be brought by any claimant on any matter pertaining to this Plan unless the legal action is commenced in the proper forum before the earlier of:

B-19

(i) thirty (30) months after the claimant knew or reasonably should have known of the principal facts on which the claim is based, or

(ii) six (6) months after the claimant has exhausted the claim and review procedure.

(g)         Knowledge of Facts by Participant Imputed to Beneficiary. Knowledge of all facts that a Participant knew or reasonably should have known shall be imputed to every claimant who is or claims to be a beneficiary of the Participant or otherwise claims to derive an entitlement by reference to the Participant for the purpose of applying the previously specified periods.

Section 11.4 – Participant’s Address. Each Participant shall keep the Company informed of his or her current address and the current address of his or her beneficiary. The Company shall not be obligated to search for any person. If the location of a Participant is not made known to the Company within three (3) years after the date on which payment of the Participant’s benefits payable under the Plan may be made, payment may be made as though the Participant had died at the end of the three‑year period. If, within one (1) additional year after such three‑year period has elapsed, or, within three (3) years after the actual death of a Participant, the Company is unable to locate any designated beneficiary of the Participant, then neither the Company nor any other Participating Employer shall have any further obligation to pay any benefit under the Plan to or on behalf of such Participant or designated beneficiary and such benefit shall be irrevocably forfeited.

ARTICLE XII

MISCELLANEOUS PROVISIONS

Section 12.1 – No Employment Rights. Neither the Plan nor any action taken under the Plan shall be construed as providing any Participant any right to be retained in the service or employ of any Participating Employer.

Section 12.2 – Participants Should Consult Advisors. Neither any Participating Employer, nor their respective directors, officers, employees or agents makes any representation or warranty with respect to the federal, state or other tax, financial, estate planning, or the securities or other legal implications of participation in the Plan. Participants should consult with their own tax, financial and legal advisors with respect to their participation in the Plan.

Section 12.3 – Unfunded and Unsecured. The Plan shall at all times be considered entirely unfunded both for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended, and no provision shall at any time be made with respect to segregating assets of any Participating Employer for payment of any amounts under the Plan. Any funds invested under the Plan allocable to a Participating Employer shall continue for all purposes to be part of the respective general assets of such Participating Employer and available to the general creditors of such Participating Employer in the event of a bankruptcy (involvement in a pending proceeding under the Federal Bankruptcy Code) or insolvency (inability to pay debts as they mature) of such Participating Employer. The Company shall promptly notify the Trustee and the applicable Participants of such bankruptcy or insolvency of a Participating Employer. No Participant or any other person shall have any interests in any particular assets of any Participating Employer by reason of the right to receive a benefit under the Plan and to the extent the Participant or any other person acquires a right to receive benefits under the Plan, such right shall be no greater than the right of any general unsecured creditor of any Participating Employer. The Plan constitutes a mere promise by the Participating Employers to make payments to the Participants in the future. Nothing contained in the Plan shall constitute a guaranty by any Participating Employer or any other person or entity that any funds in any trust or the assets of any Participating Employer will be sufficient to pay any benefit under the Plan. Furthermore, no Participant shall have any right to a benefit under the Plan except in accordance with the terms of the Plan.

B-20

Section 12.4 – The Trust.

(a)         Establishment of Trust. In order to provide assets from which to fulfill the obligations to the Participants and their beneficiaries under the Plan, each Participating Employer may establish a Trust by a trust agreement with a third party, the Trustee, to which such Participating Employer may, in its discretion, contribute cash or other property, including securities issued by the Company or such other Participating Employer, to provide for the benefit payments under the Plan. The Trustee for each Trust will have the duty to invest the Trust assets and funds in accordance with the terms of such Trust. Each Participating Employer shall be entitled at any time, and from time to time, in its sole discretion, to substitute assets of at least equal fair market value for any assets held in such Trust established by such Participating Employer. All rights associated with the assets of each such Trust will be exercised by the Trustee of the Trust or the person designated by such Trustee, and will in no event be exercisable by or rest with Participants or their beneficiaries. Each such Trust shall provide that in the event of the insolvency of the Participating Employer that established such Trust, the Trustee shall hold the assets for the benefit of the general creditors of that Participating Employer. Each such Trust shall be based on the model trust contained in Internal Revenue Service Revenue Procedure 92‑64.

(b)         Contribution Upon Change in Control. If as of the close of business on the date of a Change in Control, the aggregate value of the Participant Accounts exceeds the value of the assets held in a Trust established under subsection (a), then within thirty (30) days of such Change in Control, each Participating Employer that has established such a Trust shall contribute to such Trust assets having a value at least equal to the amount of such excess.

Section 12.5 – Plan Provisions. Except when otherwise required by the context, any singular terminology shall include the plural.

Section 12.6 – Severability. If a provision of the Plan shall be held to be illegal or invalid, the illegality or invalidity shall not affect the remaining parts of the Plan and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

B-21

Section 12.7 – Applicable Law. Except to the extent that federal law is controlling, this Plan Statement shall be construed and enforced in accordance with the laws of the State of Minnesota. All controversies, disputes, claims, or causes of actions arising under or related to the Plan or any other party with a relationship to the Plan (including any claims for benefits or any other claims brought under ERISA § 502) must be brought in the United States District Court For The District Of Minnesota.

Section 12.8 – Stock Subject to Plan. Subject to and in accordance with the terms of the Plan, the maximum number of shares of Common Stock that shall be made available for purposes of satisfying the obligations of the Participating Employers under the Plan is 100,000 shares, subject to adjustment by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or other similar corporate change.

ARTICLE XIII

AMENDMENTS

Section 13.1 – Amendment of the Plan. The Company reserves the power to alter, amend or wholly revise the Plan at any time and from time to time by the action of the Board of Directors and the interest of each Participant is subject to the powers so reserved; provided, however, that no amendment made subsequent to a Change in Control shall be effective to the extent that it would have a materially adverse impact on a Participant’s reasonably expected economic benefit attributable to compensation deferred by the Participant prior to the Change in Control. An amendment shall be authorized by the Board of Directors and shall be stated in an instrument in writing signed in the name of the Company by a person or persons authorized by the Board of Directors. After the instrument has been so executed, the Plan shall be deemed to have been amended in the manner therein set forth, and all parties interested herein shall be bound thereby. No amendment to the Plan may alter, impair, or reduce the benefits credited to any Accounts prior to the effective date of such amendment without the written consent of any affected Participant.

ARTICLE XIV

TERM OF PLAN

Section 14.1 – Term of the Plan. The Company may at any time terminate the Plan by action of the Board of Directors with such termination being effective as of the date that all Participant Accounts have been distributed to Participants in accordance with and subject to the provisions of Article VI of the Plan including, without limitation, Section 6.5 of the Plan. Effective as of the date of such Board of Directors action (or such later date as may be specified therein) all Section 4.1 compensation deferral elections will terminate and no further amounts shall be credited to any Accounts of any Participant under Sections 7.1(a), (b), (c) and 7.2(a) after such date. However, the Participants’ Accounts shall continue to be adjusted by the other provisions of Sections 7.1 and 7.2 until all benefits are distributed to the Participants or to the Participants’ beneficiaries.

Dated as of this 14th day of October, 1999.

B-22

H.B. FULLER COMPANY
By:
Title:	Chief Executive Officer

B-23

EXHIBIT A

H.B. FULLER COMPANY
KEY EMPLOYEE DEFERRED COMPENSATION PLAN PARTICIPANTS

Name of Individuals Eligible to Participate Date of Participation Eligibility Date of Participation

B-24

H.B. FULLER COMPANY
KEY EMPLOYEE DEFERRED COMPENSATION PLAN

Declaration of Amendment

Pursuant to Section 13.1 of the H.B. Fuller Company Key Employee Deferred Compensation Plan, the Company amends the Plan as follows:

1.         Section 4.3(a) is amended to reflect a matching percentage of 4% as opposed to 3%.

2.         Sections 7.1(a), (b) and (c)(i) and (ii) is amended in their entirety, to read as follows:

(a)         Deferred Amounts. lf a Participant elects to defer compensation in accordance with Section 4.2, the Participant may make an irrevocable election pursuant to this Section 7.1(a) to have a portion or all of such deferred compensation allocated to the Company Stock Account and measured by the value of Company Common Stock. This irrevocable election must be made at the time the deferral elections are made under Section 4.2 in the form and manner prescribed by the Compensation Committee, and will not be effective unless accepted by the Compensation Committee. If the Participant makes an election pursuant to this Section 7.1(a) to have a portion or all of such deferred compensation allocated to the Company Stock Account and measured by the value of Common Stock, the Participant’s Company Stock Account shall be credited with the number of units (including fractions thereof) equal to the number of shares (including fractions thereof) of Common Stock that could have been purchased with the dollar amount of such deferred compensation determined as of the payroll deferral transaction date, based on the last sale price as reported on the Nasdaq National Market on such date, in which such compensation would have otherwise been paid to the Participant. Each unit credited to the Company Stock Account shall be measured by the value of one share of Common Stock and treated as though invested in a share of Common Stock. Subject to subsection (f) of this Section 7.1, the liability of a Participating Employer under the Plan with respect to the units credited to the Company Stock Account shall be satisfied only in shares of Company Common Stock, subject to the approval of the Plan by the shareholders during the annual meeting of shareholders in April 2000.

(b)         Discretionary Amount. When a Participant’s Company Stock Account is to be credited for a Discretionary Amount, it shall be credited with that number of units (including fractions thereof) of Common Stock equal to the number of such shares (including fractions thereof) that could have been purchased with the dollar amount of the Discretionary Amount based upon the value of such shares as of the payroll deferral transaction date during which such Discretionary Amount is determined by the Participating Employer.

(c)         Company Matching Stock Account.

(i) When a Participant’s Company Matching Stock Account is to be credited with matching units pursuant to Section 4.3, said Account shall be credited with that number of units (including fractions thereof) equal to the number of shares (including fractions thereof) of Common Stock that could have been purchased with the dollar amount of such deferred compensation determined as of the payroll deferral transaction date, based on the last sale price as reported on the Nasdaq National Market on such date, in which such compensation would have otherwise been paid to the Participant.

B-25

(ii) ln addition to the matching units credited to the Company Matching Stock Account under paragraph (i) above, if a Participant makes an election under Section 7.1(a) to have deferred compensation allocated to the Company Stock Account and measured by the value of Company Common Stock, the Participant’s Participating Employer shall credit the Participant’s Company Matching Stock Account with that number of units (including fractions thereof) that shall be equal to ten percent (10%) of the number of units (including fractions thereof) that were credited to the Participant’s Company Stock Account under Section 7.1(a) determined as of the payroll deferral transaction date, based on the last sale price as reported on the Nasdaq National Market on such date, in which such compensation would have otherwise been paid to the Participant.

3.         Section 7.2(b) is amended in its entirety, to read as follows:

“(b)         Interest. Subject to Section 7.2(c) as of the close of each business day, each Participant’s Deferred Compensation Account shall be valued by calculating the product of (i) the daily balance in such Deferred Compensation Account, multiplied by (ii) one‑twelfth (1/12) of the annual prime rate for corporate borrowers quoted at the beginning of the month by the Wall Street Journal (or such other comparable interest rate as the Compensation Committee may designate from time to time).”

This Declaration of Amendment, shall be effective as of October 14, 1999, as if originally included in the Plan.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer this 2nd day of December 1999.

H.B. FULLER COMPANY

Chief Executive Officer

B-26

EX-10.40

Exhibit 10.40

FIFTH AMENDMENT

OF THE

H.B. FULLER COMPANY

DEFINED CONTRIBUTION RESTORATION PLAN

(As Amended and Restated Effective January 1, 2008)

H.B. Fuller Company (the “Company”) has adopted the H.B. Fuller Company Defined Contribution Restoration Plan (the “Plan”) and maintains the Plan, as amended and restated. The Company, acting through the Compensation Committee of the Board of Directors, pursuant to Sections 9.1 and 11.1.3 of the Plan, has approved and adopted the following Plan amendments, and has directed the Vice President of Human Resources to execute such amendments.

1. A new Section 1.2.25 is added to the Plan to read as follows:

1.2.25.              Benefit Plans Committee – the administrative committee established in connection with a Change in Control as described in Section 9.4.

2. Section 6.1 is amended in its entirety to read as follows:

6.1.         Provisions Applicable to a CIC Participant. Following the occurrence of a Change in Control, the following number of years shall be added to a CIC Participant’s years of Continuous Service for the purposes of Section 5.2(c), and to a CIC Participant’s years of Continuous Participation for the purposes of Section 5.3.1(b):

(a)         three years, if the CIC Participant is the Chief Executive Officer of the Company or is on the Executive Committee when the Change in Control occurs;

(b)         two years, if the CIC Participant is not covered in (a) above, but is pay grade 32 or above, when the Change in Control occurs;

(c)         no years, if the CIC Participant is not covered in (a) or (b) above, and is below a pay grade 32, when the Change in Control occurs.

3. A new section 6.2.3 is added to the Plan reading as follows, and the existing 6.2.3 (titled “Good Reason”) is renumbered as section 6.2.4:

6.2.3.      “Executive Committee” means an officer of the Company as defined in section 16(b) of the Exchange Act, but not including the principal accounting officer/controller position.

4. A new section 9.4 is added to the Plan to read as follows:

9.4.         Benefit Plans Committee. The provisions of this Section 9.4 shall not apply unless and until a Change in Control has occurred. For purposes of this Plan, upon a Change in Control, the Benefit Plans Committee shall be the “administrator” at all times following the occurrence of a Change in Control. The Benefit Plans Committee referred to in this Plan shall be comprised of the individuals who, immediately prior to the Change in Control, are then serving on the Company’s Benefit Plans Committee, or if there is no such committee, it shall be comprised of the individuals then serving as the Company’s chief financial officer, senior human resources officer, treasurer and vice president of corporate financial strategy (or equivalent positions, regardless of title). If one or more of the individuals serving on the Benefit Plans Committee is unable or unwilling to serve on the Benefit Plans Committee, the number of individuals serving on the Benefit Plans Committee may be reduced. In the event none of the aforementioned individuals is able or willing to serve, the individual serving as Chief Executive Officer of the Company immediately prior to the Change in Control will serve as the Benefit Plans Committee. The Benefit Plans Committee shall have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and any trust under Section 8.1, including, but not limited to, benefit entitlement determinations. Upon and after the occurrence of a Change in Control, the Company (or successor thereto) must: (1) pay all reasonable administrative expenses incurred by the Benefit Plans Committee; (2) indemnify the Benefit Plans Committee members against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of the Benefit Plans Committee hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of a Benefit Plans Committee member; and (3) supply full and timely information to the Benefit Plans Committee on all matters relating to the Plan, any trust, the Participants and their Beneficiaries, the Accounts of the Participants, and such other pertinent information as the Benefit Plans Committee may reasonably require. Upon and after a Change in Control, the members of the Benefit Plans Committee may not be removed by the Company (or successor thereto), and the Benefit Plans Committee may not be terminated by the Company (or successor thereto).

Dated: September 30, 2021	H.B. Fuller Company
	By:	/s/ Nathan D. Weaver
	Its:	Vice President, Human Resources

-2-

EX-21

Exhibit 21

Subsidiaries	State or Other Jurisdiction of Organization
ADCO Europe Holding GmbH	Germany
ADCO Europe Holding GmbH (Beijing Branch)	China
ADCO Global, Inc.	Delaware
ADCO Products, LLC	Delaware
Adecol Industria Quimica Ltda.	Brazil
Adhesive Packaging Specialties, LLC	Massachusetts
Adhesivos Mexico Servicios Especializados S. de R.L. de C.V.	Mexico
AP Plastics, LLC	Massachusetts
Bacon Acquisitions, LLC	Oklahoma
Chemical Innovations Limited 1	United Kingdom
Chemical Supply Corporation, S.A.	Panama
Cyberbond CS s.r.o. Cyberbond Group	Czech Republic
Cyberbond Europe GmbH	Germany
Cyberbond France	France
Cyberbond Iberica, S.L.	Spain
Datac Adhesives Limited	United Kingdom
Engent, Inc.	Georgia
Eternabond, LLC	Delaware
Extreme Adhesives, LLC	New Hampshire
Gabaldo Holdings Ltd	Cyprus
H.B. Fuller (Barbados) I SRL	Barbados
H.B. Fuller (China) Adhesives Ltd.	China
H.B. Fuller (Guangzhou) Adhesives Co., Ltd.	China
H.B. Fuller (Guangzhou) Trading Co., Ltd.	China
H.B. Fuller (Nanjing) Chemical Co., Ltd.	China
H.B. Fuller (New Zealand) Limited	New Zealand
H.B. Fuller (Philippines), Inc.	Philippines

H.B. Fuller (Shanghai) Co. Ltd.	China
H.B. Fuller (Suzhou) Advanced Material Co., Ltd.	China
H.B. Fuller (Thailand) Co., Ltd.	Thailand
H.B. Fuller (Vietnam) Company Limited	Vietnam
H.B. Fuller (Yantai) Advanced Materials Co., Ltd.	China
H.B. Fuller Adhesive Systems LLC	Oklahoma
H.B. Fuller Adhesives Deutschland GmbH	Germany
H.B. Fuller Adhesives France SAS	France
H.B. Fuller Adhesives Hong Kong Limited	Hong Kong SAR
H.B. Fuller Adhesives Italia S.r.l.	Italy
H.B. Fuller Adhesives Malaysia Sdn. Bhd.	Malaysia
H.B. Fuller Adhesives Mauritius Ltd.	Mauritius
H.B. Fuller Adhesives Netherlands B.V.	Netherlands
H.B. Fuller Adhesives Romania SRL	Romania
H.B. Fuller Adhesives S.A.E.	Egypt
H.B. Fuller Adhesives Spain S.L.	Spain
H.B. Fuller Adhesives UK Ltd.	United Kingdom
H.B. Fuller Argentina, S.A.I.C.	Argentina
H.B. Fuller Austria GesmbH	Austria
H.B. Fuller Belgie BVBA	Belgium
H.B. Fuller Benelux B.V.	Netherlands
H.B. Fuller Brasil, Ltda.	Brazil
H.B. Fuller Brasil, Ltda. - Branch office Curitiba Purana	Brazil
H.B. Fuller Canada (partnership)	Canada
H.B. Fuller Canada Holding Co.	Canada
H.B. Fuller Canada Investment Co.	Canada
H.B. Fuller Centroamerica, S.A.	Costa Rica
H.B. Fuller Chemie GmbH	Germany
H.B. Fuller Chile, SpA	Chile
H.B. Fuller Colombia S.A.S.	Colombia
H.B. Fuller Company Australia Pty. Ltd.	Australia
H.B. Fuller Company Australia Pty. Ltd. (New Zealand Branch)	New Zealand
H.B. Fuller Construction Products Inc.	Minnesota

H.B. Fuller Deutschland GmbH	Germany
H.B. Fuller Deutschland Holding GmbH	Germany
H.B. Fuller Deutschland Produktions GmbH	Germany
H.B. Fuller Egymelt, a limited liability company	Egypt
H.B. Fuller Egypt Investment LLC	Egypt
H.B. Fuller Egypt Trade LLC	Egypt
H.B. Fuller Europe GmbH	Switzerland
H.B. Fuller Finance (Ireland)	Ireland
H.B. Fuller Finance Luxembourg S.a.r.l.	Luxembourg
H.B. Fuller France	France
H.B. Fuller Greece S.A.I.C.	Greece
H.B. Fuller Group Limited	United Kingdom
H.B. Fuller Guatemala, S.A.1	Guatemala
H.B. Fuller India Adhesives Private Limited	India
H.B. Fuller Industrial Inc.	Delaware
H.B. Fuller International Holdings Corp.	Delaware
H.B. Fuller International Holdings Corp. (Hong Kong Branch)	Hong Kong SAR
H.B. Fuller International Holdings Corp. (Vietnam Branch)	Viet Nam
H.B. Fuller Ireland Limited 1	Ireland
H.B. Fuller Italia s.r.l.	Italy
H.B. Fuller Japan G.K.	Japan
H.B. Fuller Kenya Limited	Kenya
H.B. Fuller Kimya Sanayi Ticaret Anonim Sirketi	Turkey
H.B. Fuller Korea Co., Ltd.	Korea, Republic Of
H.B. Fuller Latin America Adhesives S.A.	Panama
H.B. Fuller Latin America Shared Services, S.R. Ltda	Costa Rica

H.B. Fuller Lebanon S.A.R.L. 1	Lebanon
H.B. Fuller Luxembourg Group S.a.r.l.	Luxembourg
H.B. Fuller Luxembourg Holdings S.a.r.l.	Luxembourg
H.B. Fuller Mexico, S.A. de C.V.	Mexico
H.B.Fuller Namekagon Ltd.	United Kingdom
H.B. Fuller Netherlands Holding B.V.	Netherlands
H.B. Fuller Pension Trustees Limited	United Kingdom
H.B. Fuller Peru, S.A. 1	Peru
H.B. Fuller Poland Sp.Z.o.o.	Poland
H.B. Fuller Portugal - SGPS, Lda.	Portugal
H.B. Fuller Portugal, Produtos Quimicos, S.A.	Portugal
H.B. Fuller Royal Luxembourg Holdings S.a.r.l.	Luxembourg
H.B. Fuller Rus Ltd.	Russian Federation
H.B. Fuller Singapore Pte. Ltd.	Singapore
H.B. Fuller Sverige AB	Sweden
H.B. Fuller Taiwan Co., Ltd.	Taiwan, Province of China
H.B. Fuller U.K. Holding Limited	United Kingdom
H.B. Fuller U.K. Limited	United Kingdom
H.B. Fuller U.K. Manufacturing Limited	United Kingdom
H.B. Fuller Uruguay, S.A. 2	Uruguay
H.B. Fuller Venezuela, C.A. 1	Venezuela
H.B. Fuller, Isar-Rakoll, S.A.	Portugal
H.B.F. Limited 1	United Kingdom
HB Fuller Espana, S.A.	Spain
HB Fuller Middle East FZE	United Arab Emirates
HB Fuller South Africa (Pty) Ltd	South Africa
HB Fuller UK Operations Limited	United Kingdom
HBF Realty Corporation	Philippines
Koemmerling (Nanjing) Advanced Materials Co. Ltd.	China
Koemmerling Hong Kong Limited	Hong Kong SAR
Kömmerling Chemische Fabrik GmbH	Germany
Kömmerling Chemische Fabrik GmbH (Russian branch)	Russian Federation
Kömmerling Chimie S.a.r.l.	France
Kommerling UK Limited	United Kingdom
Mansfield (Sixth Avenue) Properties LLC	Delaware

Millennium Adhesive Holding, LLC	Ohio
Millennium Adhesive Products, LLC	Ohio
Nutek, LLC	Massachusetts
Plexbond Quimica S/A	Brazil
PT H.B. Fuller Indonesia	Indonesia
PT. HBFuller Adhesives Indonesia	Indonesia
Resistol, S.A 1	Guatemala
Royal Acquisition Corp.	Delaware
Royal Adhesives & Sealants Canada Ltd.	Canada
Royal Adhesives and Sealants, LLC	Delaware
Royal Holdings, Inc.	Delaware
Seneca Polymer Co.	Minnesota
Simpsonville Polymer Co.	Delaware
Simpsonville Properties LLC	Delaware
South Bend Properties LLC	Delaware
Stag Limited 1	United Kingdom
Tonsan Adhesive, Inc.	China
Tonsan Suzhou Adhesive Co., Ltd.	China
WTT Systems, LLC	Ohio
Joint Ventures
Sekisui-Fuller Co. Ltd.	Japan
1 Inactive entities
2 To be liquidated

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-50005, 333-89453, 333-48420, 333-135772, 333-151841, 333-158610, 333-191549, 333-212344, 333-224570, 333-237949, and 333-257508) and Form S-3ASR (Nos. 333-215907 and 333-236084) pertaining to the Employees' Savings Plan of H.B. Fuller Company of our reports dated January 25, 2022, with respect to the consolidated financial statements of H.B. Fuller Company, and the effectiveness of internal control over financial reporting of H.B. Fuller Company, included in this Annual Report (Form 10-K) of H.B. Fuller Company for the year ended November 27, 2021.

/s/ Ernst and Young LLP

Minneapolis, Minnesota

January 25, 2022

EX-23.2

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statements (Nos. 333-50005, 333-89453, 333-48420, 333-135772, 333-151841, 333-158610, 333-191549, 333-212344, 333-224570, 333-237949 and 333-257508) on Forms S-8 and the registration statements (Nos. 333-215907 and 333-236084) on Forms S-3ASR of our report dated January 24, 2020, except for Note 15, as to which the date is June 29, 2021, with respect to the consolidated financial statements of H.B. Fuller Company.

/s/ KPMG LLP

Minneapolis, Minnesota

January 25, 2022

EX-24

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors of H.B. FULLER COMPANY, a Minnesota corporation, which proposes to file with the Securities and Exchange Commission, Washington, D.C. 20549, under the provisions of the Securities Exchange Act of 1934, as amended, a Form 10‑K Annual Report for the Company's fiscal year ended November 27, 2021, hereby constitute and appoint JAMES J. OWENS, JOHN J. CORKREAN AND TIMOTHY J. KEENAN his or her true and lawful attorneys‑in‑fact and agents, and each of them, with full power to act without the other, for him or her and in his or her name, place and stead to sign and file such Annual Report, and any and all amendments, exhibits and other documents in connection herewith, with power, where appropriate, to affix the corporate seal of said Company thereto, and to attest said seal with the Securities and Exchange Commission and with the appropriate office of any state, hereby granting unto said attorneys‑in‑fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might do in person, hereby ratifying and confirming all that said attorneys‑in‑fact and agents, or either of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the 25th day of January 2022.

/s/ Daniel L. Florness	/s/ Lee R. Mitau
DANIEL L. FLORNESS	LEE R. MITAU
Director	Director
/s/ Thomas W. Handley	/s/ Dante C. Parrini
THOMAS W. HANDLEY	DANTE C. PARRINI
Director	Director
/s/ Michael J. Happe	/s/ Teresa J. Rasmussen
MICHAEL J. HAPPE	TERESA J. RASMUSSEN
Director	Director
/s/ Ruth S. Kimmelshue	/s/ John C. van Roden, Jr.
RUTH S. KIMMELSHUE	JOHN C. VAN RODEN, JR.
Director	Director

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, James J. Owens, certify that:

1. I have reviewed this report on Form 10-K 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(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 annual 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 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: January 25, 2022

/s/ James J. Owens                                                       

James J. Owens

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, John J. Corkrean, certify that:

1.     I have reviewed this report on Form 10-K 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(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 annual 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 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: January 25, 2022

/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 Annual Report of H.B. Fuller Company on Form 10-K for the fiscal year ended November 27, 2021 (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, 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: January 25, 2022

/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 Annual Report of H.B. Fuller Company on Form 10-K for the fiscal year ended November 27, 2021 (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, 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: January 25, 2022

/s/ John J. Corkrean                                                          

John J. Corkrean

Executive Vice President, Chief Financial Officer

XML

Document And Entity Information - USD ($)	12 Months Ended
	Nov. 27, 2021	Jan. 20, 2022	May 28, 2021
Document Information [Line Items]
Entity Central Index Key	0000039368
Entity Registrant Name	FULLER H B CO
Amendment Flag	false
Current Fiscal Year End Date	--11-27
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2021
Document Type	10-K
Document Annual Report	true
Document Period End Date	Nov. 27, 2021
Document Transition Report	false
Entity File Number	001-09225
Entity Incorporation, State or Country Code	MN
Entity Tax Identification Number	41-0268370
Entity Address, Address Line One	1200 Willow Lake Boulevard
Entity Address, City or Town	St. Paul
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55110-5101
City Area Code	651
Local Phone Number	236-5900
Title of 12(b) Security	Common Stock, par value $1.00
Trading Symbol	FUL
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 3,602,301,720
Entity Common Stock, Shares Outstanding		52,828,288
ICFR Auditor Attestation Flag	true

XML

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Net revenue	$ 3,278,031	$ 2,790,269	$ 2,897,000
Cost of sales	(2,432,709)	(2,033,620)	(2,090,078)
Gross profit	845,322	756,649	806,922
Selling, general and administrative expenses	(592,710)	(538,332)	(580,928)
Other income, net	32,855	15,398	37,943
Interest expense	(78,092)	(86,776)	(103,287)
Interest income	9,476	11,417	12,178
Income from continuing operations before income taxes and income from equity method investments	216,851	158,356	172,828
Income tax expense	(63,033)	(41,921)	(49,408)
Income from equity method investments	7,657	7,353	7,424
Net income including non-controlling interest	161,475	123,788	130,844
Net income attributable to non-controlling interest	(82)	(69)	(27)
Net income attributable to H.B. Fuller	$ 161,393	$ 123,719	$ 130,817
Earnings per share attributable to H.B. Fuller common stockholders:
Basic (in dollars per share)	$ 3.05	$ 2.38	$ 2.57
Diluted (in dollars per share)	$ 2.97	$ 2.36	$ 2.52
Weighted-average common shares outstanding:
Basic (in shares)	52,887	52,039	50,920
Diluted (in shares)	54,315	52,520	51,983
Dividends declared per common share (in dollars per share)	$ 0.665	$ 0.648	$ 0.635

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021		Nov. 28, 2020	Nov. 30, 2019
Net income including non-controlling interest	$ 161,475		$ 123,788	$ 130,844
Other comprehensive income (loss)
Foreign currency translation	(26,294)		41,742	(20,395)
Defined benefit pension plans adjustment, net of tax	48,181		4,588	(21,828)
Interest rate swaps, net of tax	(4,486)	[1]	6,206	13,820	[1]
Other comprehensive income (loss)	32,580		40,771	(63,434)
Comprehensive income	194,055		164,559	67,410
Less: Comprehensive income attributable to non-controlling interest	50		99	41
Comprehensive income attributable to H.B. Fuller	194,005		164,460	67,369
Interest Rate Swap [Member]
Other comprehensive income (loss)
Interest rate swaps, net of tax	$ 15,179	[1]	$ (11,765)	$ (35,031)	[1]

[1] Loss reclassified from accumulated other comprehensive income (loss) into earnings is reported in other income, net.

XML

Consolidated Balance Sheets - USD ($) $ in Thousands		Nov. 27, 2021	Nov. 28, 2020
Current assets:
Cash and cash equivalents		$ 61,786	$ 100,534
Trade receivables, net		614,645	514,916
Inventories		448,404	323,213
Other current assets		96,335	81,113
Total current assets		1,221,170	1,019,776
Property, plant and equipment, net		695,367	670,744
Goodwill		1,298,845	1,312,003
Other intangibles, net		687,075	755,968
Other assets		372,073	278,213
Total assets	[1]	4,274,530	4,036,704
Current liabilities:
Notes payable		24,983	16,925
Current maturities of long-term debt		0	0
Trade payables		500,321	316,460
Accrued compensation		109,542	83,598
Income taxes payable		15,943	29,173
Other accrued expenses		86,061	83,976
Total current liabilities		736,850	530,132
Long-term debt, net of current maturities		1,591,479	1,756,985
Accrued pension liabilities		71,651	88,806
Other liabilities		277,190	278,919
Total liabilities		2,677,170	2,654,842
Commitments and contingencies (Note 14)
H.B. Fuller stockholders' equity:
Preferred stock (no shares outstanding) Shares authorized – 10,045,900		0	0
Common stock, par value $1.00 per share, Shares authorized – 160,000,000, Shares outstanding – 52,777,753 and 51,906,663 for 2021 and 2020, respectively		52,778	51,907
Additional paid-in capital		213,637	157,867
Retained earnings		1,600,601	1,474,406
Accumulated other comprehensive loss		(270,247)	(302,859)
Total H.B. Fuller stockholders' equity		1,596,769	1,381,321
Non-controlling interest		591	541
Total equity		1,597,360	1,381,862
Total liabilities, non-controlling interest and total equity		$ 4,274,530	$ 4,036,704

[1] Segment assets include primarily inventory, accounts receivable, property, plant and equipment, goodwill, intangible assets and other miscellaneous assets. Corporate assets include primarily corporate property, plant and equipment, deferred tax assets, certain investments and other assets.

XML

Consolidated Balance Sheets (Parentheticals) - $ / shares	Nov. 27, 2021	Nov. 28, 2020
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)	$ 1.00	$ 1.00
Common stock, shares authorized (in shares)	160,000,000	160,000,000
Common stock, shares outstanding (in shares)	52,777,753	51,906,663

XML

Consolidated Statements of Total Equity - USD ($) $ in Thousands	Cumulative Effect, Period of Adoption, Adjustment [Member] Common Stock [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Additional Paid-in Capital [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] AOCI Attributable to Parent [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Noncontrolling Interest [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member] Common Stock [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member] Additional Paid-in Capital [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member] Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member] AOCI Attributable to Parent [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member] Noncontrolling Interest [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 01, 2018	$ 0	$ 0	$ 1,043	$ 0	$ 0	$ 1,043	$ 50,733	$ 95,940	$ 1,286,289	$ (280,152)	$ 401	$ 1,153,211	$ 50,733	$ 95,940	$ 1,285,246	$ (280,152)	$ 401	$ 1,152,168
Comprehensive income (loss)													0	0	130,817	(63,448)	41	67,410
Dividends													0	0	(32,695)	0	0	(32,695)
Stock option exercises													373	10,506	0	0	0	10,879
Share-based compensation plans other, net													200	26,810	0	0	0	27,010
Repurchases of common stock													(65)	(2,961)	0	0	0	(3,026)
Balance at Nov. 30, 2019													51,241	130,295	1,384,411	(343,600)	442	1,222,789
Comprehensive income (loss)													0	0	123,719	40,741	99	164,559
Dividends													0	0	(33,724)	0	0	(33,724)
Stock option exercises													397	11,924	0	0	0	12,321
Share-based compensation plans other, net													341	19,008	0	0	0	19,349
Repurchases of common stock													(72)	(3,360)	0	0	0	(3,432)
Balance at Nov. 28, 2020													51,907	157,867	1,474,406	(302,859)	541	1,381,862
Comprehensive income (loss)													0	0	161,393	32,612	50	194,055
Dividends													0	0	(35,198)	0	0	(35,198)
Stock option exercises													741	31,584	0	0	0	32,325
Share-based compensation plans other, net													181	26,817	0	0	0	26,998
Repurchases of common stock													(51)	(2,631)	0	0	0	(2,682)
Balance at Nov. 27, 2021													$ 52,778	$ 213,637	$ 1,600,601	$ (270,247)	$ 591	$ 1,597,360

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Cash flows from operating activities:
Net income including non-controlling interest	$ 161,475	$ 123,788	$ 130,844
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Depreciation	72,106	68,226	67,115
Amortization	71,068	70,591	74,091
Deferred income taxes	16,192	(24,730)	(29,028)
Income from equity method investments, net of dividends received	2,776	375	(39)
Loss (gain) on sale of assets	648	86	(24,104)
Share-based compensation	22,366	16,914	24,003
Pension and other postretirement benefit plan contributions	(3,840)	(5,479)	(8,063)
Pension and other postretirement benefit plan income	(28,662)	(14,763)	(11,300)
Mark to market adjustment related to contingent consideration liabilities	2,300	800	0
Change in assets and liabilities, net of effects of acquisitions:
Trade receivables, net	(124,849)	(14,842)	(25,632)
Inventories	(135,351)	15,708	19,584
Other assets	(79,097)	38,412	(18,316)
Trade payables	176,337	23,130	11,553
Accrued compensation	27,741	2,588	1,342
Other accrued expenses	1,186	16,361	(1,882)
Income taxes payable	(4,137)	5,511	21,043
Other liabilities	(73,508)	24,566	448
Other	108,566	(15,683)	37,518
Net cash provided by operating activities	213,317	331,559	269,177
Cash flows from investing activities:
Purchased property, plant and equipment	(96,089)	(87,288)	(61,982)
Purchased businesses, net of cash acquired	(5,445)	(9,500)	(8,292)
Purchased business assets	0	(5,623)	0
Purchased business remaining equity	0	0	(9,870)
Proceeds from sale of property, plant and equipment	2,896	1,506	11,133
Proceeds from sale of business	0	0	70,293
Cash received from government grant	5,800	0	8,881
Cash outflow related to government grant	(1,822)	(8,555)	(2,758)
Net cash (used in) provided by investing activities	(94,660)	(109,460)	7,405
Cash flows from financing activities:
Proceeds from issuance of long-term debt	0	300,000	0
Repayment of long-term debt	(156,500)	(518,000)	(288,600)
Net proceeds from notes payable	9,346	4,128	1,662
Dividends paid	(34,859)	(33,461)	(32,357)
Contingent consideration payment	(1,700)	(767)	(3,610)
Proceeds from stock options exercised	32,325	12,321	10,885
Repurchases of common stock	(2,682)	(3,432)	(3,026)
Net cash used in financing activities	(154,070)	(239,211)	(315,046)
Effect of exchange rate changes on cash and cash equivalents	(3,335)	5,455	(138)
Net change in cash and cash equivalents	(38,748)	(11,657)	(38,602)
Cash and cash equivalents at beginning of year	100,534	112,191	150,793
Cash and cash equivalents at end of year	61,786	100,534	112,191
Supplemental disclosure of cash flow information:
Dividends paid with company stock	339	263	338
Cash paid for interest, net of amount capitalized of $905, $565, and $416 for the years ended November 27, 2021, November 28, 2020 and November 30, 2019, respectively	62,753	69,452	107,088
Cash paid for income taxes, net of refunds	$ 72,955	$ 49,986	$ 37,232

XML

Consolidated Statements of Cash Flows (Parentheticals) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Capitalized interest costs	$ 905	$ 565	$ 416

XML

Note 1 - Nature of Business and Summary of Significant Accounting Policies

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Business Description and Accounting Policies [Text Block]

Note 1: Nature of Business and Summary of Significant Accounting Policies

Nature of Business

H.B. Fuller Company and our subsidiaries formulate, manufacture and market specialty adhesives, sealants, coatings, polymers, tapes, encapsulants, additives and other specialty chemical products globally, with sales operations in 35 countries in North America, Europe, Latin America, the Asia Pacific region, India, the Middle East and Africa.

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. In 2021, as a percentage of total net revenue by operating segment, Hygiene, Health and Consumable Adhesives accounted for 45 percent, Engineering Adhesives 42 percent and Construction Adhesives 13 percent.

Our Hygiene, Health and Consumable Adhesives operating segment produces and supplies a full range of specialty industrial adhesives such as thermoplastic, thermoset, reactive, water-based and solvent-based products for applications in various markets, including packaging (food and beverage containers, flexible packaging, consumer goods, package integrity and re-enforcement, and non-durable goods), converting (corrugation, folding carton, tape and label, paper converting, envelopes, books, multi-wall bags, sacks, and tissue and towel), nonwoven and hygiene (disposable diapers, feminine care and medical garments) and health and beauty.

Our Engineering Adhesives operating segment produces and supplies high performance industrial adhesives such as reactive, light cure, two-part liquids, polyurethane, silicone, film and fast cure products to the durable assembly (appliances and filters), performance wood (windows, doors and wood flooring) and textile (footwear and sportswear), transportation, electronics, medical, clean energy, aerospace and defense, appliance, heavy machinery and insulating glass markets.

Our Construction Adhesives operating segment includes products used for tile setting (adhesives, grouts, mortars, sealers and levelers), the commercial roofing industry (pressure-sensitive adhesives, tapes and sealants) and heating, ventilation and air conditioning and insulation applications (duct sealants, weather barriers and fungicidal coatings and block fillers). This operating segment also includes caulks and sealants for the consumer market and professional trade, sold through retailers, primarily in Australia.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of H.B. Fuller Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated. Investments in affiliated companies in which we exercise significant influence, but which we do not control, are accounted for in the Consolidated Financial Statements under the equity method of accounting. As such, consolidated net income includes our equity portion in current earnings of such companies, after elimination of intercompany profits. Investments in which we do not exercise significant influence (generally less than a 20 percent ownership interest) are accounted for using the measurement alternative.

Our 50 percent ownership in Sekisui-Fuller Company, Ltd., our Japan joint venture, is accounted for under the equity method of accounting as we do not exercise control over the investee. In fiscal years 2021, 2020 and 2019, this equity method investment was not significant as defined in Regulation S-X under the Securities Exchange Act of 1934. As such, financial information as of  November 27, 2021, November 28, 2020, and November 30, 2019 for Sekisui-Fuller Company, Ltd. is not required.

Our fiscal year ends on the Saturday closest to November 30. Fiscal year-end dates were  November 27, 2021, November 28, 2020, and November 30, 2019 for 2021, 2020 and 2019, respectively.

Use of Estimates

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

Revenue Recognition

We sell a variety of adhesives, sealants and other specialty chemical products to a diverse customer base. The vast majority of our arrangements contain a single performance obligation to transfer manufactured goods to the customer as governed by an individual purchase order.

We recognize revenue at the amount of consideration to which we expect to be entitled in exchange for transferring the promised goods to the customer. The transaction price includes an estimation of any variable amounts of consideration to which we will be entitled. The most common forms of variable consideration within our arrangements are customer rebates, which are recorded as a reduction to revenue at the time of the initial sale using the expected value method. The expected value method is the sum of probability-weighted amounts in a range of possible consideration amounts and is based on a consideration of historical, current and forecast information. Changes in estimates are updated each reporting period. There are no material instances where variable consideration is constrained and not recorded at the initial time of sale. Product returns are recorded as a reduction to revenue based on historical experience and anticipated sales returns that occur in the normal course of business. We primarily have assurance-type warranties that do not result in separate performance obligations. We have elected to present revenue net of sales and other similar taxes.

We recognize revenue when control of goods is transferred to the customer. For the vast majority of our arrangements, control transfers at a point in time either upon shipment or upon delivery of the goods to the customer. The timing of transfer of control is determined considering the timing of the transfer of legal title, physical possession, and risks and rewards of goods to the customer.

We record shipping and handling revenue in net revenue and outbound shipping and handling costs in cost of goods sold. The majority of our shipping and handling activities are performed prior to transfer of control of the goods to the customer. For those arrangements where we provide shipping and handling services after control of the goods has transferred to the customer, we have elected the practical expedient allowed under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 606 to account for these activities as a fulfillment cost rather than as a separate performance obligation.

Provisions for sales returns are estimated based on historical experience and are adjusted for known returns, if material. Customer incentive programs (primarily volume purchase rebates) and arrangements such as cooperative advertising, slotting fees and buy-downs are recorded as a reduction of net revenue in accordance with ASC 606. Customer incentives recorded in the Consolidated Statements of Income as a reduction of net revenue were $33,441, $34,860 and $22,795 in 2021, 2020 and 2019, respectively.

For certain products, consigned inventory is maintained at customer locations. For this inventory, revenue is recognized in the period that the inventory is consumed. Sales to distributors require a distribution agreement or purchase order. As a normal practice, distributors do not have a right of return.

Cost of Sales

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

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses include sales and marketing, research and development, technical and customer service, finance, legal, human resources, general management and similar expenses.

Income Taxes

The income tax provision is computed based on income before income from equity method investments included in the Consolidated Statement of Income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Enacted statutory tax rates applicable to future years are applied to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances reduce deferred tax assets when it is not more-likely-than-not that a tax benefit will be realized. See Note 11 for further information.

Acquisition Accounting

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

● Identifying the acquirer,

● Determining the acquisition date,

● Recognizing and measuring the identifiable assets acquired and the liabilities assumed, and

● Recognizing and measuring goodwill or a gain from a bargain purchase

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

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

Cash Equivalents

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

Restrictions on Cash

There were no restrictions on cash as of November 27, 2021 or November 28, 2020. There are no contractual or regulatory restrictions on the ability of consolidated and unconsolidated subsidiaries to transfer funds to us, except for typical statutory restrictions which prohibit distributions in excess of net capital or similar tests. The majority of our cash in non-U.S. locations is considered indefinitely reinvested.

Trade Receivables and Allowances

Trade receivables are recorded at the invoiced amount and do not bear interest. Allowances are maintained for doubtful accounts, credits related to pricing or quantities shipped and early payment discounts. The allowance for doubtful accounts includes an estimate of future uncollectible receivables based on the aging of the receivable balance and our collection experience. The allowance also includes specific customer accounts when it is probable that the full amount of the receivable will not be collected. Current expectations of future credit losses using market and industry data are considered in the specific customer accounts. See Note 4 for further information.

Inventories

Inventories are recorded at cost (not in excess of net realizable value) as determined by the weighted-average cost method and are valued at the lower of cost or net realizable value.

Investments

Investments with a value of $9,584 and $9,006 represent the cash surrender value of life insurance contracts as of November 27, 2021 and November 28, 2020, respectively. These assets are held to primarily support supplemental pension plans and are recorded in other assets in the Consolidated Balance Sheets. The corresponding gain or loss associated with these contracts is reported in earnings each period as a component of selling, general and administrative expenses.

Equity Investments

Investments in an entity where we own less than 20% of the voting stock of the entity and do not exercise significant influence over operating and financial policies of the entity are accounted for using the measurement alternative at cost less impairment plus or minus observable price changes in orderly transactions. We have a policy in place to review our investments at least annually, to evaluate the accounting method and identify observable price changes that could indicate impairment. If we believe that an impairment exists, it is our policy to calculate the fair value of the investment and recognize as impairment any amount by which the carrying value exceeds the fair value of the investment. We did not have any impairment of our equity investments for the years ended November 27, 2021, November 28, 2020, and November 30, 2019. The book value of the equity investments was $1,667 as of  November 27, 2021 and $1,669 as of November 28, 2020.

Property, Plant and Equipment

Property, plant and equipment are carried at cost and depreciated over the useful lives of the assets using the straight-line method. Estimated useful lives range from 20 to 40 years for buildings and improvements, 3 to 20 years for machinery and equipment, and the shorter of the lease or expected life for leasehold improvements. Fully depreciated assets are retained in property and accumulated depreciation accounts until removed from service. Upon disposal, assets and related accumulated depreciation are removed. Upon sale of an asset, the difference between the proceeds and remaining net book value is charged or credited to other income, net on the Consolidated Statements of Income. Expenditures that add value or extend the life of the respective assets are capitalized, while expenditures that are typical recurring repairs and maintenance are expensed as incurred. Interest costs associated with construction and implementation of property, plant and equipment of $905, $565 and $416 were capitalized in 2021, 2020 and 2019, respectively.

Goodwill

We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows or ongoing declines in market capitalization. The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit. The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill. In performing the impairment test, we determined the fair value of our reporting units through the income approach by using discounted cash flow (“DCF”) analyses. Determining fair value requires the company to make judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the DCF analysis for each reporting unit are based on the reporting unit's budget, long-term business plan and recent operating performance. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, an impairment charge is recorded for any excess of the carrying value over the estimated fair value. Based on the analysis performed for our fiscal 2021 annual impairment test, there were no indications of impairment for any of our reporting units. See Note 5 for further information.

Intangible Assets

Intangible assets include patents, customer lists, technology, trademarks and other intangible assets acquired from independent parties and are amortized on a straight-line basis with estimated useful lives ranging from 3 to 20 years. The straight-line method of amortization of these assets reflects an appropriate allocation of the costs of the intangible assets to earnings in proportion to the amount of economic benefits obtained in each reporting period.

Impairment of Long-Lived Assets

Our long-lived assets are tested for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. An impairment loss would be measured and recognized when the carrying amount of an asset (asset group) exceeds the estimated undiscounted future cash flows expected to result from the use of the asset (asset group) and its eventual disposition. The impairment loss to be recorded would be the excess of the asset's carrying value over its fair value. Fair value is generally determined using a DCF analysis or other valuation technique. Costs related to internally developed intangible assets are expensed as incurred.

Foreign Currency Translation

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

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

Pension and Other Postretirement Benefits

We sponsor defined-benefit pension plans in both the U.S. and non-U.S. entities. Also in the U.S., we sponsor other postretirement plans for health care and life insurance benefits. Expenses and liabilities for the pension plans and other postretirement plans are actuarially calculated. These calculations are based on our assumptions related to the discount rate, expected return on assets, projected salary increases, health care cost trend rates and mortality rates. The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan. The approach identifies a broad population of corporate bonds that meet the quality and size criteria for the particular plan. We use this approach rather than a specific index that has a certain set of bonds that may or may not be representative of the characteristics of our particular plan. Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 60 percent equities and 40 percent fixed income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward-looking observations. The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the impact of active management of the plan’s assets. Note 10 includes disclosure of assumptions employed in these measurements for both the non-U.S. and U.S. plans.

Asset Retirement Obligations

We recognize asset retirement obligations ("ARO") in the period in which we have an existing legal obligation associated with the retirement of a tangible long-lived asset, and the amount can be reasonably estimated. The ARO is recognized at fair value when the liability is incurred. Upon initial recognition of a liability, that cost is capitalized as part of the related long-lived asset and depreciated on a straight-line basis over the remaining estimated useful life of the related asset. We have recognized a liability related to special handling of asbestos related materials in certain facilities for which we have plans or expectation of plans to undertake a major renovation or demolition project that would require the removal of asbestos or have plans or expectation of plans to exit a facility. In addition, we have determined that we have facilities with some level of asbestos that will require abatement action in the future. Once the probability and timeframe of an action are determined, we apply certain assumptions to determine the related liability and asset. These assumptions include the use of inflation rates, the use of credit adjusted risk-free discount rates and the estimation of costs to handle asbestos related materials. The recorded liability is required to be adjusted for changes resulting from the passage of time and/or revisions to the timing or the amount of the original estimate. The asset retirement obligation liability was $2,917 and $2,948 at November 27, 2021 and November 28, 2020, respectively.

Environmental Costs

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments are made, or remedial efforts are probable, and the costs can be reasonably estimated. The timing of these accruals is generally no later than the completion of feasibility studies.

Contingent Consideration Liability

Concurrent with business acquisitions, we enter into agreements that require us to pay the sellers a certain amount based upon a formula related to the entity’s financial results. The change in fair value of the contingent consideration liability is recorded in SG&A expenses in the Consolidated Statements of Income.

Share-based Compensation

We have various share-based compensation programs which provide for equity awards, including non-qualified stock options, incentive stock options, restricted stock units, performance awards and deferred compensation. We use the straight-line attribution method to recognize compensation expense associated with share-based awards based on the fair value on the date of grant, net of the estimated forfeiture rate. Expense is recognized over the requisite service period related to each award, which is the period between the grant date and the earlier of the award’s stated vesting term or the date the employee is eligible for early retirement based on the terms of the plan. The fair value of stock options is estimated using the Black-Scholes option pricing model. All of our stock compensation expense is recorded in SG&A expenses in the Consolidated Statements of Income. See Note 9 for additional information.

Earnings per Share

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

(in thousands, except per share data)	2021		2020		2019
Net income attributable to H.B. Fuller	$	161,393	$	123,719	$	130,817
Weighted-average common shares – basic		52,887		52,039		50,920
Equivalent shares from share-based compensation plans		1,428		481		1,063
Weighted-average common and common equivalent shares – diluted		54,315		52,520		51,983
Basic earnings per share	$	3.05	$	2.38	$	2.57
Diluted earnings per share	$	2.97	$	2.36	$	2.52

Share-based compensation awards for 1,535,503, 3,982,275 and 2,951,697 shares for 2021, 2020 and 2019, respectively, were excluded from the diluted earnings per share calculation because they were antidilutive.

Financial Instruments and Derivatives

As a part of our ongoing operations, we are exposed to market risks such as changes in foreign currency exchange rates and interest rates. To manage these risks, we may enter into derivative transactions pursuant to our established policies.

Our objective is to balance, where possible, non-functional currency denominated assets to non-functional currency denominated liabilities to have a natural hedge and minimize foreign exchange impacts. We minimize risks from foreign currency exchange rate fluctuations through normal operating and financing activities and, when deemed appropriate, through the use of derivative instruments. Derivatives consisted primarily of forward currency contracts used to manage foreign currency denominated assets and liabilities. For derivative instruments outstanding that were not designated as hedges for accounting purposes, the gains and losses related to mark-to-market adjustments were recognized as other income or expense in the income statement during the periods the derivative instruments were outstanding. To manage exposure to currency rate movements on expected cash flows, the company may enter into cross-currency swap agreements. 

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

Changes in the fair values of derivatives are recorded in net earnings or other comprehensive income, based on the type of derivative, and whether the instrument is designated and effective as a hedge transaction. Gains or losses on derivative instruments reported in accumulated other comprehensive income (loss) are reclassified to earnings in the period the hedged item affects earnings. Any ineffectiveness is recognized in earnings in the current period. We maintain master netting arrangements that allow us to net settle contracts with the same counterparties; we do not elect to offset amounts in our Consolidated Balance Sheet.  These arrangements generally do not call for collateral. We do not enter into any speculative positions with regard to derivative instruments. See Note 12 for further information regarding our financial instruments.

Purchase of Company Common Stock

Under the Minnesota Business Corporation Act, repurchased stock is included in authorized shares, but is not included in shares outstanding. The excess of the repurchase cost over par value is charged to additional paid-in capital. When additional paid-in capital is exhausted, the excess reduces retained earnings. We repurchased 47,481, 72,000 and 73,043 shares of common stock in 2021, 2020 and 2019, respectively, in connection with the statutory minimum tax withholding related to vesting of restricted stock.

Change in Accounting Principle - Credit Losses

In June 2016, the FASB issued 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. The FASB also issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, in November 2018, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments, in April 2019 and ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments, in November 2019. ASU No. 2018-19 clarifies that receivables arising from operating leases are within the scope of Topic 842, Leases. ASU No. 2019-04 and ASU No. 2019-11 clarify various scoping and other issues arising from ASU No. 2016-13. The amendments in these ASUs affect the guidance in ASU No. 2016-13 and are effective in the same timeframe as ASU No. 2016-13. We adopted these ASUs and related standards during the first quarter ended February 27, 2021. Based on the conducted analyses on the change in accounting principle, the ASUs did not have a material impact on the Consolidated Statements of Income or the Consolidated Balance Sheets. Therefore, a modified retrospective adjustment was not required. The trade receivables and allowances significant accounting policy has been changed in accordance with these ASUs.

Change in Accounting Principle – Revenue Recognition

In May 2014, 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. We adopted this ASU during the quarter ended March 2, 2019 using the modified retrospective method of adoption. As a result of the adoption of this ASU, we recorded an increase to opening retained earnings of $1,776 as of December 1, 2018 related to accelerated recognition for arrangements where we provide shipping and handling services after control of the goods has transferred to the customer. Prior periods were not restated. We have included the disclosures required by this ASU in Note 15.

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 were adopted during the quarter ended March 2, 2019 with ASU No. 2014-09 as discussed above.

Change in Accounting Principle – Income Tax Impact of Intra-Entity Transfers of Assets Other Than Inventory

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. We adopted this ASU during the quarter ended  March 2, 2019. We recorded a decrease to opening retained earnings of $733 as of  December 1, 2018 as a result of the adoption of this ASU.

New Accounting Pronouncements

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This ASU requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958-605. Our effective date for adoption of this ASU is our fiscal year beginning December 4, 2022 with early adoption permitted. We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and determined it will not have a material impact.

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

XML

Note 2 - Acquisitions and Divestiture

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Note 2: Acquisitions

STR Holdings, Inc.

On January 13, 2021, we acquired certain assets of STR Holdings, Inc. ("STR") for a base purchase price of $5,445 which was funded through existing cash. The agreement requires us to pay an additional $800 on the first anniversary of the acquisition and contingent consideration of up to $1,700 based on certain agreement provisions. STR, headquartered in Enfield, Connecticut, is a manufacturer of encapsulant products used in the solar industry. The acquisition fair value measurement, which includes intangible assets of $6,700 and other net assets of $1,245, was final as of November 27, 2021. As of November 27, 2021, the agreement provisions for the contingent consideration were met, and as a result, the $1,700 was paid. See Note 13 for the fair value and payment of this contingent consideration. We recorded no goodwill in our accounting for this acquisition. STR is reported in our Engineering Adhesives ("EA") operating segment. The STR acquisition does not represent a material business combination and therefore pro forma financial information is not provided. 

D.H.M. Adhesives, Inc.

On February 3, 2020, we acquired certain assets of D.H.M. Adhesives, Inc. (“D.H.M.”) for approximately $9,500 which was funded through existing cash. In addition, the agreement requires us to pay contingent consideration of up to approximately $8,100 based upon a formula related to revenue during the fiscal years ended November 27, 2021 and December 3, 2022. D.H.M., headquartered in Calhoun, Georgia, is a provider of hotmelt adhesives. The acquisition fair value measurement was final as of May 30, 2020 and includes goodwill of $1,063 and customer relationship intangible of $11,900. The fair value of the contingent consideration liability as of the date of acquisition was $5,000 resulting in a final purchase price of $14,500. See Note 13 for further discussion of the fair value of the contingent consideration liability. Goodwill is deductible for tax purposes. D.H.M. and the related goodwill are reported in our Hygiene, Health and Consumable Adhesives operating segment. The D.H.M. acquisition does not represent a material business combination and therefore pro forma financial information is not provided.

Ramapo Sales and Marketing, Inc.

On May 17, 2019, we acquired certain assets from a window and insulating glass sealants sales and distribution company, Ramapo Sales and Marketing, Inc. (“Ramapo”), headquartered in Charleston, South Carolina. This acquisition supports the integration of the insulating glass business that we acquired as part of the Royal Adhesives acquisition. The purchase price of $8,292 was funded through existing cash. In addition, we were required to pay up to $3,400 in contingent consideration based upon financial results for the twelve months ended December 31, 2019. Existing receivables of $2,166 from Ramapo were effectively settled as a result of the acquisition. The acquisition fair value measurement was final as of May 30, 2020 and includes goodwill of $165, customer relationship intangible of $8,800, and additional acquired assets of $4,148. The fair value of the contingent consideration liability as of the date of the acquisition was $2,654, resulting in a final purchase price of $10,947. During the second quarter of 2020, the contingent consideration liability was finalized and adjusted to a final balance of $767. Ramapo and the related goodwill are reported in our Engineering Adhesives operating segment.

Dalton Holdings, LLC

On July 1, 2019, we completed the sale of Dalton Holdings, LLC (“Dalton Holdings”), which primarily manufactures surfactants and thickeners, within the Americas Adhesives segment. The sale resulted in a pre-tax gain on sale of $18,764, which is recorded in other income, net in the Consolidated Statements of Income for the year ended November 30, 2019.

XML

Note 3 - Restructuring Actions

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

Note 3: Restructuring Actions

The company has approved restructuring plans consisting of consolidation plans, organizational changes and other actions related to the reorganization of our business into three segments, the integration of the operations of Royal Adhesives with the operations of the company and other actions to optimize operations. The following table summarizes the pre-tax distribution of charges under these restructuring plans by income statement classification:

	November 27, 2021			November 28, 2020		November 30, 2019
Cost of sales	$	(188	)	$	1,013	$	2,082
Selling, general and administrative		975			3,567		12,453
	$	787		$	4,580	$	14,535

The restructuring charges are all recorded in Corporate Unallocated for segment reporting purposes.

A summary of the restructuring liability is presented below:

	Employee-
	Related			Other			Total
Balance at end November 30, 2019	$	9,830		$	924		$	10,754
Expense incurred		2,898			1,681			4,579
Cash payments		(7,051	)		(2,357	)		(9,408	)
Foreign currency translation		157			-			157
Balance at end November 28, 2020	$	5,834		$	248		$	6,082
Expense incurred		(807	)		1,594			787
Non-cash charges		-			(135	)		(135	)
Cash payments		(3,917	)		(1,707	)		(5,624	)
Foreign currency translation		(15	)		-			(15	)
Balance at end November 27, 2021	$	1,095		$	-		$	1,095

Non-cash charges include accelerated depreciation resulting from the cessation of use of certain long-lived assets. Restructuring liabilities have been classified as a component of other accrued expenses on the Consolidated Balance Sheets.

XML

Note 4 - Supplemental Financial Statement Information

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Additional Financial Information Disclosure [Text Block]

Note 4: Supplemental Financial Statement Information

Statement of Income Information

Additional details of income statement amounts for 2021, 2020 and 2019 are as follows:

	2021			2020			2019
Foreign currency transaction losses, net	$	(5,962	)	$	(3,078	)	$	(1,156	)
(Loss) gain on disposal of assets		(648	)		(86	)		24,304
Net periodic pension benefit		32,070			17,902			13,661
Other, net		7,395			660			1,134
Total other income, net	$	32,855		$	15,398		$	37,943
Research and development expenses (included in SG&A expenses)	$	39,344		$	36,969		$	36,624

Balance Sheet Information

Additional details of balance sheet amounts as of  November 27, 2021 and November 28, 2020 are as follows:

	2021			2020
Inventories
Raw materials	$	226,723		$	151,026
Finished goods		221,681			172,187
Total inventories	$	448,404		$	323,213
Other current assets
Other receivables	$	28,874		$	18,666
Prepaid income taxes		13,359			22,137
Prepaid taxes other than income taxes		26,929			20,270
Prepaid expenses		25,889			19,212
Assets held for sale		1,284			828
Total other current assets	$	96,335		$	81,113
Property, plant and equipment
Land	$	84,492		$	87,403
Buildings and improvements		395,849			393,175
Machinery and equipment		915,914			876,858
Construction in progress		104,734			70,747
Total, at cost		1,500,989			1,428,183
Accumulated depreciation		(805,622	)		(757,439	)
Net property, plant and equipment	$	695,367		$	670,744
Other assets
Investments and company owned life insurance	$	9,584		$	9,006
Equity method investments		49,333			53,863
Equity investments		1,667			1,669
Long-term deferred income taxes		37,116			37,376
Prepaid pension costs		90,946			43,206
Postretirement other than pension asset		107,323			73,137
Operating lease right-of-use assets		32,744			28,445
Other long-term receivables		23,661			16,760
Other long-term assets		19,699			14,751
Total other assets	$	372,073		$	278,213
Other accrued expenses
Taxes other than income taxes	$	14,280		$	16,893
Miscellaneous services		5,626			5,691
Customer rebates		20,743			15,008
Interest		2,964			4,901
Insurance		329			184
Product liability		432			501
Contingent consideration liability		8,100			5,800
Current operating lease liabilities		8,921			8,706
Accrued expenses		24,666			26,292
Total other accrued expenses	$	86,061		$	83,976
Other liabilities
Asset retirement obligations	$	2,917		$	2,948
Long-term deferred income taxes		179,401			165,877
Long-term income tax liability		14,364			18,089
Long-term deferred compensation		9,665			8,510
Postretirement other than pension		2,657			2,930
Noncurrent operating lease liabilities		24,061			19,498
Long-term accrued payroll tax		4,215			7,216
Environmental liabilities		3,521			3,639
Other long-term liabilities		36,389			50,212
Total other liabilities	$	277,190		$	278,919

Additional details on the trade receivables allowance for doubtful accounts, credits related to pricing or quantities shipped and early payment discounts for 2021, 2020 and 2019 are as follows:

	2021			2020			2019
Balance at beginning of year	$	12,905		$	10,682		$	14,017
Charged to expenses and other adjustments		(546	)		8,313			2,678
Write-offs		(2,278	)		(6,158	)		(5,947	)
Foreign currency translation effect		(146	)		68			(66	)
Balance at end of year	$	9,935		$	12,905		$	10,682

Statement of Comprehensive Income Information

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

	November 27, 2021
										Non-controlling
	H.B. Fuller Stockholders									Interest
	Pretax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interests		-			-		$	161,393		$	82
Other comprehensive income (loss)
Foreign currency translation adjustment1	$	(26,262	)		-			(26,262	)		(32	)
Defined benefit pension plans adjustment2		64,912			(16,731	)		48,181			-
Interest rate swap3		20,109			(4,930	)		15,179			-
Other cash flow hedges3		(4,554	)		68			(4,486	)		-
Other comprehensive income (loss)	$	54,205		$	(21,593	)		32,612			(32	)
Comprehensive income							$	194,005		$	50

	November 28, 2020
										Non-controlling
	H.B. Fuller Stockholders									Interest
	Pretax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interests		-			-		$	123,719		$	69
Other comprehensive income (loss)
Foreign currency translation adjustment1	$	41,712			-			41,712			30
Defined benefit pension plans adjustment2		5,823			(1,235	)		4,588			-
Interest rate swap3		(15,618	)		3,853			(11,765	)		-
Other cash flow hedges3		6,307			(101	)		6,206			-
Other comprehensive income	$	38,224		$	2,517			40,741			30
Comprehensive income							$	164,460		$	99

	November 30, 2019
										Non-controlling
	H.B. Fuller Stockholders									Interest
	Pretax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interests		-			-		$	130,817		$	27
Other comprehensive income (loss)
Foreign currency translation adjustment1	$	(20,409	)		-			(20,409	)		14
Defined benefit pension plans adjustment2		(28,635	)		6,807			(21,828	)		-
Interest rate swap3		(46,254	)		11,223			(35,031	)		-
Other cash flow hedges3		14,429			(609	)		13,820			-
Other comprehensive (loss) income	$	(80,869	)	$	17,421			(63,448	)		14
Comprehensive income							$	67,369		$	41

¹ Income taxes are not provided for foreign currency translation relating to indefinite investments in international subsidiaries.

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

³ Loss reclassified from accumulated other comprehensive income (loss) into earnings is reported in other income, net.

Statement of Total Equity Information

Components of accumulated other comprehensive income (loss) are as follows:

	November 27, 2021
							Non-
				H.B. Fuller			controlling
	Total			Stockholders			Interests
Foreign currency translation adjustment	$	(132,370	)	$	(132,267	)	$	(103	)
Interest rate swap, net of taxes of $3,224		(9,924	)		(9,924	)		-
Cash flow hedges, net of taxes of ($53)		3,483			3,483			-
Defined benefit pension plans adjustment, net of taxes of $63,925		(113,198	)		(113,198	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Total accumulated other comprehensive loss	$	(270,350	)	$	(270,247	)	$	(103	)

	November 28, 2020
							Non-
				H.B. Fuller			controlling
	Total			Stockholders			Interests
Foreign currency translation adjustment	$	(106,140	)	$	(106,005	)	$	(135	)
Interest rate swap, net of taxes of $8,153		(25,103	)		(25,103	)		-
Cash flow hedges, net of taxes of ($121)		7,969			7,969			-
Defined benefit pension plans adjustment, net of taxes of $80,656		(161,379	)		(161,379	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Total accumulated other comprehensive loss	$	(302,994	)	$	(302,859	)	$	(135	)

	November 30, 2019
							Non-
				H.B. Fuller			controlling
	Total			Stockholders			Interests
Foreign currency translation adjustment	$	(147,821	)	$	(147,716	)	$	(105	)
Interest rate swap, net of taxes of ($4,300)		(13,338	)		(13,338	)		-
Cash flow hedges, net of taxes of $21		1,763			1,763			-
Defined benefit pension plans adjustment, net of taxes of $81,891		(165,968	)		(165,968	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Total accumulated other comprehensive loss	$	(343,705	)	$	(343,600	)	$	(105	)

XML

Note 5 - Goodwill and Other Intangible Assets

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note 5: Goodwill and Other Intangible Assets

Goodwill balances by reportable segment as of  November 27, 2021 and November 28, 2020 consisted of the following:

	2021		2020
Hygiene, Health and Consumable Adhesives	$	325,470	$	332,909
Engineering Adhesives		662,021		667,863
Construction Adhesives		311,354		311,231
Total	$	1,298,845	$	1,312,003

Additional details related to goodwill for 2021 and 2020 are as follows:

	2021			2020
Balance at beginning of year	$	1,312,003		$	1,281,808
Ramapo acquisition		-			(746	)
D.H.M acquisition		-			1,063
Foreign currency translation effect		(13,158	)		29,878
Balance at end of year	$	1,298,845		$	1,312,003

We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization. The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit. The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill. In performing the impairment test, we determined the fair value of our reporting units through the income approach by using DCF analyses. Determining fair value requires the company to make judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the DCF analysis for each reporting unit are based on the reporting unit's budget, long-term business plan, and recent operating performance. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. Based on the analysis performed during the fourth quarter of 2021, there were no indications of impairment for any of our reporting units.

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

	Purchased
	Technology			Customer
Amortizable Intangible Assets	and Patents			Relationships			Tradename			All Other			Total
As of November 27, 2021
Original cost	$	115,980		$	932,644		$	63,543		$	11,343		$	1,123,510
Accumulated amortization		(62,364	)		(335,143	)		(33,786	)		(5,635	)		(436,928	)
Net identifiable intangibles	$	53,616		$	597,501		$	29,757		$	5,708		$	686,582
Weighted-average useful lives (in years)		13			17			14			12			17
As of November 28, 2020
Original cost	$	113,775		$	933,943		$	63,266		$	11,410		$	1,122,394
Accumulated amortization		(53,216	)		(279,586	)		(29,368	)		(4,775	)	$	(366,945	)
Net identifiable intangibles	$	60,559		$	654,357		$	33,898		$	6,635		$	755,449
Weighted-average useful lives (in years)		13			17			14			12			17

Amortization expense with respect to amortizable intangible assets was $71,068, $70,591 and $74,091 in 2021, 2020 and 2019, respectively.

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

Fiscal Year	2022		2023		2024		2025		2026		Thereafter
Amortization Expense	$	68,879	$	66,056	$	61,146	$	58,578	$	51,773	$	380,150

The above amortization expense forecast is an estimate. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, potential impairment, accelerated amortization or other events.

Non-amortizable intangible assets as of  November 27, 2021 and November 28, 2020 were $493 and $519, respectively, and relate to trademarks and trade names. The change in non-amortizable assets in 2021 compared to 2020 was due to changes in foreign currency exchange rates.

XML

Note 6 - Leases

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

Note 6: Leases

We adopted ASU No. 2016-02 and related standards (collectively, “ASC 842”), which replaced previous lease accounting guidance, during the first quarter ended February 29, 2020 using the modified retrospective method of adoption. As a result of electing this transition method, prior periods have not been restated. The adoption of ASC 842 resulted in the recording of right-of-use assets and associated lease liabilities of approximately $28,254 each as of the first day of the quarter ended February 29, 2020. ASC 842 did not have a material impact on our Consolidated Statement of Income. We elected the package of practical expedients permitted under the transition guidance within ASC 842, which includes not reassessing lease classification of existing leases. We did not elect the hindsight practical expedient.

As a lessee, the company leases office, manufacturing and warehouse space, and equipment. Certain lease agreements include rental payments adjusted annually based on changes in an inflation index. Our leases do not contain material residual value guarantees or material restrictive covenants. Lease expense is recognized on a straight-line basis over the lease term. We determine if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used.

Operating lease and finance lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the company’s incremental borrowing rate. We determine the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region.

Certain leases include one or more options to renew, with terms that can extend the lease term up to five years. We include options to renew the lease as part of the right-of-use lease asset and liability when it is reasonably certain we will exercise the option. In addition, certain leases contain termination options with an associated penalty. In general, the company is not reasonably certain to exercise such options.

For the measurement and classification of lease agreements, we group lease and non-lease components into a single lease component for all underlying asset classes. Variable lease payments primarily include payments for non-lease components, such as maintenance costs, payments for leased assets used beyond their non-cancelable lease term as adjusted for contractual options to terminate or renew, and payments for non-components such as sales tax. Certain leases contain immaterial variable lease payments based on usage.

The components of lease expense are as follows:

	November 27, 2021		November 28, 2020
Operating lease cost	$	11,958	$	12,581
Finance lease cost:
Amortization of assets1		673
Interest on lease liabilities1		110
Variable lease cost		5,990		4,024
Total net lease cost	$	18,731	$	16,605

¹ In 2020, finance leases were not material for disclosure.

Supplemental balance sheet information related to leases is as follows:

	Location on
	Balance Sheet	November 27, 2021		November 28, 2020
Operating leases:
Operating lease right-of-use assets	Other assets	$	32,744	$	28,445
Current operating lease liabilities	Other accrued expenses		8,921		8,706
Noncurrent operating lease liabilities	Other liabilities		24,061		19,498
Total operating lease liabilities		$	32,982	$	28,204
Finance leases:
Equipment right-of-use assets1	Property, plant and equipment	$	9,455
Current obligations of finance leases1	Other accrued expenses	$	1,109
Finance leases, net of current obligations1	Other liabilities		7,548
Total finance lease liabilities		$	8,657

¹ In 2020, finance leases were not material for disclosure.

As of November 27, 2021, the weighted average remaining lease term is 7.2 years and the weighted average discount rate is 3.3% for the company's operating lease agreements. The weighted average remaining lease term is 10.1 years and the weighted average discount rate is 2.9% for the company's finance lease agreements.

Supplemental information related to leases is as follows:

	November 27, 2021		November 28, 2020
Cash paid amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,251	$	13,216
Operating cash flows from finance leases1		110
Financing cash flows from finance leases1		546
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	20,030	$	13,166
Finance leases1		7,630

¹ In 2020, finance leases were not material for disclosure.

Maturities of lease liabilities are as follows:

	November 27, 2021
Fiscal Year	Finance Leases			Operating Leases
2022	$	1,352		$	9,292
2023		1,254			7,500
2024		1,174			5,313
2025		1,171			4,009
2026		1,165			2,360
2027 and beyond		3,841			7,888
Total		9,957			36,362
Less: amounts representing interest		(1,300	)		(3,380	)
Present value of future minimum payments		8,657			32,982
Less: current obligations		(1,109	)		(8,921	)
Noncurrent lease liabilities	$	7,548		$	24,061

Rent expense for all operating leases, which includes minimum lease payments and other charges such as common area maintenance fees, was $19,618 in 2019.

XML

Note 7 - Notes Payable, Long-term Debt and Lines of Credit

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

Note 7: Notes Payable, Long-Term Debt and Lines of Credit

Notes Payable

Notes payable were $24,983 and $16,925 at November 27, 2021 and November 28, 2020, respectively. This amount primarily represents various foreign subsidiaries’ other short-term borrowings that were not part of committed lines. The weighted-average interest rates on short-term borrowings were 8.1 percent in 2021 and 2020 and 8.9 percent in 2019. Fair values of these short-term obligations approximate their carrying values due to their short maturity. There were no funds drawn from the short-term committed lines at November 27, 2021.

Long-Term Debt

	Weighted-Average			Fiscal Year		Balance at			Balance at
	Interest Rate at			Maturity		November 27,			November 28,
Long-Term Debt	November 27, 2021			Date		2021			2020
Revolving credit facility		1.59	%		2024	$	-		$	-
Term Loan B1		3.64	%		2024		1,001,150			1,157,650
Public Notes2		4.00	%		2027		300,000			300,000
Public Notes3		4.25	%		2028		300,000			300,000
Other, including debt issuance cost and discount							(9,671	)		(665	)
Total debt						$	1,591,479		$	1,756,985
Less: current maturities							-			-
Total long-term debt, excluding current maturities						$	1,591,479		$	1,756,985

¹ Term Loan B, due on October 20, 2024, $2,150,000 variable rate at the London Interbank Offered Rate (LIBOR) plus 2.00 percent (2.09 percent at November 27, 2021); $800,000 swapped to various fixed rates as detailed below.

² Public Notes, due February 15, 2027, $300,000 4.00 percent fixed.

³ Public Notes, due October 15, 2028, $300,000 4.25 percent fixed; swapped to a floating rate as detailed below.

Term Loans

On October 20, 2017, we entered into a secured term loan credit agreement (“Term Loan B Credit Agreement”) with a consortium of financial institutions under which we established a $2,150,000 term loan (“Term Loan B”) that we used to repay existing indebtedness, finance working capital needs, finance acquisitions and for general corporate purposes. The Term Loan B Credit Agreement is secured by a security interest in substantially all of the personal property assets of the company and each Guarantor, including 100% of the equity interests in certain domestic subsidiaries and 65% of the equity interests of first-tier foreign subsidiaries together with certain domestic material real property. At November 27, 2021, a balance of $1,001,150 was drawn on the Term Loan B. The interest rate on the Term Loan B is payable at the LIBOR rate plus 2.00 percent (2.09 percent at November 27, 2021). The interest rate is based on a leverage grid. The Term Loan B Credit Agreement expires on October 20, 2024. 

On February 27, 2018, we entered into an interest rate swap agreement to convert $200,000 of our Term Loan B to a fixed rate of 4.589 percent. During the second quarter of 2021, we settled a portion of this interest rate swap as the debt underlying this swap was less than the swap value due to debt paydown. We settled the ineffective portion of the interest rate swap by making a cash payment of $378 and recorded that payment to interest expense in our Consolidated Statements of Income during the second quarter of 2021. On October 20, 2017, we entered into interest rate swap agreements to convert $1,050,000, which was amortized down to $800,000 on October 20, 2021, of our Term Loan B to a fixed interest rate of 4.0275%. See Note 12 for further discussion of these interest rate swaps.

We are subject to mandatory prepayments in the first quarter of each fiscal year equal to 50% of Excess Cash Flow, as defined in the Term Loan B Credit Agreement, of the prior fiscal year less any voluntary prepayments made during that fiscal year. The Excess Cash Flow Percentage shall be reduced to 25% when our Secured Leverage Ratio is below 4.25:1.00 and to 0% when our Secured Leverage Ratio is below 3.75:1.00. The prepayment for the 2021 measurement period was satisfied through amounts prepaid during 2021. We have estimated the 2022 prepayment to be zero.

Public Notes

On February 14, 2017, we issued $300,000 aggregate principal of 10-year unsecured public notes (“10-year Public Notes”) due February 15, 2027 with a fixed coupon of 4.00 percent. Proceeds from this debt issuance were used to repay $138,000 outstanding under the revolving credit facility at that time and prepay $158,750 of our Term Loan A. On February 14, 2017, we entered into an interest rate swap agreement to convert $150,000 of the 10-year Public Notes to a variable interest rate of 1-month LIBOR plus 1.86 percent and on May 1, 2020, we terminated the swap. See Note 12 for further discussion of this interest rate swap.

On October 20, 2020, we issued $300,000 aggregate principal of 8-year unsecured public notes (“8-year Public Notes”) due October 15, 2028 with a fixed coupon of 4.25 percent. Proceeds from this debt issuance were used to prepay $300,000 of our Term Loan B. On February 12, 2021, we entered into interest rate swap agreements to convert our 8-year Public Notes to a variable interest rate of 1-month LIBOR plus 3.28 percent.

The Public Notes are senior unsecured obligations of the company and will rank equally with the company’s other unsecured and unsubordinated debt from time to time outstanding.

Fair Value of Long-Term Debt

Long-term debt had an estimated fair value of $1,618,291 and $1,811,562 as of November 27, 2021 and November 28, 2020, respectively. The fair value of long-term debt is based on quoted market prices for the same or similar issues or on the current rates offered for debt of similar maturities. The estimated fair value of these long-term obligations is not necessarily indicative of the amount that would be realized in a current market exchange.

Long-term Debt Maturities

Maturities of long-term debt for the next five fiscal years are as follows:

Fiscal Year	2022		2023		2024		2025		2026		Thereafter
Long-term debt obligations	$	-	$	-	$	1,001,150	$	-	$	-	$	600,000

Revolving Credit Facility

On October 20, 2020, we amended and restated our revolving credit facility. The revolving credit facility is secured along with the Term Loan B Credit Agreement, by a first-priority security interest in substantially all of the personal property assets of the company and each Guarantor, including 100% of the equity interests in certain domestic subsidiaries and 65% of the equity interests of first-tier foreign subsidiaries. Interest on the revolving credit facility is payable at the LIBOR plus 1.50 percent (1.59 percent at November 27, 2021). A facility fee of 0.25 percent of the unused commitment under the revolving credit facility is payable quarterly. The interest rates and the facility fee are based on a leverage grid. The revolving credit facility matures on July 22, 2024.

As of November 27, 2021, amounts related to our revolving credit facility was as follows:

	Committed		Drawn		Unused
Revolving credit facility	$	400,000	$	-	$	391,286

The secured, multi-currency revolving credit facility can be drawn upon for general corporate purposes up to a maximum of $400,000, less issued letters of credit. At November 27, 2021, letters of credit reduced the available amount under the revolving credit facility by $8,714.

Covenants

The secured Term Loan B Credit Agreement and secured revolving credit facility are subject to certain covenants and restrictions. Restrictive covenants include, but are not limited to, limitations on secured and unsecured borrowings, interest coverage, intercompany transfers and investments, third party investments, dispositions of assets, leases, liens, dividends and distributions, and contains a maximum secured debt to trailing twelve months EBITDA requirement.  Certain covenants become less restrictive after meeting leverage or other financial ratios. In addition, we cannot be a member of any consolidated group as defined for income tax purposes other than with our subsidiaries. At November 27, 2021 and November 28, 2020, all financial covenants were met.

The Indenture under which the Public Notes have been issued contains covenants imposing certain limitations on the ability of the company to incur liens or enter into sales and leaseback transactions. It also provides for customary events of default (subject in certain cases to customary grace and cure periods), which include among other things nonpayment, breach of covenants in the Indenture and certain events of bankruptcy and insolvency. If an event of default occurs and is continuing with respect to the Public Notes, the Trustee or holders of at least 25% in principal amount outstanding of the Public Notes may declare the principal and the accrued and unpaid interest, if any, on all of the outstanding Public Notes to be due and payable. These covenants and events of default are subject to a number of important qualifications, limitations and exceptions that are described in the Indenture.

XML

Note 8 - Stockholders' Equity

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note 8: Stockholders' Equity

Preferred Stock

The Board of Directors is authorized to issue up to 10,045,900 shares of preferred stock that may be issued in one or more series and with such stated value and terms as the Board of Directors may determine.

Common Stock

There were 160,000,000 shares of common stock with a par value of $1.00 authorized and 52,777,753 and 51,906,663 shares issued and outstanding at November 27, 2021 and November 28, 2020, respectively.

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 of up to five years. Under the program, we are authorized to repurchase shares for cash on the open market, from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. The timing of such repurchases is dependent on price, market conditions and applicable regulatory requirements. Upon repurchase of the shares, we reduce our common stock for the par value of the shares with the excess being applied against additional paid-in capital. This authorization replaces the September 30, 2010 authorization to repurchase shares. We did not repurchase any shares during 2021, 2020 and 2019 under our share repurchase program. Up to $187,170 of our outstanding common shares may still be repurchased under the current share repurchase program.

Common Shares Outstanding	2021			2020			2019
Beginning balance		51,906,663			51,241,190			50,732,796
Stock options exercised		740,731			397,456			378,734
Deferred compensation paid		19,895			118,742			5,354
Restricted units vested		157,945			221,275			197,349
Shares withheld for taxes		(47,481	)		(72,000	)		(73,043	)
Ending balance		52,777,753			51,906,663			51,241,190

XML

Note 9 - Accounting for Share-based Compensation

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

Note 9: Accounting for Share-Based Compensation

Overview

We have various share-based compensation programs, which provide for equity awards including non-qualified stock options, incentive stock options, restricted stock units, performance awards and deferred compensation. These equity awards fall under several plans and are described below.

Share-based Compensation Plans

We currently grant stock options and restricted stock units under equity compensation and deferred compensation plans.

Stock options are granted to officers and key employees at prices not less than the fair market value at the date of grant. Non-qualified stock options are generally exercisable beginning one year from the date of grant in cumulative yearly amounts of 33.3 percent. Incentive stock options are based on certain performance-based criteria and are generally exercisable at a stated date when the performance criteria is measured. Stock options generally have a contractual term of 10 years. Options exercised represent newly issued shares.

Restricted stock awards are nonvested stock-based awards that include grants of restricted stock units. Restricted stock awards are independent of option grants and are subject to forfeiture if employment terminates prior to the release of the restrictions. Such awards generally vest beginning one year from the date of grant or 33.3 percent per year for three years, depending on the grant. During the vesting period, ownership of the shares cannot be transferred.

Restricted stock units have dividend equivalent rights equal to the cash dividend paid on restricted stock shares. However, restricted stock units do not have voting rights of common stock and are not considered issued and outstanding upon grant. Restricted stock units become newly issued shares when vested. The dividend equivalent rights for restricted stock units are forfeitable.

We expense the cost, which is the grant date fair market value, of the restricted stock units ratably over the period during which the restrictions lapse. The grant date fair value is our closing stock price on the date of grant.

We are required to recognize compensation expense when an employee is eligible to retire. We consider employees eligible to retire at age 55 and after 10 years of service. Awards granted to retirement-eligible employees are forfeited if the retirement-eligible employees retire prior to 180 days after the grant. Accordingly, the related compensation expense is recognized during the 180 day period for awards granted to retirement-eligible employees or over the period from the grant date to the date retirement eligibility is achieved, if less than the stated vesting period.

2020 Master Incentive Plan

This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock and restricted stock units; (d) performance awards; (e) dividend equivalents; (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan. There were 2,253,157 common shares available for grant as of November 27, 2021.

2018 Master Incentive Plan

This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock and restricted stock units; (d) performance awards; (e) dividend equivalents; (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan.

Year 2016 Master Incentive Plan

This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock awards; (d) performance awards; (e) dividend equivalents; and (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan.

2009 Directors’ Stock Incentive Plan

This plan permits granting of (a) shares for amounts non-employee directors defer under the Directors’ Deferred Compensation Plan and (b) discretionary grants of restricted stock, stock options, stock appreciation rights, performance awards and other stock awards.      

Directors' Deferred Compensation Plan

This plan allows non-employee directors to defer all or a portion of their retainer and meeting fees in a number of investment choices, including units representing shares of our common stock. We provide a 10 percent match on deferred compensation invested in these units. These units are required to be paid out in our common stock.

Key Employee Deferred Compensation Plan

This plan allows key employees to defer a portion of their eligible compensation in a number of investment choices, including units representing shares of company common stock. We provide a 10 percent match on deferred compensation invested in these units.

Grant-Date Fair Value

We use the Black-Scholes option-pricing model to calculate the grant-date fair value of stock option awards. The fair value of options granted during 2021, 2020 and 2019 were calculated using the following assumptions:

	2021			2020			2019
Expected life (in years)		5.00			5.00			4.75
Weighted-average expected volatility		32.50	%		24.32	%		24.26	%
Expected volatility range		32.48% - 32.94%			24.18% - 30.99%			23.88% - 24.76%
Risk-free interest rate		0.39% - 1.20%			0.21% - 1.51%			1.34% - 2.55%
Weighted-average expected dividend		1.26	%		1.38	%		1.40	%
Expected dividend yield range		0.92% - 1.27%			1.35% - 2.53%			1.25% - 1.45%
Weighted-average fair value of grants	$	13.29		$	9.63		$	9.76

Expected life – We use historical employee exercise and option expiration data to estimate the expected life assumption for the Black-Scholes grant-date valuation. We believe that this historical data is currently the best estimate of the expected term of a new option. We use a weighted-average expected life for all awards.

Expected volatility – Volatility is calculated using our stock’s historical volatility for the same period of time as the expected life. We have no reason to believe that its future volatility will differ from the past.

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

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

Expense

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

Total share-based compensation expense was $22,366, $16,914 and $24,003 for 2021, 2020 and 2019, respectively. All share-based compensation was recorded as SG&A expense.

As of November 27, 2021, $7,510 of unrecognized compensation costs related to unvested stock option awards is expected to be recognized over a weighted-average period of 0.9 years. Unrecognized compensation costs related to unvested restricted stock units was $10,205 which is expected to be recognized over a weighted-average period of 0.9 years.

Stock Option Activity

The stock option activity for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 is summarized below:

				Weighted-
				Average
	Options			Exercise Price
Outstanding at December 1, 2018		4,466,106		$	44.72
Granted		1,020,246			45.53
Exercised		(378,734	)		28.74
Forfeited or cancelled		(47,308	)		48.90
Outstanding at November 30, 2019		5,060,310		$	46.04
Granted		1,052,968			47.70
Exercised		(397,456	)		31.00
Forfeited or cancelled		(169,907	)		49.11
Outstanding at November 28, 2020		5,545,915		$	47.34
Granted		1,237,094			53.33
Exercised		(740,731	)		43.64
Forfeited or cancelled		(1,069,886	)		56.33
Outstanding at November 27, 2021		4,972,392		$	47.45

The fair value of options granted during 2021, 2020 and 2019 was $17,250, $10,132 and $9,956, respectively. Total intrinsic value of options exercised during 2021, 2020 and 2019 was $15,261, $6,563 and $7,590, respectively. For options outstanding at November 27, 2021, the weighted-average remaining contractual life was 6.5 years and the aggregate intrinsic value was $131,515. There were 3,072,786 options exercisable at November 27, 2021, with a weighted-average remaining contractual life of 5.2 years and an aggregate intrinsic value of $85,685. Intrinsic value is the difference between our closing stock price on the respective trading day and the exercise price, multiplied by the number of options exercised. Proceeds received from option exercises during the year ended  November 27, 2021, November 28, 2020, and November 30, 2019 were $32,325, $12,321 and $10,885, respectively. The company’s actual tax benefits realized for the tax deductions related to the exercise of stock options for 2021, 2020 and 2019 was $3,874, $1,278 and $1,298, respectively.

Restricted Stock Activity

The nonvested restricted stock activity for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 is summarized below:

						Weighted-
				Weighted-		Average
				Average		Remaining
				Grant		Contractual
				Date Fair		Life
	Units			Value		(in Years)
Nonvested at December 1, 2018		414,353		$	47.45		1.0
Granted		302,132			44.29		2.2
Vested		(197,349	)		45.45		-
Forfeited		(31,139	)		43.37		0.4
Nonvested at November 30, 2019		487,997		$	46.56		0.8
Granted		216,293			46.39		3.4
Vested		(221,275	)		46.83		-
Forfeited		(50,666	)		47.55		0.1
Nonvested at November 28, 2020		432,349		$	46.22		0.8
Granted		356,779			54.49		3.2
Vested		(157,945	)		48.69		-
Forfeited		(78,818	)		47.79		0.8
Nonvested at November 27, 2021		552,365		$	50.63		1.9

Total fair value of restricted stock vested during 2021, 2020, and 2019 was $7,691, $10,362 and $8,970, respectively. The total fair value of nonvested restricted stock at  November 27, 2021 was $27,966.

We repurchased 50,799, 70,380 and 73,043 shares during 2021, 2020 and 2019, respectively, in connection with the statutory minimum tax withholding related to vesting of restricted stock. The company’s actual tax benefits realized for the tax deductions related to the restricted stock vested for 2021, 2020 and 2019 was $1,439, $2,136 and $1,574, respectively.

Deferred Compensation Activity

Deferred compensation units are fully vested at the date of contribution. The deferred compensation units outstanding for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 is summarized below:

	Non-employee
	Directors			Employees			Total
Units outstanding December 1, 2018		479,787			29,735			509,522
Participant contributions		22,153			11,166			33,319
Company match contributions1		23,720			1,117			24,837
Payouts		-			(5,354	)		(5,354	)
Units outstanding November 30, 2019		525,660			36,664			562,324
Participant contributions		18,008			13,814			31,822
Company match contributions1		23,033			1,381			24,414
Payouts		(111,436	)		(7,306	)		(118,742	)
Units outstanding November 28, 2020		455,265			44,553			499,818
Participant contributions		13,036			10,487			23,523
Company match contributions1		20,118			1,049			21,167
Payouts		(19,895	)		(7,728	)		(27,623	)
Units outstanding November 27, 2021		468,524			48,361			516,885

¹ The non-employee directors’ company match includes 18,814, 21,323 and 21,504 deferred compensation units paid as discretionary awards to all non-employee directors in 2021, 2020 and 2019, respectively.

The fair value of non-employee directors’ company matches for 2021, 2020 and 2019 was $163, $128 and $167, respectively. The fair value of the non-employee directors’ discretionary award was $1,215, $920, $1,035 for 2021, 2020 and 2019, respectively. The fair value of employee company matches was $61, $56 and $41 for 2021, 2020 and 2019, respectively.

XML

Note 10 - Pension and Postretirement Benefits

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Retirement Benefits [Text Block]

Note 10: Pension and Postretirement Benefits

Defined Contribution Plan

All U.S. employees have the option of contributing up to 75 percent of their pre-tax earnings to a 401(k) plan, subject to IRS limitations. We match up to the first 4 percent of each employee's pre-tax earnings, based on the employee’s contributions. All U.S. employees are eligible for a separate annual non-discretionary retirement contribution to the 401(k) plan of 1 percent of pay, that is invested based on the election of the individual participant. The 1 percent contribution is in addition to our 4 percent matching contribution described above and is in lieu of participation in our defined benefit pension plan. The total contribution to the 401(k) plan for 2021 was $12,488 which included the cost of the 4 percent company match of $8,698 and the additional 1 percent contribution of $3,790. The total contributions to the 401(k) plan were $10,764 and $10,784 in 2020 and 2019, respectively.

All U.S. employees are eligible to receive an annual discretionary non-elective contribution to the 401(k) plan of up to 3 percent based on achieving the company’s earnings per share target. This discretionary contribution is in addition to the contributions described above. A discretionary non-elective contribution of $5,205 was made for 2021 and no such contribution was made for 2020.

The defined contribution plan liability recorded in the Consolidated Balance Sheets was $10,494 and $9,819 in 2021 and 2020, respectively, for the U.S. Plan and several statutorily required non-U.S. Plans.

Defined Benefit Plans

Noncontributory defined benefit pension plans cover all U.S. employees employed prior to January 1, 2007. Benefits for these plans are based primarily on each employee’s years of service and average compensation. During 2011, we made significant changes to our U.S. pension plan. The changes included: benefits under the plan were locked-in using service and salary as of May 31, 2011, participants no longer earn benefits for future service and salary as they had in the past, affected participants receive a three percent increase to the locked-in benefit for every year they continue to work for us and we are making a retirement contribution of three percent of eligible compensation to the 401(k) Plan for those participants.  The funding policy is consistent with the funding requirements of federal law and regulations. Plan assets consist principally of listed equity securities and bonds. During 2020, we amended the U.S. pension plan to add a program for eligible employees to take a lump sum distribution. A total of $6,673 and $10,939 was paid during 2021 and 2020, respectively, as distributions under this program. Other U.S. postretirement benefits are funded through a Voluntary Employees' Beneficiaries Association Trust.

Health care and life insurance benefits are provided for eligible retired employees and their eligible dependents. These benefits are provided through various insurance companies and health care providers. Costs are accrued during the years the employee renders the necessary service.

Certain non-U.S. subsidiaries provide pension benefits for their employees consistent with local practices and regulations. These plans are primarily defined benefit plans covering substantially all employees upon completion of a specified period of service. Benefits for these plans are generally based on years of service and annual compensation.

Following is a reconciliation of the beginning and ending balances of the benefit obligation and fair value of plan assets as of November 27, 2021 and November 28, 2020:

	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2021			2020			2021			2020			2021			2020
Change in projected benefit obligation
Benefit obligation at beginning of year	$	388,530		$	380,388		$	250,561		$	234,542		$	39,075		$	39,256
Service cost		-			-			3,280			2,950			21			73
Interest cost		9,299			11,738			2,941			3,158			822			1,135
Participant contributions		-			-			-			-			365			226
Actuarial (gain)/loss1		(9,177	)		27,377			(3,630	)		4,350			(6,115	)		1,327
Other		-			-			-			-			-			-
Curtailments		-			-			-			14			-			-
Settlement payments		(6,673	)		(10,939	)		996			(273	)		-			-
Benefits paid		(20,767	)		(20,034	)		(8,578	)		(8,628	)		(2,906	)		(2,942	)
Foreign currency translation effect		-			-			(7,170	)		14,448			-			-
Benefit obligation at end of year		361,212			388,530			238,400			250,561			31,262			39,075
Change in plan assets
Fair value of plan assets at beginning of year		398,403			383,527			202,242			185,331			109,056			94,474
Actual return on plan assets		37,466			44,365			25,204			13,155			28,716			15,673
Employer contributions		1,382			1,677			1,989			2,177			470			1,625
Participant contributions		-			-			-			-			365			226
Other		-			-			996			-			-			-
Settlement payments		(6,673	)		(10,939	)		-			-			-			-
Benefits paid2		(20,767	)		(20,227	)		(8,578	)		(8,628	)		(2,906	)		(2,942	)
Foreign currency translation effect		-			-			(5,230	)		10,207			-			-
Fair value of plan assets at end of year		409,811			398,403			216,623			202,242			135,701			109,056
Plan assets in excess of (less than) benefit obligation as of year end	$	48,599		$	9,873		$	(21,776	)	$	(48,688	)	$	104,439		$	69,981

¹ Actuarial loss in 2021 and actuarial loss in 2020 for the U.S. Plans is primarily due to assumption changes. Actuarial loss in 2021 and actuarial loss in 2020 for the Non-U.S. Plans are due to both assumption changes and plan experience.

² Amount excludes benefit payments made from sources other than plan assets.

Amounts in accumulated other comprehensive income (loss) that have not been recognized as components of net periodic benefit cost	Pension Benefits										Other Postretirement
	U.S. Plans						Non-U.S. Plans				Benefits
	2021			2020			2021		2020		2021			2020
Unrecognized actuarial loss	$	129,198		$	147,917		$	64,782	$	87,368	$	(30,278	)	$	(4,318	)
Unrecognized prior service (benefit) cost		(3	)		(6	)		1,390		1,453		-			-
Ending balance	$	129,195		$	147,911		$	66,172	$	88,821	$	(30,278	)	$	(4,318	)

	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2021			2020			2021			2020			2021			2020
Statement of financial position as of fiscal year-end
Non-current assets	$	66,157		$	30,672		$	24,772		$	12,534		$	107,323		$	73,137
Accrued benefit cost
Current liabilities		(1,342	)		(1,467	)		(1,795	)		(1,701	)		(227	)		(226	)
Non-current liabilities		(16,216	)		(19,332	)		(44,753	)		(59,521	)		(2,657	)		(2,930	)
Ending balance	$	48,599		$	9,873		$	(21,776	)	$	(48,688	)	$	104,439		$	69,981

The accumulated benefit obligation of the U.S. pension and other postretirement plans was $384,124 at  November 27, 2021 and $418,019 at November 28, 2020. The accumulated benefit obligation of the non-U.S. pension plans was $228,713 at  November 27, 2021 and $239,572 at November 28, 2020.

The following amounts relate to pension plans with accumulated benefit obligations in excess of plan assets as of November 27, 2021 and November 28, 2020:

	Pension Benefits and Other Postretirement Benefits
	U.S. Plans				Non-U.S. Plans
	2021		2020		2021		2020
Accumulated benefit obligation	$	17,558	$	26,241	$	48,912	$	134,472
Fair value of plan assets		-		5,441		11,350		84,239

The following amounts relate to pension plans with projected benefit obligations in excess of plan assets as of November 27, 2021 and November 28, 2020:

	Pension Benefits and Other Postretirement Benefits
	U.S. Plans				Non-U.S. Plans
	2021		2020		2021		2020
Projected benefit obligation	$	17,558	$	26,241	$	131,174	$	145,461
Fair value of plan assets		-		5,441	$	84,626		84,239

Information about the expected cash flows is as follows:

	Pension Benefits				Other
			Non-U.S.		Postretirement
	U.S. Plans		Plans		Benefits
Employer contributions
2022	$	-	$	34	$	-
Expected benefit payments
2022		21,131		8,704		2,982
2023		21,280		7,933		2,851
2024		21,283		8,285		2,730
2025		21,391		8,457		2,607
2026-2031		125,388		54,038		12,948

The components of our net period defined benefit pension and postretirement benefit costs other than service cost are presented as non-operating expenses and service cost is presented in operating expenses.

Components of net periodic benefit cost and other supplemental information for the years ended  November 27, 2021, November 28, 2020, and November 30, 2019 are as follows:

	Pension Benefits																		Other
	U.S. Plans									Non-U.S. Plans									Postretirement Benefits
Net periodic cost (benefit)	2021			2020			2019			2021			2020			2019			2021			2020			2019
Service cost	$	-		$	-		$	4		$	3,280		$	2,950		$	2,237		$	21		$	73		$	98
Interest cost		9,299			11,738			14,691			2,941			3,158			4,678			822			1,135			1,550
Expected return on assets		(31,123	)		(25,758	)		(25,305	)		(12,348	)		(11,312	)		(10,224	)		(8,945	)		(7,976	)		(7,013	)
Amortization:
Prior service cost (benefit)		(3	)		(3	)		13			69			64			64			-			-			-
Actuarial loss		3,198			7,195			4,677			4,053			3,829			3,114			73			62			33
Curtailment loss		-			-			-			-			14			83			-			-			-
Settlement charge		-			-			-			-			67			-			-			-			-
Net periodic (benefit) cost	$	(18,629	)	$	(6,828	)	$	(5,920	)	$	(2,005	)	$	(1,230	)	$	(48	)	$	(8,029	)	$	(6,706	)	$	(5,332	)

	Pension Benefits																		Other
	U.S. Plans									Non-U.S. Plans									Postretirement Benefits
Weighted-average assumptions used to determine benefit obligations	2021			2020			2019			2021			2020			2019			2021			2020			2019
Discount rate		2.75	%		2.50	%		3.17	%		1.27	%		1.16	%		1.35	%		2.51	%		2.19	%		3.00	%
Rate of compensation increase1		0.00	%		4.50	%		4.50	%		1.48	%		1.74	%		1.71	%		N/A			N/A			N/A

Weighted-average assumptions used to determine net costs for years ended	2021			2020			2019			2021			2020			2019			2021			2020			2019
Discount rate		2.50	%		3.17	%		4.50	%		1.19	%		1.34	%		2.30	%		2.19	%		3.00	%		4.37	%
Expected return on plan assets		7.24	%		7.49	%		7.49	%		6.15	%		6.23	%		6.21	%		8.25	%		8.50	%		8.50	%
Rate of compensation increase1		0.00	%		4.50	%		4.50	%		1.67	%		1.74	%		1.71	%		0.00	%		N/A			N/A

¹ Under the U.S. pension plan, the compensation amount was locked-in as of May 31, 2011 and thus the benefit no longer includes compensation increases. The 4.50 percent rate for 2020 and 2019 is for the supplemental executive retirement plan only; for 2021, there is no compensation increase as subsequent to November 27, 2021, there were no active employees in the supplemental executive retirement plan.

The discount rate assumption is determined using an actuarial yield curve approach, which results in a discount rate that reflects the characteristics of the plan. The approach identifies a broad population of corporate bonds that meet the quality and size criteria for the particular plan. We use this approach rather than a specific index that has a certain set of bonds that may or may not be representative of the characteristics of our particular plan. A higher discount rate reduces the present value of the pension obligations. The discount rate for the U.S. pension plan was 2.76 percent at November 27, 2021, 2.53 percent at  November 28, 2020 and 3.19 percent at November 30, 2019. Net periodic pension cost for a given fiscal year is based on assumptions developed at the end of the previous fiscal year. A discount rate change of 0.5 percentage points at  November 27, 2021 would impact U.S. pension and other postretirement plan (income) expense by approximately $63 (pre-tax) in fiscal 2021. Discount rates for non-U.S. plans are determined in a manner consistent with the U.S. plans.

For the U.S. pension plan, we adopted the Adjusted Pri-2012 base mortality table projected generationally using scale MP-2021.

The expected long-term rate of return on plan assets assumption for the U.S. pension plan was 7.25 percent in 2021 and 7.50 percent in 2020 and 2019. Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 60 percent equities and 40 percent fixed-income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward-looking observations. For 2021, the expected long-term rate of return on the target equities allocation was 8.00 percent and the expected long-term rate of return on the target fixed-income allocation was 3.90 percent. The total plan rate of return assumption included an estimate of the effect of diversification and the plan expense. A change of 0.5 percentage points for the expected return on assets assumption would impact U.S. net pension and other postretirement plan expense by approximately $2,728 (pre-tax).

Management, in conjunction with our external financial advisors, uses the actual historical rates of return of the asset categories to assess the reasonableness of the expected long-term rate of return on plan assets.

The expected long-term rate of return on plan assets assumption for non-U.S. pension plans was a weighted-average of 6.15 percent in 2021 compared to 6.23 percent in 2020 and 6.21 percent in 2019. The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the effect of active management of the plan’s assets. Our largest non-U.S. pension plans are in the United Kingdom and Germany. The expected long-term rate of return on plan assets for the United Kingdom was 6.75 percent and the expected long-term rate of return on plan assets for Germany was 5.50 percent. Management, in conjunction with our external financial advisors, uses actual historical returns of the asset portfolio to assess the reasonableness of the expected rate of return for each plan.

Assumed health care trend rates	2021			2020			2019
Health care cost trend rate assumed for next year		6.50	%		6.75	%		7.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		5.00	%		5.00	%		0.25	%
Fiscal year that the rate reaches the ultimate trend rate	2028			2028			2028

The asset allocation for the company’s U.S. and non-U.S. pension plans at the end of 2021 and 2020 follows.

	U.S. Pension Plans									Non-U.S. Pension Plans									Other Postretirement Plans
				Percentage of									Percentage of									Percentage of
				Plan Assets at									Plan Assets at									Plan Assets at
	Target			Year-End						Target			Year-End						Target			Year-End
Asset Category	2021			2021			2020			2021			2021			2020			2021			2021			2020
Equities		60.0	%		57.7	%		55.4	%		21.2	%		21.3	%		48.8	%		0.0	%		0.0	%		0.0	%
Fixed income		40.0	%		40.1	%		36.2	%		77.3	%		67.0	%		51.0	%		0.0	%		0.0	%		0.0	%
Insurance		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		100.0	%		99.8	%		99.4	%
Cash1		0.0	%		2.2	%		8.4	%		1.5	%		11.7	%		0.2	%		0.0	%		0.2	%		0.6	%
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

¹ Negative cash for 2020 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.

Plan Asset Management

Plan assets are held in trust and invested in mutual funds, separately managed accounts and other commingled investment vehicles holding U.S. and non-U.S. equity securities, fixed income securities and other investment classes. We employ a total return approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Futures and options may also be used to enhance risk-adjusted long-term returns while improving portfolio diversification and duration. Risk management is accomplished through diversification across asset classes, utilization of multiple investment managers and general plan-specific investment policies. Risk tolerance is established through careful consideration of the plan liabilities, plan funded status and our assessment of our overall liquidity position. This asset allocation policy mix is reviewed annually and actual versus target allocations are monitored regularly and rebalanced on an as-needed basis. Plan assets are invested using a combination of active and passive investment strategies. Passive, or “indexed” strategies, attempt to mimic rather than exceed the investment performance of a market benchmark. The plans’ active investment strategies employ multiple investment management firms which in aggregate cover a range of investment styles and approaches. Performance is monitored and compared to relevant benchmarks on a regular basis.

The U.S. pension plans consist of two plans: a pension plan and a supplemental executive retirement plan (“SERP”). There were no assets in the SERP in 2021 and 2020. Consequently, all of the data disclosed in the asset allocation table for the U.S. pension plans pertain to our U.S. pension plan.

During 2021, we maintained our assets within the allowed ranges of the target asset allocation mix of 60 percent equities and 40 percent fixed income plus or minus 5 percent and continued our focus to reduce volatility of plan assets in future periods and to more closely match the duration of the assets with the duration of the liabilities of the plan.

The non-U.S. pension plans consist of all the pension plans administered by us outside the U.S., principally consisting of plans in Germany, the United Kingdom, France and Canada. During 2021, we maintained our assets for the non-U.S. pension plans at the specific target asset allocation mix determined for each plan plus or minus the allowed rate and continued our focus to reduce volatility of plan assets in future periods and to more closely match the duration of the assets with the duration of the liabilities of the individual plans. We plan to maintain the portfolios at their respective target asset allocations in 2021.

Other postretirement benefits plans consist of two U.S. plans: a retiree medical health care plan and a group term life insurance plan. There were no assets in the group term life insurance plan for 2021 and 2020. Consequently, all of the data disclosed in the asset allocation table for other postretirement plans pertain to our retiree medical health care plan. Our investment strategy for other postretirement benefit plans is to own insurance policies that maintain an asset allocation nearly completely in equities. These equities are invested in a passive portfolio indexed to the S&P 500.

Fair Value of Plan Assets

The following table presents plan assets categorized within a three-level fair value hierarchy as described in Note 13.

	November 27, 2021
U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	-	$	236,557	$	-	$	236,557
Fixed income		-		164,133		186		164,319
Cash		8,935		-		-		8,935
Total categorized in the fair value hierarchy	$	8,935	$	400,690	$	186	$	409,811

Non-U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	35,117	$	-	$	-	$	35,117
Fixed income		48,243		5,285		749		54,277
Cash		4,399		-		-		4,399
Total categorized in the fair value hierarchy		87,759		5,285		749		93,793
Other investments measured at NAV1								122,830
Total	$	87,759	$	5,285	$	749	$	216,623

Other Postretirement Benefits	Level 1		Level 2		Level 3		Total Assets
Insurance	$	-	$	-	$	135,484	$	135,484
Cash		217		-		-		217
Total	$	217	$	-	$	135,484	$	135,701

	November 28, 2020
U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	3,421	$	217,151	$	-	$	220,572
Fixed income		1,524		142,317		205		144,046
Cash		33,391		-		-		33,391
Total categorized in the fair value hierarchy		38,336		359,468		205		398,009
Other investments measured at NAV1								394
Total	$	38,336	$	359,468	$	205	$	398,403

Non-U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	33,478	$	1,368	$	-	$	34,846
Fixed income		49,813		7,182		770		57,765
Cash		352		-		-		352
Total categorized in the fair value hierarchy		83,643		8,550		770		92,963
Other investments measured at NAV1								109,279
Total	$	83,643	$	8,550	$	770	$	202,242

Other Postretirement Benefits	Level 1		Level 2		Level 3		Total Assets
Insurance	$	-	$	-	$	108,406	$	108,406
Cash		650		-		-		650
Total	$	650	$	-	$	108,406	$	109,056

¹ In accordance with ASC Topic 820-10, Fair Value Measurement, certain investments that are measured at NAV (Net Asset Value per share) (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts represented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

² Negative cash for 2020 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.

The definitions of fair values of our pension and other postretirement benefit plan assets at  November 27, 2021 and November 28, 2020 by asset category are as follows:

Equities—Primarily publicly traded common stock for purposes of total return and to maintain equity exposure consistent with policy allocations. Investments include: (i) U.S. and non-U.S. equity securities and mutual funds valued at closing prices from national exchanges; and (ii) commingled funds valued at unit values or net asset values provided by the investment managers, which are based on the fair value of the underlying investments. Funds valued at net asset value have various investment strategies including seeking maximum total returns consistent with prudent investment management, seeking current income consistent with preservation of capital and daily liquidity and seeking to approximate the risk and return characterized by a specific index fund. There are no restrictions for redeeming holdings out of these funds and the funds have no unfunded commitments.

Fixed income—Primarily corporate and government debt securities for purposes of total return and managing fixed income exposure to policy allocations. Investments include (i) mutual funds valued at closing prices from national exchanges, (ii) corporate and government debt securities valued at closing prices from national exchanges, (iii) commingled funds valued at unit values or net asset value provided by the investment managers, which are based on the fair value of the underlying investments, and (iv) an annuity contract, the value of which is determined by the provider and represents the amount the plan would receive if the contract were cashed out at year-end.

Insurance—Insurance contracts for purposes of funding postretirement medical benefits. Fair values are the cash surrender values as determined by the providers which are the amounts the plans would receive if the contracts were cashed out at year end.

Cash–Cash balances on hand, accrued income and pending settlements of transactions for purposes of handling plan payments. Fair values are the cash balances as reported by the Trustees of the plans.

The following is a roll forward of the Level 3 investments of our pension and postretirement benefit plan assets during the years ended November 27, 2021 and November 28, 2020:

	Fixed Income
U.S. Pension Plans	2021			2020
Level 3 balance at beginning of year	$	205		$	219
Purchases, sales, issuances and settlements, net		(19	)		(14	)
Level 3 balance at end of year	$	186		$	205

	Fixed Income
Non-U.S. Pension Plans	2021			2020
Level 3 balance at beginning of year	$	770		$	675
Net transfers into / (out of) level 3		64			43
Net gains		(43	)		(8	)
Currency change effect		(42	)		60
Level 3 balance at end of year	$	749		$	770

	Insurance
Other Postretirement Benefits	2021			2020
Level 3 balance at beginning of year	$	108,406		$	94,082
Net transfers into / (out of) level 3		(1,658	)		(831	)
Purchases, sales, issuances and settlements, net		(1,093	)		(822	)
Net gains		29,829			15,977
Level 3 balance at end of year	$	135,484		$	108,406

XML

Note 11 - Income Taxes

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 11: Income Taxes

Income before income taxes and income from equity method investments	2021		2020		2019
United States	$	14,989	$	20,328	$	31,796
Non-U.S.		201,861		138,028		141,032
Total	$	216,850	$	158,356	$	172,828

Components of the provision for income tax expense (benefit)	2021			2020			2019
Current:
U.S. federal	$	10,310		$	5,243		$	9,122
State		2,265			1,320			3,294
Non-U.S.		57,801			56,542			47,848
		70,376			63,105			60,264
Deferred:
U.S. federal		(6,891	)		(4,709	)		(432	)
State		(350	)		(4,111	)		125
Non-U.S.		(102	)		(12,364	)		(10,549	)
		(7,343	)		(21,184	)		(10,856	)
Total	$	63,033		$	41,921		$	49,408

Reconciliation of effective income tax	2021			2020			2019
Tax at statutory U.S. federal income tax rate	$	45,539		$	33,255		$	36,294
State income taxes, net of federal benefit		1,444			(2,104	)		2,785
Foreign dividend repatriation		1,104			900			825
Foreign operations		19,673			(563	)		8,712
Executive compensation over $1.0 million		2,507			1,420			1,661
Non-U.S. stock option expense		575			358			425
Change in valuation allowance		(9,572	)		5,925			1,097
Research and development tax credit		(993	)		(906	)		(802	)
Foreign-derived intangible income		(2,617	)		(1,396	)		(2,240	)
Global intangible low-taxed income		2,334			1,932			2,029
Provision to return		1,122			1,704			(3,271	)
Cross currency swap		3,931			(6,748	)		2,677
Contingency reserve		(2,139	)		8,287			(957	)
Other		125			(143	)		173
Total income tax expense	$	63,033		$	41,921		$	49,408

Deferred income tax balances at each year-end related to:	2021			2020
Deferred tax assets:
Pension and other post-retirement benefit plans	$	12,118		$	16,385
Employee benefit costs		26,799			24,538
Foreign tax credit carryforward		7,309			6,905
Tax loss carryforwards		24,071			31,495
Leases		8,590			7,133
Hedging activity		2,623			12,906
Interest deduction limitation		12,428			6,343
Other		27,410			30,178
Gross deferred tax assets		121,348			135,883
Less: valuation allowance		(11,341	)		(21,843	)
Total net deferred tax assets		110,007			114,040
Deferred tax liability:
Depreciation and amortization		(207,726	)		(220,379	)
Pension and other post-retirement benefit plans		(36,042	)		(14,968	)
Leases		(8,524	)		(7,194	)
Total deferred tax liability		(252,292	)		(242,541	)
Net deferred tax liability	$	(142,285	)	$	(128,501	)

The difference between the change in the deferred tax assets in the balance sheet and the deferred tax provision is primarily due to the defined benefit pension plan adjustment and floating-to-fixed hedges recorded in accumulated other comprehensive income (loss).

Valuation allowances primarily relate to foreign net operating loss carryforwards and branch foreign tax credit carryforwards where the future potential benefits do not meet the more-likely-than-not realization test. The decrease in the valuation allowance is primarily related to a decrease in foreign net operating losses for which the Company does not expect to receive a full tax benefit.

Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those deferred tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more-likely-than-not to be realized. We believe it is more-likely-than-not that reversal of deferred tax liabilities and forecasted income will be sufficient to fully recover the net deferred tax assets not already offset by a valuation allowance. In the event that all or part of the gross deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made.

U.S. income taxes have not been provided on approximately $1,044,206 of undistributed earnings of non-U.S. subsidiaries. We intend to indefinitely reinvest these undistributed earnings. Cash available in the United States has historically been sufficient and we expect it will continue to be sufficient to fund U.S. cash flow requirements. In the event these earnings are later distributed to the U.S., such distributions would likely result in additional U.S. tax.

While non-U.S. operations have been profitable overall, there are cumulative tax losses of $85,273 in various countries. These tax losses can be carried forward to offset the income tax liabilities on future income in these countries. Cumulative tax losses of $63,592 can be carried forward indefinitely, while the remaining $21,680 of tax losses must be utilized during 2022 to 2039.

The U.S. has a branch foreign tax credit carryforward of $3,994. A valuation allowance has been recorded against this foreign tax credit carryforward to reflect that this amount is not more-likely-than-not to be realized.

The table below sets forth the changes to our gross unrecognized tax benefit as a result of uncertain tax positions, excluding accrued interest.  We do not anticipate that the total unrecognized tax benefits will change significantly within the next twelve months.

	2021			2020
Balance at beginning of year	$	14,569		$	8,946
Tax positions related to the current year:
Additions		401			579
Tax positions related to prior years:
Additions		1,323			7,400
Reductions		(950	)		(283	)
Settlements		(161	)		(747	)
Lapses in applicable statutes of limitation		(1,901	)		(1,326	)
Balance at end of year	$	13,281		$	14,569

Included in the balance of unrecognized tax benefits as of  November 27, 2021 and November 28, 2020 are potential benefits of $8,888 and $9,125 respectively, that, if recognized, would affect the effective tax rate.

We report accrued interest and penalties related to unrecognized tax benefits in income tax expense. For the year ended November 27, 2021, we recognized a net benefit for interest and penalties of $703 relating to unrecognized tax benefits and had net accumulated accrued interest and penalties of $2,817 as of November 27, 2021. For the year ended November 28, 2020, we recognized a net benefit for interest and penalties of $2,378 relating to unrecognized tax benefits and had net accumulated accrued interest and penalties of $3,520 as of November 28, 2020.

We are subject to U.S. federal income tax as well as income tax in numerous state and foreign jurisdictions. We are no longer subject to U.S. federal tax examination for years prior to 2018 or Swiss income tax examination for years prior to 2018. During the second quarter of 2016, H.B. Fuller (China) Adhesives, Ltd. was notified of a transfer pricing audit covering the calendar years 2005 through 2014. We are in various stages of examination and appeal in other foreign jurisdictions. Although the final outcomes of these examinations cannot currently be determined, we believe that we have recorded adequate liabilities with respect to these examinations.

XML

Note 12 - Financial Instruments

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 12: 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 Consolidated Statement of Cash Flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings.

We are exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. We select investment-grade multinational banks and financial institutions as counterparties for derivative transactions and monitor the credit quality of each of these banks on a periodic basis as warranted. We do not anticipate nonperformance by any of these counterparties, and valuation allowances, if any, are de minimis.

Cash Flow Hedges

As of November 27, 2021, we had cash flow hedges of four cross-currency swap agreements effective October 20, 2017 to convert a notional amount of $267,860 of foreign currency denominated intercompany loans into U.S. dollars, which mature in 2022. As of November 27, 2021, the combined fair value of the swaps was an asset of $14,496 and was included in other assets in the 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 Consolidated Balance Sheets and in other net cash provided by operating activities in the Consolidated Statement of Cash Flows. The differences 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, net in the 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 amount in accumulated other comprehensive income (loss) related to cross-currency swaps was a gain of $3,483 as of November 27, 2021. The estimated net amount of the existing gain that is reported in accumulated other comprehensive income (loss) as of  November 27, 2021 that is expected to be reclassified into earnings within the next twelve months is $3,843. As of November 27, 2021, 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 November 27, 2021:

	Fiscal Year of
	Expiration	Interest Rate			Notional Value		Fair Value
Pay EUR	2022		3.00	%	$	267,860	$	14,496
Receive USD			5.1803	%

On February 27, 2018, we entered into an interest rate swap agreement to convert $200,000 of our $2,150,000 Term Loan B to a fixed interest rate of 4.589 percent. During the second quarter of 2021, we settled a portion of this interest rate swap as the debt underlying this swap was less than the swap value due to debt paydown. We settled the ineffective portion of the interest rate swap by making a cash payment of $378 and recorded that payment to interest expense in our Consolidated Statements of Income during the second quarter of 2021. On October 20, 2017, we entered into interest rate swap agreements to convert $1,050,000, which amortized down to $800,000 on October 20, 2021, of our $2,150,000 Term Loan B to a fixed interest rate of 4.0275 percent. See Note 7 for further discussion on the issuance of our Term Loan B. The combined fair value of the interest rate swaps was a liability of $12,366 at  November 27, 2021 and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as cash flow hedges. We are applying the hypothetical derivative method to assess hedge effectiveness for these interest rate swaps. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $1,125,000 variable rate Term Loan B are compared with the change in the fair value of the swaps.

On April 23, 2018, we amended our Term Loan B Credit Agreement to reduce the interest rate from LIBOR plus 2.25 percent to LIBOR plus 2.00 percent. Fixed interest rates related to swap agreements disclosed have been updated to reflect the amendment.

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

	November 27, 2021			November 28, 2020			November 30, 2019
Cross-currency swap contracts	$	(4,556	)	$	6,307		$	14,429
Interest rate swap contracts	$	20,109		$	(15,618	)	$	(46,254	)

Fair Value Hedges

On February 12, 2021, we entered into interest rate swap agreements to convert our $300,000 Public Notes that were issued on October 20, 2020 to a variable interest rate of 1-month LIBOR plus 3.28 percent. See Note 7 for further discussion on the issuance of our Public Notes. The combined fair value of the interest rate swaps was a liability of $10,539 at  November 27, 2021, and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. We apply the short cut method and assume hedge effectiveness. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $300,000 fixed rate Public Notes are compared with the change in the fair value of the swaps. On February 14, 2017, we entered into interest rate swap agreements to convert $150,000 of our $300,000 Public Notes that were issued on February 14, 2017 to a variable interest rate of 1-month LIBOR plus 1.86 percent. The swap was designated for hedge accounting treatment as fair value hedges. We applied the hypothetical derivative method to assess hedge effectiveness for this interest rate swap. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $150,000 fixed rate Public Notes are compared with the change in the fair value of the swaps. On May 1, 2020, we terminated the swap agreement. Upon termination, we received $15,808 in cash. The remaining swap liability will be accounted for as a discount on long-term debt and will be amortized to interest expense over the remaining life of the Public Notes of seven years.

Derivatives Not Designated As Hedging Instruments

The company uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries that are remeasured at the end of each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Foreign currency forward contracts are recorded as assets and liabilities on the balance sheet at fair value. Changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities. See Note 13 for fair value amounts of these derivative instruments.

As of November 27, 2021, we had forward foreign currency contracts maturing between November 29, 2021 and September 13, 2022. The mark-to-market effect associated with these contracts was largely offset by the underlying transaction gains and losses resulting from the foreign currency exposures for which these contracts relate.

The amounts of pretax gains (losses) recognized in other income, net related to derivative instruments not designated as hedging instruments are as follows:

	November 27, 2021			November 28, 2020			November 30, 2019
Foreign currency forward contracts	$	(357	)	$	(2,908	)	$	(573	)

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities in the customer base and their dispersion across many different industries and countries. As of November 27, 2021, there were no significant concentrations of credit risk.

XML

Note 13 - Fair Value Measurements

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 13: Fair Value Measurements

Overview

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

● Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

● Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

● Level 3: Unobservable inputs that reflect management’s assumptions, and include situations where there is little, if any, market activity for the asset or liability.

Balances Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of November 27, 2021 and November 28, 2020, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

			Fair Value Measurements
			Using:
	November 27,
Description	2021		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,079	$	2,079	$	-	$	-
Foreign exchange contract assets		5,725		-		5,725		-
Cross-currency cash flow hedge assets		14,496		-		14,496		-
Liabilities:
Foreign exchange contract liabilities	$	6,082	$	-	$	6,082	$	-
Interest rate swaps, cash flow hedge liabilities		12,366		-		12,366		-
Interest rate swaps, fair value hedge liabilities		10,539		-		10,539		-
Contingent consideration liability		8,100		-		-		8,100

			Fair Value Measurements
			Using:
	November 28,
Description	2020		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	22,560	$	22,560	$	-	$	-
Foreign exchange contract assets		2,320		-		2,320		-
Cross-currency cash flow hedge assets		2,823		-		2,823		-
Liabilities:
Foreign exchange contract liabilities	$	5,251	$	-	$	5,251	$	-
Cross-currency cash flow hedge liabilities		280		-		280		-
Interest rate swaps, cash flow hedge liabilities		33,256		-		33,256		-
Contingent consideration liability		5,800		-		-		5,800

See Note 7 for discussion regarding the fair value of debt.

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, 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 valuation of our contingent consideration liability related to the acquisition of D.H.M. resulted in a fair value of $8,100 as of November 27, 2021. Adjustments to the fair value of contingent consideration are recorded to selling, general and administrative expenses in the Statement of Income. See Note 2 for further discussion regarding our acquisitions.

Contingent consideration liability	2021
Level 3 balance at beginning of year	$	5,800
Acquisition		1,700
Payment of contingent consideration		(1,700	)
Mark to market adjustment		2,300
Level 3 balance at end of year	$	8,100

XML

Note 14 - Commitments and Contingencies

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 14: Commitments and Contingencies

Environmental Matters 

From time to time, we become aware of compliance matters relating to, or receive notices from, federal, state or local entities regarding possible or alleged violations of environmental, health or safety laws and regulations. We review the circumstances of each individual site, considering the number of parties involved, the level of potential liability or our contribution relative to the other parties, the nature and magnitude of the hazardous substances involved, the method and extent of remediation, the estimated legal and consulting expense with respect to each site and the time period over which any costs would likely be incurred. Also, from time to time, we are identified as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and/or similar state laws that impose liability for costs relating to the clean up of contamination resulting from past spills, disposal or other release of hazardous substances. We are also subject to similar laws in some of the countries where current and former facilities are located. Our environmental, health and safety department monitors compliance with applicable laws on a global basis. To the extent we can reasonably estimate the amount of our probable liabilities for environmental matters, we establish an undiscounted financial provision. We recorded liabilities of $6,603 and $8,099 as of November 27, 2021 and November 28, 2020, respectively, for probable and reasonably estimable environmental remediation costs. Of the amount reserved, $3,333 and $3,703 as of November 27, 2021 and November 28, 2020, respectively, is attributable to a facility we own in Simpsonville, South Carolina as a result of our Royal Adhesives acquisition that is a designated site under CERCLA.

Currently we are involved in various environmental investigations, clean up activities and administrative proceedings and lawsuits. In particular, we are currently deemed a PRP in conjunction with numerous other parties, in a number of government enforcement actions associated with landfills and/or hazardous waste sites. As a PRP, we may be required to pay a share of the costs of investigation and clean up of these sites. In addition, we are engaged in environmental remediation and monitoring efforts at a number of current and former operating facilities. While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, will not have a material adverse effect on our results of operations, financial condition or cash flow.

Other Legal Proceedings 

From time to time and in the ordinary course of business, we are a party to, or a target of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, contract, patent and intellectual property, environmental, health and safety, tax and employment matters. While we are unable to predict the outcome of these matters, we have concluded, based upon currently available information, that the ultimate resolution of any pending matter, individually or in the aggregate, including the asbestos litigation described in the following paragraphs, will not have a material adverse effect on our results of operations, financial condition or cash flow.

We have been named as a defendant in lawsuits in which plaintiffs have alleged injury due to products containing asbestos manufactured more than 35 years ago. The plaintiffs generally bring these lawsuits against multiple defendants and seek damages (both actual and punitive) in very large amounts. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable injuries or that the injuries suffered were the result of exposure to products manufactured by us. We are typically dismissed as a defendant in such cases without payment. If the plaintiff presents evidence indicating that compensable injury occurred as a result of exposure to our products, the case is generally settled for an amount that reflects the seriousness of the injury, the length, intensity and character of exposure to products containing asbestos, the number and solvency of other defendants in the case, and the jurisdiction in which the case has been brought.

A significant portion of the defense costs and settlements in asbestos-related litigation is paid by third parties, including indemnification pursuant to the provisions of a 1976 agreement under which we acquired a business from a third party. Currently, this third party is defending and paying settlement amounts, under a reservation of rights, in most of the asbestos cases tendered to the third party.

In addition to the indemnification arrangements with third parties, we have insurance policies that generally provide coverage for asbestos liabilities, including defense costs. Historically, insurers have paid a significant portion of our defense costs and settlements in asbestos-related litigation. However, certain of our insurers are insolvent.  We have entered into cost-sharing agreements with our insurers that provide for the allocation of defense costs and settlements and judgments in asbestos-related lawsuits. These agreements require, among other things, that we fund a share of settlements and judgments allocable to years in which the responsible insurer is insolvent.

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

	Year Ended		Year Ended		Year Ended
	November 27,		November 28,		November 30,
	2021		2020		2019
Lawsuits and claims settled		2		4		8
Settlement amounts	$	85	$	130	$	424
Insurance payments received or expected to be received	$	55	$	88	$	291

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.

XML

Note 15 - Segments

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 15: Segments

We are required to report segment information in the same way that we internally organize our business for assessing performance and making decisions regarding allocation of resources. Revenue and operating income of each of our segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance. Segment operating income is identified as gross profit less SG&A expenses. Corporate expenses, other than those included in Corporate Unallocated, are allocated to each operating segment. Consistent with our internal management reporting, Corporate Unallocated amounts include business acquisition and integration costs, organizational restructuring charges and project costs associated with our implementation of Project ONE. Corporate assets are not allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs.

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives.  The business components within each operating segment are managed to maximize the results of the overall operating segment rather than the results of any individual business component of the operating segment. Results of individual components of each operating segment are subject to numerous allocations of segment-wide costs that may or may not have been focused on that particular component for a particular reporting period. The costs for these allocated resources are not tracked on a “where-used” basis as financial performance is assessed at the total operating segment level.

Reportable operating segment financial information for all periods presented is as follows:

	2021			2020			2019
Net revenue
Hygiene, Health and Consumable Adhesives	$	1,472,756		$	1,332,786		$	1,328,286
Engineering Adhesives		1,371,756			1,088,313			1,158,403
Construction Adhesives		433,519			369,170			396,580
Corporate Unallocated1		-			-			13,731
Total	$	3,278,031		$	2,790,269		$	2,897,000
Segment operating income
Hygiene, Health and Consumable Adhesives	$	138,366		$	130,789		$	115,961
Engineering Adhesives		135,913			103,974			136,299
Construction Adhesives		14,148			11,148			16,657
Total segment		288,427			245,911			268,917
Corporate Unallocated1		(35,815	)		(27,594	)		(42,923	)
Total	$	252,612		$	218,317		$	225,994
Depreciation and amortization
Hygiene, Health and Consumable Adhesives	$	45,919		$	44,329		$	45,448
Engineering Adhesives		61,082			58,102			57,175
Construction Adhesives		35,002			35,811			35,851
Corporate Unallocated1		1,171			575			2,732
Total	$	143,174		$	138,817		$	141,206
Total assets2
Hygiene, Health and Consumable Adhesives	$	1,370,924		$	1,268,236
Engineering Adhesives		1,710,000			1,515,302
Construction Adhesives		810,824			934,397
Corporate		382,782			318,769
Total	$	4,274,530		$	4,036,704
Capital expenditures
Hygiene, Health and Consumable Adhesives	$	60,164		$	57,416
Engineering Adhesives		8,815			18,212
Construction Adhesives		3,591			7,635
Corporate		23,519			12,580
Total	$	96,089		$	95,843

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

² Segment assets include primarily inventory, accounts receivable, property, plant and equipment, goodwill, intangible assets and other miscellaneous assets. Corporate assets include primarily corporate property, plant and equipment, deferred tax assets, certain investments and other assets.

Reconciliation of segment operating income to income before income taxes and income from equity method investments:

	2021			2020			2019
Segment operating income	$	252,612		$	218,317		$	225,994
Other income, net		32,855			15,398			37,943
Interest expense		(78,092	)		(86,776	)		(103,287	)
Interest income		9,476			11,417			12,178
Income before income taxes and income from equity method investments	$	216,851		$	158,356		$	172,828

Financial information about geographic areas

	Net Revenue
	2021		2020		2019
United States	$	1,421,623	$	1,248,495	$	1,309,056
China		433,998		351,204		347,304
Germany		409,193		330,755		-
Countries with more than 10 percent of total		2,264,814		1,930,454		1,656,360
All other countries with less than 10 percent of total		1,013,217		859,815		1,240,640
Total	$	3,278,031	$	2,790,269	$	2,897,000

	Property, Plant and Equipment, net
	2021		2020		2019
United States	$	331,864	$	297,046	$	287,372
Germany		120,548		131,879		127,497
China		96,300		99,513		80,606
All other countries with less than 10 percent of total		146,655		142,306		134,338
Total	$	695,367	$	670,744	$	629,813

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

	November 27, 2021
	Hygiene, Health and		Engineering		Construction		Corporate
	Consumable Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	826,172	$	504,626	$	384,576	$	-	$	1,715,374
EIMEA		425,324		470,466		22,156		-		917,946
Asia Pacific		221,260		396,664		26,787		-		644,711
	$	1,472,756	$	1,371,756	$	433,519	$	-	$	3,278,031

	November 28, 2020
	Hygiene, Health and		Engineering		Construction		Corporate
	Consumable Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	736,681	$	430,866	$	325,622	$	-	$	1,493,169
EIMEA		388,271		347,417		20,506		-		756,194
Asia Pacific		207,834		310,030		23,042		-		540,906
	$	1,332,786	$	1,088,313	$	369,170	$	-	$	2,790,269

	November 30, 2019
	Hygiene, Health and		Engineering		Construction		Corporate
	Consumable Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	733,125	$	469,764	$	351,924	$	13,731	$	1,568,544
EIMEA		392,497		380,673		20,767		-		793,937
Asia Pacific		202,664		307,966		23,889		-		534,519
	$	1,328,286	$	1,158,403	$	396,580	$	13,731	$	2,897,000

XML

Note 16 - Subsequent Event

12 Months Ended

Nov. 27, 2021

Notes to Financial Statements

Subsequent Events [Text Block]

Note 16: Subsequent Events

Acquisitions

On January 11, 2022, we completed the acquisition of Fourny NV for a base purchase price of approximately $18,200. Fourny NV, headquartered in Willebroek, Belgium, is a manufacturer of construction and automotive adhesives supplying customers in Europe and China. The acquisition will be included in our Construction Adhesives operating segment.

On November 30, 2021, we completed the acquisition of certain assets of Tissue Seal, LLC for a base purchase price of $24,750. Tissue Seal, LLC, headquartered in Ann Arbor, Michigan, is a manufacturer of topical tissue adhesives and sutures. The acquisition will be included in our Hygiene, Health and Consumable Adhesives operating segment.

XML

Significant Accounting Policies (Policies)

12 Months Ended

Nov. 27, 2021

Accounting Policies [Abstract]

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 20 percent ownership interest) are accounted for using the measurement alternative.

Our 50 percent ownership in Sekisui-Fuller Company, Ltd., our Japan joint venture, is accounted for under the equity method of accounting as we do not exercise control over the investee. In fiscal years 2021, 2020 and 2019, this equity method investment was not significant as defined in Regulation S-X under the Securities Exchange Act of 1934. As such, financial information as of  November 27, 2021, November 28, 2020, and November 30, 2019 for Sekisui-Fuller Company, Ltd. is not required.

Our fiscal year ends on the Saturday closest to November 30. Fiscal year-end dates were  November 27, 2021, November 28, 2020, and November 30, 2019 for 2021, 2020 and 2019, respectively.

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 from Contract with Customer [Policy Text Block]

Revenue Recognition

We sell a variety of adhesives, sealants and other specialty chemical products to a diverse customer base. The vast majority of our arrangements contain a single performance obligation to transfer manufactured goods to the customer as governed by an individual purchase order.

We recognize revenue at the amount of consideration to which we expect to be entitled in exchange for transferring the promised goods to the customer. The transaction price includes an estimation of any variable amounts of consideration to which we will be entitled. The most common forms of variable consideration within our arrangements are customer rebates, which are recorded as a reduction to revenue at the time of the initial sale using the expected value method. The expected value method is the sum of probability-weighted amounts in a range of possible consideration amounts and is based on a consideration of historical, current and forecast information. Changes in estimates are updated each reporting period. There are no material instances where variable consideration is constrained and not recorded at the initial time of sale. Product returns are recorded as a reduction to revenue based on historical experience and anticipated sales returns that occur in the normal course of business. We primarily have assurance-type warranties that do not result in separate performance obligations. We have elected to present revenue net of sales and other similar taxes.

We recognize revenue when control of goods is transferred to the customer. For the vast majority of our arrangements, control transfers at a point in time either upon shipment or upon delivery of the goods to the customer. The timing of transfer of control is determined considering the timing of the transfer of legal title, physical possession, and risks and rewards of goods to the customer.

We record shipping and handling revenue in net revenue and outbound shipping and handling costs in cost of goods sold. The majority of our shipping and handling activities are performed prior to transfer of control of the goods to the customer. For those arrangements where we provide shipping and handling services after control of the goods has transferred to the customer, we have elected the practical expedient allowed under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 606 to account for these activities as a fulfillment cost rather than as a separate performance obligation.

Provisions for sales returns are estimated based on historical experience and are adjusted for known returns, if material. Customer incentive programs (primarily volume purchase rebates) and arrangements such as cooperative advertising, slotting fees and buy-downs are recorded as a reduction of net revenue in accordance with ASC 606. Customer incentives recorded in the Consolidated Statements of Income as a reduction of net revenue were $33,441, $34,860 and $22,795 in 2021, 2020 and 2019, 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 Goods and Service [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.

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 11 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 is determined using cash flow models following the income approach or a discounted market-based methodology approach. Significant inputs include estimated revenue growth rates, gross margins, operating expenses and estimated attrition, royalty and discount rates. Goodwill is recorded as the difference in the fair value of the acquired assets and assumed liabilities and the purchase price.

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

Restrictions on Cash

There were no restrictions on cash as of November 27, 2021 or November 28, 2020. There are no contractual or regulatory restrictions on the ability of consolidated and unconsolidated subsidiaries to transfer funds to us, except for typical statutory restrictions which prohibit distributions in excess of net capital or similar tests. The majority of our cash in non-U.S. locations is considered indefinitely reinvested.

Accounts Receivable [Policy Text Block]

Trade Receivables and Allowances

Trade receivables are recorded at the invoiced amount and do not bear interest. Allowances are maintained for doubtful accounts, credits related to pricing or quantities shipped and early payment discounts. The allowance for doubtful accounts includes an estimate of future uncollectible receivables based on the aging of the receivable balance and our collection experience. The allowance also includes specific customer accounts when it is probable that the full amount of the receivable will not be collected. Current expectations of future credit losses using market and industry data are considered in the specific customer accounts. See Note 4 for further information.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are recorded at cost (not in excess of net realizable value) as determined by the weighted-average cost method and are valued at the lower of cost or net realizable value.

Investment, Policy [Policy Text Block]

Investments

Investments with a value of $9,584 and $9,006 represent the cash surrender value of life insurance contracts as of November 27, 2021 and November 28, 2020, respectively. These assets are held to primarily support supplemental pension plans and are recorded in other assets in the Consolidated Balance Sheets. The corresponding gain or loss associated with these contracts is reported in earnings each period as a component of selling, general and administrative expenses.

Equity Securities without Readily Determinable Fair Value [Policy Text Block]

Equity Investments

Investments in an entity where we own less than 20% of the voting stock of the entity and do not exercise significant influence over operating and financial policies of the entity are accounted for using the measurement alternative at cost less impairment plus or minus observable price changes in orderly transactions. We have a policy in place to review our investments at least annually, to evaluate the accounting method and identify observable price changes that could indicate impairment. If we believe that an impairment exists, it is our policy to calculate the fair value of the investment and recognize as impairment any amount by which the carrying value exceeds the fair value of the investment. We did not have any impairment of our equity investments for the years ended November 27, 2021, November 28, 2020, and November 30, 2019. The book value of the equity investments was $1,667 as of  November 27, 2021 and $1,669 as of November 28, 2020.

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 20 to 40 years for buildings and improvements, 3 to 20 years for machinery and equipment, and the shorter of the lease or expected life for leasehold improvements. Fully depreciated assets are retained in property and accumulated depreciation accounts until removed from service. Upon disposal, assets and related accumulated depreciation are removed. Upon sale of an asset, the difference between the proceeds and remaining net book value is charged or credited to other income, net on the Consolidated Statements of Income. Expenditures that add value or extend the life of the respective assets are capitalized, while expenditures that are typical recurring repairs and maintenance are expensed as incurred. Interest costs associated with construction and implementation of property, plant and equipment of $905, $565 and $416 were capitalized in 2021, 2020 and 2019, respectively.

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

Goodwill

We evaluate our goodwill for impairment annually at the beginning of the fourth quarter or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows or ongoing declines in market capitalization. The quantitative impairment test requires judgment, including the identification of reporting units, the assignment of assets, liabilities and goodwill to reporting units, and the determination of fair value of each reporting unit. The impairment test requires the comparison of the fair value of each reporting unit with its carrying amount, including goodwill. In performing the impairment test, we determined the fair value of our reporting units through the income approach by using discounted cash flow (“DCF”) analyses. Determining fair value requires the company to make judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the DCF analysis for each reporting unit are based on the reporting unit's budget, long-term business plan and recent operating performance. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered to not be impaired. If the carrying value exceeds estimated fair value, an impairment charge is recorded for any excess of the carrying value over the estimated fair value. Based on the analysis performed for our fiscal 2021 annual impairment test, there were no indications of impairment for any of our reporting units. See Note 5 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 3 to 20 years. The straight-line method of amortization of these assets reflects an appropriate allocation of the costs of the intangible assets to earnings in proportion to the amount of economic benefits obtained in each reporting period.

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 DCF 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, net in the Consolidated Statements of Income.

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

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 or may not be representative of the characteristics of our particular plan. Our expected long-term rate of return on U.S. plan assets was based on our target asset allocation assumption of 60 percent equities and 40 percent fixed income. Management, in conjunction with our external financial advisors, determines the expected long-term rate of return on plan assets by considering the expected future returns and volatility levels for each asset class that are based on historical returns and forward-looking observations. The expected long-term rate of return on plan assets assumption used in each non-U.S. plan is determined on a plan-by-plan basis for each local jurisdiction and is based on expected future returns for the investment mix of assets currently in the portfolio for that plan. Management, in conjunction with our external financial advisors, develops expected rates of return for each plan, considers expected long-term returns for each asset category in the plan, reviews expectations for inflation for each local jurisdiction, and estimates the impact of active management of the plan’s assets. Note 10 includes disclosure of assumptions employed in these measurements for both the non-U.S. and U.S. plans.

Asset Retirement Obligation [Policy Text Block]

Asset Retirement Obligations

We recognize asset retirement obligations ("ARO") in the period in which we have an existing legal obligation associated with the retirement of a tangible long-lived asset, and the amount can be reasonably estimated. The ARO is recognized at fair value when the liability is incurred. Upon initial recognition of a liability, that cost is capitalized as part of the related long-lived asset and depreciated on a straight-line basis over the remaining estimated useful life of the related asset. We have recognized a liability related to special handling of asbestos related materials in certain facilities for which we have plans or expectation of plans to undertake a major renovation or demolition project that would require the removal of asbestos or have plans or expectation of plans to exit a facility. In addition, we have determined that we have facilities with some level of asbestos that will require abatement action in the future. Once the probability and timeframe of an action are determined, we apply certain assumptions to determine the related liability and asset. These assumptions include the use of inflation rates, the use of credit adjusted risk-free discount rates and the estimation of costs to handle asbestos related materials. The recorded liability is required to be adjusted for changes resulting from the passage of time and/or revisions to the timing or the amount of the original estimate. The asset retirement obligation liability was $2,917 and $2,948 at November 27, 2021 and November 28, 2020, 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 no later than the completion of feasibility studies.

Commitments and Contingencies, Policy [Policy Text Block]

Contingent Consideration Liability

Concurrent with business acquisitions, we enter into agreements that require us to pay the sellers a certain amount based upon a formula related to the entity’s financial results. The change in fair value of the contingent consideration liability is recorded in SG&A expenses in the Consolidated Statements of Income.

Share-based Payment Arrangement [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 units, performance awards and deferred compensation. We use the straight-line attribution method to recognize compensation expense associated with share-based awards based on the fair value on the date of grant, net of the estimated forfeiture rate. Expense is recognized over the requisite service period related to each award, which is the period between the grant date and the earlier of the award’s stated vesting term or the date the employee is eligible for early retirement based on the terms of the plan. The fair value of stock options is estimated using the Black-Scholes option pricing model. All of our stock compensation expense is recorded in SG&A expenses in the Consolidated Statements of Income. See Note 9 for additional information.

Earnings Per Share, 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)	2021		2020		2019
Net income attributable to H.B. Fuller	$	161,393	$	123,719	$	130,817
Weighted-average common shares – basic		52,887		52,039		50,920
Equivalent shares from share-based compensation plans		1,428		481		1,063
Weighted-average common and common equivalent shares – diluted		54,315		52,520		51,983
Basic earnings per share	$	3.05	$	2.38	$	2.57
Diluted earnings per share	$	2.97	$	2.36	$	2.52

Share-based compensation awards for 1,535,503, 3,982,275 and 2,951,697 shares for 2021, 2020 and 2019, 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 12 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 47,481, 72,000 and 73,043 shares of common stock in 2021, 2020 and 2019, respectively, in connection with the statutory minimum tax withholding related to vesting of restricted stock.

New Accounting Pronouncements, Policy [Policy Text Block]

Change in Accounting Principle - Credit Losses

In June 2016, the FASB issued 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. The FASB also issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, in November 2018, ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments, in April 2019 and ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments, in November 2019. ASU No. 2018-19 clarifies that receivables arising from operating leases are within the scope of Topic 842, Leases. ASU No. 2019-04 and ASU No. 2019-11 clarify various scoping and other issues arising from ASU No. 2016-13. The amendments in these ASUs affect the guidance in ASU No. 2016-13 and are effective in the same timeframe as ASU No. 2016-13. We adopted these ASUs and related standards during the first quarter ended February 27, 2021. Based on the conducted analyses on the change in accounting principle, the ASUs did not have a material impact on the Consolidated Statements of Income or the Consolidated Balance Sheets. Therefore, a modified retrospective adjustment was not required. The trade receivables and allowances significant accounting policy has been changed in accordance with these ASUs.

Change in Accounting Principle – Revenue Recognition

In May 2014, 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. We adopted this ASU during the quarter ended March 2, 2019 using the modified retrospective method of adoption. As a result of the adoption of this ASU, we recorded an increase to opening retained earnings of $1,776 as of December 1, 2018 related to accelerated recognition for arrangements where we provide shipping and handling services after control of the goods has transferred to the customer. Prior periods were not restated. We have included the disclosures required by this ASU in Note 15.

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 were adopted during the quarter ended March 2, 2019 with ASU No. 2014-09 as discussed above.

Change in Accounting Principle – Income Tax Impact of Intra-Entity Transfers of Assets Other Than Inventory

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. We adopted this ASU during the quarter ended  March 2, 2019. We recorded a decrease to opening retained earnings of $733 as of  December 1, 2018 as a result of the adoption of this ASU.

New Accounting Pronouncements

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This ASU requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model under ASC 958-605. Our effective date for adoption of this ASU is our fiscal year beginning December 4, 2022 with early adoption permitted. We have evaluated the effect that this guidance will have on our Consolidated Financial Statements and determined it will not have a material impact.

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

XML

Note 1 - Nature of Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

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

(in thousands, except per share data)	2021		2020		2019
Net income attributable to H.B. Fuller	$	161,393	$	123,719	$	130,817
Weighted-average common shares – basic		52,887		52,039		50,920
Equivalent shares from share-based compensation plans		1,428		481		1,063
Weighted-average common and common equivalent shares – diluted		54,315		52,520		51,983
Basic earnings per share	$	3.05	$	2.38	$	2.57
Diluted earnings per share	$	2.97	$	2.36	$	2.52

XML

Note 3 - Restructuring Actions (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

Restructuring and Related Costs [Table Text Block]

	November 27, 2021			November 28, 2020		November 30, 2019
Cost of sales	$	(188	)	$	1,013	$	2,082
Selling, general and administrative		975			3,567		12,453
	$	787		$	4,580	$	14,535

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

	Employee-
	Related			Other			Total
Balance at end November 30, 2019	$	9,830		$	924		$	10,754
Expense incurred		2,898			1,681			4,579
Cash payments		(7,051	)		(2,357	)		(9,408	)
Foreign currency translation		157			-			157
Balance at end November 28, 2020	$	5,834		$	248		$	6,082
Expense incurred		(807	)		1,594			787
Non-cash charges		-			(135	)		(135	)
Cash payments		(3,917	)		(1,707	)		(5,624	)
Foreign currency translation		(15	)		-			(15	)
Balance at end November 27, 2021	$	1,095		$	-		$	1,095

XML

Note 4 - Supplemental Financial Statement Information (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

Schedule of Income Statement Supplemental Disclosures [Table Text Block]

	2021			2020			2019
Foreign currency transaction losses, net	$	(5,962	)	$	(3,078	)	$	(1,156	)
(Loss) gain on disposal of assets		(648	)		(86	)		24,304
Net periodic pension benefit		32,070			17,902			13,661
Other, net		7,395			660			1,134
Total other income, net	$	32,855		$	15,398		$	37,943
Research and development expenses (included in SG&A expenses)	$	39,344		$	36,969		$	36,624

Schedule of Balance Sheet Supplemental Disclosures [Table Text Block]

	2021			2020
Inventories
Raw materials	$	226,723		$	151,026
Finished goods		221,681			172,187
Total inventories	$	448,404		$	323,213
Other current assets
Other receivables	$	28,874		$	18,666
Prepaid income taxes		13,359			22,137
Prepaid taxes other than income taxes		26,929			20,270
Prepaid expenses		25,889			19,212
Assets held for sale		1,284			828
Total other current assets	$	96,335		$	81,113
Property, plant and equipment
Land	$	84,492		$	87,403
Buildings and improvements		395,849			393,175
Machinery and equipment		915,914			876,858
Construction in progress		104,734			70,747
Total, at cost		1,500,989			1,428,183
Accumulated depreciation		(805,622	)		(757,439	)
Net property, plant and equipment	$	695,367		$	670,744
Other assets
Investments and company owned life insurance	$	9,584		$	9,006
Equity method investments		49,333			53,863
Equity investments		1,667			1,669
Long-term deferred income taxes		37,116			37,376
Prepaid pension costs		90,946			43,206
Postretirement other than pension asset		107,323			73,137
Operating lease right-of-use assets		32,744			28,445
Other long-term receivables		23,661			16,760
Other long-term assets		19,699			14,751
Total other assets	$	372,073		$	278,213
Other accrued expenses
Taxes other than income taxes	$	14,280		$	16,893
Miscellaneous services		5,626			5,691
Customer rebates		20,743			15,008
Interest		2,964			4,901
Insurance		329			184
Product liability		432			501
Contingent consideration liability		8,100			5,800
Current operating lease liabilities		8,921			8,706
Accrued expenses		24,666			26,292
Total other accrued expenses	$	86,061		$	83,976
Other liabilities
Asset retirement obligations	$	2,917		$	2,948
Long-term deferred income taxes		179,401			165,877
Long-term income tax liability		14,364			18,089
Long-term deferred compensation		9,665			8,510
Postretirement other than pension		2,657			2,930
Noncurrent operating lease liabilities		24,061			19,498
Long-term accrued payroll tax		4,215			7,216
Environmental liabilities		3,521			3,639
Other long-term liabilities		36,389			50,212
Total other liabilities	$	277,190		$	278,919

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	2021			2020			2019
Balance at beginning of year	$	12,905		$	10,682		$	14,017
Charged to expenses and other adjustments		(546	)		8,313			2,678
Write-offs		(2,278	)		(6,158	)		(5,947	)
Foreign currency translation effect		(146	)		68			(66	)
Balance at end of year	$	9,935		$	12,905		$	10,682

Comprehensive Income (Loss) [Table Text Block]

	November 27, 2021
										Non-controlling
	H.B. Fuller Stockholders									Interest
	Pretax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interests		-			-		$	161,393		$	82
Other comprehensive income (loss)
Foreign currency translation adjustment1	$	(26,262	)		-			(26,262	)		(32	)
Defined benefit pension plans adjustment2		64,912			(16,731	)		48,181			-
Interest rate swap3		20,109			(4,930	)		15,179			-
Other cash flow hedges3		(4,554	)		68			(4,486	)		-
Other comprehensive income (loss)	$	54,205		$	(21,593	)		32,612			(32	)
Comprehensive income							$	194,005		$	50

	November 28, 2020
										Non-controlling
	H.B. Fuller Stockholders									Interest
	Pretax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interests		-			-		$	123,719		$	69
Other comprehensive income (loss)
Foreign currency translation adjustment1	$	41,712			-			41,712			30
Defined benefit pension plans adjustment2		5,823			(1,235	)		4,588			-
Interest rate swap3		(15,618	)		3,853			(11,765	)		-
Other cash flow hedges3		6,307			(101	)		6,206			-
Other comprehensive income	$	38,224		$	2,517			40,741			30
Comprehensive income							$	164,460		$	99

	November 30, 2019
										Non-controlling
	H.B. Fuller Stockholders									Interest
	Pretax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interests		-			-		$	130,817		$	27
Other comprehensive income (loss)
Foreign currency translation adjustment1	$	(20,409	)		-			(20,409	)		14
Defined benefit pension plans adjustment2		(28,635	)		6,807			(21,828	)		-
Interest rate swap3		(46,254	)		11,223			(35,031	)		-
Other cash flow hedges3		14,429			(609	)		13,820			-
Other comprehensive (loss) income	$	(80,869	)	$	17,421			(63,448	)		14
Comprehensive income							$	67,369		$	41

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

	November 27, 2021
							Non-
				H.B. Fuller			controlling
	Total			Stockholders			Interests
Foreign currency translation adjustment	$	(132,370	)	$	(132,267	)	$	(103	)
Interest rate swap, net of taxes of $3,224		(9,924	)		(9,924	)		-
Cash flow hedges, net of taxes of ($53)		3,483			3,483			-
Defined benefit pension plans adjustment, net of taxes of $63,925		(113,198	)		(113,198	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Total accumulated other comprehensive loss	$	(270,350	)	$	(270,247	)	$	(103	)

	November 28, 2020
							Non-
				H.B. Fuller			controlling
	Total			Stockholders			Interests
Foreign currency translation adjustment	$	(106,140	)	$	(106,005	)	$	(135	)
Interest rate swap, net of taxes of $8,153		(25,103	)		(25,103	)		-
Cash flow hedges, net of taxes of ($121)		7,969			7,969			-
Defined benefit pension plans adjustment, net of taxes of $80,656		(161,379	)		(161,379	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Total accumulated other comprehensive loss	$	(302,994	)	$	(302,859	)	$	(135	)

	November 30, 2019
							Non-
				H.B. Fuller			controlling
	Total			Stockholders			Interests
Foreign currency translation adjustment	$	(147,821	)	$	(147,716	)	$	(105	)
Interest rate swap, net of taxes of ($4,300)		(13,338	)		(13,338	)		-
Cash flow hedges, net of taxes of $21		1,763			1,763			-
Defined benefit pension plans adjustment, net of taxes of $81,891		(165,968	)		(165,968	)		-
Reclassification of AOCI tax effects		(18,341	)		(18,341	)		-
Total accumulated other comprehensive loss	$	(343,705	)	$	(343,600	)	$	(105	)

XML

Note 5 - Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

Schedule of Goodwill [Table Text Block]

	2021			2020
Balance at beginning of year	$	1,312,003		$	1,281,808
Ramapo acquisition		-			(746	)
D.H.M acquisition		-			1,063
Foreign currency translation effect		(13,158	)		29,878
Balance at end of year	$	1,298,845		$	1,312,003

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

	Purchased
	Technology			Customer
Amortizable Intangible Assets	and Patents			Relationships			Tradename			All Other			Total
As of November 27, 2021
Original cost	$	115,980		$	932,644		$	63,543		$	11,343		$	1,123,510
Accumulated amortization		(62,364	)		(335,143	)		(33,786	)		(5,635	)		(436,928	)
Net identifiable intangibles	$	53,616		$	597,501		$	29,757		$	5,708		$	686,582
Weighted-average useful lives (in years)		13			17			14			12			17
As of November 28, 2020
Original cost	$	113,775		$	933,943		$	63,266		$	11,410		$	1,122,394
Accumulated amortization		(53,216	)		(279,586	)		(29,368	)		(4,775	)	$	(366,945	)
Net identifiable intangibles	$	60,559		$	654,357		$	33,898		$	6,635		$	755,449
Weighted-average useful lives (in years)		13			17			14			12			17

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

Fiscal Year	2022		2023		2024		2025		2026		Thereafter
Amortization Expense	$	68,879	$	66,056	$	61,146	$	58,578	$	51,773	$	380,150

Operating Segments [Member]

Notes Tables

Schedule of Goodwill [Table Text Block]

	2021		2020
Hygiene, Health and Consumable Adhesives	$	325,470	$	332,909
Engineering Adhesives		662,021		667,863
Construction Adhesives		311,354		311,231
Total	$	1,298,845	$	1,312,003

XML

Note 6 - Leases (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

Lease, Cost [Table Text Block]

	November 27, 2021		November 28, 2020
Operating lease cost	$	11,958	$	12,581
Finance lease cost:
Amortization of assets1		673
Interest on lease liabilities1		110
Variable lease cost		5,990		4,024
Total net lease cost	$	18,731	$	16,605

Lessee, Supplemental Balance Sheet Information and Weighted Average [Table Text Block]

	Location on
	Balance Sheet	November 27, 2021		November 28, 2020
Operating leases:
Operating lease right-of-use assets	Other assets	$	32,744	$	28,445
Current operating lease liabilities	Other accrued expenses		8,921		8,706
Noncurrent operating lease liabilities	Other liabilities		24,061		19,498
Total operating lease liabilities		$	32,982	$	28,204
Finance leases:
Equipment right-of-use assets1	Property, plant and equipment	$	9,455
Current obligations of finance leases1	Other accrued expenses	$	1,109
Finance leases, net of current obligations1	Other liabilities		7,548
Total finance lease liabilities		$	8,657

Lessee, Supplemental Cash Flow Information [Table Text Block]

	November 27, 2021		November 28, 2020
Cash paid amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	15,251	$	13,216
Operating cash flows from finance leases1		110
Financing cash flows from finance leases1		546
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	20,030	$	13,166
Finance leases1		7,630

Lessee, Operating and Finance Leases, Liabilities, Maturity [Table Text Block]

	November 27, 2021
Fiscal Year	Finance Leases			Operating Leases
2022	$	1,352		$	9,292
2023		1,254			7,500
2024		1,174			5,313
2025		1,171			4,009
2026		1,165			2,360
2027 and beyond		3,841			7,888
Total		9,957			36,362
Less: amounts representing interest		(1,300	)		(3,380	)
Present value of future minimum payments		8,657			32,982
Less: current obligations		(1,109	)		(8,921	)
Noncurrent lease liabilities	$	7,548		$	24,061

XML

Note 7 - Notes Payable, Long-term Debt and Lines of Credit (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

Schedule of Debt [Table Text Block]

	Weighted-Average			Fiscal Year		Balance at			Balance at
	Interest Rate at			Maturity		November 27,			November 28,
Long-Term Debt	November 27, 2021			Date		2021			2020
Revolving credit facility		1.59	%		2024	$	-		$	-
Term Loan B1		3.64	%		2024		1,001,150			1,157,650
Public Notes2		4.00	%		2027		300,000			300,000
Public Notes3		4.25	%		2028		300,000			300,000
Other, including debt issuance cost and discount							(9,671	)		(665	)
Total debt						$	1,591,479		$	1,756,985
Less: current maturities							-			-
Total long-term debt, excluding current maturities						$	1,591,479		$	1,756,985

Schedule of Maturities of Long-term Debt [Table Text Block]

Fiscal Year	2022		2023		2024		2025		2026		Thereafter
Long-term debt obligations	$	-	$	-	$	1,001,150	$	-	$	-	$	600,000

Schedule of Line of Credit Facilities [Table Text Block]

	Committed		Drawn		Unused
Revolving credit facility	$	400,000	$	-	$	391,286

XML

Note 8 - Stockholders' Equity (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

Schedule of Common Stock Outstanding Roll Forward [Table Text Block]

Common Shares Outstanding	2021			2020			2019
Beginning balance		51,906,663			51,241,190			50,732,796
Stock options exercised		740,731			397,456			378,734
Deferred compensation paid		19,895			118,742			5,354
Restricted units vested		157,945			221,275			197,349
Shares withheld for taxes		(47,481	)		(72,000	)		(73,043	)
Ending balance		52,777,753			51,906,663			51,241,190

XML

Note 9 - Accounting for Share-based Compensation (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

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

	2021			2020			2019
Expected life (in years)		5.00			5.00			4.75
Weighted-average expected volatility		32.50	%		24.32	%		24.26	%
Expected volatility range		32.48% - 32.94%			24.18% - 30.99%			23.88% - 24.76%
Risk-free interest rate		0.39% - 1.20%			0.21% - 1.51%			1.34% - 2.55%
Weighted-average expected dividend		1.26	%		1.38	%		1.40	%
Expected dividend yield range		0.92% - 1.27%			1.35% - 2.53%			1.25% - 1.45%
Weighted-average fair value of grants	$	13.29		$	9.63		$	9.76

Share-based Payment Arrangement, Option, Activity [Table Text Block]

				Weighted-
				Average
	Options			Exercise Price
Outstanding at December 1, 2018		4,466,106		$	44.72
Granted		1,020,246			45.53
Exercised		(378,734	)		28.74
Forfeited or cancelled		(47,308	)		48.90
Outstanding at November 30, 2019		5,060,310		$	46.04
Granted		1,052,968			47.70
Exercised		(397,456	)		31.00
Forfeited or cancelled		(169,907	)		49.11
Outstanding at November 28, 2020		5,545,915		$	47.34
Granted		1,237,094			53.33
Exercised		(740,731	)		43.64
Forfeited or cancelled		(1,069,886	)		56.33
Outstanding at November 27, 2021		4,972,392		$	47.45

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

						Weighted-
				Weighted-		Average
				Average		Remaining
				Grant		Contractual
				Date Fair		Life
	Units			Value		(in Years)
Nonvested at December 1, 2018		414,353		$	47.45		1.0
Granted		302,132			44.29		2.2
Vested		(197,349	)		45.45		-
Forfeited		(31,139	)		43.37		0.4
Nonvested at November 30, 2019		487,997		$	46.56		0.8
Granted		216,293			46.39		3.4
Vested		(221,275	)		46.83		-
Forfeited		(50,666	)		47.55		0.1
Nonvested at November 28, 2020		432,349		$	46.22		0.8
Granted		356,779			54.49		3.2
Vested		(157,945	)		48.69		-
Forfeited		(78,818	)		47.79		0.8
Nonvested at November 27, 2021		552,365		$	50.63		1.9

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

	Non-employee
	Directors			Employees			Total
Units outstanding December 1, 2018		479,787			29,735			509,522
Participant contributions		22,153			11,166			33,319
Company match contributions1		23,720			1,117			24,837
Payouts		-			(5,354	)		(5,354	)
Units outstanding November 30, 2019		525,660			36,664			562,324
Participant contributions		18,008			13,814			31,822
Company match contributions1		23,033			1,381			24,414
Payouts		(111,436	)		(7,306	)		(118,742	)
Units outstanding November 28, 2020		455,265			44,553			499,818
Participant contributions		13,036			10,487			23,523
Company match contributions1		20,118			1,049			21,167
Payouts		(19,895	)		(7,728	)		(27,623	)
Units outstanding November 27, 2021		468,524			48,361			516,885

XML

Note 10 - Pension and Postretirement Benefits (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan [Table Text Block]

	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2021			2020			2021			2020			2021			2020
Change in projected benefit obligation
Benefit obligation at beginning of year	$	388,530		$	380,388		$	250,561		$	234,542		$	39,075		$	39,256
Service cost		-			-			3,280			2,950			21			73
Interest cost		9,299			11,738			2,941			3,158			822			1,135
Participant contributions		-			-			-			-			365			226
Actuarial (gain)/loss1		(9,177	)		27,377			(3,630	)		4,350			(6,115	)		1,327
Other		-			-			-			-			-			-
Curtailments		-			-			-			14			-			-
Settlement payments		(6,673	)		(10,939	)		996			(273	)		-			-
Benefits paid		(20,767	)		(20,034	)		(8,578	)		(8,628	)		(2,906	)		(2,942	)
Foreign currency translation effect		-			-			(7,170	)		14,448			-			-
Benefit obligation at end of year		361,212			388,530			238,400			250,561			31,262			39,075
Change in plan assets
Fair value of plan assets at beginning of year		398,403			383,527			202,242			185,331			109,056			94,474
Actual return on plan assets		37,466			44,365			25,204			13,155			28,716			15,673
Employer contributions		1,382			1,677			1,989			2,177			470			1,625
Participant contributions		-			-			-			-			365			226
Other		-			-			996			-			-			-
Settlement payments		(6,673	)		(10,939	)		-			-			-			-
Benefits paid2		(20,767	)		(20,227	)		(8,578	)		(8,628	)		(2,906	)		(2,942	)
Foreign currency translation effect		-			-			(5,230	)		10,207			-			-
Fair value of plan assets at end of year		409,811			398,403			216,623			202,242			135,701			109,056
Plan assets in excess of (less than) benefit obligation as of year end	$	48,599		$	9,873		$	(21,776	)	$	(48,688	)	$	104,439		$	69,981

Schedule of Net Periodic Benefit Cost Not yet Recognized [Table Text Block]

Amounts in accumulated other comprehensive income (loss) that have not been recognized as components of net periodic benefit cost	Pension Benefits										Other Postretirement
	U.S. Plans						Non-U.S. Plans				Benefits
	2021			2020			2021		2020		2021			2020
Unrecognized actuarial loss	$	129,198		$	147,917		$	64,782	$	87,368	$	(30,278	)	$	(4,318	)
Unrecognized prior service (benefit) cost		(3	)		(6	)		1,390		1,453		-			-
Ending balance	$	129,195		$	147,911		$	66,172	$	88,821	$	(30,278	)	$	(4,318	)

Schedule of Amounts Recognized in Balance Sheet [Table Text Block]

	Pension Benefits												Other Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
	2021			2020			2021			2020			2021			2020
Statement of financial position as of fiscal year-end
Non-current assets	$	66,157		$	30,672		$	24,772		$	12,534		$	107,323		$	73,137
Accrued benefit cost
Current liabilities		(1,342	)		(1,467	)		(1,795	)		(1,701	)		(227	)		(226	)
Non-current liabilities		(16,216	)		(19,332	)		(44,753	)		(59,521	)		(2,657	)		(2,930	)
Ending balance	$	48,599		$	9,873		$	(21,776	)	$	(48,688	)	$	104,439		$	69,981

Defined Benefit Plan, Plan with Projected Benefit Obligation in Excess of Plan Assets [Table Text Block]

	Pension Benefits and Other Postretirement Benefits
	U.S. Plans				Non-U.S. Plans
	2021		2020		2021		2020
Accumulated benefit obligation	$	17,558	$	26,241	$	48,912	$	134,472
Fair value of plan assets		-		5,441		11,350		84,239

	Pension Benefits and Other Postretirement Benefits
	U.S. Plans				Non-U.S. Plans
	2021		2020		2021		2020
Projected benefit obligation	$	17,558	$	26,241	$	131,174	$	145,461
Fair value of plan assets		-		5,441	$	84,626		84,239

Schedule of Expected Benefit Payments [Table Text Block]

	Pension Benefits				Other
			Non-U.S.		Postretirement
	U.S. Plans		Plans		Benefits
Employer contributions
2022	$	-	$	34	$	-
Expected benefit payments
2022		21,131		8,704		2,982
2023		21,280		7,933		2,851
2024		21,283		8,285		2,730
2025		21,391		8,457		2,607
2026-2031		125,388		54,038		12,948

Schedule of Net Benefit Costs [Table Text Block]

	Pension Benefits																		Other
	U.S. Plans									Non-U.S. Plans									Postretirement Benefits
Net periodic cost (benefit)	2021			2020			2019			2021			2020			2019			2021			2020			2019
Service cost	$	-		$	-		$	4		$	3,280		$	2,950		$	2,237		$	21		$	73		$	98
Interest cost		9,299			11,738			14,691			2,941			3,158			4,678			822			1,135			1,550
Expected return on assets		(31,123	)		(25,758	)		(25,305	)		(12,348	)		(11,312	)		(10,224	)		(8,945	)		(7,976	)		(7,013	)
Amortization:
Prior service cost (benefit)		(3	)		(3	)		13			69			64			64			-			-			-
Actuarial loss		3,198			7,195			4,677			4,053			3,829			3,114			73			62			33
Curtailment loss		-			-			-			-			14			83			-			-			-
Settlement charge		-			-			-			-			67			-			-			-			-
Net periodic (benefit) cost	$	(18,629	)	$	(6,828	)	$	(5,920	)	$	(2,005	)	$	(1,230	)	$	(48	)	$	(8,029	)	$	(6,706	)	$	(5,332	)

Defined Benefit Plan, Assumptions [Table Text Block]

	Pension Benefits																		Other
	U.S. Plans									Non-U.S. Plans									Postretirement Benefits
Weighted-average assumptions used to determine benefit obligations	2021			2020			2019			2021			2020			2019			2021			2020			2019
Discount rate		2.75	%		2.50	%		3.17	%		1.27	%		1.16	%		1.35	%		2.51	%		2.19	%		3.00	%
Rate of compensation increase1		0.00	%		4.50	%		4.50	%		1.48	%		1.74	%		1.71	%		N/A			N/A			N/A

Weighted-average assumptions used to determine net costs for years ended	2021			2020			2019			2021			2020			2019			2021			2020			2019
Discount rate		2.50	%		3.17	%		4.50	%		1.19	%		1.34	%		2.30	%		2.19	%		3.00	%		4.37	%
Expected return on plan assets		7.24	%		7.49	%		7.49	%		6.15	%		6.23	%		6.21	%		8.25	%		8.50	%		8.50	%
Rate of compensation increase1		0.00	%		4.50	%		4.50	%		1.67	%		1.74	%		1.71	%		0.00	%		N/A			N/A

Schedule of Health Care Cost Trend Rates [Table Text Block]

Assumed health care trend rates	2021			2020			2019
Health care cost trend rate assumed for next year		6.50	%		6.75	%		7.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		5.00	%		5.00	%		0.25	%
Fiscal year that the rate reaches the ultimate trend rate	2028			2028			2028

Schedule of Allocation of Plan Assets [Table Text Block]

	U.S. Pension Plans									Non-U.S. Pension Plans									Other Postretirement Plans
				Percentage of									Percentage of									Percentage of
				Plan Assets at									Plan Assets at									Plan Assets at
	Target			Year-End						Target			Year-End						Target			Year-End
Asset Category	2021			2021			2020			2021			2021			2020			2021			2021			2020
Equities		60.0	%		57.7	%		55.4	%		21.2	%		21.3	%		48.8	%		0.0	%		0.0	%		0.0	%
Fixed income		40.0	%		40.1	%		36.2	%		77.3	%		67.0	%		51.0	%		0.0	%		0.0	%		0.0	%
Insurance		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		100.0	%		99.8	%		99.4	%
Cash1		0.0	%		2.2	%		8.4	%		1.5	%		11.7	%		0.2	%		0.0	%		0.2	%		0.6	%
Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

Schedule of Changes in Fair Value of Plan Assets [Table Text Block]

	November 27, 2021
U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	-	$	236,557	$	-	$	236,557
Fixed income		-		164,133		186		164,319
Cash		8,935		-		-		8,935
Total categorized in the fair value hierarchy	$	8,935	$	400,690	$	186	$	409,811

Non-U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	35,117	$	-	$	-	$	35,117
Fixed income		48,243		5,285		749		54,277
Cash		4,399		-		-		4,399
Total categorized in the fair value hierarchy		87,759		5,285		749		93,793
Other investments measured at NAV1								122,830
Total	$	87,759	$	5,285	$	749	$	216,623

Other Postretirement Benefits	Level 1		Level 2		Level 3		Total Assets
Insurance	$	-	$	-	$	135,484	$	135,484
Cash		217		-		-		217
Total	$	217	$	-	$	135,484	$	135,701

	November 28, 2020
U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	3,421	$	217,151	$	-	$	220,572
Fixed income		1,524		142,317		205		144,046
Cash		33,391		-		-		33,391
Total categorized in the fair value hierarchy		38,336		359,468		205		398,009
Other investments measured at NAV1								394
Total	$	38,336	$	359,468	$	205	$	398,403

Non-U.S. Pension Plans	Level 1		Level 2		Level 3		Total Assets
Equities	$	33,478	$	1,368	$	-	$	34,846
Fixed income		49,813		7,182		770		57,765
Cash		352		-		-		352
Total categorized in the fair value hierarchy		83,643		8,550		770		92,963
Other investments measured at NAV1								109,279
Total	$	83,643	$	8,550	$	770	$	202,242

Other Postretirement Benefits	Level 1		Level 2		Level 3		Total Assets
Insurance	$	-	$	-	$	108,406	$	108,406
Cash		650		-		-		650
Total	$	650	$	-	$	108,406	$	109,056

Schedule of Effect of Significant Unobservable Inputs, Changes in Plan Assets [Table Text Block]

	Fixed Income
U.S. Pension Plans	2021			2020
Level 3 balance at beginning of year	$	205		$	219
Purchases, sales, issuances and settlements, net		(19	)		(14	)
Level 3 balance at end of year	$	186		$	205

	Fixed Income
Non-U.S. Pension Plans	2021			2020
Level 3 balance at beginning of year	$	770		$	675
Net transfers into / (out of) level 3		64			43
Net gains		(43	)		(8	)
Currency change effect		(42	)		60
Level 3 balance at end of year	$	749		$	770

	Insurance
Other Postretirement Benefits	2021			2020
Level 3 balance at beginning of year	$	108,406		$	94,082
Net transfers into / (out of) level 3		(1,658	)		(831	)
Purchases, sales, issuances and settlements, net		(1,093	)		(822	)
Net gains		29,829			15,977
Level 3 balance at end of year	$	135,484		$	108,406

XML

Note 11 - Income Taxes (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

Income before income taxes and income from equity method investments	2021		2020		2019
United States	$	14,989	$	20,328	$	31,796
Non-U.S.		201,861		138,028		141,032
Total	$	216,850	$	158,356	$	172,828

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

Components of the provision for income tax expense (benefit)	2021			2020			2019
Current:
U.S. federal	$	10,310		$	5,243		$	9,122
State		2,265			1,320			3,294
Non-U.S.		57,801			56,542			47,848
		70,376			63,105			60,264
Deferred:
U.S. federal		(6,891	)		(4,709	)		(432	)
State		(350	)		(4,111	)		125
Non-U.S.		(102	)		(12,364	)		(10,549	)
		(7,343	)		(21,184	)		(10,856	)
Total	$	63,033		$	41,921		$	49,408

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Reconciliation of effective income tax	2021			2020			2019
Tax at statutory U.S. federal income tax rate	$	45,539		$	33,255		$	36,294
State income taxes, net of federal benefit		1,444			(2,104	)		2,785
Foreign dividend repatriation		1,104			900			825
Foreign operations		19,673			(563	)		8,712
Executive compensation over $1.0 million		2,507			1,420			1,661
Non-U.S. stock option expense		575			358			425
Change in valuation allowance		(9,572	)		5,925			1,097
Research and development tax credit		(993	)		(906	)		(802	)
Foreign-derived intangible income		(2,617	)		(1,396	)		(2,240	)
Global intangible low-taxed income		2,334			1,932			2,029
Provision to return		1,122			1,704			(3,271	)
Cross currency swap		3,931			(6,748	)		2,677
Contingency reserve		(2,139	)		8,287			(957	)
Other		125			(143	)		173
Total income tax expense	$	63,033		$	41,921		$	49,408

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

Deferred income tax balances at each year-end related to:	2021			2020
Deferred tax assets:
Pension and other post-retirement benefit plans	$	12,118		$	16,385
Employee benefit costs		26,799			24,538
Foreign tax credit carryforward		7,309			6,905
Tax loss carryforwards		24,071			31,495
Leases		8,590			7,133
Hedging activity		2,623			12,906
Interest deduction limitation		12,428			6,343
Other		27,410			30,178
Gross deferred tax assets		121,348			135,883
Less: valuation allowance		(11,341	)		(21,843	)
Total net deferred tax assets		110,007			114,040
Deferred tax liability:
Depreciation and amortization		(207,726	)		(220,379	)
Pension and other post-retirement benefit plans		(36,042	)		(14,968	)
Leases		(8,524	)		(7,194	)
Total deferred tax liability		(252,292	)		(242,541	)
Net deferred tax liability	$	(142,285	)	$	(128,501	)

Summary of Income Tax Contingencies [Table Text Block]

	2021			2020
Balance at beginning of year	$	14,569		$	8,946
Tax positions related to the current year:
Additions		401			579
Tax positions related to prior years:
Additions		1,323			7,400
Reductions		(950	)		(283	)
Settlements		(161	)		(747	)
Lapses in applicable statutes of limitation		(1,901	)		(1,326	)
Balance at end of year	$	13,281		$	14,569

XML

Note 12 - Financial Instruments (Tables)

12 Months Ended

Nov. 27, 2021

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	2022		3.00	%	$	267,860	$	14,496
Receive USD			5.1803	%

Derivative Instruments, Gain (Loss) [Table Text Block]

	November 27, 2021			November 28, 2020			November 30, 2019
Cross-currency swap contracts	$	(4,556	)	$	6,307		$	14,429
Interest rate swap contracts	$	20,109		$	(15,618	)	$	(46,254	)

	November 27, 2021			November 28, 2020			November 30, 2019
Foreign currency forward contracts	$	(357	)	$	(2,908	)	$	(573	)

XML

Note 13 - Fair Value Measurements (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

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

			Fair Value Measurements
			Using:
	November 27,
Description	2021		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	2,079	$	2,079	$	-	$	-
Foreign exchange contract assets		5,725		-		5,725		-
Cross-currency cash flow hedge assets		14,496		-		14,496		-
Liabilities:
Foreign exchange contract liabilities	$	6,082	$	-	$	6,082	$	-
Interest rate swaps, cash flow hedge liabilities		12,366		-		12,366		-
Interest rate swaps, fair value hedge liabilities		10,539		-		10,539		-
Contingent consideration liability		8,100		-		-		8,100

			Fair Value Measurements
			Using:
	November 28,
Description	2020		Level 1		Level 2		Level 3
Assets:
Marketable securities	$	22,560	$	22,560	$	-	$	-
Foreign exchange contract assets		2,320		-		2,320		-
Cross-currency cash flow hedge assets		2,823		-		2,823		-
Liabilities:
Foreign exchange contract liabilities	$	5,251	$	-	$	5,251	$	-
Cross-currency cash flow hedge liabilities		280		-		280		-
Interest rate swaps, cash flow hedge liabilities		33,256		-		33,256		-
Contingent consideration liability		5,800		-		-		5,800

Contingent Consideration Liability [Member]

Notes Tables

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

Contingent consideration liability	2021
Level 3 balance at beginning of year	$	5,800
Acquisition		1,700
Payment of contingent consideration		(1,700	)
Mark to market adjustment		2,300
Level 3 balance at end of year	$	8,100

XML

Note 14 - Commitments and Contingencies (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

Schedule of Loss Contingencies by Contingency [Table Text Block]

	Year Ended		Year Ended		Year Ended
	November 27,		November 28,		November 30,
	2021		2020		2019
Lawsuits and claims settled		2		4		8
Settlement amounts	$	85	$	130	$	424
Insurance payments received or expected to be received	$	55	$	88	$	291

XML

Note 15 - Segments (Tables)

12 Months Ended

Nov. 27, 2021

Notes Tables

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

	2021			2020			2019
Net revenue
Hygiene, Health and Consumable Adhesives	$	1,472,756		$	1,332,786		$	1,328,286
Engineering Adhesives		1,371,756			1,088,313			1,158,403
Construction Adhesives		433,519			369,170			396,580
Corporate Unallocated1		-			-			13,731
Total	$	3,278,031		$	2,790,269		$	2,897,000
Segment operating income
Hygiene, Health and Consumable Adhesives	$	138,366		$	130,789		$	115,961
Engineering Adhesives		135,913			103,974			136,299
Construction Adhesives		14,148			11,148			16,657
Total segment		288,427			245,911			268,917
Corporate Unallocated1		(35,815	)		(27,594	)		(42,923	)
Total	$	252,612		$	218,317		$	225,994
Depreciation and amortization
Hygiene, Health and Consumable Adhesives	$	45,919		$	44,329		$	45,448
Engineering Adhesives		61,082			58,102			57,175
Construction Adhesives		35,002			35,811			35,851
Corporate Unallocated1		1,171			575			2,732
Total	$	143,174		$	138,817		$	141,206
Total assets2
Hygiene, Health and Consumable Adhesives	$	1,370,924		$	1,268,236
Engineering Adhesives		1,710,000			1,515,302
Construction Adhesives		810,824			934,397
Corporate		382,782			318,769
Total	$	4,274,530		$	4,036,704
Capital expenditures
Hygiene, Health and Consumable Adhesives	$	60,164		$	57,416
Engineering Adhesives		8,815			18,212
Construction Adhesives		3,591			7,635
Corporate		23,519			12,580
Total	$	96,089		$	95,843

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

	2021			2020			2019
Segment operating income	$	252,612		$	218,317		$	225,994
Other income, net		32,855			15,398			37,943
Interest expense		(78,092	)		(86,776	)		(103,287	)
Interest income		9,476			11,417			12,178
Income before income taxes and income from equity method investments	$	216,851		$	158,356		$	172,828

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	Net Revenue
	2021		2020		2019
United States	$	1,421,623	$	1,248,495	$	1,309,056
China		433,998		351,204		347,304
Germany		409,193		330,755		-
Countries with more than 10 percent of total		2,264,814		1,930,454		1,656,360
All other countries with less than 10 percent of total		1,013,217		859,815		1,240,640
Total	$	3,278,031	$	2,790,269	$	2,897,000

	Property, Plant and Equipment, net
	2021		2020		2019
United States	$	331,864	$	297,046	$	287,372
Germany		120,548		131,879		127,497
China		96,300		99,513		80,606
All other countries with less than 10 percent of total		146,655		142,306		134,338
Total	$	695,367	$	670,744	$	629,813

Disaggregation of Revenue [Table Text Block]

	November 27, 2021
	Hygiene, Health and		Engineering		Construction		Corporate
	Consumable Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	826,172	$	504,626	$	384,576	$	-	$	1,715,374
EIMEA		425,324		470,466		22,156		-		917,946
Asia Pacific		221,260		396,664		26,787		-		644,711
	$	1,472,756	$	1,371,756	$	433,519	$	-	$	3,278,031

	November 28, 2020
	Hygiene, Health and		Engineering		Construction		Corporate
	Consumable Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	736,681	$	430,866	$	325,622	$	-	$	1,493,169
EIMEA		388,271		347,417		20,506		-		756,194
Asia Pacific		207,834		310,030		23,042		-		540,906
	$	1,332,786	$	1,088,313	$	369,170	$	-	$	2,790,269

	November 30, 2019
	Hygiene, Health and		Engineering		Construction		Corporate
	Consumable Adhesives		Adhesives		Adhesives		Unallocated		Total
Americas	$	733,125	$	469,764	$	351,924	$	13,731	$	1,568,544
EIMEA		392,497		380,673		20,767		-		793,937
Asia Pacific		202,664		307,966		23,889		-		534,519
	$	1,328,286	$	1,158,403	$	396,580	$	13,731	$	2,897,000

XML

Note 1 - Nature of Business and Summary of Significant Accounting Policies (Details Textual) $ in Thousands	12 Months Ended
	Nov. 27, 2021 USD ($) shares	Nov. 28, 2020 USD ($) shares	Nov. 30, 2019 USD ($) shares	Dec. 01, 2018 USD ($)
Number of Countries in which Entity Operates	35
Number of Reportable Segments	3
Contract with Customers, Net Revenue Reduction, Customer Incentives	$ 33,441	$ 34,860	$ 22,795
Cash Surrender Value of Life Insurance	9,584	9,006
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount	0	0	0
Equity Securities without Readily Determinable Fair Value, Amount	1,667	1,669
Interest Costs Capitalized	$ 905	$ 565	$ 416
Finite-Lived Intangible Asset, Useful Life (Year)	17 years	17 years
Asset Retirement Obligations, Noncurrent, Total	$ 2,917	$ 2,948
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | shares	1,535,503	3,982,275	2,951,697
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation (in shares) | shares	47,481	72,000	73,043
Retained Earnings (Accumulated Deficit), Ending Balance	$ 1,600,601	$ 1,474,406
Restricted Cash, Total	$ 0
Accounting Standards Update 2014-09 [Member]
Retained Earnings (Accumulated Deficit), Ending Balance				$ 1,776
Accounting Standard Update 2016-16 [Member]
Retained Earnings (Accumulated Deficit), Ending Balance				$ (733)
Defined Benefit Plan, Equity Securities [Member]
Defined Benefit Plan, Plan Assets, Target Allocation, Percentage	60.00%
Fixed Income Funds [Member]
Defined Benefit Plan, Plan Assets, Target Allocation, Percentage	40.00%
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	3 years
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life (Year)	20 years
Building and Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life (Year)	20 years
Building and Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life (Year)	40 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life (Year)	3 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life (Year)	20 years
Sekisui Fuller Company Ltd [Member]
Equity Method Investment, Ownership Percentage	50.00%
Revenue Benchmark [Member] | Hygiene, Health, and Consumable Adhesives [Member] | Product Concentration Risk [Member]
Concentration Risk, Percentage	45.00%
Revenue Benchmark [Member] | Engineering Adhesives [Member] | Product Concentration Risk [Member]
Concentration Risk, Percentage	42.00%
Revenue Benchmark [Member] | Construction Adhesives [Member] | Product Concentration Risk [Member]
Concentration Risk, Percentage	13.00%

XML

Note 1 - Nature of Business and Summary of Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Net income attributable to H.B. Fuller	$ 161,393	$ 123,719	$ 130,817
Weighted-average common shares – basic (in shares)	52,887	52,039	50,920
Equivalent shares from share-based compensation plans (in shares)	1,428	481	1,063
Weighted-average common and common equivalent shares – diluted (in shares)	54,315	52,520	51,983
Basic earnings per share (in dollars per share)	$ 3.05	$ 2.38	$ 2.57
Diluted earnings per share (in dollars per share)	$ 2.97	$ 2.36	$ 2.52

XML

Note 2 - Acquisitions and Divestiture (Details Textual) - USD ($) $ in Thousands					5 Months Ended
	Jan. 13, 2022	Jan. 13, 2021	Feb. 03, 2020	May 17, 2019	Nov. 30, 2019	Nov. 27, 2021	Nov. 28, 2020	May 30, 2020
Goodwill, Ending Balance					$ 1,281,808	$ 1,298,845	$ 1,312,003
Dalton Holdings [Member] | Other Income [Member]
Gain (Loss) on Disposition of Business					$ 18,764
STR Holdings, Inc. [Member]
Payments to Acquire Businesses, Gross		$ 5,445
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High		1,700
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total						6,700
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets						1,245
Business Combination, Contingent Consideration, Liability, Total						1,700
Goodwill, Ending Balance		$ 0
STR Holdings, Inc. [Member] | Subsequent Event [Member]
Payments to Acquire Businesses, Gross	$ 800
D.H.M Adhesives, Inc [Member]
Payments to Acquire Businesses, Gross			$ 9,500
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High			8,100
Business Combination, Contingent Consideration, Liability, Total			5,000			$ 8,100
Goodwill, Ending Balance			1,063
Business Combination, Consideration Transferred, Total			14,500
D.H.M Adhesives, Inc [Member] | Customer Relationships [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total			$ 11,900
Ramapo [Member]
Payments to Acquire Businesses, Gross				$ 8,292
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High				3,400
Business Combination, Contingent Consideration, Liability, Total				2,654				$ 767
Goodwill, Ending Balance								165
Business Combination, Consideration Transferred, Total				10,947
Business Combination, Consideration Transferred, Receivables Settled				$ 2,166
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets, Excluding Intangible Assets								4,148
Ramapo [Member] | Customer Relationships [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill, Total								$ 8,800

XML

Note 3 - Restructuring Actions (Details Textual)	12 Months Ended
	Nov. 27, 2021
Number of Reportable Segments	3

XML

Note 3 - Restructuring Actions - Restructuring Charges (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Aug. 28, 2021	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Restructuring Charges	$ 787	$ 787	$ 4,579	$ 14,535
Cost of Sales [Member]
Restructuring Charges		(188)	1,013	2,082
Selling, General and Administrative Expenses [Member]
Restructuring Charges		$ 975	$ 3,567	$ 12,453

XML

Note 3 - Restructuring Actions - Restructuring Reserve (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Aug. 28, 2021	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Balance	$ 6,082	$ 6,082	$ 10,754
Restructuring Charges	787	787	4,579	$ 14,535
Cash payments	(5,624)		(9,408)
Foreign currency translation	(15)		157
Non-cash charges	(135)
Balance	1,095		6,082	10,754
Employee Related [Member]
Balance	5,834	5,834	9,830
Restructuring Charges	(807)		2,898
Cash payments	(3,917)		(7,051)
Foreign currency translation	(15)		157
Non-cash charges	0
Balance	1,095		5,834	9,830
Other Restructuring [Member]
Balance	248	$ 248	924
Restructuring Charges	1,594		1,681
Cash payments	(1,707)		(2,357)
Foreign currency translation	0		0
Non-cash charges	(135)
Balance	$ 0		$ 248	$ 924

XML

Note 4 - Supplemental Financial Statement Information - Statement of Income Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Foreign currency transaction losses, net	$ (5,962)	$ (3,078)	$ (1,156)
(Loss) gain on disposal of assets	(648)	(86)	24,304
Net periodic pension benefit	32,070	17,902	13,661
Other, net	7,395	660	1,134
Total other income, net	32,855	15,398	37,943
Selling, General and Administrative Expenses [Member]
Research and development expenses (included in SG&A expenses)	$ 39,344	$ 36,969	$ 36,624

XML

Note 4 - Supplemental Financial Statement Information - Balance Sheet Information (Details) - USD ($) $ in Thousands	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Raw materials	$ 226,723	$ 151,026
Finished goods	221,681	172,187
Total inventories	448,404	323,213
Other receivables	28,874	18,666
Prepaid income taxes	13,359	22,137
Prepaid taxes other than income taxes	26,929	20,270
Prepaid expenses	25,889	19,212
Assets held for sale	1,284	828
Total other current assets	96,335	81,113
Land	84,492	87,403
Buildings and improvements	395,849	393,175
Machinery and equipment	915,914	876,858
Construction in progress	104,734	70,747
Total, at cost	1,500,989	1,428,183
Accumulated depreciation	(805,622)	(757,439)
Net property, plant and equipment	695,367	670,744	$ 629,813
Investments and company owned life insurance	9,584	9,006
Equity method investments	49,333	53,863
Equity Securities without Readily Determinable Fair Value, Amount	1,667	1,669
Long-term deferred income taxes	37,116	37,376
Operating lease right-of-use assets	32,744	28,445
Other long-term receivables	23,661	16,760
Other long-term assets	19,699	14,751
Total other assets	372,073	278,213
Taxes other than income taxes	14,280	16,893
Miscellaneous services	5,626	5,691
Customer rebates	20,743	15,008
Interest	2,964	4,901
Insurance	329	184
Product liability	432	501
Contingent consideration liability	8,100	5,800
Current operating lease liabilities	8,921
Accrued expenses	24,666	26,292
Total other accrued expenses	86,061	83,976
Asset Retirement Obligations, Noncurrent, Total	2,917	2,948
Long-term deferred income taxes	179,401	165,877
Long-term income tax liability	14,364	18,089
Long-term deferred compensation	9,665	8,510
Postretirement other than pension	2,657	2,930
Noncurrent operating lease liabilities	24,061
Long-term accrued payroll tax	4,215	7,216
Environmental liabilities	3,521	3,639
Other long-term liabilities	36,389	50,212
Total other liabilities	277,190	278,919
Other Accrued Expenses [Member]
Current operating lease liabilities	8,921	8,706
Other Noncurrent Liabilities [Member]
Noncurrent operating lease liabilities	24,061	19,498
Pension Plan [Member]
Prepaid postretirement costs	90,946	43,206
Other Postretirement Benefits Plan [Member]
Prepaid postretirement costs	$ 107,323	$ 73,137

XML

Note 4 - Supplemental Financial Statement Information - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Balance	$ 12,905	$ 10,682	$ 14,017
Charged to expenses and other adjustments	(546)	8,313	2,678
Write-offs	(2,278)	(6,158)	(5,947)
Foreign currency translation effect	(146)	68	(66)
Balance	$ 9,935	$ 12,905	$ 10,682

XML

Note 4 - Supplemental Financial Statement Information - Comprehensive Income (Loss) Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021		Nov. 28, 2020	Nov. 30, 2019
Net income attributable to H.B. Fuller	$ 161,393		$ 123,719	$ 130,817
Net income including non-controlling interests, non-controlling interests net	82		69	27
Foreign currency translation adjustment1	(26,262)	[1]	41,712	(20,409)	[1]
Foreign currency translation adjustment1	(26,262)	[1]	41,712	(20,409)	[1]
Foreign currency translation adjustment1	(32)	[1]	30	14	[1]
Defined benefit pension plans adjustment2	64,912	[2]	5,823	(28,635)	[2]
Defined benefit pension plans adjustment2	(16,731)	[2]	(1,235)	6,807	[2]
Defined benefit pension plans adjustment2	48,181	[2]	4,588	(21,828)	[2]
Interest rate swap3	(4,554)	[3]	6,307	14,429	[3]
Interest rate swap3	68	[3]	(101)	(609)	[3]
Interest rate swap3	(4,486)	[3]	6,206	13,820	[3]
Other comprehensive income (loss), pretax	54,205		38,224	(80,869)
Other comprehensive income (loss), tax	(21,593)		2,517	17,421
Other comprehensive income (loss), net	32,612		40,741	(63,448)
Other comprehensive income (loss), non-controlling interests net	(32)		30	14
Comprehensive income (loss), net	194,005		164,460	67,369
Comprehensive income (loss), non-controlling interests net	50		99	41
Interest Rate Swap [Member]
Interest rate swap3	20,109	[3]	(15,618)	(46,254)	[3]
Interest rate swap3	(4,930)	[3]	3,853	11,223	[3]
Interest rate swap3	$ 15,179	[3]	$ (11,765)	$ (35,031)	[3]

[1] Income taxes are not provided for foreign currency translation relating to indefinite investments in international subsidiaries.

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

[3] Loss reclassified from accumulated other comprehensive income (loss) into earnings is reported in other income, net.

XML

Note 4 - Supplemental Financial Statement Information - Components of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019	Dec. 01, 2018
Total accumulated other comprehensive loss	$ 1,597,360	$ 1,381,862	$ 1,222,789	$ 1,152,168
Accumulated Foreign Currency Adjustment Including Portion Attributable to Noncontrolling Interest [Member]
Before Reclassifications	(132,370)	(106,140)	(147,821)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Before Reclassifications	(132,267)	(106,005)	(147,716)
Accumulated Foreign Currency Adjustment Attributable to Noncontrolling Interest [Member]
Before Reclassifications	(103)	(135)	(105)
Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest [Member]
Before Reclassifications	3,483	7,969	1,763
Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest [Member] | Interest Rate Swap [Member]
Before Reclassifications	(9,924)	(25,103)	(13,338)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member]
Before Reclassifications	3,483	7,969	1,763
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member] | Interest Rate Swap [Member]
Before Reclassifications	(9,924)	(25,103)	(13,338)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Noncontrolling Interest [Member]
Before Reclassifications	0		0
Accumulated Gain (Loss), Net, Cash Flow Hedge, Noncontrolling Interest [Member] | Interest Rate Swap [Member]
Before Reclassifications	0	0	0
Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest [Member]
Before Reclassifications	(113,198)	(161,379)	(165,968)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Before Reclassifications	(113,198)	(161,379)	(165,968)
Accumulated Defined Benefit Plans Adjustment Attributable to Noncontrolling Interest [Member]
Before Reclassifications	0		0
AOCI Including Portion Attributable to Noncontrolling Interest [Member]
Reclassification of AOCI tax effects	(18,341)	(18,341)	(18,341)
Total accumulated other comprehensive loss	(270,350)	(302,994)	(343,705)
AOCI Attributable to Parent [Member]
Reclassification of AOCI tax effects	(18,341)	(18,341)	(18,341)
Total accumulated other comprehensive loss	(270,247)	(302,859)	(343,600)	$ (280,152)
AOCI Attributable to Noncontrolling Interest [Member]
Reclassification of AOCI tax effects	0		0
Total accumulated other comprehensive loss	$ (103)	$ (135)	$ (105)

XML

Note 4 - Supplemental Financial Statement Information - Components of Accumulated Other Comprehensive Income (Loss) (Details) (Parentheticals) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Before Reclassifications, tax			$ 81,891
Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest [Member]
Before Reclassifications, tax	$ (53)	$ (121)	21
Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest [Member] | Interest Rate Swap [Member]
Before Reclassifications, tax	3,224	8,153	$ (4,300)
Accumulated Defined Benefit Plans Adjustment Including Portion Attributable to Noncontrolling Interest [Member]
Before Reclassifications, tax	$ 63,925	$ 80,656

XML

Note 5 - Goodwill and Other Intangible Assets (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Amortization of Intangible Assets, Total	$ 71,068	$ 70,591	$ 74,091
Indefinite Lived Trademarks and Trade Names	$ 493	$ 519

XML

Note 5 - Goodwill and Other Intangible Assets - Goodwill by Segment (Details) - USD ($) $ in Thousands	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Goodwill	$ 1,298,845	$ 1,312,003	$ 1,281,808
Hygiene, Health, and Consumable Adhesives [Member]
Goodwill	325,470	332,909
Engineering Adhesives [Member]
Goodwill	662,021	667,863
Construction Adhesives [Member]
Goodwill	$ 311,354	$ 311,231

XML

Note 5 - Goodwill and Other Intangible Assets - Goodwill Balance (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020
Balance at beginning of year	$ 1,312,003	$ 1,281,808
Foreign currency translation effect	(13,158)	29,878
Balance at end of year	1,298,845	1,312,003
Ramapo [Member]
Acquisition	0	(746)
DHM [Member]
Acquisition	$ 0	$ 1,063

XML

Note 5 - Goodwill and Other Intangible Assets - Amortizable Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020
Original cost	$ 1,123,510	$ 1,122,394
Accumulated amortization	(436,928)	(366,945)
Net identifiable intangibles	$ 686,582	$ 755,449
Weighted-average useful lives (in years) (Year)	17 years	17 years
Accumulated amortization	$ (436,928)	$ (366,945)
Purchased Technology And Patents [Member]
Original cost	115,980	113,775
Accumulated amortization	(62,364)	(53,216)
Net identifiable intangibles	$ 53,616	$ 60,559
Weighted-average useful lives (in years) (Year)	13 years	13 years
Accumulated amortization	$ (62,364)	$ (53,216)
Customer Relationships [Member]
Original cost	932,644	933,943
Accumulated amortization	(335,143)	(279,586)
Net identifiable intangibles	$ 597,501	$ 654,357
Weighted-average useful lives (in years) (Year)	17 years	17 years
Accumulated amortization	$ (335,143)	$ (279,586)
Trade Names [Member]
Original cost	63,543	63,266
Accumulated amortization	(33,786)	(29,368)
Net identifiable intangibles	$ 29,757	$ 33,898
Weighted-average useful lives (in years) (Year)	14 years	14 years
Accumulated amortization	$ (33,786)	$ (29,368)
Other Intangible Assets [Member]
Original cost	11,343	11,410
Accumulated amortization	(5,635)	(4,775)
Net identifiable intangibles	$ 5,708	$ 6,635
Weighted-average useful lives (in years) (Year)	12 years	12 years
Accumulated amortization	$ (5,635)	$ (4,775)

XML

Note 5 - Goodwill and Other Intangible Assets - Estimated Aggregate Amortization Expense (Details) $ in Thousands	Nov. 27, 2021 USD ($)
2022	$ 68,879
2023	66,056
2024	61,146
2025	58,578
2026	51,773
Thereafter	$ 380,150

XML

Note 6 - Leases (Details Textual) - USD ($) $ in Thousands		12 Months Ended
	Feb. 19, 2020	Nov. 30, 2019	Nov. 27, 2021
Lessee, Operating and Finance Leases, Renewal Term (Year)	5 years
Operating Lease, Weighted Average Remaining Lease Term (Year)			7 years 2 months 12 days
Operating Lease, Weighted Average Discount Rate, Percent			3.30%
Finance Lease, Weighted Average Remaining Lease Term (Year)			10 years 1 month 6 days
Finance Lease, Weighted Average Discount Rate, Percent			2.90%
Operating Leases, Rent Expense, Net, Total		$ 19,618
Accounting Standards Update 2016-02 [Member]
Lessee, Operating and Finance Leases, Right-of-Use Assets	$ 28,254
Lessee, Operating and Finance Lease, Liabilities	$ 28,254

XML

Note 6 - Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands		12 Months Ended
		Nov. 27, 2021	Nov. 28, 2020
Operating lease cost		$ 11,958	$ 12,581
Amortization of assets1	[1]	673
Interest on lease liabilities1	[1]	110
Variable lease cost		5,990	4,024
Total net lease cost		$ 18,731	$ 16,605

[1] In fiscal year 2020, finance leases were not material for disclosure.

XML

Note 6 - Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands		Nov. 27, 2021	Nov. 28, 2020
Operating lease right-of-use assets		$ 32,744	$ 28,445
Current operating lease liabilities		8,921
Noncurrent operating lease liabilities		24,061
Present value of future minimum payments		32,982	28,204
Current obligations of finance leases1		1,109
Finance leases, net of current obligations1		7,548
Present value of future minimum payments, Finance Leases		8,657
Other Assets [Member]
Operating lease right-of-use assets		32,744	28,445
Other Accrued Expenses [Member]
Current operating lease liabilities		8,921	8,706
Current obligations of finance leases1	[1]	1,109
Other Liabilities [Member]
Noncurrent operating lease liabilities		24,061	19,498
Finance leases, net of current obligations1	[1]	7,548
Property, Plant and Equipment, Net [Member]
Equipment right-of-use assets1	[1]	$ 9,455

[1] In fiscal year 2020, finance leases were not material for disclosure.

XML

Note 6 - Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands		12 Months Ended
		Nov. 27, 2021	Nov. 28, 2020
Operating cash flows from operating leases		$ 15,251	$ 13,216
Operating cash flows from finance leases1	[1]	110
Financing cash flows from finance leases1	[1]	546
Operating leases		20,030	13,166
Finance leases1	[1]	$ 7,630

[1] In fiscal year 2020, finance leases were not material for disclosure.

XML

Note 6 - Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Nov. 27, 2021	Nov. 28, 2020
2022, Finance Leases	$ 1,352
2022, Operating Leases	9,292
2023, Finance Leases	1,254
2023, Operating Leases	7,500
2024, Finance Leases	1,174
2024, Operating Leases	5,313
2025, Finance Leases	1,171
2025, Operating Leases	4,009
2026, Finance Leases	1,165
2026, Operating Leases	2,360
2027 and beyond, Finance Leases	3,841
2027 and beyond, Operating Leases	7,888
Total, Finance Leases	9,957
Total, Operating Leases	36,362
Less: amounts representing interest, Finance Leases	(1,300)
Less: amounts representing interest, Operating Leases	(3,380)
Present value of future minimum payments, Finance Leases	8,657
Present value of future minimum payments	32,982	$ 28,204
Less: current obligations, Finance Leases	(1,109)
Less: current obligations, Operating Leases	(8,921)
Noncurrent lease liabilities, Finance Leases	7,548
Noncurrent lease liabilities, Operating Leases	$ 24,061

XML

Note 7 - Notes Payable, Long-term Debt and Lines of Credit (Details Textual)							3 Months Ended	12 Months Ended
	Nov. 26, 2022 USD ($)	Oct. 20, 2020 USD ($)	Apr. 23, 2018	Apr. 22, 2018	Oct. 20, 2017 USD ($)	Feb. 14, 2017 USD ($)	May 29, 2021 USD ($)	Nov. 27, 2021 USD ($)	Nov. 28, 2020 USD ($)	Nov. 30, 2019 USD ($)	Feb. 27, 2021 USD ($)	Feb. 27, 2018 USD ($)
Notes Payable, Current, Total								$ 24,983,000	$ 16,925,000
Proceeds from Issuance of Long-term Debt, Total								0	300,000,000	$ 0
Repayments of Long-term Debt, Total								156,500,000	518,000,000	$ 288,600,000
Long-term Debt, Fair Value								1,618,291,000	$ 1,811,562,000
Interest Rate Swap [Member]
Derivative, Amount of Hedged Item		$ 800,000,000			$ 1,050,000,000	$ 150,000,000					$ 1,125,000,000	$ 200,000,000
Derivative, Fixed Interest Rate					4.0275%							4.589%
Interest Rate Swap [Member] | Interest Expense [Member]
Gain (Loss) on Cash Flow Hedge Ineffectiveness, Net, Total							$ (378,000)
Term Loan B [Member]
Debt Instrument, Face Amount					$ 2,150,000,000							$ 2,150,000,000
Derivative, Amount of Hedged Item					$ 800,000,000
Percentage of Equity Interest in Domestic Subsidiaries Used to Secure Debt					100.00%
Percentage of Equity Interests in Foreign Subsidiaries Used to Secure Debt					65.00%
Proceeds from Issuance of Long-term Debt, Total								$ 1,001,150,000
Debt Instrument, Mandatory Prepayments, Percent of Excess Cash Flow					50.00%
Debt Instrument, Mandatory Prepayments, Percent of Excess Cash Flow When Secured Leverage Ratio is Below 4.25: 1					25.00%
Debt Instrument, Mandatory Prepayments, Percent of Excess Cash Flow When Secured Leverage Ratio is Below 3.75: 1					0.00%
Term Loan B [Member] | Maximum [Member]
Secured Leverage Ratio					4.25
Term Loan B [Member] | Minimum [Member]
Secured Leverage Ratio					3.75
Term Loan B [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			2.00%	2.25%	2.00%			2.09%
The 10-year Public Notes [Member]
Debt Instrument, Face Amount						$ 300,000,000
Debt Instrument, Basis Spread on Variable Rate						1.86%
Debt Instrument, Interest Rate, Stated Percentage						4.00%
Debt Instrument, Term (Year)						10 years
The 8-year Public Notes [Member]
Debt Instrument, Face Amount		$ 300,000,000
Debt Instrument, Interest Rate, Stated Percentage		4.25%
Debt Instrument, Term (Year)		8 years
Repayments of Debt		$ 300,000
The 8-year Public Notes [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		3.28%
Term Loan B, 2022 Estimated Prepayment [Member] | Forecast [Member]
Repayments of Long-term Debt, Total	$ 0
Term Loan [Member]
Repayments of Debt						$ 158,750,000
Public Notes [Member]
Debt Instrument, Term (Year)						10 years
Revolving Credit Facility [Member]
Line of Credit, Current								$ 0
Percentage of Equity Interest in Domestic Subsidiaries Used to Secure Debt		100.00%
Percentage of Equity Interests in Foreign Subsidiaries Used to Secure Debt		65.00%
Repayments of Lines of Credit						$ 138,000,000
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage								0.25%
Line of Credit Facility, Maximum Borrowing Capacity								$ 400,000,000
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		1.50%						1.59%
Letter of Credit [Member]
Letters of Credit Outstanding, Amount								$ 8,714,000
Notes Payable [Member]
Short-term Debt, Weighted Average Interest Rate, at Point in Time								8.90%	8.10%

XML

Note 7 - Notes Payable, Long-term Debt and Lines of Credit - Long-term Debt (Details) - USD ($) $ in Thousands		12 Months Ended
		Nov. 27, 2021	Nov. 28, 2020
Other, including debt issuance cost and discount		$ (9,671)	$ (665)
Long-term debt		1,591,479	1,756,985
Less: current maturities		0	0
Total long-term debt, excluding current maturities		$ 1,591,479	1,756,985
The 8-year Public Notes [Member]
Long-term weighted-average interest rate	[1]	4.25%
Term Loan B [Member]
Long-term weighted-average interest rate	[2]	3.64%
Loan maturity date	[2]	2024
Long-term debt, gross	[2]	$ 1,001,150	1,157,650
The 10-year Public Notes [Member]
Long-term weighted-average interest rate	[3]	4.00%
Loan maturity date	[3]	2027
Long-term debt, gross	[3]	$ 300,000	300,000
The 8-year Public Notes [Member]
Loan maturity date	[1]	2028
Long-term debt, gross	[1]	$ 300,000	300,000
Revolving Credit Facility [Member]
Long-term weighted-average interest rate		1.59%
Loan maturity date		2024
Long-term debt, gross		$ 0	$ 0

[1] Public Notes, due October 15, 2028, $300,000 4.25 percent fixed; swapped to a floating rate as detailed below.

[2] Term Loan B, due on October 20, 2024, $2,150,000 variable rate at the London Interbank Offered Rate (LIBOR) plus 1.50 percent(1.59 percent at November 27, 2021); $800,000 swapped to various fixed rates as detailed below.

[3] Public Notes, due February 15, 2027, $300,000 4.00 percent fixed.

XML

Note 7 - Notes Payable, Long-term Debt and Lines of Credit - Maturities of Long-term Debt (Details) $ in Thousands	Nov. 27, 2021 USD ($)
2022	$ 0
2023	0
2024	1,001,150
2025	0
2026	0
Thereafter	$ 600,000

XML

Note 7 - Notes Payable, Long-term Debt and Lines of Credit - Lines of Credit (Details) - Revolving Credit Facility [Member] $ in Thousands	12 Months Ended
	Nov. 27, 2021 USD ($)
Committed	$ 400,000
Drawn	0
Unused	$ 391,286

XML

Note 8 - Stockholders' Equity (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Apr. 06, 2017	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019	Dec. 01, 2018
Preferred Stock, Shares Authorized (in shares)		10,045,900	10,045,900
Common Stock, Shares Authorized (in shares)		160,000,000	160,000,000
Common Stock, Par or Stated Value Per Share (in dollars per share)		$ 1.00	$ 1.00
Common Stock, Shares, Issued, Total (in shares)		52,777,753	51,906,663
Common Stock, Shares, Outstanding, Ending Balance (in shares)		52,777,753	51,906,663	51,241,190	50,732,796
Stock Repurchased During Period, Shares (in shares)		0	0	0
The 2017 Share Repurchase Program [Member]
Stock Repurchase Program, Authorized Amount	$ 200,000
Stock Repurchase Program, Period in Force (Year)	5 years
Stock Repurchase Program, Remaining Authorized Repurchase Amount		$ 187,170

XML

Note 8 - Stockholders' Equity - Common Stock Outstanding (Details) - shares	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Beginning balance (in shares)	51,906,663	51,241,190	50,732,796
Stock options exercised (in shares)	740,731	397,456	378,734
Deferred compensation paid (in shares)	19,895	118,742	5,354
Restricted units vested (in shares)	157,945	221,275	197,349
Shares withheld for taxes (in shares)	(47,481)	(72,000)	(73,043)
Ending balance (in shares)	52,777,753	51,906,663	51,241,190

XML

Note 9 - Accounting for Share-based Compensation (Details Textual) - USD ($) $ in Thousands	12 Months Ended			24 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019	Nov. 27, 2021
Fair Value Options Granted During Period Value Share-based Compensation	$ 17,250	$ 10,132	$ 9,956
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value	$ 15,261	6,563	7,590
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term (Year)	6 years 6 months
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	$ 131,515			$ 131,515
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number (in shares)	3,072,786			3,072,786
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term (Year)	5 years 2 months 12 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	$ 85,685			$ 85,685
Proceeds, Issuance of Shares, Share-based Payment Arrangement, Including Option Exercised, Total	32,325	12,321	10,885
Share-based Payment Arrangement, Exercise of Option, Tax Benefit	3,874	$ 1,278	$ 1,298
Total Fair Value of Nonvested Restricted Stock	$ 27,966			$ 27,966
Repurchased Restricted Stock Shares (in shares)	50,799	70,380	73,043
Selling, General and Administrative Expenses [Member]
Share-based Payment Arrangement, Expense	$ 22,366	$ 16,914	$ 24,003
Non Employee Directors [Member]
Deferred Compensation Plan, Matching Percentage	10.00%
Deferred Compensation Arrangement with Individual, Discretionary Awards, Employer Contribution Units Paid (in shares)	18,814	21,323	21,504
Deferred Compensation Arrangement with Individual, Employer Matches Contribution Fair Value	$ 163	$ 128	$ 167
Deferred Compensation Arrangement with Individual, Discretionary Awards Employer Contribution, Fair Value	$ 1,215	920	1,035
Employees [Member]
Deferred Compensation Plan, Matching Percentage	10.00%
Deferred Compensation Arrangement with Individual, Employer Matches Contribution Fair Value	$ 61	56	41
2020 Master Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)	2,253,157			2,253,157
Share-based Payment Arrangement, Option [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 7,510			$ 7,510
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)				10 months 24 days
Share-based Payment Arrangement, Option [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)	1 year
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	33.30%
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)	10 years
Restricted Stock [Member]
Share-based Payment Arrangement, Exercise of Option, Tax Benefit	$ 1,439
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value	$ 7,691	10,362	8,970
Share-based Payment Arrangement, Expense, Tax Benefit		$ 2,136	$ 1,574
Restricted Stock [Member] | Share-based Payment Arrangement, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)	1 year
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	33.30%
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)	3 years
Restricted Stock Units (RSUs) [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 10,205			$ 10,205
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)				10 months 24 days

XML

Note 9 - Accounting for Share-based Compensation - Fair Value of Options Granted (Details) - $ / shares	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Expected life (Year)	5 years	5 years	4 years 9 months
Weighted-average expected volatility	32.50%	24.32%	24.26%
Weighted-average expected dividend	1.26%	1.38%	1.40%
Weighted-average fair value of grants (in dollars per share)	$ 13.29	$ 9.63	$ 9.76
Minimum [Member]
Expected volatility range	32.48%	24.18%	23.88%
Risk-free interest rate	0.39%	0.21%	1.34%
Expected dividend yield range	0.92%	1.35%	1.25%
Maximum [Member]
Expected volatility range	32.94%	30.99%	24.76%
Risk-free interest rate	1.20%	1.51%	2.55%
Expected dividend yield range	1.27%	2.53%	1.45%

XML

Note 9 - Accounting for Share-based Compensation - Stock Option Activity (Details) - $ / shares	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Outstanding Options (in shares)	5,545,915	5,060,310	4,466,106
Outstanding Options, weighted-average exercise price (in dollars per share)	$ 47.34	$ 46.04	$ 44.72
Granted (in shares)	1,237,094	1,052,968	1,020,246
Granted, weighted-average exercise price (in dollars per share)	$ 53.33	$ 47.70	$ 45.53
Exercised (in shares)	(740,731)	(397,456)	(378,734)
Exercised, weighted-average exercise price (in dollars per share)	$ 43.64	$ 31.00	$ 28.74
Forfeited or cancelled (in shares)	(1,069,886)	(169,907)	(47,308)
Forfeited or cancelled, weighted-average exercise price (in dollars per share)	$ 56.33	$ 49.11	$ 48.90
Outstanding Options (in shares)	4,972,392	5,545,915	5,060,310
Outstanding Options, weighted-average exercise price (in dollars per share)	$ 47.45	$ 47.34	$ 46.04

XML

Note 9 - Accounting for Share-based Compensation - Nonvested Restricted Stock Activity (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019	Dec. 01, 2018
Nonvested (in shares)	432,349	487,997	414,353
Nonvested, Weighted average grant date fair value (in dollars per share)	$ 46.22	$ 46.56	$ 47.45
Nonvested, Weighted average remaining contractual life (Year)	1 year 10 months 24 days	9 months 18 days	9 months 18 days	1 year
Granted (in shares)	356,779	216,293	302,132
Granted, Weighted average grant date fair value (in dollars per share)	$ 54.49	$ 46.39	$ 44.29
Granted, Weighted average remaining contractual life (Year)	3 years 2 months 12 days	3 years 4 months 24 days	2 years 2 months 12 days
Vested (in shares)	(157,945)	(221,275)	(197,349)
Vested, Weighted average grant date fair value (in dollars per share)	$ 48.69	$ 46.83	$ 45.45
Forfeited (in shares)	(78,818)	(50,666)	(31,139)
Forfeited, Weighted average grant date fair value (in dollars per share)	$ 47.79	$ 47.55	$ 43.37
Forfeited, Weighted average remaining contractual life (Year)	9 months 18 days	1 month 6 days	4 months 24 days
Nonvested (in shares)	552,365	432,349	487,997	414,353
Nonvested, Weighted average grant date fair value (in dollars per share)	$ 50.63	$ 46.22	$ 46.56	$ 47.45

XML

Note 9 - Accounting for Share-based Compensation - Deferred Compensation Units (Details) - shares		12 Months Ended
		Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Units outstanding (in shares)		499,818	562,324	509,522
Participant contributions (in shares)		23,523	31,822	33,319
Company match contributions1 (in shares)	[1]	21,167	24,414	24,837
Payouts (in shares)		(27,623)	(118,742)	(5,354)
Units outstanding (in shares)		516,885	499,818	562,324
Non Employee Directors [Member]
Units outstanding (in shares)		455,265	525,660	479,787
Participant contributions (in shares)		13,036	18,008	22,153
Company match contributions1 (in shares)	[1]	20,118	23,033	23,720
Payouts (in shares)		(19,895)	(111,436)	0
Units outstanding (in shares)		468,524	455,265	525,660
Employees [Member]
Units outstanding (in shares)		44,553	36,664	29,735
Participant contributions (in shares)		10,487	13,814	11,166
Company match contributions1 (in shares)	[1]	1,049	1,381	1,117
Payouts (in shares)		(7,728)	(7,306)	(5,354)
Units outstanding (in shares)		48,361	44,553	36,664

[1] The non-employee directors’ company match includes 18,814, 21,323 and 21,504 deferred compensation units paid as discretionary awards to all non-employee directors in 2021, 2020 and 2019, respectively.

XML

Note 10 - Pension and Postretirement Benefits (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019	Nov. 28, 2021
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent		75.00%
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay		4.00%
Defined Contribution Plan, Annual Retirement Percentage		1.00%
Defined Contribution Plan, Cost		$ 12,488	$ 10,764	$ 10,784
Defined Contribution Plan, Employer Discretionary Contribution Amount		5,205
Liability, Defined Benefit Plan, Total	$ 10,494	10,494	9,819
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Increase (decrease) in Discount Rate	0.50%
Impact on Pension and Other Postretirement Benefit Expense from a Change in Discount Rate	$ 63
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance	0	0	0
Group Term Life Insurance Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance	$ 0	$ 0	0
Equity Funds [Member] | Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan, Plan Assets, Target Allocation, Percentage	60.00%	60.00%
Fixed Income Funds [Member]
Defined Benefit Plan, Plan Assets, Target Allocation, Percentage	40.00%	40.00%
Fixed Income Funds [Member] | Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan, Plan Assets, Target Allocation, Percentage	40.00%	40.00%
UNITED STATES
Defined Benefit Plan, Benefit Obligation, (Increase) Decrease for Settlement, Total		$ 6,673	10,939
Defined Benefit Plan, Accumulated Benefit Obligation	$ 384,124	$ 384,124	$ 418,019
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate	2.76%	2.76%	2.53%	3.19%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Increase (decrease) in Discount Rate		0.50%
Impact on Pension and Other Postretirement Benefit Expense from a Change in Discount Rate		$ 2,728
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets		7.25%	7.50%	7.50%
UNITED STATES | Equity Funds [Member]
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets		8.00%
Defined Benefit Plan, Plan Assets, Target Allocation, Percentage	60.00%	60.00%
UNITED STATES | Fixed Income Funds [Member]
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets		3.90%
Defined Benefit Plan, Plan Assets, Target Allocation, Percentage	40.00%	40.00%
UNITED KINGDOM
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets		6.75%
GERMANY
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets		5.50%
Foreign Plan [Member]
Defined Benefit Plan, Accumulated Benefit Obligation	$ 228,713	$ 228,713	$ 239,572
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets		6.15%	6.23%	6.21%
Four Percent Match [Member]
Defined Contribution Plan, Cost		$ 8,698
One Percent Match [Member]
Defined Contribution Plan, Cost		$ 3,790
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Rate of Compensation Increase	0.00%	0.00%	4.50%	4.50%
Supplemental Executive Retirement Plan [Member] | Subsequent Event [Member]
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Rate of Compensation Increase					0.00%

XML

Note 10 - Pension and Postretirement Benefits - Change in Benefit Obligation and Plan Assets (Details) - USD ($) $ in Thousands		12 Months Ended
		Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
UNITED STATES
Settlement payments		$ (6,673)	$ (10,939)
Pension Plan [Member] | UNITED STATES
Benefit obligation at beginning of year		388,530	380,388
Service cost		0	0	$ 4
Interest cost		9,299	11,738	14,691
Participant contributions		0	0
Actuarial (gain)/loss	[1]	(9,177)	27,377
Other		0	0
Curtailments		0	0
Settlement payments		(6,673)	(10,939)
Benefits paid		(20,767)	(20,034)
Foreign currency translation effect		0	0
Benefit obligation at end of year		361,212	388,530	380,388
Level 3 balance		398,403	383,527
Actual return on plan assets		37,466	44,365
Employer contributions		1,382	1,677
Participant contributions		0	0
Other		0	0
Settlement payments		(6,673)	(10,939)
Benefits paid	[2]	(20,767)	(20,227)
Foreign currency translation effect		0	0
Level 3 balance		409,811	398,403	383,527
Plan assets in excess of (less than) benefit obligation as of year end		48,599	9,873
Pension Plan [Member] | Foreign Plan [Member]
Benefit obligation at beginning of year		250,561	234,542
Service cost		3,280	2,950	2,237
Interest cost		2,941	3,158	4,678
Participant contributions		0	0
Actuarial (gain)/loss	[1]	(3,630)	4,350
Other		0	0
Curtailments		0	14
Settlement payments		996	(273)
Benefits paid		(8,578)	(8,628)
Foreign currency translation effect		(7,170)	14,448
Benefit obligation at end of year		238,400	250,561	234,542
Level 3 balance		202,242	185,331
Actual return on plan assets		25,204	13,155
Employer contributions		1,989	2,177
Participant contributions		0	0
Other		996	0
Settlement payments		0	0
Benefits paid	[2]	(8,578)	(8,628)
Foreign currency translation effect		(5,230)	10,207
Level 3 balance		216,623	202,242	185,331
Plan assets in excess of (less than) benefit obligation as of year end		(21,776)	(48,688)
Other Postretirement Benefits Plan [Member]
Benefit obligation at beginning of year		39,075	39,256
Service cost		21	73	98
Interest cost		822	1,135	1,550
Participant contributions		365	226
Actuarial (gain)/loss	[1]	(6,115)	1,327
Other		0	0
Curtailments		0	0
Settlement payments		0	0
Benefits paid		(2,906)	(2,942)
Foreign currency translation effect		0	0
Benefit obligation at end of year		31,262	39,075	39,256
Level 3 balance		109,056	94,474
Actual return on plan assets		28,716	15,673
Employer contributions		470	1,625
Participant contributions		365	226
Other		0	0
Settlement payments		0	0
Benefits paid	[2]	(2,906)	(2,942)
Foreign currency translation effect		0	0
Level 3 balance		135,701	109,056	$ 94,474
Plan assets in excess of (less than) benefit obligation as of year end		$ 104,439	$ 69,981

[1] Actuarial loss in 2021 and actuarial loss in 2020 for the U.S. Plans is primarily due to assumption changes. Actuarial loss in 2021 and actuarial loss in 2020 for the Non-U.S. Plans are due to both assumption changes and plan experience.

[2] Amount excludes benefit payments made from sources other than plan assets.

XML

Note 10 - Pension and Postretirement Benefits - Amounts in Accumulated Other Comprehensive Income That Have Not Been Recognized as Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	Nov. 27, 2021	Nov. 28, 2020
Pension Plan [Member] | UNITED STATES
Unrecognized actuarial loss	$ 129,198	$ 147,917
Unrecognized prior service (benefit) cost	(3)	(6)
Ending balance	129,195	147,911
Pension Plan [Member] | Foreign Plan [Member]
Unrecognized actuarial loss	64,782	87,368
Unrecognized prior service (benefit) cost	1,390	1,453
Ending balance	66,172	88,821
Other Postretirement Benefits Plan [Member]
Unrecognized actuarial loss	(30,278)	(4,318)
Unrecognized prior service (benefit) cost	0	0
Ending balance	$ (30,278)	$ (4,318)

XML

Note 10 - Pension and Postretirement Benefits - Statement of Financial Position as of Fiscal Year End (Details) - USD ($) $ in Thousands	Nov. 27, 2021	Nov. 28, 2020
Non-current liabilities	$ (71,651)	$ (88,806)
Pension Plan [Member]
Prepaid postretirement costs	90,946	43,206
Pension Plan [Member] | UNITED STATES
Prepaid postretirement costs	66,157	30,672
Current liabilities	(1,342)	(1,467)
Non-current liabilities	(16,216)	(19,332)
Ending balance	48,599	9,873
Pension Plan [Member] | Foreign Plan [Member]
Prepaid postretirement costs	24,772	12,534
Current liabilities	(1,795)	(1,701)
Non-current liabilities	(44,753)	(59,521)
Ending balance	(21,776)	(48,688)
Other Postretirement Benefits Plan [Member]
Prepaid postretirement costs	107,323	73,137
Current liabilities	(227)	(226)
Non-current liabilities	(2,657)	(2,930)
Ending balance	$ 104,439	$ 69,981

XML

Note 10 - Pension and Postretirement Benefits - Pension Plans With Accumulated Benefit and Projected Benefit Obligations in Excess of Plan Assets (Details) - Pension Plan [Member] - USD ($) $ in Thousands	Nov. 27, 2021	Nov. 28, 2020
UNITED STATES
Accumulated benefit obligation	$ 17,558	$ 26,241
Fair value of plan assets	0	5,441
Projected benefit obligation	17,558	26,241
Fair value of plan assets	0	5,441
Foreign Plan [Member]
Accumulated benefit obligation	48,912	134,472
Fair value of plan assets	11,350	84,239
Projected benefit obligation	131,174	145,461
Fair value of plan assets	$ 84,626	$ 84,239

XML

Note 10 - Pension and Postretirement Benefits - Expected Cash Flows for Employer Contributions and Expected Benefit Payments (Details) $ in Thousands	Nov. 27, 2021 USD ($)
Pension Plan [Member] | UNITED STATES
2022	$ 0
2022	21,131
2023	21,280
2024	21,283
2025	21,391
2026-2031	125,388
Pension Plan [Member] | Foreign Plan [Member]
2022	34
2022	8,704
2023	7,933
2024	8,285
2025	8,457
2026-2031	54,038
Other Postretirement Benefits Plan [Member]
2022	0
2022	2,982
2023	2,851
2024	2,730
2025	2,607
2026-2031	$ 12,948

XML

Note 10 - Pension and Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Net periodic (benefit) cost	$ (8,029)	$ (6,706)	$ (5,332)
UNITED STATES
Net periodic (benefit) cost	(18,629)	(6,828)	(5,920)
Foreign Plan [Member]
Net periodic (benefit) cost	(2,005)	(1,230)	(48)
Pension Plan [Member] | UNITED STATES
Service cost	0	0	4
Interest cost	9,299	11,738	14,691
Expected return on assets	(31,123)	(25,758)	(25,305)
Prior service cost (benefit)	(3)	(3)	13
Actuarial loss	3,198	7,195	4,677
Curtailment loss	0	0	0
Settlement charge	0	0	0
Pension Plan [Member] | Foreign Plan [Member]
Service cost	3,280	2,950	2,237
Interest cost	2,941	3,158	4,678
Expected return on assets	(12,348)	(11,312)	(10,224)
Prior service cost (benefit)	69	64	64
Actuarial loss	4,053	3,829	3,114
Curtailment loss	0	14	83
Settlement charge	0	67	0
Other Postretirement Benefits Plan [Member]
Service cost	21	73	98
Interest cost	822	1,135	1,550
Expected return on assets	(8,945)	(7,976)	(7,013)
Prior service cost (benefit)	0	0	0
Actuarial loss	73	62	33
Curtailment loss	0	0	0
Settlement charge	$ 0	$ 0	$ 0

XML

Note 10 - Pension and Postretirement Benefits - Weighted-average Assumption Used to Determine Benefit Obligations and Net Costs (Details)		12 Months Ended
		Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
UNITED STATES
Discount rate		2.76%	2.53%	3.19%
Expected return on plan assets		7.25%	7.50%	7.50%
Foreign Plan [Member]
Expected return on plan assets		6.15%	6.23%	6.21%
Pension Plan [Member] | UNITED STATES
Discount rate		2.75%	2.50%	3.17%
Rate of compensation increase	[1]	0.00%	4.50%	4.50%
Discount rate		2.50%	3.17%	4.50%
Expected return on plan assets		7.24%	7.49%	7.49%
Rate of compensation increase	[1]	0.00%	4.50%	4.50%
Pension Plan [Member] | Foreign Plan [Member]
Discount rate		1.27%	1.16%	1.35%
Rate of compensation increase	[1]	1.48%	1.74%	1.71%
Discount rate		1.19%	1.34%	2.30%
Expected return on plan assets		6.15%	6.23%	6.21%
Rate of compensation increase	[1]	1.67%	1.74%	1.71%
Other Postretirement Benefits Plan [Member]
Discount rate		2.51%	2.19%	3.00%
Discount rate		2.19%	3.00%	4.37%
Expected return on plan assets		8.25%	8.50%	8.50%

[1] Under the U.S. Pension Plan compensation was locked-in as of May 31, 2011 and the benefit no longer includes compensation increases. The 4.50 percent rate for 2020 and 2019 is for the supplemental executive retirement plan only and for 2021, there is no rate of compensation increase as subsequent to November 27, 2021, there were no active employees in the supplemental executive retirement plan and therefore will be no compensation increase going forward.

XML

Note 10 - Pension and Postretirement Benefits - Assume Health Care Trend Rates (Details)	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Health care cost trend rate assumed for next year	6.50%	6.75%	7.00%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5.00%	5.00%	0.25%
Fiscal year that the rate reaches the ultimate trend rate	2028	2028	2028

XML

Note 10 - Pension and Postretirement Benefits - Asset Allocation (Details)		Nov. 27, 2021	Nov. 28, 2020
Equity Funds [Member] | UNITED STATES
Defined Benefit Plan, Target Plan Asset Allocation		60.00%
Fixed Income Funds [Member]
Defined Benefit Plan, Target Plan Asset Allocation		40.00%
Fixed Income Funds [Member] | UNITED STATES
Defined Benefit Plan, Target Plan Asset Allocation		40.00%
Pension Plan [Member] | UNITED STATES
Defined Benefit Plan, Target Plan Asset Allocation		100.00%
Percentage of Plan Assets at Year End		100.00%	100.00%
Pension Plan [Member] | Foreign Plan [Member]
Defined Benefit Plan, Target Plan Asset Allocation		100.00%
Percentage of Plan Assets at Year End		100.00%	100.00%
Pension Plan [Member] | Equity Funds [Member] | UNITED STATES
Defined Benefit Plan, Target Plan Asset Allocation		60.00%
Percentage of Plan Assets at Year End		57.70%	55.40%
Pension Plan [Member] | Equity Funds [Member] | Foreign Plan [Member]
Defined Benefit Plan, Target Plan Asset Allocation		21.20%
Percentage of Plan Assets at Year End		21.30%	48.80%
Pension Plan [Member] | Fixed Income Funds [Member] | UNITED STATES
Defined Benefit Plan, Target Plan Asset Allocation		40.00%
Percentage of Plan Assets at Year End		40.10%	36.20%
Pension Plan [Member] | Fixed Income Funds [Member] | Foreign Plan [Member]
Defined Benefit Plan, Target Plan Asset Allocation		77.30%
Percentage of Plan Assets at Year End		67.00%	51.00%
Pension Plan [Member] | Insurance [Member] | UNITED STATES
Defined Benefit Plan, Target Plan Asset Allocation		0.00%
Percentage of Plan Assets at Year End		0.00%	0.00%
Pension Plan [Member] | Insurance [Member] | Foreign Plan [Member]
Defined Benefit Plan, Target Plan Asset Allocation		0.00%
Percentage of Plan Assets at Year End		0.00%	0.00%
Pension Plan [Member] | Cash [Member] | UNITED STATES
Defined Benefit Plan, Target Plan Asset Allocation	[1]	0.00%
Percentage of Plan Assets at Year End	[1]	2.20%	8.40%
Pension Plan [Member] | Cash [Member] | Foreign Plan [Member]
Defined Benefit Plan, Target Plan Asset Allocation	[1]	1.50%
Percentage of Plan Assets at Year End	[1]	11.70%	0.20%
Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Target Plan Asset Allocation		100.00%
Percentage of Plan Assets at Year End		100.00%	100.00%
Other Postretirement Benefits Plan [Member] | Equity Funds [Member]
Defined Benefit Plan, Target Plan Asset Allocation		0.00%
Percentage of Plan Assets at Year End		0.00%	0.00%
Other Postretirement Benefits Plan [Member] | Fixed Income Funds [Member]
Defined Benefit Plan, Target Plan Asset Allocation		0.00%
Percentage of Plan Assets at Year End		0.00%	0.00%
Other Postretirement Benefits Plan [Member] | Insurance [Member]
Defined Benefit Plan, Target Plan Asset Allocation		100.00%
Percentage of Plan Assets at Year End		99.80%	99.40%
Other Postretirement Benefits Plan [Member] | Cash [Member]
Defined Benefit Plan, Target Plan Asset Allocation	[1]	0.00%
Percentage of Plan Assets at Year End	[1]	0.20%	0.60%

[1] Negative cash for 2020 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.

XML

Note 10 - Pension and Postretirement Benefits - Fair Value of Plan Assets (Details) - USD ($) $ in Thousands		Nov. 27, 2021		Nov. 28, 2020	Nov. 30, 2019
Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		$ 135,701		$ 109,056	$ 94,474
UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		409,811		398,403	383,527
Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		216,623		202,242	185,331
Fair Value, Inputs, Level 1 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		217		650
Fair Value, Inputs, Level 1 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		8,935		38,336
Fair Value, Inputs, Level 1 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		87,759		83,643
Fair Value, Inputs, Level 2 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		0
Fair Value, Inputs, Level 2 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		400,690		359,468
Fair Value, Inputs, Level 2 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		5,285		8,550
Fair Value, Inputs, Level 3 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		135,484		108,406
Fair Value, Inputs, Level 3 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		186		205
Fair Value, Inputs, Level 3 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		749		770
Fair Value, Inputs, Level 1, 2 and 3 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		135,701		109,056
Fair Value, Inputs, Level 1, 2 and 3 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		409,811		398,009
Fair Value, Inputs, Level 1, 2 and 3 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		93,793		92,963
Fair Value Measured at Net Asset Value Per Share [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance	[1]			394
Fair Value Measured at Net Asset Value Per Share [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance	[1]	122,830		109,279
Equity Funds [Member] | Fair Value, Inputs, Level 1 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		3,421
Equity Funds [Member] | Fair Value, Inputs, Level 1 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		35,117		33,478
Equity Funds [Member] | Fair Value, Inputs, Level 2 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		236,557		217,151
Equity Funds [Member] | Fair Value, Inputs, Level 2 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		1,368
Equity Funds [Member] | Fair Value, Inputs, Level 3 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		0
Equity Funds [Member] | Fair Value, Inputs, Level 3 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		0
Equity Funds [Member] | Fair Value, Inputs, Level 1, 2 and 3 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		236,557		220,572
Equity Funds [Member] | Fair Value, Inputs, Level 1, 2 and 3 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		35,117		34,846
Insurance [Member] | Fair Value, Inputs, Level 1 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		0
Insurance [Member] | Fair Value, Inputs, Level 2 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		0
Insurance [Member] | Fair Value, Inputs, Level 3 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		135,484		108,406	94,082
Insurance [Member] | Fair Value, Inputs, Level 1, 2 and 3 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		135,484		108,406
Fixed Income Funds [Member] | Fair Value, Inputs, Level 1 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		1,524
Fixed Income Funds [Member] | Fair Value, Inputs, Level 1 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		48,243		49,813
Fixed Income Funds [Member] | Fair Value, Inputs, Level 2 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		164,133		142,317
Fixed Income Funds [Member] | Fair Value, Inputs, Level 2 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		5,285		7,182
Fixed Income Funds [Member] | Fair Value, Inputs, Level 3 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		186		205	$ 219
Fixed Income Funds [Member] | Fair Value, Inputs, Level 3 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		749		770
Fixed Income Funds [Member] | Fair Value, Inputs, Level 1, 2 and 3 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		164,319		144,046
Fixed Income Funds [Member] | Fair Value, Inputs, Level 1, 2 and 3 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		54,277		57,765
Cash [Member] | Fair Value, Inputs, Level 1 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		217		650
Cash [Member] | Fair Value, Inputs, Level 1 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		8,935	[2]	33,391
Cash [Member] | Fair Value, Inputs, Level 1 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		4,399		352
Cash [Member] | Fair Value, Inputs, Level 2 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		0
Cash [Member] | Fair Value, Inputs, Level 2 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0	[2]	0
Cash [Member] | Fair Value, Inputs, Level 2 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		0
Cash [Member] | Fair Value, Inputs, Level 3 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		0
Cash [Member] | Fair Value, Inputs, Level 3 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0	[2]	0
Cash [Member] | Fair Value, Inputs, Level 3 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		0		0
Cash [Member] | Fair Value, Inputs, Level 1, 2 and 3 [Member] | Other Postretirement Benefits Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		217		650
Cash [Member] | Fair Value, Inputs, Level 1, 2 and 3 [Member] | UNITED STATES | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		8,935	[2]	33,391
Cash [Member] | Fair Value, Inputs, Level 1, 2 and 3 [Member] | Foreign Plan [Member] | Pension Plan [Member]
Defined Benefit Plan, Plan Assets, Amount, Ending Balance		$ 4,399		$ 352

[1] In accordance with ASC Topic 820-10, Fair Value Measurement, certain investments that are measured at NAV (Net Asset Value per share) (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts represented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

[2] Negative cash for 2020 represents unsettled pending trades within an investment that are classified in cash and cash equivalents until settled.

XML

Note 10 - Pension and Postretirement Benefits - Changes in the Level 3 Plan Assets of Pension and Other Postretirement Plans (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020
Pension Plan [Member] | UNITED STATES
Level 3 balance	$ 398,403	$ 383,527
Currency change effect	0	0
Level 3 balance	409,811	398,403
Pension Plan [Member] | Foreign Plan [Member]
Level 3 balance	202,242	185,331
Currency change effect	(5,230)	10,207
Level 3 balance	216,623	202,242
Other Postretirement Benefits Plan [Member]
Level 3 balance	109,056	94,474
Currency change effect	0	0
Level 3 balance	135,701	109,056
Fair Value, Inputs, Level 3 [Member] | Pension Plan [Member] | UNITED STATES
Level 3 balance	205
Level 3 balance	186	205
Fair Value, Inputs, Level 3 [Member] | Pension Plan [Member] | Foreign Plan [Member]
Level 3 balance	770
Level 3 balance	749	770
Fair Value, Inputs, Level 3 [Member] | Other Postretirement Benefits Plan [Member]
Level 3 balance	108,406
Level 3 balance	135,484	108,406
Fixed Income Funds [Member] | Fair Value, Inputs, Level 3 [Member] | Pension Plan [Member] | UNITED STATES
Level 3 balance	205	219
Purchases, sales, issuances and settlements, net	(19)	(14)
Level 3 balance	186	205
Fixed Income Funds [Member] | Fair Value, Inputs, Level 3 [Member] | Pension Plan [Member] | Foreign Plan [Member]
Level 3 balance	770
Level 3 balance	749	770
Fixed Income Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Pension Plan [Member] | Foreign Plan [Member]
Level 3 balance	770	675
Net transfers into / (out of) level 3	64	43
Net gains	(43)	(8)
Currency change effect	(42)	60
Level 3 balance	749	770
Insurance [Member] | Fair Value, Inputs, Level 3 [Member] | Other Postretirement Benefits Plan [Member]
Level 3 balance	108,406	94,082
Purchases, sales, issuances and settlements, net	(1,093)	(822)
Net transfers into / (out of) level 3	(1,658)	(831)
Net gains	29,829	15,977
Level 3 balance	$ 135,484	$ 108,406

XML

Note 11 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	May 28, 2016	Nov. 27, 2021	Nov. 28, 2020
Undistributed Earnings, Basic, Total		$ 1,044,206
Unrecognized Tax Benefits that Would Impact Effective Tax Rate		8,888	$ 9,125
Income Tax Examination, Penalties and Interest Expense, Total		703	2,378
Income Tax Examination, Penalties and Interest Accrued, Total		2,817	$ 3,520
Income Tax Examination, Year under Examination	2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Branch Foreign Tax Credit Carryforward [Member]
Tax Credit Carryforward, Amount		3,994
Foreign Tax Authority [Member]
Operating Loss Carryforwards, Total		$ 85,273
Foreign Tax Authority [Member] | Swiss Federal Tax Administration (FTA) [Member]
Open Tax Year		2018 2019 2020 2021
Foreign Tax Authority [Member] | Indefinite [Member]
Operating Loss Carryforwards, Total		$ 63,592
Foreign Tax Authority [Member] | Tax Year 2022 to 2039 [Member]
Operating Loss Carryforwards, Total		$ 21,680
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member]
Open Tax Year		2018 2019 2020 2021

XML

Note 11 - Income Taxes - Income From Continuing Operations Before Income Tax and Income From Equity Method Investments (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
United States	$ 14,989	$ 20,328	$ 31,796
Non-U.S.	201,861	138,028	141,032
Income from continuing operations before income taxes and income from equity method investments	$ 216,851	$ 158,356	$ 172,828

XML

Note 11 - Income Taxes - Components of the Provision for Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
U.S. federal	$ 10,310	$ 5,243	$ 9,122
State	2,265	1,320	3,294
Non-U.S.	57,801	56,542	47,848
Total current	70,376	63,105	60,264
U.S. federal	(6,891)	(4,709)	(432)
State	(350)	(4,111)	125
Non-U.S.	(102)	(12,364)	(10,549)
Total deferred	(7,343)	(21,184)	(10,856)
Total	$ 63,033	$ 41,921	$ 49,408

XML

Note 11 - Income Taxes - Reconciliation of Effective Income Tax (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Tax at statutory U.S. federal income tax rate	$ 45,539	$ 33,255	$ 36,294
State income taxes, net of federal benefit	1,444	(2,104)	2,785
Foreign dividend repatriation	1,104	900	825
Foreign operations	19,673	(563)	8,712
Executive compensation over $1.0 million	2,507	1,420	1,661
Non-U.S. stock option expense	575	358	425
Change in valuation allowance	(9,572)	5,925	1,097
Research and development tax credit	(993)	(906)	(802)
Foreign-derived intangible income	(2,617)	(1,396)	(2,240)
Global intangible low-taxed income	2,334	1,932	2,029
Provision to return	1,122	1,704	(3,271)
Cross currency swap	3,931	(6,748)	2,677
Contingency reserve	(2,139)	8,287	(957)
Other	125	(143)	173
Total income tax expense	$ 63,033	$ 41,921	$ 49,408

XML

Note 11 - Income Taxes - Deferred Income Tax Balances (Details) - USD ($) $ in Thousands	Nov. 27, 2021	Nov. 28, 2020
Pension and other post-retirement benefit plans	$ 12,118	$ 16,385
Employee benefit costs	26,799	24,538
Foreign tax credit carryforward	7,309	6,905
Tax loss carryforwards	24,071	31,495
Leases	8,590	7,133
Hedging activity	2,623	12,906
Interest deduction limitation	12,428	6,343
Other	27,410	30,178
Gross deferred tax assets	121,348	135,883
Less: valuation allowance	(11,341)	(21,843)
Total net deferred tax assets	110,007	114,040
Depreciation and amortization	(207,726)	(220,379)
Pension and other post-retirement benefit plans	(36,042)	(14,968)
Leases	(8,524)	(7,194)
Total deferred tax liability	(252,292)	(242,541)
Net deferred tax liability	$ (142,285)	$ (128,501)

XML

Note 11 - Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020
Balance at beginning of year	$ 14,569	$ 8,946
Additions	401	579
Additions	1,323	7,400
Reductions	(950)	(283)
Settlements	(161)	(747)
Lapses in applicable statutes of limitation	(1,901)	(1,326)
Balance at end of year	$ 13,281	$ 14,569

XML

Note 12 - Financial Instruments (Details Textual) $ in Thousands					3 Months Ended	12 Months Ended
	May 01, 2020 USD ($)	Apr. 23, 2018	Apr. 22, 2018	Oct. 20, 2017 USD ($)	May 29, 2021 USD ($)	Nov. 27, 2021 USD ($)	Feb. 27, 2021 USD ($)	Feb. 12, 2021 USD ($)	Oct. 20, 2020 USD ($)	Feb. 27, 2018 USD ($)	Feb. 14, 2017 USD ($)
Public Notes [Member]
Debt Instrument, Face Amount	$ 150,000					$ 300,000					$ 300,000
Hedged Liability, Discontinued Fair Value Hedge, Cumulative Increase (Decrease)	$ 15,808
Amortization Period of Deferred Gain (Loss) on Discontinuation of Fair Value Hedge (Year)	7 years
Term Loan B [Member]
Derivative, Amount of Hedged Item				$ 800,000
Debt Instrument, Face Amount				$ 2,150,000						$ 2,150,000
Term Loan B [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		2.00%	2.25%	2.00%		2.09%
Cross Currency Interest Rate Contract [Member]
Derivative, Notional Amount				$ 267,860
AOCI, Cash Flow Hedge, Cumulative Gain (Loss), after Tax						$ 3,483
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months						3,843
Cross Currency Interest Rate Contract [Member] | Other Assets [Member]
Foreign Currency Cash Flow Hedge Asset at Fair Value						$ 14,496
Cross Currency Interest Rate Contract [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivative, Number of Instruments Held, Total						4
Interest Rate Swap [Member]
Derivative, Amount of Hedged Item				$ 1,050,000			$ 1,125,000		$ 800,000	$ 200,000	150,000
Derivative, Fixed Interest Rate				4.0275%						4.589%
Interest Rate Swap [Member] | Interest Expense [Member]
Gain (Loss) on Cash Flow Hedge Ineffectiveness, Net, Total					$ (378)
Interest Rate Swap [Member] | Other Liabilities [Member]
Interest Rate Fair Value Hedge Liability at Fair Value						$ 12,366
Interest Rate Swap Related to Public Notes [Member]
Derivative, Amount of Hedged Item								$ 300,000			$ 150,000
Interest Rate Swap Related to Public Notes [Member] | London Interbank Offered Rate (LIBOR) [Member]
Derivative, Variable Interest Rate								3.28%			1.86%
Interest Rate Swap Related to Public Notes [Member] | Other Liabilities [Member]
Interest Rate Fair Value Hedge Liability at Fair Value						$ 10,539

XML

Note 12 - Financial Instruments - Swaps Outstanding (Details) - Cross Currency Interest Rate Contract [Member] - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Oct. 20, 2017
Derivative, Notional Amount		$ 267,860
Currency Swap 1 [Member]
Fiscal Year of Expiration	2022
Interest rate minimum	3.00%
Derivative, Notional Amount	$ 267,860
Fair Value	$ 14,496
Interest rate maximum	5.1803%

XML

Note 12 - Financial Instruments - Gains (Losses) on Derivative Instruments (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 27, 2021		Nov. 28, 2020	Nov. 30, 2019
Cross-currency swap contracts		$ (4,554)	[1]	$ 6,307	$ 14,429	[1]
Interest Rate Swap [Member]
Cross-currency swap contracts		20,109	[1]	(15,618)	(46,254)	[1]
Not Designated as Hedging Instrument [Member] | Foreign Exchange Forward [Member] | Other Operating Income (Expense) [Member]
Pretax gain (loss) recognized in income		$ (357)		(2,908)	(573)
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Currency Swap [Member]
Cross-currency swap contracts	$ (4,556)			6,307	14,429
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Cross-currency swap contracts	$ 20,109			$ (15,618)	$ (46,254)

[1] Loss reclassified from accumulated other comprehensive income (loss) into earnings is reported in other income, net.

XML

Note 13 - Fair Value Measurements (Details Textual) - USD ($) $ in Millions	Nov. 27, 2021	Feb. 03, 2020
D.H.M Adhesives, Inc [Member]
Business Combination, Contingent Consideration, Liability, Total	$ 8.1	$ 5.0

XML

Note 13 - Fair Value Measurements - Fair Value Measurements (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Nov. 27, 2021	Nov. 28, 2020
Assets:
Marketable securities	$ 2,079	$ 22,560
Foreign exchange contract assets	5,725	2,320
Cross-currency cash flow hedge assets	14,496	2,823
Liabilities:
Foreign exchange contract liabilities	6,082	5,251
Interest rate swaps, cash flow hedge liabilities	12,366	33,256
Interest rate swaps, fair value hedge liabilities	10,539
Contingent consideration liability	8,100	5,800
Cross-currency cash flow hedge liabilities		280
Fair Value, Inputs, Level 1 [Member]
Assets:
Marketable securities	2,079	22,560
Foreign exchange contract assets	0	0
Cross-currency cash flow hedge assets	0	0
Liabilities:
Foreign exchange contract liabilities	0	0
Interest rate swaps, cash flow hedge liabilities	0	0
Interest rate swaps, fair value hedge liabilities	0
Contingent consideration liability	0	0
Cross-currency cash flow hedge liabilities		0
Fair Value, Inputs, Level 2 [Member]
Assets:
Marketable securities	0	0
Foreign exchange contract assets	5,725	2,320
Cross-currency cash flow hedge assets	14,496	2,823
Liabilities:
Foreign exchange contract liabilities	6,082	5,251
Interest rate swaps, cash flow hedge liabilities	12,366	33,256
Interest rate swaps, fair value hedge liabilities	10,539
Contingent consideration liability	0	0
Cross-currency cash flow hedge liabilities		280
Fair Value, Inputs, Level 3 [Member]
Assets:
Marketable securities	0	0
Foreign exchange contract assets	0	0
Cross-currency cash flow hedge assets	0	0
Liabilities:
Foreign exchange contract liabilities	0	0
Interest rate swaps, cash flow hedge liabilities	0	0
Interest rate swaps, fair value hedge liabilities	0
Contingent consideration liability	$ 8,100	5,800
Cross-currency cash flow hedge liabilities		$ 0

XML

Note 13 - Fair Value Measurements - Contingent Consideration (Details) - Contingent Consideration Liability [Member] $ in Millions	12 Months Ended
	Nov. 27, 2021 USD ($)
Level 3 balance at beginning of year	$ 5.8
Acquisition	1.7
Payment of contingent consideration	(1.7)
Mark to market adjustment	2.3
Level 3 balance at end of year	$ 8.1

XML

Note 14 - Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands	Nov. 27, 2021	Nov. 28, 2020
Accrued Environmental Loss Contingencies, Noncurrent	$ 6,603	$ 8,099
Facility in Simpsonville, South Carolina [Member]
Accrual for Environmental Loss Contingencies, Ending Balance	$ 3,333	$ 3,703

XML

Note 14 - Commitments and Contingencies - Asbestos Related Lawsuits and Claims (Details) - Asbestos Related Lawsuits and Claims [Member] $ in Thousands	12 Months Ended
	Nov. 27, 2021 USD ($)	Nov. 28, 2020 USD ($)	Nov. 30, 2019 USD ($)
Lawsuits and claims settled	2	4	8
Settlement amounts	$ 85	$ 130	$ 424
Insurance payments received or expected to be received	$ 55	$ 88	$ 291

XML

Note 15 - Segments (Details Textual)	12 Months Ended
	Nov. 27, 2021
Number of Reportable Segments	3

XML

Note 15 - Segments - Reportable Operating Segment Financial Information (Details) - USD ($) $ in Thousands		12 Months Ended
		Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Revenue		$ 3,278,031	$ 2,790,269	$ 2,897,000
Segment operating income (loss)		252,612	218,317	225,994
Depreciation and amortization		143,174	138,817	141,206
Assets	[1]	4,274,530	4,036,704
Capital expenditures		96,089	95,843
Corporate, Non-Segment [Member]
Segment operating income (loss)	[2]	(35,815)	(27,594)	(42,923)
Hygiene, Health, and Consumable Adhesives [Member] | Operating Segments [Member]
Revenue		1,472,756	1,332,786	1,328,286
Segment operating income (loss)		138,366	130,789	115,961
Depreciation and amortization		45,919	44,329	45,448
Assets	[1]	1,370,924	1,268,236
Capital expenditures		60,164	57,416
Engineering Adhesives [Member] | Operating Segments [Member]
Revenue		1,371,756	1,088,313	1,158,403
Segment operating income (loss)		135,913	103,974	136,299
Depreciation and amortization		61,082	58,102	57,175
Assets	[1]	1,710,000	1,515,302
Capital expenditures		8,815	18,212
Construction Adhesives [Member] | Operating Segments [Member]
Revenue		433,519	369,170	396,580
Segment operating income (loss)		14,148	11,148	16,657
Depreciation and amortization		35,002	35,811	35,851
Assets	[1]	810,824	934,397
Capital expenditures		3,591	7,635
Construction Adhesives [Member] | Corporate, Non-Segment [Member]
Revenue				396,580
Corporate Segment [Member] | Corporate, Non-Segment [Member]
Revenue	[2]	0	0	13,731
Depreciation and amortization	[2]	1,171	575	2,732
Assets	[1]	382,782	318,769
Capital expenditures		23,519	12,580
Total Segment [Member]
Segment operating income (loss)		$ 288,427	$ 245,911	$ 268,917

[1] Segment assets include primarily inventory, accounts receivable, property, plant and equipment, goodwill, intangible assets and other miscellaneous assets. Corporate assets include primarily corporate property, plant and equipment, deferred tax assets, certain investments and other assets.

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

XML

Note 15 - Segments - Reconciliation of Segment Operating Income to Income From Continuing Operations Before Income Taxes and Income From Equity Method Investments (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Segment operating income (loss)	$ 252,612	$ 218,317	$ 225,994
Other income, net	32,855	15,398	37,943
Interest expense	(78,092)	(86,776)	(103,287)
Interest income	9,476	11,417	12,178
Income from continuing operations before income taxes and income from equity method investments	$ 216,851	$ 158,356	$ 172,828

XML

Note 15 - Segments - Financial Information About Geographic Areas (Details) - USD ($) $ in Thousands	12 Months Ended
	Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Revenue	$ 3,278,031	$ 2,790,269	$ 2,897,000
Property, plant and equipment, net	695,367	670,744	629,813
UNITED STATES
Revenue	1,421,623	1,248,495	1,309,056
Property, plant and equipment, net	331,864	297,046	287,372
CHINA
Revenue	433,998	351,204	347,304
Property, plant and equipment, net	96,300	99,513	80,606
GERMANY
Revenue	409,193	330,755	0
Property, plant and equipment, net	120,548	131,879	127,497
Countries with More Than 10 Percent of Total [Member]
Revenue	2,264,814	1,930,454	1,656,360
All Other Countries With Less than 10 Percent of Total [Member]
Revenue	1,013,217	859,815	1,240,640
Property, plant and equipment, net	$ 146,655	$ 142,306	$ 134,338

XML

Note 15 - Segments - Disaggregated Revenue Information (Details) - USD ($) $ in Thousands		12 Months Ended
		Nov. 27, 2021	Nov. 28, 2020	Nov. 30, 2019
Revenue		$ 3,278,031	$ 2,790,269	$ 2,897,000
Americas [Member]
Revenue		1,715,374	1,493,169	1,568,544
EIMEA [Member]
Revenue		917,946	756,194	793,937
Asia Pacific [Member]
Revenue		644,711	540,906	534,519
Hygiene, Health, and Consumable Adhesives [Member] | Operating Segments [Member]
Revenue		1,472,756	1,332,786	1,328,286
Hygiene, Health, and Consumable Adhesives [Member] | Americas [Member] | Operating Segments [Member]
Revenue		826,172	736,681	733,125
Hygiene, Health, and Consumable Adhesives [Member] | EIMEA [Member] | Operating Segments [Member]
Revenue		425,324	388,271	392,497
Hygiene, Health, and Consumable Adhesives [Member] | Asia Pacific [Member] | Operating Segments [Member]
Revenue		221,260	207,834	202,664
Engineering Adhesives [Member] | Operating Segments [Member]
Revenue		1,371,756	1,088,313	1,158,403
Engineering Adhesives [Member] | Americas [Member] | Operating Segments [Member]
Revenue		504,626	430,866	469,764
Engineering Adhesives [Member] | EIMEA [Member] | Operating Segments [Member]
Revenue		470,466	347,417	380,673
Engineering Adhesives [Member] | Asia Pacific [Member] | Operating Segments [Member]
Revenue		396,664	310,030	307,966
Construction Adhesives [Member] | Operating Segments [Member]
Revenue		433,519	369,170	396,580
Construction Adhesives [Member] | Corporate, Non-Segment [Member]
Revenue				396,580
Construction Adhesives [Member] | Americas [Member] | Operating Segments [Member]
Revenue		384,576	325,622	351,924
Construction Adhesives [Member] | EIMEA [Member] | Operating Segments [Member]
Revenue		22,156	20,506	20,767
Construction Adhesives [Member] | Asia Pacific [Member] | Operating Segments [Member]
Revenue		26,787	23,042	23,889
Corporate Segment [Member] | Corporate, Non-Segment [Member]
Revenue	[1]	0	0	13,731
Corporate Segment [Member] | Americas [Member] | Corporate, Non-Segment [Member]
Revenue		0	0	13,731
Corporate Segment [Member] | EIMEA [Member] | Corporate, Non-Segment [Member]
Revenue		0	0	0
Corporate Segment [Member] | Asia Pacific [Member] | Corporate, Non-Segment [Member]
Revenue		$ 0	$ 0	$ 0

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

XML

Note 16 - Subsequent Event (Details Textual) - Subsequent Event [Member] - USD ($) $ in Thousands	Jan. 11, 2022	Nov. 30, 2021
MICHIGAN | Tissue Seal, LLC [Member]
Payments to Acquire Productive Assets, Total		$ 24,750
Fourny NV [Member] | BELGIUM
Payments to Acquire Businesses, Gross	$ 18,200