UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 1, 2024

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

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 per share	FUL	New York Stock Exchange

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “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 is a shell company (as defined in Rule 12(b) of the Exchange Act. Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PROCEEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of the Registrant’s Common Stock, par value $1.00 per share, was 54,521,587 as of June 21, 2024.

1

H.B. Fuller Company

Quarterly Report on Form 10-Q

Table of Contents

		Page
PART 1. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	3
	Consolidated Statements of Income for the three and six months ended June 1, 2024 and June 3, 2023	3
	Consolidated Statements of Comprehensive Income for the three and six months ended June 1, 2024 and June 3, 2023	4
	Consolidated Balance Sheets as of June 1, 2024 and December 2, 2023	5
	Consolidated Statements of Total Equity for the three months and six months ended June 1, 2024 and June 3, 2023	6
	Consolidated Statements of Cash Flows for the six months ended June 1, 2024 and June 3, 2023	7
	Notes to Consolidated Financial Statements	8
ITEM 2.	MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	32
ITEM 4.	CONTROLS AND PROCEDURES	32
PART II. OTHER INFORMATION		33
ITEM 1.	LEGAL PROCEEDINGS	33
ITEM 1A.	RISK FACTORS	33
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	34
ITEM 6.	EXHIBITS	34
SIGNATURES		35

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 1,			June 3,			June 1,			June 3,
	2024			2023			2024			2023
Net revenue	$	917,107		$	898,239		$	1,727,525		$	1,707,421
Cost of sales		(635,055	)		(641,464	)		(1,206,237	)		(1,235,838	)
Gross profit		282,052			256,775			521,288			471,583
Selling, general and administrative expenses		(181,456	)		(166,625	)		(353,817	)		(321,167	)
Other income, net		3,634			605			5,135			3,209
Interest expense		(32,314	)		(33,131	)		(64,216	)		(66,200	)
Interest income		1,199			932			2,506			1,599
Income before income taxes and income from equity method investments		73,115			58,556			110,896			89,024
Income taxes		(22,418	)		(19,291	)		(30,231	)		(29,024	)
Income from equity method investments		600			1,157			1,644			2,338
Net income including non-controlling interest		51,297			40,422			82,309			62,338
Net income attributable to non-controlling interest		(33	)		(21	)		(54	)		(48	)
Net income attributable to H.B. Fuller	$	51,264		$	40,401		$	82,255		$	62,290
Earnings per share attributable to H.B. Fuller common stockholders:
Basic	$	0.93		$	0.74		$	1.50		$	1.15
Diluted	$	0.91		$	0.73		$	1.45		$	1.12
Weighted-average common shares outstanding:
Basic		54,946			54,269			54,824			54,222
Diluted		56,636			55,717			56,604			55,818
Dividends declared per common share	$	0.223		$	0.205		$	0.428		$	0.395

See accompanying Notes to Unaudited Consolidated Financial Statements.

3

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 1,			June 3,			June 1,			June 3,
	2024			2023			2024			2023
Net income including non-controlling interest	$	51,297		$	40,422		$	82,309		$	62,338
Other comprehensive (loss) income
Foreign currency translation		(26,926	)		26,410			(46,288	)		22,774
Defined benefit pension plans adjustment, net of tax		419			858			2,538			1,709
Interest rate swaps, net of tax		10,196			(9,488	)		7,731			(1,153	)
Net investment hedges, net of tax		123			(5,384	)		3,913			(5,683	)
Other comprehensive (loss) income		(16,188	)		12,396			(32,106	)		17,647
Comprehensive income		35,109			52,818			50,203			79,985
Less: Comprehensive income attributable to non-controlling interest		1			6			13			43
Comprehensive income attributable to H.B. Fuller	$	35,108		$	52,812		$	50,190		$	79,942

See accompanying Notes to Unaudited Consolidated Financial Statements.

4

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

	June 1,			December 2,
	2024			2023
Assets
Current assets:
Cash and cash equivalents	$	114,823		$	179,453
Trade receivables (net of allowances of $12,523 and $11,080, as of June 1, 2024 and December 2, 2023, respectively)		571,134			577,932
Inventories		496,085			442,040
Other current assets		109,021			112,678
Total current assets		1,291,063			1,312,103
Property, plant and equipment		1,813,723			1,755,035
Accumulated depreciation		(974,875	)		(930,380	)
Property, plant and equipment, net		838,848			824,655
Goodwill		1,578,297			1,486,512
Other intangibles, net		813,063			729,140
Other assets		397,839			371,165
Total assets	$	4,919,110		$	4,723,575
Liabilities, non-controlling interest and total equity
Current liabilities
Notes payable	$	1,396		$	1,841
Trade payables		474,095			439,700
Accrued compensation		78,343			95,680
Income taxes payable		46,883			47,688
Other accrued expenses		83,350			107,902
Total current liabilities		684,067			692,811
Long-term debt		2,023,520			1,836,590
Accrued pension liabilities		50,848			50,189
Other liabilities		368,561			388,072
Total liabilities	$	3,126,996		$	2,967,662
Commitments and contingencies (Note 13)
Equity
H.B. Fuller stockholders' equity:
Preferred stock (no shares outstanding) shares authorized – 10,045,900		-			-
Common stock, par value $1.00 per share, shares authorized – 160,000,000, shares outstanding – 54,507,836 and 54,092,987 as of June 1, 2024 and December 2, 2023, respectively	$	54,508		$	54,093
Additional paid-in capital		310,458			301,485
Retained earnings		1,901,372			1,842,507
Accumulated other comprehensive loss		(474,945	)		(442,880	)
Total H.B. Fuller stockholders' equity		1,791,393			1,755,205
Non-controlling interest		721			708
Total equity		1,792,114			1,755,913
Total liabilities, non-controlling interest and total equity	$	4,919,110		$	4,723,575

 See accompanying Notes to Unaudited Consolidated Financial Statements.

5

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Total Equity

(In thousands)

(Unaudited)

	H.B. Fuller Company Shareholders
										Accumulated
				Additional						Other
	Common			Paid-in			Retained			Comprehensive			Non-Controlling
	Stock			Capital			Earnings			Income (Loss)			Interest		Total
Balance at December 2, 2023	$	54,093		$	301,485		$	1,842,507		$	(442,880	)	$	708	$	1,755,913
Comprehensive income		-			-			30,991			(15,909	)		12		15,094
Dividends		-			-			(11,246	)		-			-		(11,246	)
Stock option exercises		200			8,777			-			-			-		8,977
Share-based compensation plans and other, net		225			5,490			-			-			-		5,715
Repurchases of common stock		(80	)		(6,128	)		-			-			-		(6,208	)
Balance at March 2, 2024	$	54,438		$	309,624		$	1,862,252		$	(458,789	)	$	720	$	1,768,245
Comprehensive income		-			-			51,264			(16,156	)		1		35,109
Dividends		-			-			(12,144	)		-			-		(12,144	)
Stock option exercises		189			9,123			-			-			-		9,312
Share-based compensation plans and other, net		81			7,111			-			-			-		7,192
Repurchases of common stock		(200	)		(15,400	)		-			-			-		(15,600	)
Balance at June 1, 2024	$	54,508		$	310,458		$	1,901,372		$	(474,945	)	$	721	$	1,792,114

	H.B. Fuller Company Shareholders
										Accumulated
				Additional						Other
	Common			Paid-in			Retained			Comprehensive			Non-Controlling
	Stock			Capital			Earnings			Income (Loss)			Interest		Total
Balance at December 3, 2022	$	53,677		$	266,491		$	1,741,359		$	(451,357	)	$	624	$	1,610,794
Comprehensive income		-			-			21,889			5,241			37		27,167
Dividends		-			-			(10,305	)		-			-		(10,305	)
Stock option exercises		76			3,520			-			-			-		3,596
Share-based compensation plans and other, net		102			5,221			-			-			-		5,323
Repurchases of common stock		(36	)		(2,412	)		-			-			-		(2,448	)
Balance at March 4, 2023	$	53,819		$	272,820		$	1,752,943		$	(446,116	)	$	661	$	1,634,127
Comprehensive income (loss)		-			-			40,401			12,411			6		52,818
Dividends		-			-			(11,129	)		-			-		(11,129	)
Stock option exercises		13			584			-			-			-		597
Share-based compensation plans other, net		30			6,818			-			-			-		6,848
Repurchases of common stock		(2	)		(102	)		-			-			-		(104	)
Balance at June 3, 2023	$	53,860		$	280,120		$	1,782,215		$	(433,705	)	$	667	$	1,683,157

See accompanying Notes to Unaudited Consolidated Financial Statements. 

6

H.B. FULLER COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended
	June 1, 2024			June 3, 2023
Cash flows from operating activities:
Net income including non-controlling interest	$	82,309		$	62,338
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Depreciation		45,099			39,163
Amortization		39,574			37,813
Deferred income taxes		(24,117	)		(16,831	)
Income from equity method investments, net of dividends received		(1,644	)		(2,338	)
Debt issuance costs write-off		-			2,689
Loss on fair value adjustment on contingent consideration liability		-			(220	)
Gain on sale or disposal of assets		(166	)		(42	)
Share-based compensation		11,930			10,953
Pension and other post-retirement benefit plan activity		(4,370	)		(6,226	)
Change in assets and liabilities, net of effects of acquisitions:
Trade receivables, net		22,639			66,896
Inventories		(56,512	)		8,285
Other assets		(22,328	)		(36,951	)
Trade payables		38,781			(20,301	)
Accrued compensation		(16,424	)		(42,190	)
Other accrued expenses		(7,002	)		(9,988	)
Income taxes payable		(11,218	)		10,025
Other liabilities		(1,786	)		18,819
Other		34,210			(13,497	)
Net cash provided by operating activities		128,975			108,397
Cash flows from investing activities:
Purchased property, plant and equipment		(90,181	)		(82,578	)
Purchased businesses, net of cash acquired		(254,287	)		(103,744	)
Proceeds from sale of property, plant and equipment		694			2,623
Net cash used in investing activities		(343,774	)		(183,699	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		1,497,000			1,300,000
Repayment of long-term debt		(1,305,500	)		(1,176,650	)
Payment of debt issuance costs		(3,493	)		(10,214	)
Net payment of notes payable		(376	)		(239	)
Dividends paid		(23,295	)		(21,258	)
Proceeds from stock options exercised		18,289			4,193
Repurchases of common stock		(21,809	)		(2,552	)
Net cash provided by financing activities		160,816			93,280
Effect of exchange rate changes on cash and cash equivalents		(10,647	)		5,295
Net change in cash and cash equivalents		(64,630	)		23,273
Cash and cash equivalents at beginning of period		179,453			79,910
Cash and cash equivalents at end of period	$	114,823		$	103,183

See accompanying Notes to Unaudited Consolidated Financial Statements.

7

H.B. FULLER COMPANY AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Amounts in thousands, except per share amounts)

(Unaudited)

Note 1: Basis of Presentation

Overview

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

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from these estimates. These unaudited interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended  December 2, 2023 as filed with the Securities and Exchange Commission.

New Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU provides new disclosure requirements including presentation of prescribed line items in the effective tax rate reconciliation and disclosures regarding state and local tax payments. Our effective date for adoption of this ASU is our fiscal year ending November 28, 2026. We are evaluating the impact the new disclosure guidance will have on our Consolidated Finance Statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. This ASU extends the existing requirements for annual disclosures to quarterly periods, and requires that both annual and quarterly disclosures present segment expenses using line items consistent with information regularly provided to the chief operating decision maker. Our effective date for adoption of this ASU is our fiscal year ending November 29, 2025. We are evaluating the impact the new disclosure guidance will have on our Consolidated Finance Statements.

Supplier Finance Program

In September 2022, the FASB issued ASU No. 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. This ASU requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the requirement on rollforward information which is an annual requirement. During the first quarter of our fiscal year ending November 30, 2024, we adopted ASU 2022-04. We will present the annual roll-forward disclosure requirement within our annual report on Form 10-K.

We have agreements with third parties to provide supplier finance programs which facilitate participating suppliers' ability to finance payment obligations of the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, elect to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company has no economic interest in the sale of these suppliers’ receivables and no direct financial relationship with the financial institutions concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements. The outstanding payment obligations that were confirmed as valid and remained outstanding as of June 1, 2024 were approximately $4,710. These obligations under the Company’s supplier finance programs are included in Accounts Payable in the Consolidated Balance Sheets, and the associated payments are reflected in the cash flows from operating activities section of the Consolidated Statements of Cash Flows.

8

 

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

Note 2: Acquisitions

ND Industries, Inc. 

On May 20, 2024, we acquired the assets of ND Industries, Inc. (“ND Industries”) for a base purchase price of $255,734 which was funded through borrowings on our credit facility and existing cash. This includes a holdback amount of $1,446 that will be paid on the 4-month anniversary of the closing date. ND Industries, headquartered in Clawson, Michigan, is a leading provider of specialty adhesives and fastener locking and sealing solutions serving customers in the automotive, electronics, aerospace and other industries. The acquisition of ND Industries is expected to accelerate the realization of our top growth priorities, consistent with our strategy to proactively drive capital allocation to the highest margin, highest growth market segments within the functional coatings, adhesives, sealants and elastomer industry. The acquisition fair value measurement was preliminary as of June 1, 2024. ND Industries is included in our Engineering Adhesives operating segment.

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

	Amounts
Current assets	$	15,417
Property, plant and equipment		21,888
Goodwill		89,825
Other intangibles
Customer relationships		113,200
Trademarks/trade names		4,800
Technology		11,800
Other assets		662
Current liabilities		(1,442	)
Other liabilities		(416	)
Total	$	255,734

The expected useful lives of the acquired intangible assets are 12 years. Based on the fair value measurement of the assets acquired and liabilities assumed, we allocated $89,825 to goodwill for the expected synergies from combining ND Industries with our existing business. Such goodwill is deductible for tax purposes. The goodwill was assigned to our Engineering Adhesives operating segment.

Sanglier Ltd.

On September 8, 2023, we acquired the assets of Sanglier Ltd. (“Sanglier”) for a base purchase price of 13,361 British pound sterling, or approximately $16,660 which was funded through existing cash. This includes a holdback amount of 2,100 British pound sterling that will be paid on the 18-month anniversary of the closing date. Sanglier, headquartered in Mansfield, United Kingdom, is a manufacturer and filler of sprayable (aerosol and cannister) industrial adhesives. The acquisition of Sanglier expands our innovation capabilities and product portfolio across the United Kingdom and Europe transforming adhesives applications to enable sprayable delivery providing end users with an opportunity to greatly improve labor efficiency. The acquisition fair value measurement was preliminary as of June 1, 2024 and includes intangible assets of $7,354, goodwill of $3,362 and other net assets of $5,944. Sanglier is included in our Construction Adhesives operating segment.

Adhezion Biomedical LLC

On June 23, 2023, we acquired Adhezion Biomedical LLC (“Adhezion”) for a base purchase price of $80,802 which was funded through borrowings on our credit facility. This includes a holdback amount of $780 that will be paid on the 12-month anniversary of the closing date. The agreement includes a payment of contingent consideration up to $15,000 following the completion of certain performance goals and conditions. Adhezion, headquartered in Wyomissing, Pennsylvania, is a manufacturer of cyanoacrylate-based healthcare adhesives and infection prevention products. The acquisition of Adhezion positions us for expansion in the healthcare adhesives industry and creates a solid, unique platform from which to scale and innovate in the healthcare adhesives industry. The acquisition fair value measurement is final as of June 1, 2024 and includes intangible assets of $38,500, goodwill of $37,589 and other net assets of $4,713. Goodwill represents expected synergies from combining Adhezion with our existing business. The amount of goodwill that is deductible for tax purposes is $25,717. Adhezion is included in our Hygiene, Health and Consumable Adhesives operating segment.

XChem International LLC

On June 12, 2023, we acquired XChem International LLC ("XChem") for a base purchase price of approximately $14,496 which was funded through borrowings on our credit facility. This includes a holdback amount of $1,650 that will be paid on the 18-month anniversary of the closing date. XChem, headquartered in Ras Al-Khaimah, United Arab Emirates, is a manufacturer of adhesives and sealants for construction-related applications. The acquisition of XChem provides our construction adhesives global business with additional manufacturing presence for certain brands outside the U.S. and broadens our construction adhesives portfolio of highly specified applications and diversifies it toward both non-U.S. and infrastructure-oriented markets. The acquisition fair value measurement is final as of June 1, 2024 and includes intangible assets of $4,600, goodwill of $4,318 and other net assets of $5,578. Goodwill represents expected synergies from combining XChem with our existing business. Goodwill is not deductible for tax purposes. XChem is included in our Construction Adhesives operating segment.

Beardow Adams Holdings Ltd.

On May 1, 2023, we acquired Beardow Adams Holdings Ltd. (“Beardow Adams”) for a total purchase price of 80,738 British pound sterling, or approximately $100,885, which was funded through borrowings on our credit facility. This includes a holdback amount of 8,000 British pound sterling that will be paid on the 18-month anniversary of the closing date. Beardow Adams, based in the United Kingdom, develops and manufactures adhesives, sealants and coatings, principally in the fields of packaging and related applications. The acquisition of Beardow Adams is expected to accelerate profitable growth in many of our core end markets and generate business synergies through better raw material pricing, production optimization and an expanded distribution platform. The acquisition fair value measurement is final as of June 1, 2024 and includes intangible assets of $35,425, goodwill of $28,148 and other net assets of $37,312. Goodwill represents expected synergies from combining Beardow Adams with our existing business. The amount of goodwill that is deductible for tax purposes is $3,561. The remaining goodwill is not deductible for tax purposes. Beardow Adams is included in our Hygiene, Health and Consumable Adhesives operating segment.

9

 

Aspen Research Corporation

On January 31, 2023, we acquired the assets of Aspen Research Corporation (“Aspen”) for a total purchase price of $9,761, which was funded through existing cash. This includes a holdback amount of $500 that will be paid on the 18-month anniversary of the closing date. Aspen, located in Maple Grove, Minnesota, is a contract research organization that develops and manufactures innovative solutions for some of the adhesives used in our insulating glass market. Aspen is known for their superior understanding of materials science, engineering and analytical testing and specializes in custom materials manufacturing for chemicals and adhesives products. The acquisition of Aspen is expected to expand our Engineering Adhesives footprint in North America and strengthen our capabilities in the insulating glass market, in addition to bringing additive continuous flow, process manufacturing capabilities that we plan to leverage. The acquisition fair value measurement was final as of December 2, 2023 and includes intangible assets of $4,900, goodwill of $3,832 and other net assets of $1,029. Goodwill represents expected synergies from combining Aspen with our existing business. Goodwill is deductible for tax purposes. Aspen is included in our Engineering Adhesives operating segment.

Lemtapes Oy

On December 15, 2022, we acquired Lemtapes Oy (“Lemtapes”) for a total purchase price of $8,922 Euro, or approximately $9,482 which was funded through existing cash. This includes a holdback amount of 850 Euro that will be paid on the 18-month anniversary of the closing date. Lemtapes, located in Valkeakoski, Finland, is a solutions provider of ecological, innovative tapes and adhesives for the packaging and plywood industries. The acquisition of Lemtapes is expected to reinforce our strategic position in Europe, especially for our adhesives coated solutions products. This acquisition will also accelerate our growth strategy of fast-growing, high margin businesses while adding technology capabilities and strong customer relationships. The acquisition fair value measurement was final as of December 2, 2023 and includes intangible assets of $5,526, goodwill of $3,028 and other net assets of $928. Goodwill represents expected synergies from combining Lemtapes with our existing business. Goodwill is not deductible for tax purposes. Lemtapes is included in our Hygiene, Health and Consumable Adhesives operating segment.

All acquisitions, individually and in the aggregate, are not material and therefore pro forma financial information is not provided.

Note 3: Restructuring Actions

During fiscal year 2023, the Company approved restructuring plans (the "Plans") related to organizational changes and other actions to optimize operations and integrate acquired businesses. The Plans were implemented in the second quarter of fiscal year 2023 and are currently expected to be completed during fiscal year 2026, with the majority of the charges recognized and cash payments occurring in fiscal 2023 and 2024. In implementing the Plans, the Company currently expects to incur pre-tax costs of approximately $39,100 to $44,100 for severance and related employee costs globally, other restructuring costs related to the streamlining of processes and the payment of anticipated income taxes in certain jurisdictions related to the Plans. 

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

	Three Months Ended				Six Months Ended
	June 1, 2024		June 3, 2023		June 1, 2024		June 3, 2023
Cost of sales	$	1,279	$	2,784	$	4,194	$	5,085
Selling, general and administrative		1,279		2,618		2,444		3,243
	$	2,558	$	5,402	$	6,638	$	8,328

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

A summary of the restructuring liability is presented below:

	Employee-Related			Asset-Related			Other			Total
Balance at December 3, 2022	$	57		$	-		$	-		$	57
Expenses incurred		22,731			1,369			487			24,587
Non-cash charges		-			(1,369	)		(453	)		(1,822	)
Cash payments		(9,802	)		-			(34	)		(9,836	)
Foreign currency translation		(1,263	)		-			-			(1,263	)
Balance at December 2, 2023	$	11,723		$	-		$	-		$	11,723
Expenses incurred		2,918			3,607			113			6,638
Non-cash charges		-			(3,607	)		(102	)		(3,709	)
Cash payments		(9,017	)		-			(11	)		(9,028	)
Foreign currency translation		(140	)		-			-			(140	)
Balance at June 1, 2024	$	5,484		$	-		$	-		$	5,484

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

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Note 4: Inventories

The composition of inventories is as follows:

	June 1,		December 2,
	2024		2023
Raw materials	$	225,908	$	206,140
Finished goods		270,177		235,900
Total inventories	$	496,085	$	442,040

Note 5: Goodwill and Other Intangible Assets

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

	Hygiene, Health
	and Consumable			Engineering			Construction
	Adhesives			Adhesives			Adhesives		Total
Balance at December 2, 2023	$	402,598		$	651,145		$	432,769	$	1,486,512
Acquisitions	$	1,674		$	89,825		$	2,897		94,396
Foreign currency translation effect	$	(719	)	$	(1,999	)	$	107		(2,611	)
Balance at June 1, 2024	$	403,553		$	738,971		$	435,773	$	1,578,297

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

	June 1, 2024
	Purchased
	Technology			Customer
Amortizable Intangible Assets	and Patents			Relationships			Trade Names			Other			Total
Original cost	$	144,456		$	1,068,558		$	62,944		$	9,887		$	1,285,845
Accumulated amortization		(52,568	)		(387,964	)		(26,320	)		(6,402	)		(473,254	)
Net identifiable intangibles	$	91,888		$	680,594		$	36,624		$	3,485		$	812,591

	December 2, 2023
	Purchased
	Technology			Customer
Amortizable Intangible Assets	and Patents			Relationships			Trade Names			Other			Total
Original cost	$	144,763		$	986,470		$	58,484		$	10,911		$	1,200,628
Accumulated amortization		(59,631	)		(382,220	)		(23,099	)		(7,012	)		(471,962	)
Net identifiable intangibles	$	85,132		$	604,250		$	35,385		$	3,899		$	728,666

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

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

	Remainder
Fiscal Year	2024		2025		2026		2027		2028		Thereafter
Amortization expense	$	40,716	$	87,399	$	80,670	$	77,359	$	77,103	$	449,344

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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  June 1, 2024 and December 2, 2023 were $472 and $474, respectively, and relate to trademarks and trade names. The change in non-amortizable assets as of June 1, 2024 compared to December 2, 2023 was due to changes in foreign currency exchange rates.

Note 6: Long-Term Debt

On March 4, 2024, we entered into a Refinancing and Incremental Amendment (the “Refinancing and Incremental Amendment”), which amends the Second Amended and Restated Credit Agreement dated as of February 15, 2023, as previously amended. Pursuant to the Refinancing and Incremental Amendment, the existing Term B loans under the Credit Agreement were refinanced by “Refinancing Loans” (as defined in the Credit Agreement) in the principal amount of $794,000 (the “Amended TLB”), certain lenders party to the Refinancing and Incremental Amendment made additional Term B loans to the Company in the principal amount of $200,000, thereby increasing the aggregate principal amount of the Amended TLB to $994,000, and the interest rate margins applicable to the Amended TLB were decreased by 25 basis points (0.25% per annum) to 200 basis points for SOFR rate loans and 100 basis points for prime rate loans. The additional $200,000 of proceeds will be used to finance our working capital needs and for general corporate purposes, including permitted acquisitions. Interest on Term Loan B borrowings are payable at SOFR plus an interest rate spread of 200 basis points with a SOFR floor of 50 basis points (7.33 percent at June 1, 2024). The maturity date of February 15, 2030 remains unchanged. The commitment fee rates and interest rates applicable to the revolving credit facility and the Term Loan A facility remain unchanged.

Note 7: Components of Net Periodic Benefit related to Pension and Other Postretirement Benefit Plans

	Three Months Ended June 1, 2024 and June 3, 2023
													Other
	Pension Benefits												Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
Net periodic (benefit) cost:	2024			2023			2024			2023			2024			2023
Service cost	$	-		$	-		$	347		$	413		$	-		$	-
Interest cost		3,464			3,475			1,560			1,410			291			301
Expected return on assets		(6,555	)		(7,205	)		(1,627	)		(1,730	)		(2,727	)		(2,465	)
Amortization:
Prior service cost		-			-			16			15			-			-
Actuarial loss		1,159			635			510			491			-			-
Net periodic (benefit) cost	$	(1,932	)	$	(3,095	)	$	806		$	599		$	(2,436	)	$	(2,164	)

	Six Months Ended June 1, 2024 and June 3, 2023
													Other
	Pension Benefits												Postretirement
	U.S. Plans						Non-U.S. Plans						Benefits
Net periodic (benefit) cost:	2024			2023			2024			2023			2024			2023
Service cost	$	-		$	-		$	697		$	833		$	-		$	-
Interest cost		6,928			6,951			3,129			2,846			583			602
Expected return on assets		(13,110	)		(14,412	)		(3,264	)		(3,492	)		(5,454	)		(4,929	)
Amortization:
Prior service (benefit) cost		-			-			32			30			-			-
Actuarial loss (gain)		2,318			1,271			1,024			990			-			-
Net periodic (benefit) cost	$	(3,864	)	$	(6,190	)	$	1,618		$	1,207		$	(4,871	)	$	(4,327	)

Service cost is included with employee compensation cost in cost of sales and selling, general and administrative expenses in the Consolidated Statements of Income. The components of our net periodic defined benefit pension and postretirement benefit costs other than service cost are presented in other income, net in the Consolidated Statements of Income.

Note 8: Accumulated Other Comprehensive Income (Loss)

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

	Three Months Ended June 1, 2024												Three Months Ended June 3, 2023
										Non-												Non-
										controlling												controlling
	H.B. Fuller Stockholders									Interest			H.B. Fuller Stockholders									Interest
	Pre-tax			Tax			Net			Net			Pre-tax			Tax			Net			Net
Net income attributable to H.B. Fuller and non-controlling interest							$	51,264		$	33								$	40,401		$	21
Foreign currency translation¹	$	(26,894	)	$	-			(26,894	)		(32	)	$	26,425		$	-			26,425			(15	)
Defined benefit pension plans adjustment²		555			(136	)		419			-			1,151			(293	)		858			-
Interest rate swaps³		13,493			(3,297	)		10,196			-			(12,584	)		3,096			(9,488	)		-
Net investment hedges³		163			(40	)		123			-			(7,141	)		1,757			(5,384	)		-
Other comprehensive (loss) income	$	(12,683	)	$	(3,473	)	$	(16,156	)	$	(32	)	$	7,851		$	4,560		$	12,411		$	(15	)
Comprehensive income							$	35,108		$	1								$	52,812		$	6

Six Months Ended June 1, 2024		Six Months Ended June 3, 2023
	Non-		Non-
	controlling		controlling
H.B. Fuller Stockholders	Interest	H.B. Fuller Stockholders	Interest <