-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DHNS1z79niKGiYGAKlF0GXF8hjZZyaR/RT6FTSH1JXiIJG6p2f/6wc8xjbqW8ccv 8q3Db8/OylThkGRT2gtUbg== 0000950131-97-002572.txt : 19970415 0000950131-97-002572.hdr.sgml : 19970415 ACCESSION NUMBER: 0000950131-97-002572 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970301 FILED AS OF DATE: 19970414 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FULLER H B CO CENTRAL INDEX KEY: 0000039368 STANDARD INDUSTRIAL CLASSIFICATION: ADHESIVES & SEALANTS [2891] IRS NUMBER: 410268370 STATE OF INCORPORATION: MN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09225 FILM NUMBER: 97580109 BUSINESS ADDRESS: STREET 1: 1200 WILLOW LAKE BLVD CITY: ST PAUL STATE: MN ZIP: 55110-5132 BUSINESS PHONE: 6126453401 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT Under Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTER ENDED MARCH 1, 1997 Commission File No. 0-3488 H. B. FULLER COMPANY A Minnesota Corporation IRS Employer Identification No. 41-0268370 1200 Willow Lake Boulevard, P.O. Box 64683, St. Paul, Minnesota 55164-0683 Telephone - (612) 415-5900 Common Stock, $1.00 par value 14,094,900 shares outstanding as of March 31, 1997 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No____ ---- -1- H. B. FULLER COMPANY FIRST QUARTER 1997 Form 10-Q Quarterly Report Table of Contents PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Condensed Statements of Earnings - Thirteen weeks ended March 1, 1997 and March 2, 1996 Consolidated Condensed Balance Sheets - March 1, 1997 and November 30, 1996 Consolidated Condensed Statements of Cash Flows - Thirteen weeks ended March 1, 1997 and period ended March 2, 1996 Notes to Consolidated Condensed Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Signatures -2- H.B. FULLER COMPANY AND CONSOLIDATED SUBSIDIARIES Consolidated Condensed Statements of Earnings (Unaudited) (In Thousands Except Per Share Amounts)
THIRTEEN WEEKS ENDED -------------------------------- MARCH 1, 1997 MARCH 2, 1996 ------------- ------------- NET SALES $304,091 $303,571 -------- -------- Costs and expenses: Cost of sales 209,363 211,510 Selling, administrative and other expenses 79,395 82,034 Interest expense 4,980 5,256 Other (income) expense, net 480 290 -------- -------- 294,218 299,090 -------- -------- Earnings before income taxes and minority interests 9,873 4,481 Income taxes (4,028) (1,788) Net earnings of consolidated subsidiaries applicable to minority interests (24) (23) -------- -------- Net earnings 5,821 2,670 Dividends on preferred stock (4) (4) -------- -------- NET EARNINGS APPLICABLE TO COMMON STOCK $ 5,817 $ 2,666 ======== ======== Average number of common and common equivalent shares outstanding 14,190 14,088 ======== ======== NET EARNINGS PER COMMON SHARE $0.41 $0.19 ======== ======== Cash dividend per common share $0.17 $0.16 ======== ========
* See accompanying Notes to Consolidated Condensed Financial Statements. H.B. FULLER COMPANY AND CONSOLIDATED SUBSIDIARIES Consolidated Condensed Balance Sheets (Unaudited) (In Thousands)
MARCH 1, 1997 NOVEMBER 30, 1996 ------------- ----------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,847 $ 3,515 Trade receivables 195,986 199,786 Allowance for doubtful accounts (6,723) (7,043) Inventories 150,961 151,212 Other current assets 43,239 40,728 -------- -------- TOTAL CURRENT ASSETS 386,310 388,198 Property, plant and equipment, net of accumulated depreciation of $273,543 in 1997 and $272,991 in 1996 386,873 391,201 Other intangibles 14,768 15,383 Excess cost 34,981 36,036 Other assets 38,234 38,457 -------- -------- TOTAL ASSETS $861,166 $869,275 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable 48,854 47,920 Current installments of long-term debt 10,498 11,141 Accounts payable 108,499 118,181 Accrued expenses 52,225 61,210 Income taxes payable 12,034 8,129 -------- -------- TOTAL CURRENT LIABILITIES 232,110 246,581 Long-term debt, excluding current installments 183,349 172,779 Deferred income taxes, accrued pension cost, postretirement costs, other liabilities and minority interests 111,517 115,175 STOCKHOLDERS' EQUITY: Preferred stock 306 306 Common stock 14,090 14,066 Additional paid-in capital 23,116 22,493 Retained earnings 296,312 292,828 Foreign currency translation adjustment 4,278 9,097 Unearned compensation (3,912) (4,050) -------- -------- TOTAL STOCKHOLDERS' EQUITY 334,190 334,740 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $861,166 $869,275 ======== ========
See accompanying Notes to Consolidated Condensed Financial Statements. -4- H.B. FULLER COMPANY AND CONSOLIDATED SUBSIDIARIES Consolidated Condensed Statement of Cash Flows (Unaudited) (In Thousands)
Thirteen Weeks Ended Period Ended * March 1, 1997 March 2, 1996 --------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 5,821 $ 2,789 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,203 14,437 Pension costs 2,764 2,998 Deferred income tax (624) 1,248 Other items (1,473) 3,571 Change in current assets and liabilities: Accounts receivable (685) (6,833) Inventory (3,067) 6,091 Prepaid assets (5,101) (2,616) Accounts payable (4,825) (8,126) Accrued expense (4,330) (9,216) Income taxes payable 1,420 (2,606) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,103 1,737 CASH FLOWS FROM INVESTING ACTIVITIES: Purchased property, plant and equipment (12,395) (22,161) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (12,395) (22,161) CASH FLOWS FROM FINANCING ACTIVITIES: Increase in long-term debt 16,977 26,359 Current installments and payments of long-term debt (4,715) (13,544) Notes payable 1,722 12,289 Dividends paid (2,328) (2,245) Other (916) (654) -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 10,740 22,205 Effect of exchange rate changes on cash (116) (197) -------- -------- NET CHANGE IN CASH AND CASH EQUIVALENTS (668) 1,584 Cash and cash equivalents at beginning of year 3,515 9,061 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,847 $ 10,645 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest expense (net of amount capitalized) $ 7,689 $ 5,748 Income taxes $ 3,182 $ 1,094 Noncash investing and financing activities: Assets acquired by incurring long-term debt $ - $ 3,765
For purposes of this statement, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. * Includes the thirteen weeks ended March 1, 1996 for all entities and the two month stub period for Non-U.S. entities. -5- H.B. FULLER COMPANY AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Condensed Financial Statements (Amounts in Thousands) (Unaudited) 1. In the opinion of the Company, the accompanying unaudited Consolidated Condensed Financial Statements include all adjustments necessary to present fairly the financial position as of March 1, 1997 and November 30, 1996, the results of its operations for the thirteen weeks ended March 1, 1997 and March 2, 1996 and its cash flows for the thirteen weeks ended March 1, 1997 and March 2, 1996. All adjustments were of a normal recurring nature. 2. The results of operations for the thirteen week period ended March 1, 1997 are not necessarily indicative of the results to be expected for the full year. 3. The composition of inventories is presented below: March 1, 1997 November 30, 1996 ------------- ----------------- Raw materials $ 68,952 $ 67,562 Finished goods 93,130 94,642 LIFO reserve (11,121) (10,992) -------- -------- $150,961 $151,212 ======== ======== 4. Net earnings per common share is determined by dividing the net earnings applicable to common stock by the weighted average number of common and common equivalent shares outstanding (stock options). 5. The Company enters into foreign exchange forward contracts as a hedge against firm commitment foreign currency intercompany accounts receivable/payable/debt. Market value gains and losses are recognized, and the resulting credit or debit offsets foreign exchange gains or losses on those receivables/payables/debt. At March 1, 1997, the aggregate contract value of instruments used to sell 4,823 pound sterling and $4,569 to buy foreign currency (primarily 22,112 Dutch guilders) was $12,101. The contracts mature between April 28, 1997 and November 20, 2000. -6- 6. The carrying amounts and estimated fair values of the Company's significant other financial instruments at March 1, 1997, are as follows: Carrying Fair Amount Value -------- -------- Cash and short-term investments $ 2,847 $ 2,847 Notes payable 48,854 48,854 Long-term debt 193,847 201,423 Fair values of short-term financial instruments approximate their carrying values due to their short maturity. 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 to the Company for debt of similar maturities. The estimates presented above on long-term financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange. -7- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in Thousands) The following discussion includes comments and data relating to the Company's financial condition and results of operations during the periods included in the accompanying Consolidated Condensed Financial Statements. Results of Operations Net sales for the first quarter of 1997 increased $520 or 0.2% when compared to the same quarter in 1996. Adjusting the 1996 sales for the $7,283 sales of Monarch Division, which was divested in third quarter 1996, sales increased $7,803, or 2.6%. A comparison of sales increases by operating area is as follows: Thirteen Weeks Ended March 1, 1997 And Operating Area March 2, 1996 --------------- ------------------- North America $ 5,137 3% Latin America 300 1% Europe (4,926) (7%) Asia/Pacific 9 -- ------- Total $ 520 -- ======= In North America, the 3% first quarter sales increase was composed of 5 percentage points relating to increased volume and changes in product mix, 3 percentage points resulting from a second quarter 1996 acquisition, a negative 4 percentage points from the third quarter 1996 divestiture of Monarch Division, and a negative one percentage point from pricing. The Adhesives, Sealants and Coatings Group had a 7% increase in sales with 4% resulting from a second quarter 1996 acquisition. The growth occurred primarily in the paper/converting and graphic arts markets of the industrial adhesives group and in the engineered systems and window markets of the structural adhesives group. A slow down in car production caused a decrease in automotive sales compared to the prior period and a similar slowdown in key sectors had a negative impact on our polymer sales. In the Specialty Group, sales increased 9%, excluding the impact of the Monarch Division divestiture. The primary growth in sales occurred in Industrial Coatings Division and TEC Incorporated where significant growth occurred. Foster Products sales were down substantially due to delays in export customer projects. North American operating earnings grew at a rate of 44% increasing from $5,547 to $8,001. -8- Latin American first quarter 1997 sales increased 1% from 1996. The increase in sales is composed of 2 percentage points relating to increased volume and changes in product mix partially offset by a 1 percentage point decrease in pricing. Latin American operating earnings increased 23% when compared to 1996, increasing from $4,164 to $5,120. Stable raw material costs and tight cost controls were the primary causes for the improved earnings. In Europe, the 7% first quarter 1997 sales decrease was composed of 7 percentage points resulting from unfavorable foreign currency translations due to the strengthening of the U.S. dollar, a negative 5 percentage points due to pricing, and a positive 5 percentage points due to increased volume and changes in product mix. Operating earnings increased from $731 in first quarter 1996 to $2,343 in 1997. Increased sales volumes, stable raw materials and tight cost controls produced the increase in earnings. Asia/Pacific sales approximated the sales of the same period last year. The strengthening of the U.S. dollar, compared to local currencies, caused a 4 percentage point decrease. A positive 6 percentage point increase due to increased volume and changes in product mix was partially offset by a negative 2 percentage points in pricing. Operating earnings improved from ($415) in 1996 to ($131) in 1997. Cost of sales for the first quarter decreased 1.0% ($2,147) over the same quarter in 1996. Consolidated gross margins, as a percent of sales, increased from 30.33% in 1996 to 31.15% in 1997. Gross margins, as a percent of sales, increased in all geographic operating areas. Excluding Monarch Division, which was divested in the third quarter of 1996, 1996 gross margin, as a percent of sales, would have been 30.05%. Stable to reduced raw materials costs compared to first quarter 1996, improved volumes, and cost control measures were the reason for the improved gross margins. Some suppliers, early in the second quarter of 1997, have announced price increases of certain raw materials. The Company has already announced price increases in North America effective April 30, 1997, and is planning to increase prices in the rest of the world. Selling, administrative, and other expenses for the quarter were down 3.2% ($2,639) when compared to the prior year. This category of expense, as a percent of sales, improved from 27.0% in 1996 to 26.1% in 1997. This expense, as a percent of sales, decreases from 27.0% to 26.6% for first quarter 1996, when Monarch Division results are excluded. Cost control measures implemented in 1996 and carried into 1997 is the primary reason for the improvement in this category of expense. Income taxes for the first quarter of 1997 increased $2,240 (125.3%) when compared to the first quarter of 1996 primarily as a result of increased earnings. The 1996 effective tax rate increased from 39.9% in the first quarter to 40.8% for the year. The first quarter of 1997 reflects the 40.8% annual effective tax rate of 1996. Net earnings increased from $2,670 in the first quarter of 1996 to $5,821 in the first quarter of 1997. -9- Liquidity and Capital Resources The cash flows as presented in this section have been calculated by comparison of the Consolidated Condensed Balance Sheets at March 1, 1997 and November 30, 1996 and March 2, 1996 and November 30, 1995. During the first quarter of 1997, the Company generated $1,103 of cash to finance operations as compared to $1,737 in the first quarter of 1996. Working capital was $154,200 at March 1, 1997 compared to $141,617 at November 30, 1996. The current ratio at March 1, 1997 was 1.7 compared to a ratio of 1.6 at November 30, 1996. The number of days sales in trade accounts receivable was 56 days at March 1, 1997 compared to 54 days sales at March 2, 1996. The average days sales in inventory on hand was at 65 days compared to 68 days sales at March 2, 1996. The primary reason for the reduction in accrued expenses is the payment of year-end 1996 salary accruals in the first quarter of 1997. The primary reason for the decrease in accounts payable was the decrease in inventories. The Company's long-term debt to total capitalization ratio was 35.4% at March 1, 1997 compared to 34.0% at November 30, 1996. Capital expenditures for property, plant and equipment of $12,395 in first quarter 1997 were primarily for continued construction of a manufacturing facility in Georgia, the investment in Information Technology, for general improvements in manufacturing productivity and operating efficiency and for environmental projects. Environmental capital expenditures, less than 10% of total expenditures, are not a material portion of overall Company expenditures. -10- H.B. FULLER COMPANY AND CONSOLIDATED SUBSIDIARIES Increases(Decreases) (Dollars in Thousands) A summary of the period changes in the principal items included in the Consolidated Condensed Statements of Earnings is presented below:
Comparison of Thirteen Weeks Ended March 1, 1997 and March 2, 1996 -------------------------- NET SALES $ 520 0.2% Cost of sales 2,147 1.0% Selling, administrative and other expenses 2,639 3.2% Interest expense 276 5.3% Other income (expense), net (190) (65.5%) ------- Earnings before income taxes and minority interests $ 5,392 * Income taxes (2,240) * Net earnings of consolidated subsidiaries applicable to minority interests (1) (4.3%) ------- NET EARNINGS $ 3,531 * =======
* Change of 100% or more. -11- PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K (a) Exhibits to Part I 27 Financial Data Schedule 99 Report on Form 11-K of H.B. Fuller Company Thrift Plan (b) Reports on Form 8-K. No reports on Form 8-K were filed for the thirteen weeks ended March 1, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. H. B. Fuller Company Dated: April 14, 1997 /S/ Jorge Walter Bolanos ------------------------ Jorge Walter Bolanos Senior Vice President, Treasurer and Chief Financial Officer Dated: April 14, 1997 /S/ David J. Maki ----------------------- David J. Maki Vice President and Controller -12- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE SHEET, INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS NOV-29-1997 DEC-01-1996 MAR-01-1997 2,847 0 195,986 6,723 150,961 386,310 660,416 273,543 861,166 232,110 183,349 0 306 14,090 319,794 861,166 304,091 304,091 209,363 79,395 480 121 4,980 9,873 4,028 5,821 0 0 0 5,821 0.41 0.41
EX-99 3 FORM 11-K Exhibit 99 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended October 31, 1996, and the two months ended December 31, 1996 H.B. Fuller Company Thrift Plan H.B. FULLER COMPANY 1200 Willow Lake Boulevard, P.O. Box 64683 St. Paul, Minnesota 55164-0683 Financial Statements and Exhibits (a) Financial Statements: Page Number(s) Report of Independent Accountants F-1 Statements of Financial Condition as of December 31, 1996 and F-2 - F-4 October 31, 1996 and 1995 Statements of Income and Changes in Plan Equity for the two months ended December 31, 1996, and the years ended October 31, 1996, F-5 - F-8 1995, and 1994 Notes to Financial Statements F-9 - F-11 (b) Exhibits: Consent of Independent Accountants E-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the H.B. Fuller Company Thrift Plan In our opinion, the accompanying statements of financial condition and statements of income and changes in plan equity present fairly, in all material respects, the financial position of the H.B. Fuller Company Thrift Plan at December 31, 1996 and October 31, 1996 and 1995, and the results of its operations and the change in its plan equity for the two months ended December 31, 1996 and each of the three years in the period ended October 31, 1996 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Minneapolis, Minnesota April 14, 1997 F-1 H.B. FULLER COMPANY THRIFT PLAN Statement of Financial Condition December 31, 1996
Company Money Small Common Market Index Balanced Company ASSETS Stock Fund Fund Fund Fund Growth Fund Total - ------ ----------- ---------- ----------- ----------- ---------- ------------ Investments at Fair Value: Securities of Participating Employer - Common Stock of H. B. Fuller Company (1,710,381 shares; cost $42,457,790) $80,387,900 $ 80,387,900 Securities of unaffiliated issuers - Norwest Index Stock Fund Norwest Bank (601,755 units; cost $14,875,591) $20,580,027 20,580,027 Norwest Growth Balanced Fund Norwest Bank (459,294 units; cost $9,089,003) $10,485,681 10,485,681 Norwest Small Company Growth Fund Norwest Bank (150,661 units; cost $4,630,254) $4,515,304 4,515,304 Norwest Short-Term Investment Fund (9,121,105 units; cost $9,121,105) 156,266 $8,971,952 5,055 (2,739) (9,429) 9,121,105 ----------- ---------- ----------- ----------- ---------- ------------ Total Investments 80,544,166 8,971,952 20,585,082 10,482,942 4,505,875 125,090,017 Other Assets 1,075 40,800 41,875 ----------- ---------- ----------- ----------- ---------- ------------ Total Assets $80,545,241 $9,012,752 $20,585,082 $10,482,942 $4,505,875 $125,131,892 =========== ========== =========== =========== ========== ============ PLAN EQUITY - ----------- Plan Equity $80,545,241 $9,012,752 $20,585,082 $10,482,942 $4,505,875 $125,131,892 ----------- ---------- ----------- ----------- ---------- ------------ Total Plan Equity $80,545,241 $9,012,752 $20,585,082 $10,482,942 $4,505,875 $125,131,892 =========== ========== =========== =========== ========== ============
See accompanying Notes to Financial Statements. F-2 H.B. FULLER COMPANY THRIFT PLAN Statement of Financial Condition October 31, 1996
COMPANY MONEY SMALL COMMON MARKET INDEX BALANCED COMPANY ASSETS STOCK FUND FUND FUND FUND GROWTH FUND TOTAL - ------ ----------- ----------- ----------- ---------- ---------- ------------ Investments at Fair Value: Securities of Participating Employer - Common Stock of H. B. Fuller Company (1,731,735 shares; cost $42,762,044) $72,299,949 $ 72,299,949 Securities of unaffiliated issuers - Norwest Index Stock Fund Norwest Bank (591,981 units; cost $14,331,255) $19,795,851 19,795,851 Norwest Growth Balanced Fund Norwest Bank (410,849 units; cost $7,908,707) $9,659,064 9,659,064 Norwest Small Company Growth Fund Norwest Bank (127,451 units; cost $3,922,409) $4,044,018 4,044,018 Norwest Short-Term Investment Fund (7,880,965 units; cost $7,880,965) 190,792 $ 7,681,056 34 10,083 (1,000) 7,880,965 ----------- ----------- ----------- ---------- ---------- ------------ Total Investments 72,490,741 7,681,056 19,795,885 9,669,147 4,043,018 113,679,847 Other Assets 286,880 33,647 320,527 ----------- ----------- ----------- ---------- ---------- ------------ Total Assets $72,777,621 $ 7,714,703 $19,795,885 $9,669,147 $4,043,018 $114,000,374 =========== =========== =========== ========== ========== ============ PLAN EQUITY Plan Equity $72,777,621 $ 7,714,703 $19,795,885 $9,669,147 $4,043,018 $114,000,374 ----------- ----------- ----------- ---------- ---------- ------------ Total Plan Equity $72,777,621 $ 7,714,703 $19,795,885 $9,669,147 $4,043,018 $114,000,374 =========== =========== =========== ========== ========== ============
See accompanying Notes to Financial Statements. F-3 H.B. FULLER COMPANY THRIFT PLAN Statement of Financial Condition October 31, 1995
Company Money Small Common Market Index Balanced Company ASSETS Stock Fund Fund Fund Fund Growth Fund Total - ------ ----------- ---------- ----------- ---------- -------- ----------- Investments at Fair Value: Securities of Participating Employer - Common Stock of H. B. Fuller Company (1,724,174 shares; cost $41,339,033) $54,316,023 $54,316,023 Securities of unaffiliated issuers - Norwest Index Stock Fund Norwest Bank (544,573 units; cost $12,228,760) $15,068,344 15,068,344 Norwest Growth Balanced Fund Norwest Bank (401,627 units; cost $7,352,998) $8,534,563 8,534,563 Norwest Small Company Growth Fund Norwest Bank (31,166 units; cost $966,470) $934,678 934,678 Norwest Short-Term Investment Fund (7,404,064 units; cost $7,404,064) 276,786 $7,129,101 (1,859) 36 0 7,404,064 ----------- ---------- ----------- ---------- -------- ----------- Total Investments 54,592,809 7,129,101 15,066,485 8,534,599 934,678 86,257,672 Other Assets 272,052 34,788 306,840 ----------- ---------- ----------- ---------- -------- ----------- Total Assets $54,864,861 $7,163,889 $15,066,485 $8,534,599 $934,678 $86,564,512 =========== ========== =========== ========== ======== =========== PLAN EQUITY - ----------- Plan Equity $54,864,861 $7,163,889 $15,066,485 $8,534,599 $934,678 $86,564,512 ----------- ---------- ----------- ---------- -------- ----------- Total Plan Equity $54,864,861 $7,163,889 $15,066,485 $8,534,599 $934,678 $86,564,512 =========== ========== =========== ========== ======== ===========
See accompanying Notes to Financial Statements. F-4 H.B. FULLER COMPANY THRIFT PLAN Statement of Income and Changes in Plan Equity Two-Month Period Ended December 31, 1996
COMPANY MONEY SMALL COMMON MARKET INDEX BALANCED COMPANY STOCK FUND FUND FUND FUND GROWTH FUND TOTAL ----------- ---------- ----------- ----------- ----------- ------------ Investment Income: Dividends $ 285,005 $ 271,843 $ 556,848 Interest $ 2,056 $ 76,244 78,300 ----------- ---------- ----------- ----------- ------------ Total Investment Income 2,056 76,244 285,005 271,843 635,148 Realized Gain on the Sale and Distribution of Investments 654,595 514,636 447,455 $ 496,371 2,113,057 Unrealized Appreciation / (Depreciation) of Investments 8,392,205 239,840 (353,679) (236,559) 8,041,807 ----------- ---------- ----------- ----------- ---------- ------------ Total Fund Income 9,048,856 76,244 1,039,481 365,619 259,812 10,790,012 ----------- ---------- ----------- ----------- ---------- ------------ Contributions: By employees 432,312 74,239 294,008 148,976 110,860 1,060,395 By participating employer 363,989 363,989 Employee rollover 3,098 1,354 7,494 9 - 11,955 ----------- ---------- ----------- ----------- ---------- ------------ Total Contributions 799,399 75,593 301,502 148,985 110,860 1,436,339 ----------- ---------- ----------- ----------- ---------- ------------ Cash Transferred between Funds (1,497,890) 1,276,072 (237,828) 316,366 143,280 - ----------- ---------- ----------- ----------- ---------- ------------ Total Increase in Plan Equity 8,350,365 1,427,909 1,103,155 830,970 513,952 12,226,351 Decreases in Plan Equity Attributed to Withdrawals (582,745) (129,860) (313,958) (17,175) (51,095) (1,094,833) ----------- ---------- ----------- ----------- ---------- ------------ Net increase in Plan Equity 7,767,620 1,298,049 789,197 813,795 462,857 11,131,518 Plan Equity at Beginning of Period 72,777,621 7,714,703 19,795,885 9,669,147 4,043,018 114,000,374 ----------- ---------- ----------- ----------- ---------- ------------ Plan Equity at End of Period $80,545,241 $9,012,752 $20,585,082 $10,482,942 $4,505,875 $125,131,892 =========== ========== =========== =========== ========== ============
See accompanying Notes to Financial Statements. F-5 H.B. FULLER COMPANY THRIFT PLAN Statement of Income and Changes in Plan Equity Year Ended October 31, 1996
COMPANY MONEY SMALL COMMON MARKET INDEX BALANCED COMPANY STOCK FUND FUND FUND FUND GROWTH FUND TOTAL ----------- ----------- ----------- ---------- ----------- ------------ Investment Income: Dividends $ 1,141,463 $ 238,396 $ 205,629 $ 1,585,488 Interest 11,801 $ 378,183 389,984 ----------- ----------- ----------- ---------- ------------ Total Investment Income 1,153,264 378,183 238,396 205,629 1,975,472 Realized Gain / (Loss) on the Sale and Distribution of Investments 1,515,165 799,508 503,528 $ 166,739 2,984,940 Unrealized Appreciation / (Depreciation) of Investments 16,560,915 2,625,012 568,792 153,401 19,908,120 ----------- ----------- ----------- ---------- ---------- ------------ Total Fund Income 19,229,344 378,183 3,662,916 1,277,949 320,140 24,868,532 ----------- ----------- ----------- ---------- ---------- ------------ Contributions: By employees 3,029,227 525,706 1,738,354 875,913 526,483 6,695,683 By participating employer, net of forfeitures of $77,373 2,739,869 2,739,869 Employee rollover 23,738 155,098 52,661 33,802 37,314 302,613 ----------- ----------- ----------- ---------- ---------- ------------ Total Contributions 5,792,834 680,804 1,791,015 909,715 563,797 9,738,165 ----------- ----------- ----------- ---------- ---------- ------------ Cash Transferred between Funds (3,772,736) 860,403 852,842 (273,335) 2,332,826 - ----------- ----------- ----------- ---------- ---------- ------------ Total Increase in Plan Equity 21,249,442 1,919,390 6,306,773 1,914,329 3,216,763 34,606,697 Decreases in Plan Equity Attributed to Withdrawals (3,336,682) (1,368,576) (1,577,373) (779,781) (108,423) (7,170,835) ----------- ----------- ----------- ---------- ---------- ------------ Net increase/(decrease) in Plan Equity 17,912,760 550,814 4,729,400 1,134,548 3,108,340 27,435,862 Plan Equity at Beginning of Period 54,864,861 7,163,889 15,066,485 8,534,599 934,678 86,564,512 ----------- ----------- ----------- ---------- ---------- ------------ Plan Equity at End of Period $72,777,621 $ 7,714,703 $19,795,885 $9,669,147 $4,043,018 $114,000,374 =========== =========== =========== ========== ========== ============
See accompanying Notes to Financial Statements. F-6 H.B. FULLER COMPANY THRIFT PLAN Statement of Income and Changes in Plan Equity Year Ended October 31, 1995
COMPANY MONEY SMALL COMMON MARKET INDEX BALANCED COMPANY STOCK FUND FUND FUND FUND GROWTH FUND TOTAL ----------- ---------- ----------- ---------- ----------- ----------- Investment Income: Dividends $ 1,069,565 $ 1,069,565 Interest 15,079 $ 368,897 383,976 ----------- ---------- ----------- Total Investment Income 1,084,644 368,897 1,453,541 Realized Gain / (Loss) on the Sale and Distribution of Investments 793,493 $ 822,603 $ 468,276 $ (639) 2,083,733 Unrealized Appreciation / (Depreciation) of Investments (3,631,797) 2,068,592 819,656 (31,792) (775,341) ----------- ---------- ----------- ---------- -------- ----------- Total Fund Income (1,753,660) 368,897 2,891,195 1,287,932 (32,431) 2,761,933 ----------- ---------- ----------- ---------- -------- ----------- Contributions: By employees 3,321,868 566,232 1,446,917 800,948 21,773 6,157,738 By participating employer, net of forfeitures of $25,366 2,683,804 2,683,804 Employee rollover 88,781 32,933 77,148 122,419 13,027 334,308 ----------- ---------- ----------- ---------- -------- ----------- Total Contributions 6,094,453 599,165 1,524,065 923,367 34,800 9,175,850 ----------- ---------- ----------- ---------- -------- ----------- Cash Transferred between Funds (2,657,740) 1,266,951 349,770 108,710 932,309 0 ----------- ---------- ----------- ---------- -------- ----------- Total Increase in Plan Equity 1,683,053 2,235,013 4,765,030 2,320,009 934,678 11,937,783 Decreases in Plan Equity Attributed to Withdrawals (2,074,740) (880,280) (596,367) (383,152) 0 (3,934,539) ----------- ---------- ----------- ---------- -------- ----------- Net increase/(decrease) in Plan Equity (391,687) 1,354,733 4,168,663 1,936,857 934,678 8,003,244 Plan Equity at Beginning of Period 55,256,548 5,809,156 10,897,822 6,597,742 0 78,561,268 ----------- ---------- ----------- ---------- -------- ----------- Plan Equity at End of Period $54,864,861 $7,163,889 $15,066,485 $8,534,599 $934,678 $86,564,512 =========== ========== =========== ========== ======== ===========
See accompanying Notes to Financial Statements. F-7 H.B. FULLER COMPANY THRIFT PLAN Statement of Income and Changes in Plan Equity Year Ended October 31, 1994
COMPANY MONEY COMMON MARKET INDEX BALANCED STOCK FUND FUND FUND FUND TOTAL ----------- ---------- ----------- ---------- ----------- Investment Income: Dividends $ 899,525 $ 899,525 Interest 11,562 $ 222,069 233,631 ----------- ---------- ----------- Total Investment Income 911,087 222,069 1,133,156 Realized Gain on the Sale and Distribution of Investments 370,907 $ 73,932 $ 90,123 534,962 Unrealized Appreciation of Investments 908,229 362,284 82,183 1,352,696 ----------- ---------- ----------- ---------- ----------- Total Fund Income 2,190,223 222,069 436,216 172,306 3,020,814 ----------- ---------- ----------- ---------- ----------- Contributions: By employees 3,117,555 509,983 1,271,280 707,686 5,606,504 By participating employer, net of forfeitures of $46,462 2,440,706 2,440,706 Employee rollover 407,221 342,278 240,357 382,568 1,372,424 ----------- ---------- ----------- ---------- ----------- Total Contributions 5,965,482 852,261 1,511,637 1,090,254 9,419,634 ----------- ---------- ----------- ---------- ----------- Cash Transferred between Funds 1,306,149 (530,433) (981,968) 206,252 - ----------- ---------- ----------- ---------- ----------- Total Increase in Plan Equity 9,461,854 543,897 965,885 1,468,812 12,440,448 Decreases in Plan Equity Attributed to Withdrawals (2,201,480) (427,175) (518,803) (664,557) (3,812,015) ----------- ---------- ----------- ---------- ----------- Net increase in Plan Equity 7,260,374 116,722 447,082 804,255 8,628,433 Plan Equity at Beginning of Period 47,996,174 5,692,434 10,450,740 5,793,487 69,932,835 ----------- ---------- ----------- ---------- ----------- Plan Equity at End of Period $55,256,548 $5,809,156 $10,897,822 $6,597,742 $78,561,268 =========== ========== =========== ========== ===========
See accompanying Notes to Financial Statements. F-8 H.B. FULLER COMPANY THRIFT PLAN NOTES TO FINANCIAL STATEMENTS (1) Summary of Significant Accounting Policies The accompanying financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles. The fair values of the H.B. Fuller Thrift Plan (the Plan) investments in common stock of the participating employer are based on published quotations. The fair values of investments in securities of unaffiliated issuers are based on fair values supplied by the Trustee (Norwest Bank). Realized gains or losses reflect all differences between sales proceeds and historical cost of units sold, on an average cost basis. Securities transactions are recorded on the trade date. H.B. Fuller Company (the Employer) pays or reimburses participants for all administrative costs of the Plan. (2) Change in Plan Year The Plan was amended effective December 31, 1996 to change the fiscal year of the Plan from November/October to January/December. Plan results for the two- month period, November - December 1996, are shown separately in the accompanying financial statements. (3) Summary Description of the Plan H.B. Fuller Company full-time employees are eligible to participate in the Plan after six months of employment; part-time employees are eligible after twelve months. To become a participant in the Plan, an employee must agree to make contributions equal to 1% of pre-tax compensation up to a maximum of 9% of pre- tax compensation for highly compensated participants and 15% for non-highly compensated participants. In 1996, a participant could elect to contribute up to a limit of $9,500. The Company makes contributions to employees' accounts by matching 100% of an employee's contributions, up to 3% of the employee's compensation. A participant's contribution may be invested in any combination of the following investment funds: Company Common Stock Fund, Money Market Fund, Index Fund (S&P 500), Small Company Growth Fund and Balanced Fund. A participant's investment option for past and future contributions can be changed daily, by calling the Trustee's on-line customer services.
The number of participants in each fund was as follows: 12/31/96 10/31/96 10/31/95 -------- -------- -------- Company Common Stock Fund 1,885 1,904 2,007 Money Market Fund 642 640 696 Index Fund 1,141 1,135 1,077 Balanced Fund 729 721 659 Small Company Growth Fund 456 433 102
A participant's voluntary contribution percentage amount can be changed or suspended once a month, by calling the Trustee's on-line service prior to month- end. Suspensions must be made for a minimum of six months. Employer contributions to the Plan cease during the suspension period. F-9 H.B. FULLER COMPANY THRIFT PLAN NOTES TO FINANCIAL STATEMENTS Participants' contributions are fully vested. Employer contributions become fully vested after five years of service or upon age 65, permanent and total disability or death. Participants who terminate employment with H.B. Fuller Company forfeit the non-vested portion of the Company's contribution to their accounts. Amounts forfeited are used to reduce subsequent Company contributions. Benefits payable to a participant are based upon the fair market value of the vested portion of the participant's account on the valuation date immediately preceding the time for payment. Payment occurs no later than the earlier of (a) the sixtieth day following the close of the Plan year during which there occurs the later of the date the participant terminates employment, and the participant's normal retirement date; and (b) April 1 of the calendar year following the calendar year during which the participant attains age 70 1/2. The amount of benefit paid will be 100% of the portion of the account attributable to the participant's own contributions and, if the participant is vested, the portion of the account attributable to the Company's matching contributions. Distribution of a participant's account is made in a lump sum. The investment in the Company Common Stock Fund can be withdrawn in the form of stock at the option of Plan participants. Although it has no intention to do so, H.B. Fuller Company may, at any time, by action of its Board of Directors, terminate the Plan or discontinue contributions. Upon termination or discontinuance of contributions, all Employer contribution amounts in participant accounts will become fully vested. (4) Unrealized Appreciation (Depreciation) of Investments The unrealized appreciation (depreciation) of investments was as follows:
SMALL CO COMPANY COMMON BALANCED GROWTH STOCK FUND INDEX FUND FUND FUND TOTAL --------------- ---------- -------- ------------ ------------- Unrealized appreciation at October 31, 1993 $15,700,558 $ 408,708 $ 279,725 $16,388,991 Change during the year ended October 31, 1994 908,229 362,284 82,184 1,352,697 ----------- ---------- ---------- ----------- Unrealized appreciation at October 31, 1994 16,608,787 770,992 361,909 17,741,688 Change during the year ended October 31, 1995 (3,631,797) 2,068,592 819,656 $ (31,792) (775,341) ----------- ---------- ---------- --------- ----------- Unrealized apprec/(deprec) at October 31, 1995 12,976,990 2,839,584 1,181,565 (31,792) 16,966,347 Change during the year ended October 31, 1996 16,560,915 2,625,012 568,792 153,401 19,908,120 ----------- ---------- ---------- --------- ----------- Unrealized appreciation at October 31, 1996 29,537,905 5,464,596 1,750,357 121,609 36,874,467 Change during the two-mth period ended Dec 31, 1996 8,392,205 239,840 (353,679) (236,559) 8,041,807 ----------- ---------- ---------- --------- ----------- Unrealized apprec/(deprec) at December 31, 1996 $37,930,110 $5,704,436 $1,396,678 $(114,950) $44,916,274 =========== ========== ========== ========= ===========
F-10 H.B. FULLER COMPANY THRIFT PLAN NOTES TO FINANCIAL STATEMENTS (5) Realized Gains During the two-month period ended December 31, 1996, and fiscal years ended October 31, 1996, 1995, and 1994, realized gains resulting from the sale and distribution of investments were as follows:
COMPANY SMALL CO COMMON BALANCED GROWTH STOCK FUND INDEX FUND FUND FUND TOTAL --------------- ------------- ---------- ---------- ----------- Nov - Dec, 1996: Aggregate proceeds $ 2,918,971 $ 988,652 $ 637,617 $ 809,818 $ 5,355,058 Aggregate average cost 2,264,376 474,016 190,162 313,447 3,242,001 --------------- ------------- ---------- ---------- ----------- Realized gain $ 654,595 $ 514,636 $ 447,455 $ 496,371 $ 2,113,057 =============== ============= ========== ========== =========== 1996: Aggregate proceeds $ 12,340,177 $ 2,954,531 $2,391,111 $1,781,449 $19,467,268 Aggregate average cost 10,825,012 2,155,023 1,887,583 1,614,710 16,482,328 --------------- ------------- ---------- ---------- ----------- Realized gain $ 1,515,165 $ 799,508 $ 503,528 $ 166,739 $ 2,984,940 =============== ============= ========== ========== =========== 1995: Aggregate proceeds $ 8,671,760 $ 12,608,657 $7,902,058 $ 13,726 $29,196,201 Aggregate average cost 7,878,267 11,786,054 7,433,782 14,365 27,112,468 --------------- ------------- ---------- ---------- ----------- Realized gain $ 793,493 $ 822,603 $ 468,276 $ (639) $ 2,083,733 =============== ============= ========== ========== =========== 1994: Aggregate proceeds $ 7,501,873 $ 1,714,495 $1,908,616 $11,124,984 Aggregate average cost 7,130,966 1,640,563 1,818,493 10,590,022 --------------- ------------- ---------- ----------- Realized gain $ 370,907 $ 73,932 $ 90,123 $ 534,962 =============== ============= ========== ===========
(6) Income Taxes The Plan is qualified under Section 401(a) and 401(k) and is exempt from federal income taxation under Section 501(a) of the Internal Revenue code of 1986, as amended. A participant is not subject to federal income taxes on the pre-tax contribution, on the Company's matching contribution, or on the earnings of the account until a withdrawal is made or distribution is received from the account. During employment, a participant is entitled to make a withdrawal from the account upon showing financial hardship. The Plan has been revised to meet the requirements for qualification under the 1986 revisions to the Internal Revenue code. The Company submitted the Plan to the IRS for approval during 1995 and received a favorable determination letter on November 14, 1995. F-11 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 2-73650) of H.B. Fuller Company of our report dated April 14, 1997 appearing on page F-1 of the Annual Report of the H.B. Fuller Company Thrift Plan which is included in this Annual Report on Form 11-K for the two months ended December 31, 1996 and the year ended October 31, 1996. Price Waterhouse LLP Minneapolis, Minnesota April 14, 1997 E-1 -----END PRIVACY-ENHANCED MESSAGE-----