Exhibit 99.1

 

Worldwide Headquarters 1200 Willow Lake Boulevard St. Paul, Minnesota 55110-5101				Maximillian Marcy Investor Relations Contact 651-236-5062
NEWS		For Immediate Release		January 16, 2013

H.B. Fuller Reports Fourth Quarter and Fiscal Year 2012 Results

Fourth Quarter Adjusted Diluted EPS from Continuing Operations $0.64¹;

Fourth Quarter Diluted EPS from Continuing Operations $0.49;

Company Sets 2013 EPS guidance at $2.55 to $2.65

ST. PAUL, Minn. – H.B. Fuller Company (NYSE: FUL) today reported financial results for the fourth quarter that ended December 1, 2012.

Fourth Quarter 2012 Highlights Included:

 

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Integration of the acquired Forbo adhesives business remained on or ahead of schedule and on track to fully deliver synergy targets;

 

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Net revenue was up 28 percent, organic revenue was up 3 percent from last year’s fourth quarter, as adjusted to reflect the same number of weeks in each period;

 

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Gross profit margin improved 120 basis points compared to the prior quarter;

 

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Regional operating income2 increased 36 percent versus last year;

 

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Adjusted diluted EPS from continuing operations of $0.641 was up approximately 23 percent on a comparable 13 week basis.

Full-Year 2012 Highlights Included:

 

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Achieved record levels of net revenue and adjusted diluted earnings per share from continuing operations;

 

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Completed acquisition of Industrial Adhesives business from the Forbo Group;

 

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Completed divestiture of Central America Paints business to Grupo Mundial;

 

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Integration of the acquired Forbo adhesives business remained on schedule and on track to fully deliver synergy targets;

 

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Organic revenue increased 6 percent when adjusting for the extra week in the prior year;

 

•

Regional operating income2 increased 39 percent year-over-year;

 

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Adjusted diluted EPS1 from continuing operations grew 28 percent year-over-year.

 

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Note that the 2011 fiscal year had 53 weeks of commercial activity, with the extra week in the fourth quarter of 2011, while the 2012 fiscal year was the normal 52 weeks in length.

Fourth Quarter 2012 Results:

Net income from continuing operations for the fourth quarter of 2012 was $25.0 million, or $0.49 per diluted share, versus net income from continuing operations of $22.2 million, or $0.45 per diluted share, in last year’s fourth quarter. Adjusted total diluted earnings per share from continuing operations in the fourth quarter of 2012 were $0.64¹, up 14 percent from the prior year’s adjusted result of $0.56¹ and up 23 percent on a comparable 13 week basis.

Net revenue for the fourth quarter of 2012 was $513.3 million, up 27.8 percent versus the fourth quarter of 2011. Year-over-year growth was approximately 35 percent when adjusting for the extra week in the prior year. When excluding the incremental revenue from the acquired Forbo business, net revenue was flat, representing 3 percent organic growth offset by 3 percentage points of unfavorable foreign currency translation. The organic growth was comprised of a 1 percent increase in price and 2 percent growth in volume.

“The results we delivered in the final quarter of this fiscal year are impressive, even when comparing to last year’s reported results which included an extra week,” said Jim Owens, H.B. Fuller president and chief executive officer. “Our fourth quarter revenue came in right on target and we exceeded our internal expectations for margin expansion as some business integration benefits were realized earlier than anticipated and the raw material cost environment was generally favorable. Our performance trends are good, our integration plans are on schedule and we have strong momentum as we enter the 2013 fiscal year.”

Gross profit margin from continuing operations was flat compared to the prior year as the margin dilution from the acquired Forbo business was fully offset by benefits from the business integration activities and other margin enhancement initiatives. Sequentially, gross profit margin increased 120 basis points, due to the positive impact of the business integration and the favorable raw material cost environment. Relative to the prior year, Selling, General and Administrative (SG&A) expense from continuing operations increased by 24 percent to $95.4 million, but was down 50 basis points as a percentage of net revenue to 18.6 percent.

 

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Balance Sheet and Cash Flow:

At the end of the fourth quarter of 2012, the Company had cash totaling $200 million and total debt of $520 million. This compares to third quarter levels of $208 million and $532 million, respectively. Sequentially, net debt was essentially unchanged. Operating cash flow in the fourth quarter was $44 million reflecting solid profitability in the core business and better inventory management. Operating cash flow for the full-year was $109 million. Capital expenditures were $21.0 million in the fourth quarter and $39.2 million for the full-year.

Fiscal Year 2012 Results:

“This has been a transformative year for H.B. Fuller”, said Owens. “While working to complete the acquisition of the industrial adhesives business from the Forbo Group and the divestiture of the Central America Paints business, our teams kept the momentum going. EBITDA margin expansion is one of our key financial metrics and in 2012 we delivered. In 2012 we increased our EBITDA margin by 90 basis points relative to the reported level of last year – and this was achieved while integrating the Forbo business that generated about 6 percent EBITDA margin in the year before the acquisition. The results of our hard work are evident and plans are set to extend these trends in 2013.”

Net income from continuing operations for the 2012 fiscal year was $68.3 million, or $1.34 per diluted share, versus $80.2 million, or $1.61 per diluted share, in the 2011 fiscal year. Adjusted total diluted earnings per share from continuing operations in the 2012 fiscal year were $2.20¹, up 28 percent from the prior year’s adjusted result of $1.72¹.

Net revenue for the 2012 fiscal year was $1,886.2 million, up 30.6 percent versus the 2011 fiscal year. Year-over-year growth was approximately 33 percent when adjusting for the extra week in the prior year. When excluding the incremental revenue from the acquired Forbo business, net revenue grew 3 percent, representing 6 percent organic growth offset by 3 percentage points of unfavorable foreign currency translation. The organic growth was comprised of a 5 percent increase in price and 1 percent growth in volume.

Business Integration and Special Charges

The Company has implemented a comprehensive business integration program to deliver synergies related to the acquisition of the Forbo adhesives business and to improve the performance of the EIMEA operating segment. The table below provides an estimate of the expected one-time costs of executing this multi-year project. In addition, the table lists, for each cost element, the costs incurred in the current quarter, year-to-date period, and since the project’s inception in the fourth quarter of 2011:

 

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		Expected				Costs Incurred
Cost Elements		Costs				Q4 2012				FY 2012				Total To-Date
		($ millions)				($ millions)				($ millions)				($ millions)
Acquisition and transformation			35				2				18				26
Workforce reduction			53				5				28				28
Facility exit			17				1				1				1
Other			10				0				2				2
Total cash costs			115				8				49				57
Total non-cash costs			6				1				3				3

Fiscal 2013 Outlook:

The Company’s adjusted earnings guidance for the 2013 fiscal year is a range of $2.55 to $2.65 per diluted share. Adjusted earnings per share exclude all special charges related to the business integration project which is ongoing.

The Company expects end-market demand to generally reflect the broad economic conditions in the regions where the Company operates. Reported revenue growth is expected to be more than 10 percent while organic revenue growth is expected to be in the low single digits, the difference reflecting the benefit of a full year of the Forbo business which was acquired at the beginning of the second quarter of 2012. Raw material costs are expected to remain at current levels through the first half of 2013 with some modest inflation possible in the second half of the year. The company anticipates margin expansion in 2013, primarily related to the benefits of the business integration project, driving operating income and EBITDA growth of about 20 percent. The EBITDA margin goal for 2013 is 12.5 percent, up approximately 100 basis points relative to the 2012 fiscal year and on track to achieve the 15 percent margin target for 2015. Capital expenditures will be unusually large in 2013 as a significant portion of the investment for the business integration project is completed. The company’s earlier projections of $195 million of aggregate capital expenditures over the three years of the business integration project, or a total of about $250 million of capital expenditures over the fiscal years 2012 through 2015, are confirmed.

The table below shows each of the elements of the Company’s 2013 guidance. All amounts shown are presented on the basis described above.

 

		Expected Full-Year
Earnings per Diluted Share		$2.55 to $2.65
Core Tax Rate		30%
Capex ( $ millions)		$110
EBITDA ($ millions)		$260-$265

 

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Conference Call:

The Company will host an investor conference call to discuss fourth quarter and fiscal year 2012 results on Thursday, January 17, 2013, at 9:30 a.m. Central U.S. time (10:30 a.m. Eastern U.S. time). The conference call audio and accompanying presentation slides will be available to all interested parties via a simultaneous webcast at www.hbfuller.com under the Investor Relations section. The event is scheduled to last one hour. For those unable to listen live, an audio replay of the event along with the accompanying presentation will be archived on the Company’s website.

Regulation G:

Note that the 2011 fiscal year had 53 weeks of commercial activity while the 2012 fiscal year was the normal 52 weeks in length. The fourth quarter of 2011 had 14 weeks while the fourth quarter of 2012 was the normal 13 weeks in length. Year-over-year comparisons are provided on an as reported basis or in certain cases presented to reflect the estimated result as if both periods contained the same number of weeks of commercial activity. In addition, adjusted results are reported which exclude the special charges related to the business integration project, the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business and certain other one-time tax items. Reconciliations of all adjusted results are included in the final pages of this document.

The information presented in this earnings release regarding regional operating income, regional operating margin, adjusted diluted earnings per share, adjusted diluted earnings per share from continuing operations and earnings before interest, taxes, depreciation, and amortization (EBITDA) does not conform to generally accepted accounting principles (GAAP) and should not be construed as an alternative to the reported results determined in accordance with GAAP. Management has included this non-GAAP information to assist in understanding the operating performance of the Company and its operating segments as well as the comparability of results. The non-GAAP information provided may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results in the tables below.

About H.B. Fuller Company:

For 125 years, H.B. Fuller has been a leading global adhesives provider focusing on perfecting adhesives, sealants and other specialty chemical products to improve products and lives. Recognized for unmatched technical support and innovation, H.B. Fuller brings knowledge and expertise to help its customers find precisely the right formulation for the right performance. With fiscal 2012 net revenue of $1.9 billion, H.B. Fuller serves customers in packaging, hygiene, general assembly, paper converting, woodworking, construction, automotive and consumer businesses. For more information, visit us at www.hbfuller.com and subscribe to our blog.

 

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Safe Harbor for Forward-Looking Statements:

Certain statements in this document may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, including but not limited to the following: the Company’s ability to effectively integrate and operate acquired businesses; political and economic conditions; product demand; competitive products and pricing; costs of and savings from restructuring initiatives; geographic and product mix; availability and price of raw materials; the Company’s relationships with its major customers and suppliers; changes in tax laws and tariffs; devaluations and other foreign exchange rate fluctuations; the impact of litigation and environmental matters; the effect of new accounting pronouncements and accounting charges and credits; and similar matters. Further information about the various risks and uncertainties can be found in the Company’s SEC 10-Q filings of October 5, 2012, July 6, 2012 and March 30, 2012, and 10-K filing for the fiscal year ended December 3, 2011. All forward-looking information represents management’s best judgment as of this date based on information currently available that in the future may prove to have been inaccurate. Additionally, the variety of products sold by the Company and the regions where the Company does business make it difficult to determine with certainty the increases or decreases in net revenue resulting from changes in the volume of products sold, currency impact, changes in product mix, and selling prices. However, management’s best estimates of these changes as well as changes in other factors have been included.

 

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H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

		13 Weeks Ended				Percent of				14 Weeks Ended				Percent of
		December 1, 2012				Net Revenue				December 3, 2011				Net Revenue
Net revenue		$	513,255				100.0	%		$	401,545				100.0	%
Cost of sales			(369,541	)			(72.0	%)			(289,284	)			(72.0	%)
Gross profit			143,714				28.0	%			112,261				28.0	%
Selling, general and administrative expenses			(95,395	)			(18.6	%)			(76,680	)			(19.1	%)
Special charges, net			(9,204	)			(1.8	%)			(7,499	)			(1.9	%)
Asset impairment charges			(846	)			(0.2	%)			—				0.0	%
Other income (expense), net			759				0.1	%			2,170				0.5	%
Interest expense			(5,476	)			(1.1	%)			(2,895	)			(0.7	%)
Income from continuing operations before income taxes and income from equity method investments			33,552				6.5	%			27,357				6.8	%
Income taxes			(11,191	)			(2.2	%)			(7,753	)			(1.9	%)
Income from equity method investments			2,651				0.5	%			2,575				0.6	%
Income from continuing operations			25,012				4.9	%			22,179				5.5	%
Income from discontinued operations, net of tax			182				0.0	%			4,418				1.1	%
Net income including non-controlling interests			25,194				4.9	%			26,597				6.6	%
Net income attributable to non-controlling interests			(82	)			(0.0	%)			(188	)			(0.0	%)
Net income attributable to H.B. Fuller		$	25,112				4.9	%		$	26,409				6.6	%
Basic income per common share attributable to H.B. Fullera
Income from continuing operations			0.50								0.45
Income from discontinued operations			—								0.09
		$	0.51							$	0.54
Diluted income per common share attributable to H.B. Fullera
Income from continuing operations			0.49								0.45
Income from discontinued operations			—								0.09
		$	0.49							$	0.53
Weighted-average common shares outstanding:
Basic			49,640								48,937
Diluted			50,798								49,821
Dividends declared per common share		$	0.085							$	0.075
a Income per share amounts may not add due to rounding

Selected Balance Sheet Information (subject to change prior to filing of the Company’s Annual Report on Form 10-K)

 

		December 1, 2012				December 3, 2011				November 27, 2010
Cash & cash equivalents		$	200,436			$	154,649			$	131,777
Trade accounts receivable, net			320,152				217,424				196,965
Inventories			208,531				116,443				104,004
Trade payables			163,062				104,418				93,881
Total assets			1,786,320				1,227,709				1,153,457
Total debt			520,225				232,296				250,721

 

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H.B. FULLER COMPANY AND SUBSIDIARIES

CONSOLIDATED FINANCIAL INFORMATION

In thousands, except per share amounts (unaudited)

 

		52 Weeks Ended				Percent of				53 Weeks Ended				Percent of
		December 1, 2012				Net Revenue				December 3, 2011				Net Revenue
Net revenue		$	1,886,239				100.0	%		$	1,444,085				100.0	%
Cost of sales			(1,368,963	)			(72.6	%)			(1,040,253	)			(72.0	%)
Gross profit			517,276				27.4	%			403,832				28.0	%
Selling, general and administrative expenses			(354,735	)			(18.8	%)			(286,871	)			(19.9	%)
Special charges			(52,467	)			(2.8	%)			(7,499	)			(0.5	%)
Asset impairment charges			(1,517	)			(0.1	%)			(332	)			(0.0	%)
Other income (expense), net			784				0.0	%			4,101				0.3	%
Interest expense			(19,793	)			(1.0	%)			(10,811	)			(0.7	%)
Income from continuing operations before income taxes and income from equity method investments			89,548				4.7	%			102,420				7.1	%
Income taxes			(30,479	)			(1.6	%)			(31,211	)			(2.2	%)
Income from equity method investments			9,218				0.5	%			9,006				0.6	%
Income from continuing operations			68,287				3.6	%			80,215				5.6	%
Income from discontinued operationsa			57,568				3.1	%			8,832				0.6	%
Net income including non-controlling interests			125,855				6.7	%			89,047				6.2	%
Net (income) loss attributable to non-controlling interests			(233	)			(0.0	%)			58				0.0	%
Net income attributable to H.B. Fuller		$	125,622				6.7	%		$	89,105				6.2	%
Basic income per common share attributable to H.B. Fuller
Income from continuing operations			1.37								1.64
Income from discontinued operations			1.16								0.18
		$	2.53							$	1.82
Diluted income per common share attributable to H.B. Fuller
Income from continuing operations			1.34								1.61
Income from discontinued operations			1.14								0.18
		$	2.48							$	1.79
Weighted-average common shares outstanding:
Basic			49,571								48,991
Diluted			50,618								49,866
Dividends declared per common share		$	0.330							$	0.295
a Fiscal 2012 includes the gain on sale of discontinued operations of $51,060, net of tax of $15,119

 

 

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H.B. FULLER COMPANY AND SUBSIDIARIES

REGION FINANCIAL INFORMATION

In thousands (unaudited)

 

		13 Weeks Ended				14 Weeks Ended
		December 1, 2012				December 3, 2011
Net Revenue:
North America		$	218,586			$	169,660
EIMEA			190,336				134,130
Latin America			41,910				42,958
Asia Pacific			62,423				54,797
Total H.B. Fuller		$	513,255			$	401,545
Regional Operating Income:2
North America		$	29,476			$	20,672
EIMEA			12,181				9,162
Latin America			3,792				3,151
Asia Pacific			2,870				2,596
Total H.B. Fuller		$	48,319			$	35,581
Depreciation Expense:
North America		$	4,492			$	3,742
EIMEA			3,850				2,594
Latin America			499				465
Asia Pacific			1,228				1,094
Total H.B. Fuller		$	10,069			$	7,895
Amortization Expense:
North America		$	3,156			$	2,021
EIMEA			1,799				313
Latin America			64				4
Asia Pacific			471				269
Total H.B. Fuller		$	5,490			$	2,607
EBITDA:3
North America		$	37,124			$	26,435
EIMEA			17,830				12,069
Latin America			4,355				3,620
Asia Pacific			4,569				3,959
Total H.B. Fuller		$	63,878			$	46,083
Regional Operating Margin:4
North America			13.5	%			12.2	%
EIMEA			6.4	%			6.8	%
Latin America			9.0	%			7.3	%
Asia Pacific			4.6	%			4.7	%
Total H.B. Fuller			9.4	%			8.9	%
EBITDA Margin:3
North America			17.0	%			15.6	%
EIMEA			9.4	%			9.0	%
Latin America			10.4	%			8.4	%
Asia Pacific			7.3	%			7.2	%
Total H.B. Fuller			12.4	%			11.5	%
Net Revenue Growth:
North America			28.8	%
EIMEA			41.9	%
Latin America			(2.4	%)
Asia Pacific			13.9	%
Total H.B. Fuller			27.8	%

 

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H.B. FULLER COMPANY AND SUBSIDIARIES

REGION FINANCIAL INFORMATION

In thousands (unaudited)

 

		52 Weeks Ended				53 Weeks Ended
		December 1, 2012				December 3, 2011
Net Revenue:
North America		$	830,061			$	624,494
EIMEA			672,423				473,763
Latin America			155,634				147,140
Asia Pacific			228,121				198,688
Total H.B. Fuller		$	1,886,239			$	1,444,085
Regional Operating Income:2
North America		$	107,484			$	76,500
EIMEA			34,483				24,590
Latin America			13,218				8,002
Asia Pacific			7,356				7,869
Total H.B. Fuller		$	162,541			$	116,961
Depreciation Expense:
North America		$	16,659			$	13,467
EIMEA			12,746				9,744
Latin America			1,819				1,686
Asia Pacific			4,563				3,991
Total H.B. Fuller		$	35,787			$	28,888
Amortization Expense:
North America		$	11,177			$	8,052
EIMEA			5,653				1,004
Latin America			198				17
Asia Pacific			1,675				1,089
Total H.B. Fuller		$	18,703			$	10,162
EBITDA:3
North America		$	135,320			$	98,019
EIMEA			52,882				35,338
Latin America			15,235				9,705
Asia Pacific			13,594				12,949
Total H.B. Fuller		$	217,031			$	156,011
Regional Operating Margin:4
North America			12.9	%			12.2	%
EIMEA			5.1	%			5.2	%
Latin America			8.5	%			5.4	%
Asia Pacific			3.2	%			4.0	%
Total H.B. Fuller			8.6	%			8.1	%
EBITDA Margin:3
North America			16.3	%			15.7	%
EIMEA			7.9	%			7.5	%
Latin America			9.8	%			6.6	%
Asia Pacific			6.0	%			6.5	%
Total H.B. Fuller			11.5	%			10.8	%
Net Revenue Growth:
North America			32.9	%
EIMEA			41.9	%
Latin America			5.8	%
Asia Pacific			14.8	%
Total H.B. Fuller			30.6	%

 

*	Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business of $3.3 million

 

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H.B. FULLER COMPANY AND SUBSIDIARIES

REGION FINANCIAL INFORMATION

NET REVENUE GROWTH

(unaudited)

 

		13 Weeks Ended December 1, 2012
		North America				EIMEA				Latin America				Asia Pacific				Total HBF
Price			1.6	%			1.0	%			0.5	%			(0.7	%)			1.0	%
Volume			1.8	%			2.4	%			2.3	%			0.6	%			1.9	%
Organic Growth			3.4	%			3.4	%			2.8	%			(0.1	%)			2.9	%
F/X			0.1	%			(8.7	%)			0.0	%			0.4	%			(2.8	%)
Acquisition			32.4	%			54.3	%			1.9	%			20.7	%			34.8	%
Extra Week (2011)			(7.1	%)			(7.1	%)			(7.1	%)			(7.1	%)			(7.1	%)
			28.8	%			41.9	%			(2.4	%)			13.9	%			27.8	%
		52 Weeks Ended December 1, 2012
		North America				EIMEA				Latin America				Asia Pacific				Total HBF
Price			6.4	%			4.1	%			4.3	%			1.9	%			4.8	%
Volume			0.5	%			3.3	%			1.9	%			(1.2	%)			1.4	%
Organic Growth			6.9	%			7.4	%			6.2	%			0.7	%			6.2	%
F/X			(0.1	%)			(8.7	%)			0.0	%			0.3	%			(2.9	%)
Acquisition			28.0	%			45.2	%			1.7	%			15.8	%			29.3	%
Extra Week (2011)			(1.9	%)			(2.0	%)			(2.1	%)			(2.0	%)			(2.0	%)
			32.9	%			41.9	%			5.8	%			14.8	%			30.6	%

 

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H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

		13 Weeks Ended				14 Weeks Ended
		December 1, 2012				December 3, 2011
Net income including non-controlling interests		$	25,194			$	26,597
Income from discontinued operations			(182	)			(4,418	)
Income from equity method investments			(2,651	)			(2,575	)
Income taxes			11,191				7,753
Interest expense			5,476				2,895
Other income (expense), net			(759	)			(2,170	)
Asset impairment charges			846				—
Special charges			9,204				7,499
Regional Operating Income2			48,319				35,581
Depreciation expense			10,069				7,895
Amortization expense			5,490				2,607
EBITDA3		$	63,878			$	46,083

 

		52 Weeks Ended				53 Weeks Ended
		December 1, 2012				December 3, 2011
Net income including non-controlling interests		$	125,855			$	89,047
Income from discontinued operations			(57,568	)			(8,832	)
Income from equity method investments			(9,218	)			(9,006	)
Income taxes			30,479				31,211
Interest expense			19,793				10,811
Other income (expense), net			(784	)			(4,101	)
Asset impairment charges			1,517				332
Special charges			52,467				7,499
Regional Operating Income2			162,541				116,961
Depreciation expense			35,787				28,888
Amortization expense			18,703				10,162
EBITDA3		$	217,031			$	156,011

 

*	Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business of $3.3 million

 

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H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands (unaudited)

 

		13 Weeks Ended				14 Weeks Ended
		December 1, 2012				December 3, 2011
Net revenue		$	513,255			$	401,545
Cost of sales			(369,541	)			(289,284	)
Gross profit			143,714				112,261
Selling, general and administrative expenses			(95,395	)			(76,680	)
Regional operating income2			48,319				35,581
Depreciation expense			10,069				7,895
Amortization expense			5,490				2,607
EBITDA3		$	63,878			$	46,083
EBITDA margin3			12.4	%			11.5	%

 

		52 Weeks Ended				53 Weeks Ended
		December 1, 2012				December 3, 2011
Net revenue		$	1,886,239			$	1,444,085
Cost of sales			(1,368,963	)			(1,040,253	)
Gross profit			517,276				403,832
Selling, general and administrative expenses			(354,735	)			(286,871	)
Regional operating income2			162,541				116,961
Depreciation expense			35,787				28,888
Amortization expense			18,703				10,162
EBITDA3		$	217,031			$	156,011
EBITDA margin3			11.5	%			10.8	%

 

*	Numbers are not adjusted to remove the one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business of $3.3 million

 

13

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H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

														Adjusted
						13 Weeks Ended								13 Weeks Ended
						December 1, 2012				Adjustments				December 1, 2012
Net revenue						$	513,255			$	—			$	513,255
Cost of sales							(369,541	)			—				(369,541	)
Gross profit							143,714				—				143,714
Selling, general and administrative expenses							(95,395	)			—				(95,395	)
Acquisition and transformation related costs			(2,217	)
Workforce reduction costs			(4,529	)
Facility exit costs			(1,840	)
Other related costs			(618	)
Special charges, net							(9,204	)			(9,204	)			—
Asset impairment charges							(846	)			—				(846	)
Other income (expense), net							759				—				759
Interest expense							(5,476	)			—				(5,476	)
Income from continuing operations before income taxes and income from equity method investments							33,552				(9,204	)			42,756
Income taxes							(11,191	)			1,701				(12,892	)
Income from equity method investments							2,651				—				2,651
Net income from continuing operations							25,012				(7,503	)			32,515
Income from discontinued operations							182				—				182
Net income including non-controlling interests							25,194				(7,503	)			32,697
Net income attributable to non-controlling interests							(82	)			—				(82	)
Net income attributable to H.B. Fuller						$	25,112			$	(7,503	)		$	32,615
Basic income per common share attributable to H.B. Fullera
Income (loss) from continuing operations							0.50				(0.15	)			0.65
Income from discontinued operations							—				—				—
						$	0.51			$	(0.15	)		$	0.67
Diluted income per common share attributable to H.B. Fullera
Income (loss) from continuing operations							0.49				(0.15	)			0.64	1
Income from discontinued operations							—				—				—
						$	0.49			$	(0.15	)		$	0.64
Weighted-average common shares outstanding:
Basic							49,640				49,640				49,640
Diluted							50,798				50,798				50,798
a Income per share amounts may not add due to rounding

 

14

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H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

														Adjusted
						52 Weeks Ended								52 Weeks Ended
						December 1, 2012				Adjustments				December 1, 2012
Net revenue						$	1,886,239			$	—			$	1,886,239
Cost of sales							(1,368,963	)			(3,314	)			(1,365,649	)
Gross profit							517,276				(3,314	)			520,590
Selling, general and administrative expenses							(354,735	)			—				(354,735	)
Acquisition and transformation related costs			(18,167	)
Workforce reduction costs			(28,087	)
Facility exit costs			(4,203	)
Other related costs			(2,010	)
Special charges, net							(52,467	)			(52,467	)			—
Asset impairment charges							(1,517	)			—				(1,517	)
Other income (expense), net							784				—				784
Interest expense							(19,793	)			—				(19,793	)
Income from continuing operations before income taxes and income from equity method investments							89,548				(55,781	)			145,329
Income taxes							(30,479	)			12,534				(43,013	)
Income from equity method investments							9,218				—				9,218
Income from continuing operations							68,287				(43,247	)			111,534
Income from discontinued operations							57,568				—				57,568
Net income including non-controlling interests							125,855				(43,247	)			169,102
Net income attributable to non-controlling interests							(233	)			—				(233	)
Net income attributable to H.B. Fuller						$	125,622			$	(43,247	)		$	168,869
Basic income per common share attributable to H.B. Fuller4, a
Income (loss) from continuing operations							1.37				(0.87	)			2.25
Income from discontinued operations							1.16				—				1.16
						$	2.53			$	(0.87	)		$	3.41
Diluted income per common share attributable to H.B. Fuller4, a
Income (loss) from continuing operations							1.34				(0.85	)			2.20	1
Income from discontinued operations							1.14				—				1.14
						$	2.48			$	(0.85	)		$	3.34
Weighted-average common shares outstanding:
Basic							49,571				49,571				49,571
Diluted							50,618				50,618				50,618
a Income per share amounts may not add due to rounding

 

15

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H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

										Adjusted
		14 Weeks Ended								14 Weeks Ended
		December 3, 2011				Adjustments				December 3, 2011
Net revenue		$	401,545			$	—			$	401,545
Cost of sales			(289,284	)			—				(289,284	)
Gross profit			112,261				—				112,261
Selling, general and administrative expenses			(76,680	)			—				(76,680	)
Special charges, net			(7,499	)			(7,499	)			—
Other income (expense), net			2,170				—				2,170
Interest expense			(2,895	)			—				(2,895	)
Income from continuing operations before income taxes and income from equity method investments			27,357				(7,499	)			34,856
Income taxes			(7,753	)			1,747				(9,500	)
Income from equity method investments			2,575				—				2,575
Net income from continuing operations			22,179				(5,752	)			27,931
Income from discontinued operations			4,418				—				4,418
Net income including non-controlling interests			26,597				(5,752	)			32,349
Net income attributable to non-controlling interests			(188	)			—				(188	)
Net income attributable to H.B. Fuller		$	26,409			$	(5,752	)		$	32,161
Basic income per common share attributable to H.B. Fullera
Income (loss) from continuing operations			0.45				(0.12	)			0.57
income from discontinued operations			0.09				—				0.09
		$	0.54			$	(0.12	)		$	0.66
Diluted income per common share attributable to H.B. Fullera
Income (loss) from continuing operations			0.45				(0.12	)			0.56	1
income from discontinued operations			0.09				—				0.09
		$	0.53			$	(0.12	)		$	0.65
Weighted-average common shares outstanding:
Basic			48,937				48,937				48,937
Diluted			49,821				49,821				49,821
a Income per share amounts may not add due to rounding

 

16

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H.B. FULLER COMPANY AND SUBSIDIARIES

REGULATION G RECONCILIATION

In thousands, except per share amounts (unaudited)

 

										Adjusted
		53 Weeks Ended								53 Weeks Ended
		December 3, 2011				Adjustments				December 3, 2011
Net revenue		$	1,444,085			$	—			$	1,444,085
Cost of sales			(1,040,253	)			—				(1,040,253	)
Gross profit			403,832				—				403,832
Selling, general and administrative expenses			(286,871	)			—				(286,871	)
Special charges			(7,499	)			(7,499	)			—
Asset impairment charges			(332	)			—				(332	)
Other income (expense), net			4,101				—				4,101
Interest expense			(10,811	)			—				(10,811	)
Income from continuing operations before income taxes and income from equity method investments			102,420				(7,499	)			109,919
Income taxes			(31,211	)			1,747				(32,958	)
Income from equity method investments			9,006				—				9,006
Income from continuring operations			80,215				(5,752	)			85,967
Income from discontinued operations			8,832				—				8,832
Net income including non-controlling interests			89,047				(5,752	)			94,799
Net loss attributable to non-controlling interests			58				—				58
Net income attributable to H.B. Fuller		$	89,105			$	(5,752	)		$	94,857
Basic income per common share attributable to H.B. Fullera
Income (loss) from continuing operations		$	1.64			$	(0.12	)		$	1.75
Income from discontinued operations		$	0.18			$	—			$	0.18
		$	1.82			$	(0.12	)		$	1.94
Diluted income per common share attributable to H.B. Fullera
Income (loss) from continuing operations		$	1.61			$	(0.12	)		$	1.72	1
Income from discontinued operations		$	0.18			$	—			$	0.18
		$	1.79			$	(0.12	)		$	1.90
Weighted-average common shares outstanding:
Basic			48,991				48,991				48,991
Diluted			49,866				49,866				49,866
a Income per share amounts may not add due to rounding

 

17

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1

Adjusted diluted earnings per share (EPS) from continuing operations is a non-GAAP financial measure. First, second, third and fourth quarters of 2012 exclude special charges associated with two previously announced events: the EIMEA business transformation project and the expenses associated with the Forbo acquisition integration project, which have been combined and are now referred to as the “business integration”. Special charges, net amounted to $6.5 million, $32.1 million, $4.7 million and $9.2 million on a pre-tax basis ($0.14, $0.47, $0.08 and $0.15 per diluted share) in the first, second, third and fourth quarters, respectively. During the fourth quarter of 2011, these costs amounted to $7.5 million on a pre-tax basis ($0.12 per diluted share in Q4 2011 and $0.11 per diluted for the full year 2011). During the second quarter of 2012, the Company recorded a one-time negative impact of the fair value step-up on the inventory acquired with the Forbo business on the gross profit margin line of the income statement. On a pre-tax basis, this “step-up” amounted to $3.3 million dollars ($0.05 per diluted share). Lastly, during the third quarter of 2012, various discrete items impacted the quarter’s results. These tax items had a positive impact on net income of $1.7 million dollars ($0.03 per diluted share). A reconciliation to reported earnings per diluted share is provided in the tables above.

2

Regional operating income is defined as gross profit less SG&A expense. Items that are reported on the special charges line of the income statement are excluded from the regional operating income calculation. In Q4 2011, special charges, net totaled $7.5 million. In Q1, Q2, Q3 and Q4 2012, special charges, net totaled $6.5 million, $32.1 million, $4.7 million and $9.2 million, respectively.

3

EBITDA is a non-GAAP financial measure defined on a consolidated basis as gross profit, less SG&A expense, plus depreciation expense, plus amortization expense. On a regional basis it is defined as operating income, plus depreciation expense, plus amortization expense. EBITDA margin is defined as EBITDA divided by net revenue.

4	Regional operating margin is a non-GAAP financial measure defined as gross profit, less SG&A expense, divided by net revenue.

 

18