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Last updated on April 18, 2014 at 5:30 EDT

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

January 16, 2013

ST. PAUL, Minn., Jan. 16, 2013 /PRNewswire/ — H.B. Fuller Company (NYSE: FUL) today reported financial results for the fourth quarter that ended December 1, 2012.

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Fourth Quarter 2012 Highlights Included:

  • Integration of the acquired Forbo adhesives business remained on or ahead of schedule and on track to fully deliver synergy targets;
  • 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;
  • Gross profit margin improved 120 basis points compared to the prior quarter;
  • Regional operating income(2) increased 36 percent versus last year;
  • Adjusted diluted EPS from continuing operations of $0.64(1) was up approximately 23 percent on a comparable 13 week basis.

Full-Year 2012 Highlights Included:

  • Achieved record levels of net revenue and adjusted diluted earnings per share from continuing operations;
  • Completed acquisition of Industrial Adhesives business from the Forbo Group;
  • Completed divestiture of Central America Paints business to Grupo Mundial;
  • Integration of the acquired Forbo adhesives business remained on schedule and on track to fully deliver synergy targets;
  • Organic revenue increased 6 percent when adjusting for the extra week in the prior year;
  • Regional operating income(2) increased 39 percent year-over-year;
  • Adjusted diluted EPS(1) from continuing operations grew 28 percent year-over-year.

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 $0.64(1), up 14 percent from the prior year’s adjusted result of $0.56(1) 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.

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 $2.20(1), up 28 percent from the prior year’s adjusted result of $1.72(1).

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:

                                   Expected Costs   ____________Costs
                                                  Incurred_____________
                                                     Q4 2012      FY 2012
                                                      Total To-Date
                                                  -------------------------
    Cost Elements                   ($ 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

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.

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.

                                                                 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,                               December 3,                     November 27,
                              2012                                      2011                            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

                                                                                         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

                             H.B. FULLER COMPANY AND SUBSIDIARIES
                                 REGION FINANCIAL INFORMATION
                                   In thousands (unaudited)

                  13 Weeks Ended                              14 Weeks Ended
                    December 1,                                 December 3,
                        2012                                        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%
                                                        ====

                                  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

                                             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%
                                     ====          ====                                    ===              ====            ====

                         H.B. FULLER COMPANY AND SUBSIDIARIES
                              REGULATION G RECONCILIATION
                               In thousands (unaudited)

                                        13 Weeks                  14 Weeks
                                          Ended                    Ended
                                       December 1,              December 3,
                                           2012                     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                  53 Weeks
                                          Ended                    Ended
                                       December 1,              December 3,
                                           2012                     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

                                 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

                                                                        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,               Adjustments     December 1,
                                                                                            2012                                      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

                                                                                          H.B. FULLER COMPANY AND SUBSIDIARIES
                                                                                              REGULATION G RECONCILIATION
                                                                                   In thousands, except per share amounts (unaudited)

                                                                     52 Weeks Ended                                                         Adjusted
                                                                                                                                         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

                                                   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,               Adjustments                  December 3,
                                              2011                                                   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


                                                    H.B. FULLER COMPANY AND SUBSIDIARIES
                                                         REGULATION G RECONCILIATION
                                             In thousands, except per share amounts (unaudited)

                                         53 Weeks Ended                                              Adjusted
                                                                                                  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 continuing
     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

<hr></hr>

(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.

Maximillian Marcy
Investor Relations Contact
651-236-5062

SOURCE H.B. Fuller Company


Source: PR Newswire