H.B. Fuller Reports Third Quarter 2010 Results

Mon Sep 13, 2010 5:45pm EDT

* Reuters is not responsible for the content in this press release.

http://www.businesswire.com/news/home/20100913007389/en

Diluted EPS $0.38;
Net Revenue Up 7 Percent Year-Over-Year,
Organic Revenue Grew 9 Percent Year-Over-Year
ST. PAUL, Minn.--(Business Wire)--
H.B. Fuller Company (NYSE: FUL) today reported financial results for the third
quarter that ended August 28, 2010. 

Third Quarter 2010 Notable Items:

* Net revenue totaled $338.6 million, up 7 percent year-over-year; 
* Organic revenue increased 9 percent year-over-year driven by double-digit
organic revenue growth in EIMEA and Latin America Adhesives; 
* Gross margin contracted in the third quarter versus the prior quarter;
however, year-to-date adjusted gross margin1 remained at a historically high
level; 
* Selling, general, and administrative expense declined versus the second
quarter; 
* Acquisition of Revertex Finewaters in Malaysia was completed.

Third Quarter 2010 Results:
Net income for the third quarter of 2010 was $19.0 million, or $0.38 per diluted
share, versus $35.4 million, or $0.72 per diluted share, in last year`s third
quarter. Net Income for the third quarter of 2009 included a significant
one-time gain related to the settlement of a lawsuit. Excluding this settlement,
net income in last year`s third quarter was $0.482 per diluted share. 

Net revenue for the third quarter of 2010 was $338.6 million, up 7.4 percent
versus the third quarter of 2009. Higher volume, higher average selling prices,
and acquisitions positively impacted net revenue growth by 6.4, 2.5, and 1.6
percentage points, respectively. Unfavorable foreign currency translation
reduced net revenue growth by 3.1 percentage points. Organic sales grew by 8.9
percent year-over-year. 

"We faced many challenges in the third quarter -- most notably rising raw
material costs and raw material shortages -- and achieved mixed results. While
we were successful in sourcing sufficient material to satisfy customer orders,
our material costs escalated more than our prices and profit margins did not
meet our expectations. Additionally, in the North America region, end-market
demand contracted significantly at the beginning of the quarter, and
consequently, we did not achieve our volume expectations in the region. Amidst
these challenges, we successfully maintained the overall growth momentum that is
a key component of our strategic transformation," said Michele Volpi, H.B.
Fuller president and chief executive officer. "While we are disappointed in our
bottom line performance this quarter we believe that we have put in place the
actions necessary to improve financial performance in the fourth quarter and
beyond." 

Segment Perspective:
In North America, net revenue grew by 5.2 percent year-over-year with Adhesives
up 6.2 percent and Construction Products up 1.9 percent. Nearly all of the
growth for the segment was organic. After recording stronger volume growth in
the previous quarter, sales momentum slowed significantly, especially in
Construction Products, at the start of the third quarter, but improved somewhat
at the end of the quarter. 

In EIMEA (Europe, India, Middle East, Africa), net revenue was up 3.4 percent
year-over-year, and 15.6 percent on an organic basis. The region posted strong
growth across all geographies and market segments, benefiting from improved
end-market conditions and significant new business wins with key customers. 

In Latin America, net revenue grew by 8.2 percent year-over-year with Adhesives
up 13.1 percent and Paints up 2.2 percent. Adhesives continued to gain business
with new and existing customers, while Paints returned to positive organic
growth for the first time since the end of 2008. 

In Asia Pacific, economic activity remains strong. Net revenue grew by 27.2
percent versus last year`s third quarter and organic growth was 7.6 percent.
Sales from the region benefited from our recent acquisition in Malaysia by 15.7
percent, and positive currency translation of 3.9 percent. 

Balance Sheet and Cash Flow:
At the end of the third quarter of 2010 the Company had cash totaling $141
million and total debt of $299 million. This compares to second quarter levels
of $161 million and $292 million, respectively. Sequentially, net debt increased
by approximately $27 million, primarily driven by cash used for the acquisition
of Revertex Finewaters which was completed at the start of the third quarter.
Cash flow from operations was $11 million in the third quarter. This year`s cash
flow was approximately $50 million lower than last year`s third quarter driven
primarily by higher working capital requirements to support continued growth. 

Year-To-Date 2010 Results:
Net Income for the first nine months of 2010 was $48.9 million, or $0.99 per
diluted share, versus $59.1 million, or $1.21 per diluted share, in the last
year`s first nine months. Net income for the first nine months of 2010 includes
one-time charges associated with exiting a product line in Europe. After
adjusting for these charges, net income for the first nine months of 2010 was
$57.4 million, or $1.162 per diluted share. Additionally, last year`s first nine
months net income included two non-recurring items that, taken together, boosted
net income. Excluding these items, net income for the first nine months of last
year was $0.982 per diluted share. On an adjusted basis, net income per diluted
share for the first nine months of 2010 was up 18 percent year-over-year. 

Net revenue for the first nine months of 2010 was $995.9 million, up 11.5
percent versus the first nine months of 2009. Higher volume, favorable foreign
currency translation, and acquisitions positively impacted net revenue growth by
9.8, 0.8, and 1.0 percentage points, respectively. Organic sales increased by
9.7 percent year-over-year in the first nine months of 2010. 

Fiscal 2010 Outlook:
"As we move into the fourth quarter, we are able to provide more specific
guidance for the remainder of the fiscal year. We now expect net revenue for the
full year to be up approximately 10 percent from last year, with fourth quarter
net revenue between $360 million and $365 million. We expect financial
performance to improve in the fourth quarter relative to the third quarter and
we will continue to press forward to achieve our long term objectives for
profitable growth," said Michele Volpi, H.B. Fuller president and chief
executive officer. 

Expectations for fiscal year 2010 include:

* Net revenue between $1.356 billion and $1.361 billion, up about 10 percent
from last year (revised guidance); 
* Raw material costs up about 8 percent from last year (no change from previous
guidance); 
* Capital expenditures of approximately $30 million (revised guidance); 
* Effective tax rate, excluding discrete items, of approximately 34 percent for
the fourth quarter (no change from previous guidance).

Conference Call:
The Company will host an investor conference call to discuss third quarter 2010
results on Tuesday, September 14, 2010 at 9:30 a.m. central time (10:30 a.m.
eastern 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 our website. 

Regulation G:
The information presented in this earnings release regarding adjusted earnings
per share, operating income, operating margin, adjusted gross margin, adjusted
SG&A expense, 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. The Company has included this
non-GAAP information to assist in understanding the operating performance of the
Company and our operating segments. 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:
H.B. Fuller Company is a leading worldwide manufacturer and marketer of
adhesives, sealants, paints and other specialty chemical products, with fiscal
2009 net revenue of $1.235 billion. Its common stock is traded on the New York
Stock Exchange under the symbol FUL. For more information, please visit the
website at www.hbfuller.com. 

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 March 21, 2010 and June 30, 2010, and
10-K filing, as amended, for the fiscal year ended November 28, 2009. 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                                                13 Weeks                     
                                                                  Ended                                                   Ended                        
                                                                  August 28, 2010                                         August 29, 2009              
                                                                                                                                                       
 Net revenue                                                      $       338,568                                       $       315,329            
 Cost of sales                                                            (242,294   )                                          (214,914   )       
                                                                                                                                                       
 Gross profit                                                             96,274                                                100,415            
                                                                                                                                                       
 Selling, general and administrative expenses                             (73,584    )                                          (68,324    )       
 Other income (expense), net                                              1,041                                                 18,487             
 Interest expense                                                         (2,669     )                                          (1,680     )       
                                                                                                                                                       
 Income before income taxes and income from equity investments            21,062                                                48,898             
                                                                                                                                                       
 Income taxes                                                             (4,071     )                                          (15,113    )       
                                                                                                                                                       
 Income from equity investments                                           1,859                                                 1,677              
                                                                                                                                                       
 Net income including non-controlling interests                           18,850                                                35,462             
                                                                                                                                                       
 Net (income) loss attributable to non-controlling interests              128                                                   (49        )       
                                                                                                                                                       
 Net income attributable to H.B. Fuller                           $       18,978                                        $       35,413             
                                                                                                                                                       
                                                                                                                                                       
                                                                                                                                                       
 Basic income per common share attributable to H.B. Fuller        $       0.39                                          $       0.73               
                                                                                                                                                       
 Diluted income per common share attributable to H.B. Fuller      $       0.38                                          $       0.72               
                                                                                                                                                       
 Weighted-average common shares outstanding:                                                                                                           
 Basic                                                                    48,595                                                48,343             
 Diluted                                                                  49,585                                                49,242             
                                                                                                                                                       
 Dividends declared per common share                              $       0.0700                                        $       0.0680             
                                                                                                                                                       
                                                                                                                                                       
                                                                                                                                                       
                                                                                                                                                       
 Selected Balance Sheet Information (subject to change prior to filing of the Company's Quarterly Report on Form 10-Q)                                       
                                                                                                                                                       
                                                                  August 28, 2010                November 28, 2009        August 29, 2009              
 Cash & cash equivalents                                          $       140,717              $          100,154      $       180,136            
 Inventories                                                              148,464                         116,907              112,452            
 Trade accounts receivable, net                                           209,429                         203,898              190,211            
 Trade payables                                                           118,967                         109,165              96,245             
 Total assets                                                             1,178,669                       1,100,445            1,150,732          
 Total debt                                                               299,355                         214,028              243,915            
                                                                                                                                                       
                                                                                                                                                       


 H.B. FULLER COMPANY AND SUBSIDIARIES                                                                     
 CONSOLIDATED FINANCIAL INFORMATION                                                                       
 Common Size Income Statement (unaudited)                                                                 
                                                                                                      
                                                                  13 Weeks           13 Weeks         
                                                                  Ended              Ended            
                                                                  August 28, 2010    August 29, 2009  
                                                                                                      
 Net revenue                                                      100.0%             100.0%           
 Cost of sales                                                    (71.6%)            (68.2%)          
                                                                                                      
 Gross profit                                                     28.4%              31.8%            
                                                                                                      
 Selling, general and administrative expenses                     (21.7%)            (21.7%)          
 Other income (expense), net                                      0.3%               5.9%             
 Interest expense                                                 (0.8%)             (0.5%)           
                                                                                                      
 Income before income taxes and income from equity investments    6.2%               15.5%            
                                                                                                      
 Income taxes                                                     (1.2%)             (4.8%)           
                                                                                                      
 Income from equity investments                                   0.5%               0.5%             
                                                                                                      
 Net income including non-controlling interests                   5.6%               11.2%            
                                                                                                      
 Net (income) loss attributable to non-controlling interests      0.0%               (0.0%)           
                                                                                                      
 Net income attributable to H.B. Fuller                           5.6%               11.2%            
                                                                                                      


 H.B. FULLER COMPANY AND SUBSIDIARIES                                                                                           
 CONSOLIDATED FINANCIAL INFORMATION                                                                                             
 In thousands, except per share amounts (unaudited)                                                                             
                                                                                                                            
                                                                  39 Weeks                      39 Weeks                    
                                                                  Ended                         Ended                       
                                                                  August 28, 2010               August 29, 2009             
                                                                                                                            
 Net revenue                                                      $       995,918             $       893,086           
 Cost of sales                                                            (700,857  )                 (628,264  )       
                                                                                                                            
 Gross profit                                                             295,061                     264,822           
                                                                                                                            
 Selling, general and administrative expenses                             (220,324  )                 (192,446  )       
 Asset impairment charges                                                 (8,785    )                 (790      )       
 Other income (expense), net                                              2,318                       16,142            
 Interest expense                                                         (7,660    )                 (6,266    )       
                                                                                                                            
 Income before income taxes and income from equity investments            60,610                      81,462            
                                                                                                                            
 Income taxes                                                             (17,152   )                 (26,175   )       
                                                                                                                            
 Income from equity investments                                           5,391                       3,744             
                                                                                                                            
 Net income including non-controlling interests                   $       48,849              $       59,031            
                                                                                                                            
 Net (income) loss attributable to non-controlling interests              92                          56                
                                                                                                                            
 Net income attributable to H.B. Fuller                           $       48,941              $       59,087            
                                                                                                                            
                                                                                                                            
                                                                                                                            
 Basic income per common share attributable to H.B. Fuller        $       1.01                $       1.22              
                                                                                                                            
 Diluted income per common share attributable to H.B. Fuller      $       0.99                $       1.21              
                                                                                                                            
 Weighted-average common shares outstanding:                                                                                
 Basic                                                                    48,552                      48,312            
 Diluted                                                                  49,564                      49,031            
                                                                                                                            
 Dividends declared per common share                              $       0.2080              $       0.2020            
                                                                                                                            


 H.B. FULLER COMPANY AND SUBSIDIARIES                                                                     
 CONSOLIDATED FINANCIAL INFORMATION                                                                       
 Common Size Income Statement (unaudited)                                                                 
                                                                                                      
                                                                  39 Weeks           39 Weeks         
                                                                  Ended              Ended            
                                                                  August 28, 2010    August 29, 2009  
                                                                                                      
 Net revenue                                                      100.0%             100.0%           
 Cost of sales                                                    (70.4%)            (70.3%)          
                                                                                                      
 Gross profit                                                     29.6%              29.7%            
                                                                                                      
 Selling, general and administrative expenses                     (22.1%)            (21.5%)          
 Asset impairment charges                                         (0.9%)             (0.1%)           
 Other income (expense), net                                      0.2%               1.8%             
 Interest expense                                                 (0.8%)             (0.7%)           
                                                                                                      
 Income before income taxes and income from equity investments    6.1%               9.1%             
                                                                                                      
 Income taxes                                                     (1.7%)             (2.9%)           
                                                                                                      
 Income from equity investments                                   0.5%               0.4%             
                                                                                                      
 Net income including non-controlling interests                   4.9%               6.6%             
                                                                                                      
 Net (income) loss attributable to non-controlling interests      0.0%               0.0%             
                                                                                                      
 Net income attributable to H.B. Fuller                           4.9%               6.6%             
                                                                                                      


 H.B. FULLER COMPANY AND SUBSIDIARIES                                                 
 SEGMENT FINANCIAL INFORMATION                                                        
 In thousands (unaudited)                                                             
                                                                                  
                          13 Weeks                     13 Weeks                   
                          Ended                        Ended                      
                          August 28, 2010              August 29, 2009            
 Net Revenue:                                                                     
 North America            $       146,584            $       139,353          
 EIMEA                            97,306                     94,145           
 Latin America                    53,726                     49,635           
 Asia Pacific                     40,952                     32,196           
 Total H.B. Fuller        $       338,568            $       315,329          
                                                                                  
 Operating Income4:                                                               
 North America            $       18,491             $       21,469           
 EIMEA                            2,276                      7,043            
 Latin America                    1,207                      1,448            
 Asia Pacific                     716                        2,131            
 Total H.B. Fuller        $       22,690             $       32,091           
                                                                                  
 Depreciation Expense:                                                            
 North America            $       3,414              $       4,084            
 EIMEA                            2,284                      2,488            
 Latin America                    1,055                      1,081            
 Asia Pacific                     829                        547              
 Total H.B. Fuller        $       7,582              $       8,200            
                                                                                  
 Amortization Expense:                                                            
 North America            $       2,009              $       2,238            
 EIMEA                            219                        664              
 Latin America                    12                         99               
 Asia Pacific                     261                        54               
 Total H.B. Fuller        $       2,501              $       3,055            
                                                                                  
 EBITDA3:                                                                         
 North America            $       23,914             $       27,791           
 EIMEA                            4,779                      10,195           
 Latin America                    2,274                      2,628            
 Asia Pacific                     1,806                      2,732            
 Total H.B. Fuller        $       32,773             $       43,346           
                                                                                  
 Operating Margin5:                                                               
 North America                    12.6     %                 15.4     %       
 EIMEA                            2.3      %                 7.5      %       
 Latin America                    2.2      %                 2.9      %       
 Asia Pacific                     1.7      %                 6.6      %       
 Total H.B. Fuller                6.7      %                 10.2     %       
                                                                                  
 EBITDA Margin3:                                                                  
 North America                    16.3     %                 19.9     %       
 EIMEA                            4.9      %                 10.8     %       
 Latin America                    4.2      %                 5.3      %       
 Asia Pacific                     4.4      %                 8.5      %       
 Total H.B. Fuller                9.7      %                 13.7     %       
                                                                                  
 Net Revenue Growth:                                                              
 North America                    5.2      %                                    
 EIMEA                            3.4      %                                    
 Latin America                    8.2      %                                    
 Asia Pacific                     27.2     %                                    
 Total H.B. Fuller                7.4      %                                    
                                                                                  
 H.B. FULLER COMPANY AND SUBSIDIARIES                                                 
 SEGMENT FINANCIAL INFORMATION                                                        
 In thousands (unaudited)                                                             
                                                                                  
                          39 Weeks                     39 Weeks                   
                          Ended                        Ended                      
                          August 28, 2010              August 29, 2009            
 Net Revenue:                                                                     
 North America            $       424,752            $       393,820          
 EIMEA                            295,893                    258,604          
 Latin America                    163,758                    155,502          
 Asia Pacific                     111,515                    85,160           
 Total H.B. Fuller        $       995,918            $       893,086          
                                                                                  
 Operating Income4:                                                               
 North America            $       54,536             $       51,348           
 EIMEA                            9,681                      15,240           
 Latin America                    6,317                      4,282            
 Asia Pacific                     4,203                      1,506            
 Total H.B. Fuller        $       74,737             $       72,376           
                                                                                  
 Depreciation Expense:                                                            
 North America            $       10,256             $       12,199           
 EIMEA                            7,055                      7,221            
 Latin America                    3,099                      3,462            
 Asia Pacific                     1,982                      1,566            
 Total H.B. Fuller        $       22,392             $       24,448           
                                                                                  
 Amortization Expense:                                                            
 North America            $       6,380              $       6,723            
 EIMEA                            1,390                      1,796            
 Latin America                    191                        299              
 Asia Pacific                     364                        164              
 Total H.B. Fuller        $       8,325              $       8,982            
                                                                                  
 EBITDA3:                                                                         
 North America            $       71,172             $       70,270           
 EIMEA                            18,126                     24,257           
 Latin America                    9,607                      8,043            
 Asia Pacific                     6,549                      3,236            
 Total H.B. Fuller        $       105,454            $       105,806          
                                                                                  
 Operating Margin5:                                                               
 North America                    12.8     %                 13.0     %       
 EIMEA                            3.3      %                 5.9      %       
 Latin America                    3.9      %                 2.8      %       
 Asia Pacific                     3.8      %                 1.8      %       
 Total H.B. Fuller                7.5      %                 8.1      %       
                                                                                  
 EBITDA Margin3:                                                                  
 North America                    16.8     %                 17.8     %       
 EIMEA                            6.1      %                 9.4      %       
 Latin America                    5.9      %                 5.2      %       
 Asia Pacific                     5.9      %                 3.8      %       
 Total H.B. Fuller                10.6     %                 11.8     %       
                                                                                  
 Net Revenue Growth:                                                              
 North America                    7.9      %                                    
 EIMEA                            14.4     %                                    
 Latin America                    5.3      %                                    
 Asia Pacific                     30.9     %                                    
 Total H.B. Fuller                11.5     %                                    
                                                                                


 H.B. FULLER COMPANY AND SUBSIDIARIES                                                                
 SEGMENT FINANCIAL INFORMATION                                                                       
 (unaudited)                                                                                         
                                                                                           
                                                                                           
 13 Weeks Ended August 28, 2010                                                                      
                                                                                           
                   North America    EIMEA      Latin America    Asia Pacific    Total HBF  
 Price             1.9%             3.1%       4.4%             (0.2%)          2.5%       
 Volume            2.9%             12.5%      3.8%             7.8%            6.4%       
 Organic Growth    4.8%             15.6%      8.2%             7.6%            8.9%       
 F/X               0.4%             (12.2%)    0.0%             3.9%            (3.1%)     
 Acquisition       0.0%             0.0%       0.0%             15.7%           1.6%       
                   5.2%             3.4%       8.2%             27.2%           7.4%       
                                                                                           
                                                                                           
                                                                                           
 39 Weeks Ended August 28, 2010                                                                      
                                                                                           
                   North America    EIMEA      Latin America    Asia Pacific    Total HBF  
 Price             0.2%             (1.5%)     2.3%             (1.6%)          (0.1%)     
 Volume            6.9%             17.0%      3.0%             14.4%           9.8%       
 Organic Growth    7.1%             15.5%      5.3%             12.8%           9.7%       
 F/X               0.8%             (2.4%)     0.0%             12.2%           0.8%       
 Acquisition       0.0%             1.3%       0.0%             6.0%            1.0%       
                   7.9%             14.4%      5.3%             31.0%           11.5%      
                                                                                           


 H.B. FULLER COMPANY AND SUBSIDIARIES                                                                                                                              
 REGULATION G RECONCILIATION                                                                                                                                       
 In thousands, except per share amounts (unaudited)                                                                                                                
                                                                                                                                                            
                                                                  39 Weeks                                                   Adjusted 39 Weeks              
                                                                  Ended                         Product Line Exit            Ended                          
                                                                  August 28, 2010               Adjustments                  August 28, 2010                
                                                                                                                                                            
 Net revenue                                                      $       995,918             $       -                  $       995,918              
 Cost of sales                                                            (700,857  )                 (1,831   )                 (699,026  )          
                                                                                                                                                            
 Gross profit                                                             295,061                     (1,831   )                 296,892              
                                                                                                                                                            
 Selling, general and administrative expenses                             (220,324  )                 (752     )                 (219,572  )          
 Asset impairment charges                                                 (8,785    )                 (8,785   )                 -                    
 Other income (expense), net                                              2,318                       -                          2,318                
 Interest expense                                                         (7,660    )                 -                          (7,660    )          
                                                                                                                                                            
 Income before income taxes and income from equity investments            60,610                      (11,368  )                 71,978               
                                                                                                                                                            
 Income taxes                                                             (17,152   )                 2,928                      (20,080   )          
                                                                                                                                                            
 Income from equity investments                                           5,391                       -                          5,391                
                                                                                                                                                            
 Net income including non-controlling interests                   $       48,849              $       (8,440   )         $       57,289               
                                                                                                                                                            
 Net (income) loss attributable to non-controlling interests              92                          -                          92                   
                                                                                                                                                            
 Net income attributable to H.B. Fuller                           $       48,941              $       (8,440   )         $       57,381               
                                                                                                                                                            
                                                                                                                                                            
                                                                                                                                                            
 Basic income per common share attributable to H.B. Fuller        $       1.01                $       (0.17    )         $       1.18                 
                                                                                                                                                            
 Diluted income per common share attributable to H.B. Fuller      $       0.99                $       (0.17    )         $       1.16              2  
                                                                                                                                                            
 Weighted-average H.B. Fuller common shares outstanding:                                                                                                    
 Basic                                                                    48,552                      48,552                     48,552               
 Diluted                                                                  49,564                      49,564                     49,564               
                                                                                                                                                      


 H.B. FULLER COMPANY AND SUBSIDIARIES                                                                                                                         
 REGULATION G RECONCILIATION                                                                                                                                  
 In thousands, except per share amounts (unaudited)                                                                                                           
                                                                                                                                                       
                                                                  13 Weeks                                              Adjusted 13 Weeks              
                                                                  Ended                                                 Ended                          
                                                                  August 29, 2009               Adjustments             August 29, 2009                
                                                                                                                                                       
 Net revenue                                                      $       315,329             $     -               $       315,329              
 Cost of sales                                                            (214,914  )               -                       (214,914  )          
                                                                                                                                                       
 Gross profit                                                             100,415                   -                       100,415              
                                                                                                                                                       
 Selling, general and administrative expenses                             (68,324   )               -                       (68,324   )          
 Other income (expense), net                                              18,487                    18,750                  (263      )          
 Interest expense                                                         (1,680    )               -                       (1,680    )          
                                                                                                                                                       
 Income before income taxes and income from equity investments            48,898                    18,750                  30,148               
                                                                                                                                                       
 Income taxes                                                             (15,113   )               (6,989  )               (8,124    )          
                                                                                                                                                       
 Income from equity investments                                           1,677                     -                       1,677                
                                                                                                                                                       
 Net income including non-controlling interests                           35,462                    11,761                  23,701               
                                                                                                                                                       
 Net (income) loss attributable to non-controlling interests              (49       )               -                       (49       )          
                                                                                                                                                       
 Net income attributable to H.B. Fuller                           $       35,413              $     11,761          $       23,652               
                                                                                                                                                       
                                                                                                                                                       
                                                                                                                                                       
 Basic income per common share attributable to H.B. Fuller        $       0.73                $     0.24            $       0.49                 
                                                                                                                                                       
 Diluted income per common share attributable to H.B. Fuller      $       0.72                $     0.24            $       0.48              2  
                                                                                                                                                       
 Weighted-average common shares outstanding:                                                                                                           
 Basic                                                                    48,343                    48,343                  48,343               
 Diluted                                                                  49,242                    49,242                  49,242               
                                                                                                                                                 


 H.B. FULLER COMPANY AND SUBSIDIARIES                                                                                                                         
 REGULATION G RECONCILIATION                                                                                                                                  
 In thousands, except per share amounts (unaudited)                                                                                                           
                                                                                                                                                       
                                                                  39 Weeks                                              Adjusted 39 Weeks              
                                                                  Ended                         Impairment              Ended                          
                                                                  August 29, 2009               Adjustments             August 29, 2009                
                                                                                                                                                       
 Net revenue                                                      $       893,086             $     -               $       893,086              
 Cost of sales                                                            (628,264  )               -                       (628,264  )          
                                                                                                                                                       
 Gross profit                                                             264,822                   -                       264,822              
                                                                                                                                                       
 Selling, general and administrative expenses                             (192,446  )               -                       (192,446  )          
 Asset impairment charges                                                 (790      )               (790    )               -                    
 Other income (expense), net                                              16,142                    18,750                  (2,608    )          
 Interest expense                                                         (6,266    )               -                       (6,266    )          
                                                                                                                                                       
 Income before income taxes and income from equity investments            81,462                    17,960                  63,502               
                                                                                                                                                       
 Income taxes                                                             (26,175   )               (6,695  )               (19,480   )          
                                                                                                                                                       
 Income from equity investments                                           3,744                     -                       3,744                
                                                                                                                                                       
 Net income including non-controlling interests                   $       59,031              $     11,265          $       47,766               
                                                                                                                                                 
 Net (income) loss attributable to non-controlling interests              56                        -                       56                   
                                                                                                                                                       
 Net income attributable to H.B. Fuller                           $       59,087              $     11,265          $       47,822               
                                                                                                                                                       
                                                                                                                                                       
                                                                                                                                                       
 Basic income per common share attributable to H.B. Fuller        $       1.22                $     0.23            $       0.99                 
 Diluted income per common share attributable to H.B. Fuller      $       1.21                $     0.23            $       0.98              2  
                                                                                                                                                       
 Weighted-average common shares outstanding:                                                                                                           
 Basic                                                                    48,312                    48,312                  48,312               
 Diluted                                                                  49,031                    49,031                  49,031               
                                                                                                                                                 


 H.B. FULLER COMPANY AND SUBSIDIARIES                                                    
 REGULATION G RECONCILIATION                                                             
 In thousands (unaudited)                                                                
                                                                                     
                                                 13 Weeks           13 Weeks         
                                                 Ended              Ended            
                                                 August 28, 2010    August 29, 2009  
                                                                                     
 Net revenue                                     338,568            315,329          
 Cost of sales                                   242,294            214,914          
                                                                                     
 Gross profit                                    96,274             100,415          
                                                                                     
 Selling, general and administrative expenses    73,584             68,324           
                                                                                     
 Operating Income4                               22,690             32,091           
                                                                                     
 Depreciation expense                            7,582              8,200            
 Amortization expense                            2,501              3,055            
                                                                                     
 EBITDA3                                         32,773             43,346           
                                                                                     
 EBITDA margin3                                  9.7%               13.7%            
                                                                                     
                                                                                     
                                                                                     
                                                 39 Weeks           39 Weeks         
                                                 Ended              Ended            
                                                 August 28, 2010    August 29, 2009  
 Net revenue                                     995,918            893,086          
 Cost of sales                                   700,857            628,264          
                                                                                     
 Gross profit                                    295,061            264,822          
                                                                                     
 Selling, general and administrative expenses    220,324            192,446          
                                                                                     
 Operating Income4                               74,737             72,376           
                                                                                     
 Depreciation expense                            22,392             24,448           
 Amortization expense                            8,325              8,982            
                                                                                     
 EBITDA3                                         105,454            105,806          
                                                                                     
 EBITDA margin3                                  10.6%              11.8%            
                                                                                     


1 Adjusted gross margin is a non-GAAP financial measure. Second quarter 2010
excludes pre-tax exit costs and non-cash impairment charges associated with the
exit of the Company`s European polysulfide-based insulating glass product line
of $1.2 million and $0.6 million respectively. 

2 Adjusted diluted earnings per share (EPS) is a non-GAAP financial measure.
First quarter 2009 excludes an after-tax "true-up" for the estimated goodwill
impairment charge taken at the end of 2008 of $0.5 million ($0.01 per diluted
share). Third quarter 2009 excludes an after-tax gain related to the settlement
of a lawsuit filed against the former owners of the Roanoke Companies Group of
$11.8 million ($0.24 per diluted share). Second quarter 2010 excludes after-tax
exit costs and non-cash impairment charges associated with the exit of the
Company`s European polysulfide-based insulating glass product line of $1.7
million ($0.03 per diluted share) and $6.7 million ($0.14 per diluted share)
respectively. A full reconciliation is provided in the tables above. 

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 segment basis it is defined as operating income, plus depreciation
expense, plus amortization expense. EBITDA margin is defined as EBITDA divided
by net revenue. 

4 Management evaluates the performance of each of the Company`s operating
segments based on operating income, which is defined as gross profit less SG&A
expense for the segments. 

5 Operating Income is a non-GAAP financial measure defined on a consolidated
basis as gross profit less SG&A expense. Operating margin is a non-GAAP
financial measure defined as gross profit, less SG&A expense, divided by net
revenue.

H.B. Fuller Company
Maximillian Marcy, 651-236-5062
Investor Relations Contact 

Copyright Business Wire 2010

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