FULLER H B CO

(Amounts in thousands, except per share amounts)

Note1: Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements of H.B. Fuller Company and Subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form10-Q and Article10 of Regulation S-X. Accordingly, they donot include all of the information necessary for a fair presentation of results of operations, comprehensive income, financial position and cash flows in conformity with U.S. generally accepted accounting principles. In our opinion, the unaudited interim Consolidated Financial Statements reflect all adjustments of a normal recurring nature considered necessary for the fair presentation of the results for the periods presented. Operating results for interim periods arenot necessarily indicative of results that* may*be expected for the fiscal year as a whole.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from these estimates. These unaudited interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form10-K for the year ended* December 2, 2023* as filed with the Securities and Exchange Commission.

New Accounting Pronouncements

In* December**2023,* the Financial Accounting Standards Board (“FASB”) issued ASUNo. 2023-09, Income Taxes (Topic740*) - Improvements to Income Tax Disclosures*. This ASU provides new disclosure requirements including presentation of prescribed line items in the effective tax rate reconciliation and disclosures regarding state and local tax payments. Our effective date for adoption of this ASU is our fiscal year ending* November 28, 2026.*We are evaluating the impact the new disclosure guidance will have on our Consolidated Finance Statements.

In* November 2023,the FASB issued ASUNo.* 2023-07, Segment Reporting (Topic280*) - Improvements to Reportable Segment Disclosures*. This ASU extends the existing requirements for annual disclosures to quarterly periods, and requires that both annual and quarterly disclosures present segment expenses using line items consistent with information regularly provided to the chief operating decision maker. Our effective date for adoption of this ASU is our fiscal year ending* November 29, 2025.*We are evaluating the impact the new disclosure guidance will have on our Consolidated Finance Statements.

Supplier Finance Program

In* September 2022,the FASB issued ASUNo.* 2022-04, Liabilities - Supplier Finance Programs (Subtopic405*-50): Disclosure of Supplier Finance Program Obligations.* This ASU requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. ASU2022-04 is effective for fiscal years beginning after* December 15, 2022,including interim periods within those fiscal years, except for the requirement on rollforward information which is an annual requirement. During thefirst* quarter of our fiscal year ending* November 30, 2024,we adopted ASU2022*-04. We will present the annual roll-forward disclosure requirement within our annual report on Form10-K.

We have agreements withthird parties to provide supplier finance programs which facilitate participating suppliers' ability to finance payment obligations of the Company with designatedthird-party financial institutions. Participating suppliers* may,at their sole discretion, elect to financeone* or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company hasno economic interest in the sale of these suppliers’ receivables andno direct financial relationship with the financial institutions concerning these services. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, arenot impacted by suppliers’ decisions to finance amounts under these arrangements. The outstanding payment obligations that were confirmed as valid and remained outstanding as of* June 1, 2024*were approximately $4,710. These obligations under the Company’s supplier finance programs are included in Accounts Payable in the Consolidated Balance Sheets, and the associated payments are reflected in the cash flows from operating activities section of the Consolidated Statements of Cash Flows.

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Recently issued accounting standards or pronouncementsnot disclosed above have been excluded as they arenot relevant to the company.

Note2: Acquisitions

ND Industries, Inc.

On* May 20, 2024,we acquired the assets of ND Industries, Inc. (“ND Industries”) for a base purchase price of $255,734 which was funded through borrowings on our credit facility and existing cash. This includes a holdback amount of $1,446 that will be paid on the4*-month anniversary of the closing date. ND Industries, headquartered in Clawson, Michigan, is a leading provider of specialty adhesives and fastener locking and sealing solutions serving customers in the automotive, electronics, aerospace and other industries. The acquisition of ND Industries is expected to accelerate the realization of our top growth priorities, consistent with our strategy to proactively drive capital allocation to the highest margin, highest growth market segments within the functional coatings, adhesives, sealants and elastomer industry. The acquisition fair value measurement was preliminary as of* June 1, 2024*. ND Industries is included in our Engineering Adhesives operating segment.

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

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

Sanglier Ltd.

On* September 8, 2023,we acquired the assets of Sanglier Ltd. (“Sanglier”) for a base purchase price of 13,361 British pound sterling, or approximately $16,660 which was funded through existing cash. This includes a holdback amount of 2,100 British pound sterling that will be paid on the18*-month anniversary of the closing date. Sanglier, headquartered in Mansfield, United Kingdom, is a manufacturer and filler of sprayable (aerosol and cannister) industrial adhesives. The acquisition of Sanglier expands our innovation capabilities and product portfolio across the United Kingdom and Europe transforming adhesives applications to enable sprayable delivery providing end users with an opportunity to greatly improve labor efficiency. The acquisition fair value measurement was preliminary as of* June 1, 2024* and includes intangible assets of $7,354, goodwill of $3,362 and other net assets of $5,944. Sanglier is included in our Construction Adhesives operating segment.

Adhezion Biomedical LLC

On* June 23, 2023,we acquired Adhezion Biomedical LLC (“Adhezion”) for a base purchase price of $80,802 which was funded through borrowings on our credit facility. This includes a holdback amount of $780 that will be paid on the12*-month anniversary of the closing date. The agreement includes a payment of contingent consideration up to $15,000 following the completion of certain performance goals and conditions. Adhezion, headquartered in Wyomissing, Pennsylvania, is a manufacturer of cyanoacrylate-based healthcare adhesives and infection prevention products. The acquisition of Adhezion positions us for expansion in the healthcare adhesives industry and creates a solid, unique platform from which to scale and innovate in the healthcare adhesives industry. The acquisition fair value measurement is final as of* June 1, 2024* and includes intangible assets of $38,500, goodwill of $37,589 and other net assets of $4,713. Goodwill represents expected synergies from combining Adhezion with our existing business. The amount of goodwill that is deductible for tax purposes is $25,717. Adhezion is included in our Hygiene, Health and Consumable Adhesives operating segment.

XChem International LLC

On* June 12, 2023,we acquired XChem International LLC ("XChem") for a base purchase price of approximately $14,496 which was funded through borrowings on our credit facility. This includes a holdback amount of $1,650 that will be paid on the18*-month anniversary of the closing date. XChem, headquartered in Ras Al-Khaimah, United Arab Emirates, is a manufacturer of adhesives and sealants for construction-related applications. The acquisition of XChem provides our construction adhesives global business with additional manufacturing presence for certain brands outside the U.S. and broadens our construction adhesives portfolio of highly specified applications and diversifies it toward both non-U.S. and infrastructure-oriented markets. The acquisition fair value measurement is final as of* June 1, 2024* and includes intangible assets of $4,600, goodwill of $4,318 and other net assets of $5,578. Goodwill represents expected synergies from combining XChem with our existing business. Goodwill isnot deductible for tax purposes. XChem is included in our Construction Adhesives operating segment.

Beardow Adams Holdings Ltd.

On* May 1, 2023,we acquired Beardow Adams Holdings Ltd. (“Beardow Adams”) for a total purchase price of 80,738 British pound sterling, or approximately $100,885, which was funded through borrowings on our credit facility. This includes a holdback amount of 8,000 British pound sterling that will be paid on the18*-month anniversary of the closing date. Beardow Adams, based in the United Kingdom, develops and manufactures adhesives, sealants and coatings, principally in the fields of packaging and related applications. The acquisition of Beardow Adams is expected to accelerate profitable growth in many of our core end markets and generate business synergies through better raw material pricing, production optimization and an expanded distribution platform. The acquisition fair value measurement is final as of* June 1, 2024* and includes intangible assets of $35,425, goodwill of $28,148 and other net assets of $37,312. Goodwill represents expected synergies from combining Beardow Adams with our existing business. The amount of goodwill that is deductible for tax purposes is $3,561. The remaining goodwill isnot deductible for tax purposes. Beardow Adams is included in our Hygiene, Health and Consumable Adhesives operating segment.

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Aspen Research Corporation

On* January 31, 2023,we acquired the assets of Aspen Research Corporation (“Aspen”) for a total purchase price of $9,761, which was funded through existing cash. This includes a holdback amount of $500 that will be paid on the18*-month anniversary of the closing date. Aspen, located in Maple Grove, Minnesota, is a contract research organization that develops and manufactures innovative solutions for some of the adhesives used in our insulating glass market. Aspen is known for their superior understanding of materials science, engineering and analytical testing and specializes in custom materials manufacturing for chemicals and adhesives products. The acquisition of Aspen is expected to expand our Engineering Adhesives footprint in North America and strengthen our capabilities in the insulating glass market, in addition to bringing additive continuous flow, process manufacturing capabilities that we plan to leverage. The acquisition fair value measurement was final as of* December 2, 2023*and includes intangible assets of $4,900, goodwill of $3,832 and other net assets of $1,029. Goodwill represents expected synergies from combining Aspen with our existing business. Goodwill is deductible for tax purposes. Aspen is included in our Engineering Adhesives operating segment.

Lemtapes Oy

On* December 15, 2022,we acquired Lemtapes Oy (“Lemtapes”) for a total purchase price of $8,922 Euro, or approximately $9,482 which was funded through existing cash. This includes a holdback amount of 850 Euro that will be paid on the18*-month anniversary of the closing date. Lemtapes, located in Valkeakoski, Finland, is a solutions provider of ecological, innovative tapes and adhesives for the packaging and plywood industries. The acquisition of Lemtapes is expected to reinforce our strategic position in Europe, especially for our adhesives coated solutions products. This acquisition will also accelerate our growth strategy of fast-growing, high margin businesses while adding technology capabilities and strong customer relationships. The acquisition fair value measurement was final as of* December 2, 2023and includes intangible assets of $5,526, goodwill of $3,028 and other net assets of $928. Goodwill represents expected synergies from combining Lemtapes with our existing business. Goodwill isnot* deductible for tax purposes. Lemtapes is included in our Hygiene, Health and Consumable Adhesives operating segment.

All acquisitions, individually and in the aggregate, arenot material and therefore pro forma financial information isnot provided.

Note3: Restructuring Actions

During fiscal year2023, the Company approved restructuring plans (the "Plans") related to organizational changes and other actions to optimize operations and integrate acquired businesses. The Plans were implemented in thesecond quarter of fiscal year2023 and are currently expected to be completed during fiscal year2026, with the majority of the charges recognized and cash payments occurring in fiscal2023 and2024. In implementing the Plans, the Company currently expects to incur pre-tax costs of approximately $39,100 to $44,100 for severance and related employee costs globally, other restructuring costs related to the streamlining of processes and the payment of anticipated income taxes in certain jurisdictions related to the Plans.

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

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

A summary of the restructuring liability is presented below:

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

Note4: Inventories

The composition of inventories is as follows:

Note5: Goodwill and Other Intangible Assets

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

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

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

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

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The above amortization expense forecast is an estimate. Actual amounts* may*change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions, potential impairment, accelerated amortization or other events.

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

Note6: Long-Term Debt

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

Note7: Components of Net Periodic Benefit related to Pension and Other Postretirement Benefit Plans

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

Note8: Accumulated Other Comprehensive Income (Loss)

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

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The components of accumulated other comprehensive loss are as follows:

Note9: Income Taxes

Income tax expense for thethree andsix months ended* June 1, 2024* includes $1,317 of discrete tax expense and $1,210 of discrete tax benefit, respectively, relating to various foreign tax matters, as well as an excess tax benefit related to U.S. stock compensation. Excluding the discrete tax expense and benefit, the overall effective tax rate was 28.9 percent and 28.4 percent for thethree andsix months ended* June 1, 2024*, respectively.

Income tax expense for thethree andsix months ended* June 3, 2023* includes $2,042 and $2,888 of discrete tax expense, respectively, relating to various foreign tax matters offset by an excess tax benefit related to U.S. stock compensation. Excluding the discrete tax expense, the overall effective tax rate was 29.5 percent and 29.4 percent for thethree andsix months ended* June 3, 2023*, respectively.

As of* June 1, 2024*, we had a liability of $14,097 recorded for gross unrecognized tax benefits (excluding interest) compared to $14,254 as of* December 2, 2023*. As of* June 1, 2024* and* December 2, 2023*, we had accrued $6,797 and $6,310 of gross interest relating to unrecognized tax benefits, respectively.

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Note10: Earnings Per Share

A reconciliation of the common share components for the basic and diluted earnings per share calculations is as follows:

Basic earnings per share is calculated by dividing net income attributable to H.B. Fuller by the weighted-average number of common shares outstanding during the applicable period. Diluted earnings per share is based upon the weighted-average number of common and common equivalent shares outstanding during the applicable period. The difference between basic and diluted earnings per share is attributable to share-based compensation awards. We use the treasury stock method to calculate the effect of outstanding shares, which computes total employee proceeds as the sum of (a) the amount the employee must pay upon exercise of the award and (b) the amount of unearned share-based compensation costs attributed to future services. Share-based compensation awards for which total employee proceeds exceed the average market price over the applicable period have an antidilutive effect on earnings per share, and accordingly, are excluded from the calculation of diluted earnings per share.

Share-based compensation awards of 787,801 and 1,026,155 shares for thethree months ended* June 1, 2024and June 3, 2023*, respectively, and 1,110,664 and 1,156,557 shares for thesix months ended* June 1, 2024and June 3, 2023*, respectively, were excluded from diluted earnings per share calculations because they were antidilutive.

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Note11: Financial Instruments

As a result of being a global enterprise, foreign currency exchange rates and fluctuations in those rates* may*affect the Company's net investment in foreign subsidiaries, and our earnings, cash flows and financial position are exposed to foreign currency risk from foreign currency denominated receivables and payables.

We use foreign currency forward contracts, cross-currency swaps, interest rate swaps and net investment hedges to manage risks associated with foreign currency exchange rates and interest rates. We donot hold derivative financial instruments of a speculative nature or for trading purposes. We record derivatives as assets and liabilities on the balance sheet at fair value. Changes in fair value are recognized immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the Consolidated Statement of Cash Flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. We evaluate hedge effectiveness at inception and on an ongoing basis. If a derivative isno longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is recorded in earnings.

We are exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts and interest rate swap agreements. We select investment-grade multinational banks and financial institutions as counterparties for derivative transactions and monitor the credit quality of each of these banks on a periodic basis as warranted. We donot anticipate nonperformance by any of these counterparties, and valuation allowances, if any, are de minimis.

Cash Flow Hedges

On* January 12, 2023,we entered into an interest rate swap agreement to convert $400,000 of our variable rate1*-month LIBOR rate debt to a fixed rate of 3.6895 percent that matures on* January 12, 2028.On February 28, 2023,after refinancing our debt, we amended the interest rate swap agreement to our1*-month SOFR rate debt to a fixed rate of 3.7260 in accordance with the practical expedients included in ASC848, Reference Rate Reform. The combined fair value of the interest rate swap was an asset of $8,454 at* June 1, 2024* and was included in other assets in the Consolidated Balance Sheets. The swap was designated for hedge accounting treatment as a cash flow hedge. We are applying the hypothetical derivative method to assess hedge effectiveness for this interest rate swap. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our variable rate debt are compared with the change in the fair value of the swap.

On* March 16, 2023,we entered into an interest rate swap agreement to convert $300,000 of our1*-month SOFR rate debt to a fixed rate of 3.7210 percent that matures on* February 15, 2028.The combined fair value of the interest rate swap was an asset of $6,168 at June 1, 2024* and was included in other assets in the Consolidated Balance Sheets. The swap was designated for hedge accounting treatment as a cash flow hedge. We are applying the hypothetical deriv ative method to assess hedge effectiveness for this interest rate swap. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our variable rate debt are compared with the change in the fair value of the swaps.

On* March 16, 2023,we entered into an interest rate swap agreement to convert $100,000 of our1*-month SOFR rate debt to a fixed rate of 3.8990 percent that matures on* February 15, 2028.The combined fair value of the interest rate swapwas an asset of $1,527 at June 1, 2024* and was included in other assetsinthe Consolidated Balance Sheets. The swap was designated for hedge accounting treatment as a cash flow hedge. We are applying the hypothetical derivative method to assess hedge effectiveness for these interest rate swaps. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our variable rate debt are compared with the change in the fair value of the swaps.

The amounts of pretax gains (losses) recognized in Comprehensive Income related to derivative instruments designated as cash flow hedges are as follows:

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Fair Value Hedges

On* February 12, 2021,we entered into interest rate swap agreements to convert our $300,000 Public Notes that were issued on October**20,* 2020 to a variable interest rate of1-month LIBOR plus 3.28 percent. On* June 30, 2023,1-month LIBOR rates ceased to exist and the IBOR Fallbacks Protocol published by the International Swaps and Derivatives Association ("ISDA") took effect as outlined in the interest rate swap agreement. As a result, the interest rate swap agreement was converted to Overnight SOFR plus 3.28 percent. We applied the practical expedients included in ASC848, Reference Rate Reform. These interest rate swap agreements mature on October 15, 2028.The combined fair value of the interest rate swaps was a liability of $42,374 at June 1, 2024*, and was included in other liabilities in the Consolidated Balance Sheets. The swaps were designated for hedge accounting treatment as fair value hedges. We apply the short cut method and assume hedge effectiveness. Changes in the fair value of a hypothetically perfect swap with terms that match the critical terms of our $300,000 fixed rate Public Notes are compared with the change in the fair value of the swaps.

Net Investment Hedges

On* October 17, 2022,we entered into a float-to-float cross-currency interest rate swap agreement with a notional amount of€307,173 maturing in October 2028.On October 20, 2022,we entered into fixed-to-fixed cross-currency interest rate swap agreements for a total notional amount of€300,000 with tranches maturing in August 2025,** August 2026and February 2027.On June 30, 2023,1-month LIBOR rates ceased to exist and the IBOR Fallbacks Protocol published by the International Swaps and Derivatives Association (ISDA) took effect as outlined in the interest rate swap agreement. As a result, the1-month LIBOR leg of the float-to-float agreement was converted to Overnight SOFR plus 3.28 percent. On July 17, 2023,we amended the1*-month EURIBOR leg of the float-to-float agreement to Overnight ESTR plus 3.2195 percent. We applied the practical expedients included in ASC848, Reference Rate Reform. As of* June 1, 2024*, the combined fair value of the swaps was a liabilityof $67,411 and was included in other liabilities in the Consolidated Balance Sheets. The cross-currency interest rate swaps hedge a portion of the Company’s investment in Euro denominated foreign subsidiaries.

The swaps are designated as net investment hedges for accounting treatment. The net gains or losses attributable to changes in spot exchange rates are recorded in the cumulative translation adjustment within other comprehensive income. The gains or losses are reclassified into earnings upon a liquidation event or deconsolidation of the foreign subsidiary. Any ineffective portions of net investment hedges are reclassified from accumulated other comprehensive income (loss) into earnings during the period of change. The amount in accumulated other comprehensive income (loss) related to net investment hedge cross-currency swaps was a loss of $50,937 of* June 1, 2024*. The amounts of pretax gain recognized in comprehensive income related to the net investment hedge was $163 for thethree months ended* June 1, 2024*. As of* June 1, 2024*, we didnot reclassify any gains or losses into earnings from net investment hedges and we donot expect to reclassify any such gain or loss into earnings within the nexttwelve months.No amounts related to net investment hedges have been excluded from the assessment of hedge effectiveness.

DerivativesNot* Designated as Hedging Instruments*

We use foreign currency forward contracts to offset our exposure to the change in value of certain foreign currency denominated assets and liabilities held at foreign subsidiaries that are remeasured at the end of each period. Although the contracts are effective economic hedges, they arenot designated as accounting hedges. Foreign currency forward contracts are recorded as assets and liabilities on the balance sheet at fair value. Changes in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related foreign currency denominated assets and liabilities. See Note12 for the fair value amounts of these derivative instruments.

As of* June 1, 2024*, we had forward foreign currency contracts maturing between* June 3, 2024and February 5, 2025.*The mark-to-market effect associated with these contracts was largely offset by the underlying transaction gains and losses resulting from the foreign currency exposures for which these contracts relate.

The amounts of pretax gains (losses) recognized in other income, net related to derivative instrumentsnot designated as hedging instruments for thesix months ended* June 1, 2024and June 3, 2023* were $263 and $1,276, respectively.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities in the customer base and their dispersion across many different industries and countries. As of* June 1, 2024*, there wereno significant concentrations of credit risk.

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Note12: Fair Value Measurements

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value intothree broad levels. The following is a brief description of thosethree levels:

Balances Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of* June 1, 2024* and* December 2, 2023*, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

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The valuation of our contingent consideration liability related to the acquisition of TissueSeal and was $500 as of* June 1, 2024*. The contingent consideration of $870 related to the acquisition of GSSI was paid in thefirst quarter of2024. Adjustments to the fair value of contingent consideration are recorded to selling, general and administrative expenses in the Statement of Income. See Note2 for further discussion regarding our acquisitions. The following table provides details of the contingent consideration liabilities:

Balances Measured at Fair Value on a Nonrecurring Basis

We measure certain assets and liabilities at fair value on a nonrecurring basis. These assets include intangible assets acquired in an acquisition. The identified intangible assets of customer relationships, technology and tradenames acquired in connection with our acquisitions were measured using unobservable (Level3) inputs. The fair value of the intangible assets was calculated using either the income or cost approach. Significant inputs include estimated revenue growth rates, gross margins, operating expenses, attrition rate, royalty rate and discount rate.

See Note2 for further discussion regarding our acquisitions.

Balances Disclosed at Fair Value

Long-term debt had an estimated fair value of $2,008,768 and $1,785,199 as of* June 1, 2024* and* December 2, 2023*, respectively. The fair value of long-term debt is based on quoted market prices for the same or similar issues or on the current rates offered for debt of similar maturities. The estimated fair value of these long-term obligations isnot necessarily indicative of the amount that would be realized in a current market exchange.

Note13: Commitments and Contingencies

Environmental Matters

We are involved in environmental investigations, clean-up activities and administrative proceedings related to environmental compliance matters at former and current operating facilities. We have also been identified as a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and/or similar state laws that impose liability for costs relating to the clean-up of contamination resulting from past spills, disposal or other release of hazardous substances associated with landfills and/or hazardous waste sites. As a PRP, we* maybe required to pay a share of the costs of investigation and clean-up of these sites. We are subject to similar laws in some of the countries where current and former facilities are located. Our environmental, health and safety department monitors compliance with applicable laws on a global basis. To the extent we can reasonably estimate the amount of our probable liabilities for environmental matters, we establish an undiscounted financial provision. We recorded liabilities of $4,426 and $5,034 as of June 1, 2024* and* December 2, 2023*, respectively, for probable and reasonably estimable environmental remediation costs. Of the amount reserved, $1,745 and $2,301 as of* June 1, 2024* and* December 2, 2023*, respectively, is attributable to a facility we own in Simpsonville, South Carolina as a result of our Royal Adhesives acquisition that is a designated site under CERCLA.

While uncertainties exist with respect to the amounts and timing of the ultimate environmental liabilities, based on currently available information, we have concluded that these matters, individually or in the aggregate, willnot have a material adverse effect on our results of operations, financial condition or cash flow.

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Other Legal Proceedings

From time to time and in the ordinary course of business, we are a party to, or a target of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, contract, patent and intellectual property, environmental, health and safety, tax and employment matters. While we are unable to predict the outcome of these matters, we have concluded, based upon currently available information, that the ultimate resolution of any pending matter, individually or in the aggregate, including the asbestos litigation described in the following paragraphs, willnot have a material adverse effect on our results of operations, financial condition or cash flow.

We have been named as a defendant in lawsuits in which plaintiffs have alleged injury due to products containing asbestos manufactured more than35 years ago. The plaintiffs generally bring these lawsuits against multiple defendants and seek damages (both actual and punitive) in very large amounts. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable injuries or that the injuries suffered were the result of exposure to products manufactured by us. We are typically dismissed as a defendant in such cases without payment. If the plaintiff presents evidence indicating that compensable injury occurred as a result of exposure to our products, the case is generally settled for an amount that reflects the seriousness of the injury, the length, intensity and character of exposure to products containing asbestos, the number and solvency of other defendants in the case, and the jurisdiction in which the case has been brought.

A significant portion of the defense costs and settlements in asbestos-related litigation is paid bythird parties, including indemnification pursuant to the provisions of a1976 agreement under which we acquired a business from athird party. Currently, thisthird party is defending and paying settlement amounts, under a reservation of rights, in most of the asbestos cases tendered to thethird party.

In addition to the indemnification arrangements withthird parties, we have insurance policies that generally provide coverage for asbestos liabilities, including defense costs. Historically, insurers have paid a significant portion of our defense costs and settlements in asbestos-related litigation. However, certain of our insurers are insolvent. We have entered into cost-sharing agreements with our insurers that provide for the allocation of defense costs and settlements and judgments in asbestos-related lawsuits. These agreements require, among other things, that we fund a share of settlements and judgments allocable to years in which the responsible insurer is insolvent.

A summary of the number of and settlement amounts for asbestos-related lawsuits and claims is as follows:

We donot believe that it would be meaningful to disclose the aggregate number of asbestos-related lawsuits filed against us because relatively few of these lawsuits are known to involve exposure to asbestos-containing products that we manufactured. Rather, we believe it is more meaningful to disclose the number of lawsuits that are settled and result in a payment to the plaintiff. To the extent we can reasonably estimate the amount of our probable liabilities for pending asbestos-related claims, we establish a financial provision and a corresponding receivable for insurance recoveries.

In* February 2024,the named plaintiffs inRouse et al. v. H.B. Fuller Company et al.* filed athird amended complaint in their lawsuit against the Company andone of its subsidiaries, which was initiated in* September 2022.The suit is pending in the federal District of Minnesota and seeks damages arising from property damage attributed to alleged defects in grout sold by the Company or its affiliates. The named plaintiffs seek to represent a class but havenot* yet moved for class certification. The Company intends to vigorously defend itself against the claims outlined in this lawsuit. As of* June 1, 2024*, we are unable to estimate any possible loss or range of possible losses and havenot recorded a loss contingency for this matter.

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Based on currently available information, we have concluded that the resolution of any pending matter, including asbestos-related litigation, individually or in the aggregate, willnot have a material adverse effect on our results of operations, financial condition or cash flow.

Note14: Share Repurchase Program

On* April**22,* 2022, the Board of Directors authorized a share repurchase program of up to $300,000 of our outstanding common shares for a period of up tofive years. Under the program, we are authorized to repurchase shares for cash on the open market, from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. The timing of such repurchases is dependent on price, market conditions and applicable regulatory requirements. Upon repurchasing shares, we reduce our common stock for the par value of the shares with the excess being applied against additional paid-in capital.

During thesecond quarter of2024, we repurchased shares under this program with an aggregate value of $14,262. Of this amount, $183 reduced common stock and $14,079 reduced additional paid-in capital. There wereno shares repurchased under this program during thefirst quarter of2024 or thefirst six months of2023.

Note15: Segments

We are required to report segment information in the same way that we internally organize our business for assessing performance and making decisions regarding allocation of resources. Revenue and operating income of each of our segments are regularly reviewed by our chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance. Segment operating income is identified as gross profit less SG&A expenses. Corporate expenses, other than those included in Corporate Unallocated, are allocated to each operating segment. Consistent with our internal management reporting, Corporate Unallocated amounts include business acquisition and integration costs, organizational restructuring charges and project costs associated with implementing a global Enterprise Resource Planning (“ERP”) system that we refer to as Project ONE. Corporate assets arenot allocated to the operating segments. Inter-segment revenues are recorded at cost plus a markup for administrative costs.

We have three reportable segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. The business components within each operating segment are managed to maximize the results of the overall operating segment rather than the results of any individual business component of the operating segment. Results of individual components of each operating segment are subject to numerous allocations of segment-wide costs that* mayor may**not* have been focused on that particular component for a particular reporting period. The costs for these allocated resources arenot tracked on a "where-used" basis as financial performance is assessed at the total operating segment level.

The table below provides certain information regarding net revenue and operating income (loss) for each of our operating segments.

1 Consistent with our internal management reporting, Corporate Unallocated amounts in the tables above include charges that arenot allocated to the Company’s reportable segments.

The table below provides a reconciliation of operating income to income before income taxes and income from equity method investments:

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We view the following disaggregation of net revenue by geographic region as useful to understanding the composition of revenue recognized during the respective reporting periods: