United States securities and exchange commission logo
April 2, 2021
John Corkrean
Chief Financial Officer
FULLER H B CO
1200 Willow Lake Boulevard
St. Paul, Minnesota 55110-5101
Re: FULLER H B CO
Form 10-K For the
Fiscal Year Ended November 30, 2020
Filed January 26,
2021
Form 10-Q for the
Quarterly Period Ended February 27, 2021
Filed March 25,
2021
Form 8-K
Filed March 25,
2021
File No: 001-09225
Dear Mr. Corkrean:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-Q for the Quarterly Period Ended February 27, 2021
Note 13. Segments, page 18
1. You indicate that
operating income and adjusted EBITDA of each of your segments are
regularly reviewed by
your chief operating decision maker to make decisions about
resources to be
allocated to the segments and assess their performance. Since
your CODM uses more
than one measure of your segments' profit or loss, the reported
measure shall be the
one that management believes is determined in accordance with the
measurement principles
most consistent with those used in measuring the corresponding
amounts in your
consolidated financial statements. Refer to ASC 280-10-50-22 and 50-28
and ASC 280-10-55-9.
Please note that additional segment profit or loss measure may be
John Corkrean
FirstName
FULLER HLastNameJohn Corkrean
B CO
Comapany
April NameFULLER H B CO
2, 2021
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presented outside of your financial statements and footnotes as non-
GAAP measures if
they comply with Regulation G and Item 10(e) of Regulation S-K.
Form 10-K For the Fiscal Year Ended November 30, 2020
Reports of Registered Independent Public Accounting Firms, page 36
2. Based on the language provided in the audit reports of your successor
and
predecessor auditors, it is not clear who has taken audit
responsibility for the adjustments
made to the prior periods presented in the financial statements
stemming from the changes
to your reportable segment structure. Please ask your auditors to
address the following
comments:
Please clarify whether Ernst & Young performed additional
procedures for the prior
period segment changes, and if so, how they concluded they were
not required to
revise their audit report to discuss the procedures performed on
the prior period
financial statements. Refer to AS 3105 and Question 5 of the
PCAOB's Staff
Questions and Answers on Adjustments to Prior-Period Financial
Statements Audited
by a Predecessor Auditor; and
Notwithstanding the information presented in KPMG s consent
dated January 26,
2021, please address why KPMG did not also make corresponding
changes to their
audit report. Refer to Question 9 of the PCAOB's Staff Questions
and Answers on
Adjustments to Prior-Period Financial Statements Audited by a
Predecessor Auditor.
Also, please note that the segment information KPMG referred to in
its consent is
presented in Note 15, not Note 16.
Note 5. Goodwill and Other Intangible Assets, page 58
3. We note your change in segments resulted in a change in the allocation
of goodwill to
your reporting units. Please tell us whether you performed an interim
goodwill
impairment test related to the existing reporting units before the
change. If not, explain
why not. Refer to ASC 350-20-35-45 and ASC 350-20-35-3Cf.
Note 15. Segments, page 83
4. You state in the first paragraph that corporate expenses are fully
allocated to each
operating segment. However, we note that you have a Corporate
Unallocated line item
within the tabular presentation. Please identify the nature of the
unallocated corporate
costs and to the extent there are material changes in these costs
period to period, expand
your Operating Segment Results within Management s Discussion and
Analysis to discuss
these changes.
5. You indicate that the adjusted EBITDA information does not conform to
U.S. GAAP and
should not be construed as an alternative to the reported results
determined in accordance
with U.S. GAAP. Item 10(e)(1)(ii)(C) expressly prohibits non-GAAP
measures in
financial statements prepared in accordance with GAAP. Please revise
to remove this
John Corkrean
FirstName
FULLER HLastNameJohn Corkrean
B CO
Comapany
April NameFULLER H B CO
2, 2021
April 32, 2021 Page 3
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non-GAAP information from the notes to your financial statements.
Please note that
additional segment profit or loss measures may be presented outside of
your financial
statements and footnotes if they comply with Regulation G and Item
10(e) of Regulation
S-K. In this regard, we note that if you chose to present adjusted
EBITDA for each
segment, each segment s non-GAAP measure EBITDA must be reconciled
to its most
directly comparable GAAP measure. In this regard, it is not clear that
such GAAP
measure would be a consolidated amount, such as net income
attributable to H.B. Fuller.
Item 2.02 Form 8-K filed March 25,2021
Regulation G Reconciliation Adjusted net income attributable to H.B. Fuller,
page 7
6. In your reconciliations related to Adjusted net income attributable to
H.B. Fuller, your
adjustments appear to be net of tax. Please revise your
reconciliations to reflect the impact
of income taxes as a separate adjustment and to explain how the tax
impact is calculated.
Refer to Question 102.11 of the updated Compliance & Disclosure
Interpretations
on Non-GAAP Financial Measures. Address this comment as it relates to
your
tabular presentations on page 11.
Regulation G Reconciliation Income before income taxes and income from equity
method
investments, page 9
7. Please reconcile the adjustments related to the Organizational
realignment and Royal
restructuring and integration for the 13 Weeks Ended February 27, 2021
and February 29,
2020 to your disclosure in Note 3 to your Form 10-Q for the Quarter
ended February 27,
2021 which indicates that the total restructuring actions reflected in
your interim financial
statements totaled $1.8M in 2021 and $43K in 2020. In this regard, we
also note your
disclosure on page 18 of your Form 10-K that your Royal Adhesives
Restructuring Plan
was implemented in the first quarter of 2018 and was substantially
complete. Tell us and
expand your disclosures to discuss the nature of costs and your basis
for excluding such
amounts from your non-GAAP measures. Refer to the guidance of Question
100.01 of the
Compliance and Disclosure Interpretations on Non-GAAP Financial
Measures with
respect to if you consider these expenses to be normal, recurring,
cash operating
expenses.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Tracey McKoy, Staff Accountant, at (202)551-3772 or,
Jeanne Baker,
Staff Accountant, at (202) 551-3651 or, Terence O'Brien, Accounting Branch
Chief, at (202)551-
3355 with any questions.
John Corkrean
FULLER H B CO
April 2, 2021
Page 4
FirstName LastNameJohn Corkrean Sincerely,
Comapany NameFULLER H B CO
Division of Corporation Finance
April 2, 2021 Page 4 Office of Life Sciences
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