HBF Thrift Plan Form 11-K
Table of Contents

FORM 11-K

 


 

FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS

AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2003

 

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from              to             

 

Commission file number 001-09225

 


 

H.B. FULLER COMPANY THRIFT PLAN

 

H.B. FULLER COMPANY

1200 Willow Lake Boulevard, P.O. Box 64683

St. Paul, Minnesota 55164-0683

 



Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Financial Statements and Supplemental Schedules

 

December 31, 2003 and 2002

 

(With Reports of Independent Registered Public Accounting Firms Thereon)


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Table of Contents

 

     Page

Report of Independent Registered Public Accounting Firm – KPMG LLP

   F-l

Report of Independent Registered Public Accounting Firm – PricewaterhouseCoopers LLP

   F-2

Statements of Net Assets Available for Benefits

   F-3

Statement of Changes in Net Assets Available for Benefits

   F-4

Notes to Financial Statements

   F-5

Supplemental Schedules

    

I Schedule of Assets (Held at End of Year)

   F-11

II Schedule of Reportable Transactions

   F-12

 

Note:  Other schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.


Table of Contents

Report of Independent Registered Public Accounting Firm

 

The Plan Administrator

H.B. Fuller Company Thrift Plan:

 

We have audited the accompanying statement of net assets available for benefits of the H.B. Fuller Company Thrift Plan (the Plan) as of December 31, 2003 and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2003 and the changes in its net assets available for benefits for the year then ended in conformity with U.S. generally accepted accounting principles.

 

Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets (held at end of year) and reportable transactions as of and for the year ended December 31, 2003 are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

By:

 

/s/ KPMG LLP


   

Minneapolis, Minnesota

   

June 11, 2004

 

F–1    


Table of Contents

Report of Independent Registered Public Accounting Firm

 

To the Participants and Administrator

of the H.B. Fuller Company Thrift Plan

 

In our opinion, the accompanying statement of net assets available for benefits presents fairly, in all material respects, the net assets available for benefits of the H.B. Fuller Company Thrift Plan (the “Plan”) at December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. This financial statement is the responsibility of the Plan’s management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit of this statement in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

By:

 

/s/ PricewaterhouseCoopers LLP


   

Minneapolis, Minnesota

   

June 20, 2003

 

F–2    


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Statements of Net Assets Available for Benefits

 

December 31, 2003 and 2002

 

     2003

   2002

Assets:

           

Cash

   $ 186,162    503,388

Investments, at fair value

     151,104,123    134,161,949

Receivables:

           

Participant contributions receivable

     293,068    322,174

Employer contributions receivable

     117,607    146,258

Trade settlement receivable

     87,005    —  

Accrued income

     13,010    982
    

  

Total assets

     151,800,975    135,134,751

Liabilities:

           

Trade settlements payable

     —      209,564
    

  

Net assets available for benefits

   $ 151,800,975    134,925,187
    

  

 

See accompanying notes to financial statements.

 

F–3    


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Statements of Changes in Net Assets Available for Benefits

 

December 31, 2003

 

Additions:

        

Contributions:

        

Participant contributions

   $ 6,573,082  

Employer contributions

     2,951,168  
    


Total contributions

     9,524,250  
    


Investment income:

        

Interest

     192,675  

Dividends

     1,503,498  

Net appreciation in fair value of investments

     21,190,617  

Other income

     419,236  
    


Total investment income

     23,306,026  
    


Deductions:

        

Distributions paid to participants

     (15,806,333 )

Administrative expense

     (148,155 )
    


Total deductions

     (15,954,488 )
    


Net increase

     16,875,788  

Net assets available for benefits:

        

Beginning of year

     134,925,187  
    


End of year

   $ 151,800,975  
    


 

See accompanying notes to financial statements.

 

F–4    


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Notes to Financial Statements

 

December 31, 2003 and 2002

 

(1) Description of the Plan

 

The following brief description of the H.B. Fuller Company Thrift Plan (the Plan) is provided for general information purposes only. Participants should refer to the Plan document for more complete information regarding the Plan’s definitions, benefits, eligibility, and other matters.

 

  (a) General

 

The Plan is a contributory defined contribution plan covering all eligible employees of H.B. Fuller Company (the Employer). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

 

  (b) Trustee

 

The trustee for the Plan is Wells Fargo Minnesota, N.A. (the Trustee).

 

  (c) Eligibility and Contributions

 

All regular full-time and part-time employees may begin contributing to the Plan as soon as administratively practicable after their date of hire. To be eligible for the Company matching contribution, a full-time employee must have six months of employment and a part-time employee must have twelve months of service. To become a participant in the Plan, an employee must agree to make contributions equal to 1% of pre-tax compensation up to a maximum of 12% of pre-tax compensation for highly compensated participants and 25% for nonhighly compensated participants, each subject to a statutory maximum of $12,000 for 2003.

 

The Employer makes contributions to employees’ accounts by matching 100% of an employee’s contributions, up to 4% of the employee’s eligible compensation in the form of H.B. Fuller Company Common Stock. A participant’s contribution may be invested in any combination of the following participant directed investment funds or H.B. Fuller Company Common Stock. Other funds include the Wells Fargo Stable Return Fund, PIMCO Total Return Bond Fund, Wells Fargo Index Equity Fund (S&P 500), Wells Fargo Small Company Growth Equity Fund, Wells Fargo Growth Balanced Fund, Janus Twenty Fund, Janus Overseas Fund, Wells Fargo S&P Midcap Index Fund, and Van Kampen Common Stock Fund. A participant’s investment option for past and future contributions can be changed daily. Investment income is allocated to all participants on the basis of their respective account balances at the close of each daily fund valuation.

 

A participant’s voluntary contribution percentage amount can be changed or suspended at anytime. Employer contributions to the Plan cease during the suspension period.

 

  (d) Participant Accounts

 

Each participant’s account is credited with (a) the participant’s contribution, (b) the Employer’s contribution, (c) an allocation of the Plan’s investment income, and (d) discretionary Employer contributions. Allocations of the Plan’s investment income are based on account balances, as defined in the Plan document.

 

F–5   (Continued)


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Notes to Financial Statements

 

December 31, 2003 and 2002

 

  (e) Payment of Benefits

 

On termination of service due to death or retirement, a participant may elect to receive a lump-sum amount equal to the value of the participant’s vested interest in his or her account as defined in the Plan agreement. If the participant terminates employment at the age of 55 or older, he or she may elect to receive their distribution in installment payments as defined by the Plan agreement. For termination of service due to disability, a participant is eligible for distribution after 12 months of permanent disability. For termination of service due to other reasons, a participant will receive a lump-sum amount equal to the value of the participant’s vested interest in his or her account. The investment in H.B. Fuller Company Common Stock may be withdrawn in the form of shares of stock at the option of the Plan participant.

 

  (f) Vesting

 

Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company’s matching and discretionary contribution portion of their accounts plus actual earnings thereon is based on years of eligible service. A participant is 100% vested after three years of credited service to the Employer, or upon age 65, disability, or death.

 

  (g) Participant Loans

 

Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their account balance, whichever is less. The loans are collateralized by the balance in the participant’s account and bear interest at rates equal to the current Wells Fargo prime rate at the time of the loan (4.25% at December 31, 2003). The rate will remain fixed over the term of the loan, usually 5-15 years. Participant loans are collateralized by a borrower’s vested account balance and are repaid through payroll deductions. Participant loans at December 31, 2003 had interest notes ranging from 4.25% to 9.50% and mature at various dates through 2018. Principal and interest are repaid ratably through payroll deductions.

 

  (h) Forfeitures

 

Participants who terminate employment with the Employer forfeit the nonvested portion of the Employer’s contribution to the participants’ accounts. Amounts forfeited are used to reduce future Employer contributions. Forfeitures for the year ended December 31, 2003 were $63,103.

 

  (i) Plan Termination

 

Although it has no intention to do so, the Employer may, at any time, by action of its board of directors, terminate the Plan or discontinue contributions. Upon termination or discontinuance of contributions, all Employer contribution amounts in participant accounts will become fully vested.

 

(2) Summary of Significant Accounting Policies

 

  (a) Basis of Accounting

 

The accompanying financial statements are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.

 

F–6   (Continued)


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Notes to Financial Statements

 

December 31, 2003 and 2002

 

  (b) Investment Valuation

 

The fair values of the Plan’s investments in H.B. Fuller Company Common Stock are based on published quotations. The fair values of investments in securities of unaffiliated issuers are based on quoted market prices. Securities transactions are recorded on the trade date.

 

  (c) Interest and Dividends

 

Interest income is recorded as earned on an accrual basis and dividend income is recorded on the ex-dividend date.

 

  (d) Net Appreciation (Depreciation) in the Fair Value of Investments

 

The Plan presents in the statement of changes in net assets available for benefits, the net appreciation (depreciation) in the fair value of investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments.

 

  (e) Contributions

 

Participant contributions are recorded in the period the Employer makes the payroll deductions. Employer matching contributions are recorded based on participant contributions.

 

  (f) Concentration of Market Risk

 

At December 31, 2003 and 2002, approximately 50% and 53%, respectively, of the Plan’s net assets were invested in the common stock of H.B. Fuller Company. The underlying value of the H.B. Fuller Common Stock is entirely dependent upon the performance of H.B. Fuller Company and the market’s evaluation of such performance. It is at least reasonably possible that changes in the fair value of H.B. Fuller Company Common Stock in the near term could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits and the statement of changes in net assets available for benefits.

 

  (g) Distributions to Participants

 

Distributions to participants are recorded when the distribution is made.

 

  (h) Plan Expenses

 

The administrative expenses of the Plan are paid by the Plan participants. Certain asset management and administrative fees of the Plan are charged against the Plan’s investment income.

 

  (i) Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of net assets available for benefits and changes therein, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of investment earnings and expenses during the reporting period. Actual results could differ from those estimates.

 

F–7   (Continued)


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Notes to Financial Statements

 

December 31, 2003 and 2002

 

  (j) Risks and Uncertainties

 

The Plan provides for various investment options in any combination of stocks, bonds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market, and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits and the statement of changes in net assets available for benefits.

 

(3) Investments

 

Investments, at fair value, include the following at December 31, 2003 and 2002:

 

     2003

    2002

 

H.B. Fuller Company Common Stock, 2,556,852 and 2,778,725 shares, respectively**

   $ 76,040,778 *   71,913,414 *

Wells Fargo Stable Return Fund, 510,857 and 507,907 shares, respectively

     18,262,101 *   17,333,347 *

Wells Fargo Index Equity Fund, 477,154 and 494,391 shares, respectively

     21,290,601 *   17,422,329 *

Wells Fargo Growth Balanced Fund, 408,074 and 421,580 shares, respectively

     11,568,904 *   9,894,477 *

Wells Fargo Small Company Growth Equity Fund, 284,633 and 268,948 shares, respectively

     7,776,172 *   4,886,794  

PIMCO Total Return Bond Fund, 506,680 and 553,740 shares, respectively

     5,426,539     5,908,410  

Janus Twenty Fund, 73,283 and 74,705 shares, respectively

     2,650,637     2,167,202  

Janus Overseas Fund, 107,399 and 78,640 shares, respectively

     2,218,860     1,202,410  

Wells Fargo S&P Midcap Index Fund, 41,579 and 11,965 shares, respectively

     1,792,869     381,794  

Van Kampen Common Stock Fund, 83,782 and 13,356 shares, respectively

     1,336,322     164,813  

Participant loans receivable

     2,740,340     2,886,959  
    


 

     $ 151,104,123     134,161,949  
    


 


* Represents 5% or more of the Plan’s net assets at the beginning of the Plan year.
** Nonparticipant directed investment, see note 4.

 

F–8   (Continued)


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Notes to Financial Statements

 

December 31, 2003 and 2002

 

During 2003, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $21,190,617 as follows:

 

Wells Fargo and Janus Mutual Funds

   $ 10,263,649

H.B. Fuller Company Common Stock

     9,809,841

Wells Fargo Stable Return Fund

     812,625

PIMCO Total Return Bond Fund

     96,865

Van Kampen Common Stock Fund

     207,637
    

     $ 21,190,617
    

 

(4) Non-participant Directed Investments

 

Information about the net assets and the significant components of the changes in net assets relating to the non-participant directed investments is as follows at December 31, 2003 and 2002:

 

     2003

   2002

 

Net assets:

             

H.B. Fuller Company Common Stock

   $ 76,040,778    71,913,414  

Cash and cash equivalents

     344,442    503,388  

Distributions payable to participants

     —      (211,964 )

Accrued income

     219    982  
    

  

     $ 76,385,439    72,205,820  
    

  

 

    

Year ended

December 31,

2003


 

Changes in net assets:

        

Contributions

   $ 4,266,440  

Interest

     5,131  

Dividends

     1,182,799  

Other loss

     (763 )

Net appreciation of investments

     9,809,841  

Distributions paid to participants

     (7,039,445 )

Net transfers to participant directed investments

     (4,042,505 )

Administrative expenses

     (1,879 )
    


     $ 4,179,619  
    


 

F–9   (Continued)


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

Notes to Financial Statements

 

December 31, 2003 and 2002

 

(5) Tax Status

 

The Internal Revenue Service has determined and informed the Employer by a letter dated March 19, 2004 that the Plan is designed in accordance with applicable sections of the Internal Revenue Code (IRC).

 

(6) Related-party and Party-in-interest Transactions

 

Plan investments include H.B. Fuller Company Common Stock which is invested in shares of stock of the Employer. H.B. Fuller Company is the plan sponsor and, therefore, these transactions qualify as party-in-interest. Purchases and sales of H.B. Fuller Company Common Stock for the year ended December 31, 2003 amounted to $11,191,297 and $11,855,059, respectively.

 

The Plan also invests in various funds managed by Wells Fargo Minnesota, N.A. Wells Fargo Minnesota, N.A. is the trustee as defined by the Plan and, therefore, the related transactions qualify as party-in-interest. The Trustee is authorized to invest in securities under its management and control on behalf of the Plan. During 2003, the Trustee made purchases and sales of such securities amounting to $23,480,960 and $20,863,212, respectively.

 

F–10    


Table of Contents

Schedule I

 

H.B. FULLER COMPANY THRIFT PLAN

Schedule of Assets (Held at End of Year)

December 31, 2003

 

(a)


  

(b)

Identity of issuer,

borrower, or

similar party


  

(c)

Description


   Units/
shares


  

(d)

Cost


 

(e)

Current

value


*

   Wells Fargo
    Minnesota, N.A.
  

H.B. Fuller Company Common Stock

   2,556,852    $ 48,235,011     76,040,778

*

   Wells Fargo
    Minnesota, N.A.
  

Stable Return Fund Pooled, Common, & Collective

   510,857      **     18,262,101

*

   Wells Fargo
    Minnesota, N.A.
  

Index Equity Fund Common Stock

   477,154      **     21,290,601

*

   Wells Fargo
    Minnesota, N.A.
  

Growth Balanced Fund Mutual Fund – Balanced

   408,074      **     11,568,904

*

  

Wells Fargo

    Minnesota, N.A.

  

Small Company Growth Equity Fund Common Stock

   284,633      **     7,776,172

*

   Wells Fargo
    Minnesota, N.A.
  

PIMCO Total Return Bond Fund Corporate Bonds

   506,680      **     5,426,539

*

   Wells Fargo
    Minnesota, N.A.
  

Janus Twenty Fund Common Stock

   73,283      **     2,650,637

*

   Wells Fargo
    Minnesota, N.A.
  

Janus Overseas Fund Common Stock

   107,399      **     2,218,860

*

   Wells Fargo
    Minnesota, N.A.
  

S&P Midcap Index Fund

   41,579      **     1,792,869

*

   Wells Fargo
    Minnesota, N.A.
  

Van Kampen Common Stock Fund

   83,782      **     1,336,322

*

   Participant loans   

Participant loans receivable, interest at 4.25% to 9.5%, due at various dates through 2018

          **     2,740,340
                         

         

Total investments at end of plan year

              $ 151,104,123
                         


* Represents party-in-interest.
** Historical cost information is not required for participant directed investments.

 

See accompanying independent registered public accounting firm report.

 

F–11    


Table of Contents

Schedule II

 

H.B. FULLER COMPANY THRIFT PLAN

Schedule of Reportable Transactions*

Year ended December 31, 2003

 

Five percent of series of transaction by security issue:

 

Security issue


   Number of

   Total dollar amount

  

Transaction

cost


  

Net

gain


   Purchases

   Sales

   Purchases

   Sales

     

H.B. Fuller Common Stock

   48    76    $ 11,191,297    $ 15,677,620    $ 11,855,059    $ 3,822,561

* Transactions or series of transactions in excess of 5% of the current value of the Plan’s assets at December 31, 2003, as defined in 29 CFR 2520.103-6 of the Department of Labor’s Rules and ER1SA. Regulations for Reporting and Disclosure under

 

See accompanying independent registered public accounting firm report.

 

F–12    


Table of Contents

EXHIBITS

 

The following documents are filed as exhibits to this Report:

 

Exhibit No.

 

Document


(23)   Consents of Independent Registered Public Accounting Firms
(99)   Certification pursuant to Section 906

 

F–13    


Table of Contents

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

H.B. FULLER COMPANY THRIFT PLAN

 

   

By:

 

/s/ Todd Mestad


Date: June 28, 2004

     

(Plan administrator)

 

F–14    


Table of Contents

H.B. FULLER COMPANY THRIFT PLAN

 

EXHIBIT INDEX

 

Exhibit No.

 

Document


 

Method of Filing


(23)   Consents of Independent Registered Public Accounting Firms   Filed herewith electronically
(99)   Certification pursuant to Section 906   Filed herewith electronically

 

 

F–15