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, 2002
------------------------------------
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
H.B. Fuller Company
Thrift Plan
Financial Statements and Supplemental Schedules
December 31, 2002 and 2001
H.B. Fuller Company Thrift Plan
Index
December 31, 2002 and 2001
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Page(s)
Report of Independent Auditors........................................................ F-1
Financial Statements
Statement of Net Assets Available for Benefits........................................ F-2
Statement of Changes in Net Assets Available for Benefits............................. F-3
Notes to Financial Statements......................................................... F-4-F-10
Supplemental Schedules
Schedule I: Schedule of Assets (Held at End of Year).................................. F-11
Schedule 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.
Report of Independent Auditors
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
and the related statement of changes in net assets available for benefits
present 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 and
2001, and the changes in net assets available for benefits for the year ended
December 31, 2002, in conformity with accounting principles generally accepted
in the United States of America. 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 audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the H.B.
Fuller Company Thrift Plan, as listed in the accompanying index, 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 Regulation 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/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 20, 2003
F-1
H.B. Fuller Company Thrift Plan
Statement of Net Assets Available for Benefits
December 31, 2002 and 2001
--------------------------------------------------------------------------------
2002 2001
Assets
Cash $ 503,388 $ 797,569
Investments, at fair value 134,161,949 159,904,130
Receivables
Participant contributions receivable 322,174 183,485
Employer contributions receivable 146,258 90,146
Accrued income 982 10,760
-------------- --------------
Total assets 135,134,751 160,986,090
Liabilities
Trade settlements payable 209,564 119,076
============== ==============
Net assets available for benefits $ 134,925,187 $ 160,867,014
============== ==============
The accompanying notes are an integral part of these financial statements.
F-2
H.B. Fuller Company Thrift Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2002
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Additions
Contributions
Participant contributions $ 7,120,366
Employer contributions 3,195,364
--------------
Total contributions 10,315,730
--------------
Investment income (loss)
Interest 198,349
Dividends 1,569,032
Net depreciation in fair value of investments (17,590,045)
Other income 363,509
--------------
Total investment loss (15,459,155)
--------------
Deductions
Distributions paid to participants (20,638,396)
Administrative expense (160,006)
--------------
Total deductions (20,798,402)
--------------
Net decrease (25,941,827)
Net assets available for benefits
Beginning of year 160,867,014
--------------
End of year $ 134,925,187
==============
The accompanying notes are an integral part of these financial statements.
F-3
H.B. Fuller Company Thrift Plan
Notes to Financial Statements
December 31, 2002 and 2001
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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.
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").
Trustee
The trustee for the Plan is Wells Fargo Minnesota, N.A. (the "Trustee").
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 percent of pre-tax
compensation up to a maximum of 12 percent of pre-tax compensation for
highly compensated participants and 25 percent for non-highly compensated
participants each subject to a statutory maximum of $11,000 for 2002.
The Employer makes contributions to employees' accounts by matching 100
percent of an employee's contributions, up to 4 percent 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 in H.B. Fuller Company
Common Stock. Investment 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. 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.
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-4
H.B. Fuller Company Thrift Plan
Notes to Financial Statements
December 31, 2002 and 2001
--------------------------------------------------------------------------------
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.
Vesting
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company' matching and discretionary
contribution portion of their accounts plus actual earnings thereon is
based on years of eligible service. A participant is 100 percent vested
after three years of credited service to the Employer, or upon age 65,
disability or death.
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum of $50,000 or 50 percent 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 percent at December 31, 2002). 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, 2002, had interest rates ranging from 4.25 percent to 9.5
percent and mature at various dates through 2017. Principal and interest
are repaid ratably through payroll deductions.
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, 2002, were
$59,698.
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
Basis of Accounting
The accompanying financial statements are presented on the accrual basis
of accounting in accordance with accounting principles generally accepted
in the United States of America.
Investment Valuation
F-5
H.B. Fuller Company Thrift Plan
Notes to Financial Statements
December 31, 2002 and 2001
--------------------------------------------------------------------------------
The fair values of the Plan's investments in H.B. Fully 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.
F-6
H.B. Fuller Company Thrift Plan
Notes to Financial Statements
December 31, 2002 and 2001
--------------------------------------------------------------------------------
Interest and Dividends
Interest income is recorded as earned on an accrual basis and dividend
income is recorded on the ex-dividend date.
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.
Contributions
Participant contributions are recorded in the period the Employer makes
the payroll deductions. Employer matching contributions are recorded based
on participant contributions.
Concentration of Market Risk
At December 31, 2002 and 2001, approximately 53 percent and 55 percent,
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.
Distributions to Participants
Distributions to participants are recorded when the distribution is made.
Plan Expenses
The Company pays a portion of the administrative expenses of the Plan and
a portion is paid by Plan participants within the Plan. Certain asset
management and administrative fees of the Plan are charged against the
Plan's investment income.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities 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.
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.
Payment of Benefits
Benefits are recorded when paid.
F-7
H.B. Fuller Company Thrift Plan
Notes to Financial Statements
December 31, 2002 and 2001
--------------------------------------------------------------------------------
3. Investments
Investments, at fair value, include the following at December 31, 2002 and
2001:
2002 2001
H.B. Fuller Company Common Stock,
2,778,725 and 3,098,465 shares, respectively ** $ 71,913,414 * $ 89,142,834 *
Wells Fargo Stable Return Fund,
507,907 and 509,961 shares, respectively 17,333,347 * 16,437,563 *
Wells Fargo Index Equity Fund,
494,391 and 498,495 shares, respectively 17,422,329 * 22,885,911 *
Wells Fargo Growth Balanced Fund,
421,580 and 467,836 shares, respectively 9,894,477 * 13,281,851 *
Wells Fargo Small Company Growth Equity Fund,
268,948 and 265,947 shares, respectively 4,886,794 6,864,080
PIMCO Total Return Bond Fund,
553,740 and 395,477 shares, respectively 5,908,410 4,136,692
Janus Twenty Fund,
74,705 and 78,059 shares, respectively 2,167,202 3,002,137
Janus Overseas Fund,
78,640 and 73,303 shares, respectively 1,202,410 1,488,048
Wells Fargo S&P Midcap Index Fund,
11,965 shares 381,794
Van Kampen Common Stock Fund,
13,356 shares 164,813
Participant loans receivable 2,886,959 2,665,014
------------- -------------
$ 134,161,949 $ 159,904,130
============= =============
* Represents 5 percent or more of the Plan's net assets at the beginning
of the Plan year.
** Nonparticipant directed investment, see Note 4.
During 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $17,590,045 as follows:
Wells Fargo and Janus Mutual Funds $ (10,946,381)
H.B. Fuller Company Common Stock (7,896,672)
Wells Fargo Stable Return Fund 996,269
PIMCO Total Return Bond Fund 273,243
Van Kampen Common Stock Fund (16,504)
-------------
$ (17,590,045)
=============
F-8
H.B. Fuller Company Thrift Plan
Notes to Financial Statements
December 31, 2002 and 2001
--------------------------------------------------------------------------------
4. Nonparticipant Directed Investments
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant directed investments
is as follows at December 31, 2002 and 2001:
2002 2001
Net assets
H.B. Fuller Company Common Stock $ 71,913,414 $ 89,142,834
Distributions payable to participants (211,973)
Accrued income 982 9,495
------------- -------------
$ 71,702,423 $ 89,152,329
============= =============
Year Ended
December 31,
2002
Changes in net assets
Contributions $ 4,718,449
Interest 7,466
Dividends 1,263,256
Other income 175,473
Net depreciation of investments (7,896,672)
Distributions paid to participants (9,596,852)
Net transfers to participant directed investments (6,114,718)
Administrative expenses (6,308)
-------------
$ (17,449,906)
=============
5. Tax Status
The Internal Revenue Service has determined and informed the Employer by a
letter dated November 14, 1995, that the Plan is designed in accordance
with applicable sections of the Internal Revenue Code ("IRC"). The Plan
has been amended since receiving the determination letter; however, the
Plan's administrator believes the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
Therefore, no provision for income taxes has been included in the Plan's
financial statements.
F-9
H.B. Fuller Company Thrift Plan
Notes to Financial Statements
December 31, 2002 and 2001
--------------------------------------------------------------------------------
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, 2002, amounted to $7,355,058 and $13,640,302, 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 2002, the Trustee made purchases and
sales of such securities amounting to $24,366,413 and $23,159,298,
respectively.
F-10
H.B. Fuller Company Thrift Plan
Schedule of Assets (Held at End of Year)
December 31, 2002 Schedule I
--------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Identity of Issuer,
Borrower or Units/ Current
Similar Party Description Shares Cost Value
* Wells Fargo H.B. Fuller Company Common
Minnesota, N.A. Stock 2,778,725 $ 49,779,324 $ 71,913,414
* Wells Fargo Stable Return Fund
Minnesota, N.A. Pooled, Common & Collective 507,907 ** 17,333,347
* Wells Fargo Index Equity Fund
Minnesota, N.A. Common Stock 494,391 ** 17,422,329
* Wells Fargo Growth Balanced Fund
Minnesota, N.A. Mutual Fund - Balanced 421,580 ** 9,894,477
* Wells Fargo Small Company Growth Equity Fund
Minnesota, N.A. Common Stock 268,948 ** 4,886,794
* Wells Fargo PIMCO Total Return Bond Fund
Minnesota, N.A. Corporate Bonds 553,740 ** 5,908,410
* Wells Fargo Janus Twenty Fund
Minnesota, N.A. Common Stock 74,705 ** 2,167,202
* Wells Fargo Janus Overseas Fund
Minnesota, N.A. Common Stock 78,640 ** 1,202,410
* Wells Fargo Van Kampen Common Stock Fund 13,356 ** 164,813
Minnesota, N.A.
* Wells Fargo
Minnesota, N.A. S&P Midcap Index Fund 11,965 ** 381,794
* Participant Loans Participant loans receivable,
interest at 4.25 percent to
9.5 percent, due at various
dates through 2017 ** 2,886,959
-------------
Total investments at end of
plan year $ 134,161,949
=============
* Represents party-in-interest.
** Historical cost information is not required for participant directed
investments.
F-11
H.B. Fuller Company Thrift Plan
Schedule of Reportable Transactions*
Year Ended December 31, 2002 Schedule II
--------------------------------------------------------------------------------
Five percent of series of transaction by security issue:
Number of Total Dollar Amount Transaction Net
---------------- --------------------------
Security Issue Purchases Sales Purchases Sales Cost Gain
H.B. Fuller Common 27 $ 7,355,058 $ 7,355,058
Stock 46 $ 13,640,302 8,181,895 $ 5,458,407
* Transactions or series of transactions in excess of 5 percent of the current
value of the Plan's assets at December 31, 2002, as defined in 29 CFR
2520.103-6 of the Department of Labor's Rules and Regulations for Reporting
and Disclosure under ERISA.
F-12
H.B. FULLER COMPANY THRIFT PLAN
EXHIBITS
The following documents are filed as exhibits to this Report:
Exhibit No. Document
----------- --------
(23) Consent of Independent Auditors
(99) Certification pursuant to Section 906
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
DATE June 30, 2003
By: /s/ Larry S. Morgan
Larry S. Morgan
Director of Compensation, Benefits and HRMS
H.B. Fuller Company
(Plan Administrator)
EXHIBIT INDEX
Exhibit No. Document Method of Filing
---------- -------- ----------------
(23) Consent of Independent Auditors Filed herewith electronically
(99) Certification pursuant to Section 906 Filed herewith electronically