year-end results and announced a major restructuring
program that will reduce its global capacity by as much
as 20%, according to chairman, president and CEO Al
The company’s fourth quarter net income, excluding
special charges related to the restructuring initiative,
was $14.4 million compared to $14.3 million reported in
the same quarter one year ago. Fourth quarter results
were reduced to $12.9 million or $0.46 per share (diluted),
after a $1.5 million after-tax special charge for asset
impairments related to the restructuring initiative.
“This quarter and the past year were very difficult in
terms of the environment we operated in and yet we were
able to post financial results which were very respectable
due to the dedication of our employees and the inherent
strength of our organization,” said Mr. Stroucken.
“However, economic and industry conditions continue to
put pressure on our cost structure. To ensure a healthy
and vibrant company, we have to take additional steps to
bring our installed capacity more in line with the present
and projected run rates. The restructuring will create a
more focused and cost efficient company that can continue
to succeed in a very adverse economic environment and
really excel when the market improves.”
Special items for the year 2001 reflect the charge for
asset impairments of $1.5 million after-tax, or $0.05 per
share (diluted), and a one-time tax benefit of $2.6 million,
or $0.09 per share (diluted). Special items for the year
2000 reflect a restructuring credit of $0.2 million after
tax. In addition, in 2001, H.B. Fuller adopted the
Securities and Exchange Commission’s Staff Accounting
Bulletin (SAB) 101, “Revenue Recognition” resulting in a
cumulative effect of a change in accounting principle that
reduced earnings by $0.5 million, or $0.02 per share,
according to the company.
Net sales for the fourth quarter of 2001 were $322.9
million, an 11.3% decline from the fourth quarter of 2000.
Lower volume accounted for a decrease of 11.9%. The
absence of one week in 2001 versus 2000 accounted for
approximately seven percentage points of the 11.9% volume
decrease. These negative effects were partially offset
by an increase in pricing of 0.6%.
Net sales for 2001 were $1.27 billion, a 6.6% decrease.
Volume dropped 6.9% while negative currency effects of
1.6% offset selling price increases of 1.9%. The absence of
one week in 2001 versus 2000 accounted for approximately
two percentage points of the 6.9% volume decrease,
according to the company.
The company also announced a restructuring plan
aimed at strengthening the organization and removing
excess manufacturing capacity. As part of the initiative,
H.B. Fuller will eliminate 20% of its current available
capacity and will streamline its facilities and operations
in Latin America, Europe and in particular, North
By reducing the installed capacity and removing other
cost structures, H.B. Fuller estimates that upon completion,
it will reduce costs by $10-12 million annually.
In connection with the restructuring initiative, H.B.
Fuller will take special charges to income in the range of
$30 to $35 million before tax, inclusive of the $1.6 million
($1.5 million after-tax) incurred this quarter. The remaining
charges will be realized over the next four quarters
and will include severance, accelerated depreciation on
assets held and used until disposal and other plan-related
costs, according to the company.