FULLER H B CO Leases Disclosure

Note 6: Leases

 

As a lessee, the Company leases office, manufacturing and warehouse space, and equipment. Certain lease agreements include rental payments adjusted annually based on changes in an inflation index. Our leases do not contain material residual value guarantees or material restrictive covenants. Lease expense is recognized on a straight-line basis over the lease term. We determine if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used.

 

Operating lease and finance lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company’s incremental borrowing rate. We determine the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region.

 

Certain leases include one or more options to renew, with terms that can extend the lease term up to five years. We include options to renew the lease as part of the right-of-use lease asset and liability when it is reasonably certain we will exercise the option. In addition, certain leases contain termination options with an associated penalty. In general, the Company is not reasonably certain to exercise such options.

 

For the measurement and classification of lease agreements, we group lease and non-lease components into a single lease component for all underlying asset classes. Variable lease payments primarily include payments for non-lease components, such as maintenance costs, payments for leased assets used beyond their non-cancelable lease term as adjusted for contractual options to terminate or renew, and payments for non-components such as sales tax. Certain leases contain immaterial variable lease payments based on usage.

 

The components of lease expense are as follows:

 

		November 29, 2025				November 30, 2024
Operating net lease cost		$	18,582			$	16,559
Finance net lease cost:
Amortization of assets			1,970				1,698
Interest on lease liabilities			448				402
Variable net lease cost			10,535				12,091
Total net lease cost		$	31,535			$	30,750

 

Supplemental balance sheet information related to leases is as follows:

 

	Location on
	Balance Sheet		November 29, 2025				November 30, 2024
Operating leases:
Operating lease right-of-use assets	Other assets		$	55,743			$	61,116
Current operating lease liabilities	Other accrued expenses			14,702				13,473
Noncurrent operating lease liabilities	Other liabilities			42,451				48,628
Total operating lease liabilities			$	57,153			$	62,101
Finance leases:
Equipment right-of-use assets	Property, plant and equipment		$	8,157			$	9,183
Current obligations of finance leases	Other accrued expenses		$	1,939			$	1,908
Finance leases, net of current obligations	Other liabilities			6,570				7,600
Total finance lease liabilities			$	8,509			$	9,508

 

As of November 29, 2025, the weighted average remaining lease term is 6.1 years and the weighted average discount rate is 5.4% for the Company's operating lease agreements. The weighted average remaining lease term is 5.9 years and the weighted average discount rate is 5.3% for the Company's finance lease agreements.

 

Supplemental information related to leases is as follows:

 

		November 29, 2025				November 30, 2024
Cash paid amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		$	31,122			$	15,707
Operating cash flows from finance leases			448				402
Financing cash flows from finance leases			2,108				16,089
Non-cash investing and financing activities
Additions to right-of-use assets obtained from:
New operating lease liabilities		$	26,175			$	29,651
New finance lease liabilities			1,556				3,282

 

Maturities of lease liabilities are as follows:

 

		November 29, 2025
Fiscal Year		Finance Leases				Operating Leases
2026		$	2,424			$	16,421
2027			2,112				14,599
2028			1,591				9,642
2029			1,042				6,915
2030			698				5,215
2031 and beyond			1,909				14,671
Total			9,776				67,463
Less: amounts representing interest			(1,267	)			(10,310	)
Present value of future minimum payments			8,509				57,153
Less: current obligations			(1,939	)			(14,702	)
Noncurrent lease liabilities		$	6,570			$	42,451