Good morning and welcome to the H. B. Fuller first quarter 2008 investor conference call. (Operator Instructions). Management in attendance on today’s call includes Mr. Michele Volpi, President and Chief Executive Officer; Mr. Jim Giertz, Senior Vice President and Chief Financial Officer, Mr. Jim McCreary, Vice President and Controller, and Mr. Steven Brazones, Director of Investor Relations. At this time I would like to turn the meeting over to Mr. Steven Brazones; sir, you may begin your conference.

Welcome, everyone. Today’s conference call is being webcast and will therefore be archived on our website for future listening. In addition, this call will be available for replay approximately one hour after we are finished with the question-and-answer portion of our call. Before beginning I would like to inform everyone that certain matters discussed during this call will include forward-looking statements as that term is defined under the Private Securities Litigation Reform Act of 1995. Such statements reflect our current expectations. Actual results may differ. In addition, during today’s conference call we will be discussing certain non-GAAP financial measures, specifically, operating income and earnings before interest expense, taxes, depreciation expense and amortization expense, or EBIDTA, Operating income is defined as gross profit less SG&A expense and EBIDTA is defined as gross profit less SG&A expense plus depreciation and amortization expense. These measures should not be construed as an alternative to the reported results determined in accordance with GAAP. Management believes that a discussion of these measures is useful to investors because it assists in understanding the operating performance of the company and its operating segments, as well as the comparability of results, and it provides insight into the ability of the company to fund such things as debt reduction, acquisitions and share repurchase programs. The non-GAAP information discussed today may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results on the last pages of the presentation. The results discussed today for all periods are for continuing operations and do not include the divested automotive joint venture. For more information please refer to our recent press release and end report on Form 10K filed with the Securities and Exchange Commission each of which are available on our website at www.hbfuller.com under the Investor Relations section. Now I would like to turn the call over to Michele.

Thank you, Steven. Good morning everyone and thank you for joining us. Before I start my comments I’d like to take this opportunity to publically welcome Jim Giertz, our new Chief Financial Officer. We are happy to have his depth of experience and broad background on our management team. I’d also like to thank Jim McCreany who acted at Interim Chief Financial Officer during our search. Jim remains our Corporate Controller and will assist Jim Giertz in executing our financial initiatives. Now let me start my comments on the quarter. Although we improved EPS by 3% year-over-year our operational performance did not meet our standards, specifically our gross margin and net working capital performance should have been better. Let me provide some context, explain what actions we are taking to remedy the situation and highlight what we have accomplished in spite of these conditions. First off, the difficult macro economic environment we were experiencing at the end of fiscal year 2007 has continued. Global economic growth is slowing led principally by the United States. Despite this slowing record high petroleum prices has led to high raw material cost inflation. Although this confluence of factors was challenging we continued to execute on some of the controllable items and invest for the long-term in accordance with our five-year plan. Despite the conditions I just touched upon, we were successful in growing diluted earnings per share from continuing operations by 3% year-over-year. Sustained cost controls and lower interest expense offset a significant portion of the weakness in gross profits while the share repurchase programs led to the improved per-share performance. Additionally rather than cutting back on the level of investment in the business we have continued to increase our investments for growth. We have added talent to sales and marketing organizations of each…

Thank you Michele and good morning everyone. For the first quarter consolidated net revenue was $322.6 million, down 3.2% from last year’s first quarter. Foreign currency translation favorably contributed 4.4 percentage points to net revenue growth. Higher average selling prices contributed 0.4 percentage points and volume declines reduced growth by eight percentage points year-over-year. Gross profit was $91.5 million for the quarter compared to $99.7 million in the first quarter of 2007. Gross margin for the first quarter was 28.4% down 150 basis points on a year-over-year basis and Michele already spoke about the reasons for the decline and the actions we’ve put in place to remedy this situation. SG&A expense was $65.0 million versus last year’s first quarter of $71.6 million. Last year’s first quarter SG&A expense included a $1.7 million charge resulting from the accelerated amortization from a discontinued Roanoke product line. Aside from this item, the majority of the improvement year-over-year was due to lower discretionary spend and lower salary and benefit expense related in part to productivity gains and lower headcount. Operating income for the first quarter was $26.5 million versus $28 million in last year’s first quarter. Correspondingly operating margin eased slightly from a first quarter record high 8.4% to 8.2%. EBITDA for the first quarter was $38.1 million versus $41.9 million in last year’s first quarter. Consequently EBITDA margin declined from 12.6% to 11.8% in this year’s first quarter. The effective tax rate for continuing operations in the first quarter was 29.0% compared to 29.1% in last year’s first quarter. For fiscal year 2008 we continue to expect an effective tax rate of approximately 29%. For the first quarter of 2008 reported net income from continuing operations was $18.2 million. This was basically flat with the $18.7 million in the first quarter of last…

Thank you Jim. In my opening comments I discussed the challenges we are facing, however let me be very clear that we will continue to take advantage of investment opportunities and continue to execute regardless of the challenges we face. One thing is for sure; we will come out of this economic situation stronger and much better positioned for long-term growth. For the remainder of 2008 we are determined to execute on the controllable items, build our pipeline of new business, turn around the under performing businesses and make the necessary investments to position the company to succeed in both the short and long terms. We are dealing with a deteriorating economy environment and correcting the execution issues we encounter. We have a strong team and a dedicated workforce all of whom are aligned and incentivized to grow the top-line, improve the operating performance of the business and ultimately to achieve our long-term financial goals. Thank you for your attention and now I will open up the call for your questions.

Your first question comes from Jeff Zekauskas - J.P. Morgan

Just a couple of questions, I guess the housekeeping questions first. How many employees did you have last year in the first quarter?

For the end of the first quarter we had 3,200 employees.

And at the end of this quarter?

That was the end of this quarter, so for the end of first quarter of 2007 we had 3,484 employees.

Okay and what was the headcount reduction in the North American segment you mentioned?

For the North America segment we went from roughly 1,100 down to 975.

That’s year-over-year?

That’s year-over-year.

And sequentially from the end of the fourth quarter?

For North America sequentially it was up slightly.

And what was that? Where did you add people?

There were just two additions. Basically investment-type positions.

They were basically flat but you have to take into account that when you analyze our expenses pattern in the first quarter there is a lot of churn going on because while on one side we have been very thorough in our cost controls we other talents specifically in the commercial functions. So the balance is just an aggregate number that doesn’t shed light on some of the investments we have already made and that we will continue to make.

Okay and if we go back to working capital. So your inventory was up like $16 million sequentially what was the reason? Was it that you just tried to purchase more raw materials in advance or you were not able to sell the products you produced, so what happened there?

As we said in the script, the regions tried to offset some of the raw material increases by working with the suppliers in a tactical way. Clearly moving forward we need to make sure that the model is sustainable long term because we believe that inflationary pressures will continue so our approach needs to be much more thorough and also we need to make sure that we regain the rigor of the past.

Okay and if I may put question share repurchase program, so you borrowed like $40, $42 million for the share repurchases purposes, do you plan to do it in the future? So you’re trying just to buyback as many shares as you can and as fast as you can? Should we expect additional borrowing to fund your share repurchase program?

I’ll try to answer that question. Well we have authorization to acquire additional company stock and we’ll do that as we think it’s appropriate in the future. Basically over the long-term we’ll fund the share repurchase with our operating cash flow but in the short-term we funded with whatever cash we have available in the US and right now the short-term approach would be to borrow from our committed credit facility and then it will be repaid with operating cash flow.

Okay thank you.

Your next question comes from James Sheehan - Deutsche Bank

First on the raw material, sorry on your price increase targets for 2008 you had been talking about 2% to 4% price increases on your last conference call have you revised what your expectation is for pricing this year?

Well we talked about price increase on a full year basis and I think we’ve been pretty clear and direct in saying that we have faced difficulties in the first quarter in really implementing in full the price increases that we should have. I know materials have gone up faster than expected. Customers given specifically the economic situation in North America have been pushing back big time. The environment is that of people cutting down on inventories, reengineering products, shutting down plants and that makes it very, very difficult. At the same time the competitive environment has been fierce and some of the capacity additions that are supposed to come in the second half of the year, we are still monitoring what impact they will have. The dollar has added farther to this raw material pressures but we are going to be very clear and very honest as we also had our own internal execution issues that we are remedying as we speak. Clearly there is a time lag in terms of the impact of those actions.

Okay also on your volume declines, I know you’re targeting organic volumes to improve in the second half of ’08 and you also commented today that some of your actions, your corrective actions you’ve been taking are not expected to really come into affect until Q3, so should we expect similar volume declines in Q2 and can you just comment directionally what are volumes so far in Q2 in March, are they less than they were in Q1?

Well when we gave full year guidance we already said at the time that we were expecting a ramp up in the second half of the year. We confirmed that and that is based not really on banking on economic recovery but is banking on our own forces and our strength, on our pipeline. It is clear that second quarter as I said earlier is still going to be rough on all aspects while our counter measures have an impact on the P&L. Now clearly our return to a better trend in sales in the second half of the year is still the goal, is still attainable, and is what we are focusing on accomplishing. As you heard before on the comments of Roanoke, we have landed new business that is going to start having an impact in the second quarter but as in everything, in Roanoke and in other accounts we are going to have a ramp up. So the pipeline is a positive top-line variable. The landing of new business has already happened is another positive. Clearly the more we go towards the second part of the year and we already made that in the Q&A clear last quarter there are going to be easier erosion compatibles but also we have to take into account that the headwinds are a long list. Currently in construction and markets are weaker and weaker, competitive environment more intense. We’ll see what happens when the situation becomes a bit more clear coming April or May and also we needed to make sure that we [inaudible] some of our pricing discipline and some actions have already been decided but are going to have a full impact as we said earlier as of the third quarter.

Okay thank you very much.

Your next question comes from Michael Sison - KeyBanc Capital Markets Michael Sison – Keybanc Capital Markets: Welcome onboard Jim. I wanted to get a better feel and I know you talked about a couple of variables here in terms of pricing, what’s perplexing is through the third quarter of ’07 you were ahead of raw materials in an environment where you could probably argue wasn’t any better. You sort of talked about three areas that have impacted pricing; one the ongoing weak demand, two it sounds like there’s a little bit more capacity or over capacity and three more intense competitive environment. So and maybe a little bit of internal issues, so could you help us bridge the gap of what happened since the third quarter when you for a couple of quarters were getting pricing, is it more just more supplies, it is more demand weak or is it really this competitive, maybe on or two bad competitors, not bad competitors, maybe just busy competitors that aren’t raising prices as they once should?

Well Mike, we believe that internally what we experienced was a temporary setback in terms of execution. So there is an internal component. Some mixed signals on how fast and how broadly raw materials would have hit our ledger in the first quarter and that is what I consider a controllable item and we are taking care of that. Nonetheless while we leverage all the tools, let me be very clear that the economic environment in the first quarter has got much worse. People started in December by cutting down on inventories but right now it seems it’s about reengineering products to reduce costs. It’s shopping around and the environment we’re getting is in many cases there are customers that are shutting down plants, are reducing shifts and is not easy to have a discussion on price even if you have all the reasons [inaudible] to basically recover your raw material increases. At the same time clearly the competitive environment has been fierce. I think it will become more rationale during the year for several factors also because I think that when everybody reports first quarter there will be a better perspective from everybody on what is really going on in the economy, specifically North America. Michael Sison – KeyBanc Capital Markets: Okay then if I think about the raw material increase you’ve alluded to, 3% to 5%, if I did the math, it’s anywhere between lets say $30 to $35 million potentially on the high end, how much of that assuming that you fix some of the internal issues that you had hoped to fix may be some help from the external environment on pricing, can you cover in 2008? Can you cover some of it, most of it or as you saw in the first quarter little?

Well it is clear that in the second half of the year, we expect to return on our previous ability to execute. Clearly second quarter is going to be a transition quarter and all comments that I’m making Mike are related to our controllables. That is independent of what the economy does. Clearly if raw material increases our higher than the 3% to 5% that we are highlighting we will have to review that. But based on what we know today we have our plan in place. We have started executing and we expect that the third and the fourth quarter will be more satisfying, more gratifying from our side both in terms of pricing processes but also I would say net working capital process. Michael Sison – KeyBanc Capital Markets: But you can cover some of the price increases under what’s your control assuming raw materials stay at these levels going forwards?

Well I think that longer term, our business model can’t deviate from recovering in full the raw material increases. Clearly it takes some time and again that’s why we provide full year guidance and we try to give directionally why its going to be more backend loaded both from a volume, from pricing and raw material standpoint. Michael Sison – KeyBanc Capital Markets: And last question, if you do catch up by year end which would be great in terms of closing the gap between raw materials and pricing, in 2009 it does appear that there could be some over supply particularly on the major commodity chemical chains and if raw materials indeed fall in ’09 and 2008, what happens to your pricing? Is that sort of a tailwind for you, can you hold some of that? What type of margin expansion could you expect in the event although I would, I hear you, we’ve never seen raw materials far, if that does fall, is that a positive for you?

Well I think that relatively speaking over the last three years, we have shown that we are better equipped than the rest of the market place as far as the business are concerned. Clearly I’m speaking now at the low point because first quarter was not in line with that and that’s why we are trying to recover but that is our expectation, that is our desire and that is our plan. Now speaking of 2009 based on what is going on right now in the economy, is really a challenge. Everybody is speaking from a raw material side that [inaudible], that capacity will come a strain in the second part of the year. We have to see that really happening. We have to see what happens with the dollar. We have to see what happens on the supply side, profitability [inaudible]. So there are lots of variables at this point in time. I can tell you directionally we are not moving away from our pricing strategy and the processes and tools that we have developed but we are banking more on our own internal forces than on macro economic aspects. Michael Sison – KeyBanc Capital Markets: If raw materials fall, you should be able to hold some pricing.

Well that’s… Michael Sison – KeyBanc Capital Markets: Part of your pricing mechanisms would suggest that you would hold some pricing.

That’s the expectation; we want to be true to our word. Michael Sison – KeyBanc Capital Markets: Alright, thank you.

Your next question comes from Chitra Sundaram - Cardinal Capital Management

Congratulations for navigating such a tough environment. A couple of things. When we look at the 8% volume decline, is it possible to get a ballpark on the standing by regions, in North America, Europe and then in Latin America. How that 8% kind of split up without having to wait for the 10-Q and then within North America, you mentioned a couple of major items in Roanoke and in glass, but I’m not clear what the impact would have been on whatever that number is of volume decline?

What I can tell you Chitra, first of all good morning and thanks for the comment because I think its showing an understanding of the situation. Volume clearly as we said earlier by our comments, the majority of the volume decline was in North America and as we said before from a top-line perspective clearly Roanoke performance was the main contributor to that. Overall while we had a positive mix impact volume was down to a lesser extent in all regions of the corporation. As we said we are working diligently to make sure that our expectations for the second half materialize and there is a trend reversal in the second half of the year. Of course what we are doing is to make sure that there is that trend reversal is not at the expense of a profitable price.

Okay and the 50% decline you mentioned for Roanoke that was year-over-year, correct? It wasn’t from fourth quarter or anything?

Year-over-year, correct.

When we talk about working capital, so it sounds like—I mean one of the things that I have given a lot of people comfort in following Fuller has been that despite the challenging situation beginning to unfold as you went into Q4, you really had your act together when it came to the working capital piece especially and then pricing to the extent the environment might support it. So what might have happened, when you look at the working capital usage, how much—you know you said a certain piece was execution but can you elaborate a little bit more on that and what you’re doing, perhaps with some more specificity?

From an inventory and accounts payable perspective as I said earlier, there has been the attempt to tactically cooperate with suppliers to delay, postpone, and mitigate some of the raw material impacts in our P&L. So that has come a bit at the expense of that portion of the working capital. At the same time there have been some logistic projects in parts of the world like Latin America that have not worked as expected and they have already been corrected as we speak. So there is both, let’s say intentional changes regardless that we really considered them right and there have been also execution issues internally. On the receivables side, there has been really no change. Actually we believe in a period like the current one that it is extremely important to manage very closely receivables not to get surprises. So a mix of intentional, a mix of execution issues that of course we are correcting because we believe the net working capital is a key component of our profitable growth model starting to look at it from a [inaudible] perspective so, we are not happy with our performance in the first quarter on that side as we are not on pricing and we are correcting to make sure that our full year guidance is in shape.

And if I may, when you said new capacity coming on, I guess I had understood it as on the raw material side, did you—is there new capacity coming on, on the acquisition side? Did I misunderstand?

Well as you know part of our organic growth plan is both acquisitions and investments and all of them are right now unaligned. There are projects under way on both sides of the equation external and internal growth and a soon as we have something that we can announce either in terms of acquisitions or investments, we will communicate accordingly. But all options are on the table and we are working on all options.

And lastly, were there any severance expenses that might have gone through cost of goods sold that might have inflated that number a bit as you reduced headcount?

In the first quarter, very limited impact.

Okay. Thank you so much.

Your next question comes from Christopher Butler - Sidoti & Company Christopher Butler – Sidoti & Company : I wanted to ask about the North American segment, could you give us an idea of revenue, how much revenue fell in non-construction products?

Around five percentage points. Christopher Butler – Sidoti & Company: And you had said in your opening that North America continues to worsen, as well look into the second quarter, are we looking at top-line falling similar to the first quarter or do we have easier comparisons in the second?

Well more than easier comparisons, one thing that encourages us and is part of our decision to refine the guidance is that we have landed already new business. Clearly there is a ramp up in that new business so you’re not going to see the full impact in the second quarter but specifically for the biggest negative contributor of the first quarter which was Roanoke. That is expected to be the first quarter of ’08, is expected to be the lowest point. Christopher Butler – Sidoti & Company: And shifting gears to Latin America, you had mentioned that there is a supply chain problem there, wondering if you could give us an idea of the impact on that and maybe some more color on the profitability out of Latin America?

Well there were three factors affecting profitability in Latin America. The first factor being clearly raw materials where that escalated pretty rapidly and our pricing actions had a time lag which as you have heard here has been a non-satisfying theme for the first quarter and that’s why we’re taking action. The second component was the investments that we decided to make in the region and those investments are hitting the first quarter, not that it means that it will not be different during the rest of the year, were mainly headcount related in terms of adding sales and marketing people to the region which is what gives us confidence for accelerating sales growth in the second part of the year. But it’s also due to investments in promotional spend which you know specifically for some parts of the business in Latin America are critical to foster growth and we thought it was the right thing to do and we still believe in that and we expect to get the returns for that ready in the second half of the year. The third part was clearly net working capital management. I wouldn’t say really so much on the receivables side but really on the inventory side. We made some attempts to go into a different logistic model specialized by plans; it didn’t work out as expected and we are correcting the situation as we speak. Christopher Butler – Sidoti & Company: And did you mention the supply chain problem in that, is that expected to be a big impact?

The supply chain model was exactly that change in the logistic aspect that now we are correcting and clearly as of the second quarter we should see an improvement. It will still two to three quarters to go back exactly to normal for the portion of that. Christopher Butler – Sidoti & Company: Alright, thank you.

Your next question comes from Dmitry Silversteyn - Longbow Research

Going back to North America, you did drive your operating margin up about a point-and-a half and you alluded to some cost saving techniques that will help drive that, but I guess looking at the economic situation, higher raw material costs and at Roanoke was there anything else besides those cost saving actions that helped drive the operating margin higher?

Well take into account that when we’re speaking of cost, based on the way we report, we are speaking of costs not only controlled by the region but we’re also speaking of corporate costs that are allocated to the regions. So and this is I think important for everybody that everybody understand. While we have extremely tact in our cost control measures, we have clearly differentiated between cost controls more into the non-sales related area—the sales related areas where instead we have continued to invest and we will continue to do that during the year. So yes, there have been some cost savings on the operational side of North America but there has been also a lot of cost savings on the corporate side which you see reflected in every region. At the same time, take into account that last year in ’07 we had, call it a negative unusual of $1.7 million that didn’t repeat this year due to the Roanoke amortization of a product line.

Okay and can you speak about the acquisition pipeline and what we’re looking at for 2008?

Well we are working a lot on our geographic expansion strategy. That is both organic but also through M&A and M&A we are looking both at straight out acquisitions and also at joint ventures. Clearly the areas are as we said Middle Eastern North Africa, are Eastern Europe, are China, India, Brazil and hopefully during the remaining three quarters of the year, we will be able to come back to you and to the rest of the investment community with some news. So far what we have done has been mainly doing organic investments in Asia-Pacific and in Latin America but more is expected to come. At this point in time, still we cannot comment because it’s still under review.

Overall is it fairly robust or have you seen it slow in the past quarter or two as far as opportunities?

I think it’s more robust. I think it’s more strategic, I mean aligned with the strategies, so I’m pretty comfortable but clearly when you’re speaking of acquisitions and joint ventures there are lots of things on the plate so you’ll have to wait until you have a score on that.

Okay, thank you.

Your final question comes from Robert Felice – Gabelli & Company Robert Felice – Gabelli & Company: You know you did a great job during the quarter whittling down that SG&A number and that was really your leverage to offset the gross margin decline and I was hoping you can just delve a little bit deeper into how you were able to do that. I mean beyond just the lower headcount reduction or the headcount reductions. And then more specifically by how much did you step up investment spend in that line item? So if you could just kind of work through the gives and takes during the quarter?

Well I think that first of all to give some context taking into account that that expense reduction has been achieved despite absorbing the corporate cost that we had previously allocated to the automotive business. So remember that we had a lot of those corporate costs that didn’t go away and you know that managing those takes time. So any recovery of those will be ramping up during the year. Take into account that amortization expenses declined $1.7 million; that explains basically two points of the ten percentage drop. Pension expense is $1.5 million lower and that explains another 2%, while the remaining five to six points of the drop are lower discretionary spend, lower salary and benefit expense; that’s the lion’s share. Now take into account that several million dollars that over the last three quarters we have injected into the different regions to add as I said earlier, commercial talent. We are not really speaking of capital investments but really headcount so the number actually in terms of savings is higher than what I’m telling you but we typically don’t go into that level of detail. What I can tell you is that in October with everybody that we present here at the Investor Conference we committed to a five-year plan and investments for growth were part of Chapter 3 but we also said that we were going to start doing some of those area and we have started. And based on what I see, for instance in Asia-Pacific on how things are developing based on the talent we have hired there, and the things we are doing, I am encouraged. Clearly the economy is not very conducive but I fully believe that we are doing the right things and that’s one of the factors behind our reaffirming the guidance. Robert Felice – Gabelli & Company: Thank you.

I would like to turn the call back over to management for any closing remarks.

We would just like to thank everybody for joining us today for our conference call. Have a good day.