Good morning ladies and gentlemen and welcome to the HB Fuller Conference Call to discuss their Fourth Quarter Results. At the request of the company this conference is being recorded for instant replay purposes. This event has been scheduled for one hour. Following today’s brief remarks, there will be a brief question-and-answer session. Instructions will be given at that time should you wish to ask a question. Management and attendants on today’s call include Mr. Michele Volpi, President and Chief Executive Officer, Mr. Jim Giertz, Senior Vice President and Chief Financial Officer, and Mr. Steven Brazones, Assistant Treasurer. At this time I would like to turn the meeting over to Mr. Steven Brazones. Sir, you may begin your call.

Thank you Christi and welcome everyone. Today’s conference call is being webcast live and will also 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 I begin 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. Since some 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, earnings before interest expense, taxes, depreciation expense and amortization expense, or EBITDA, and return on gross investment, or ROGI. Operating income is defined as gross profit less SG&A expense. EBITDA is defined as gross profit less SG&A expense plus depreciation and amortization expense. ROGI is defined as trailing 12 months gross cash flow divided by gross investments. More importantly, during today’s call all numbers referenced for the fourth quarter of 2008 and fiscal year 2008 will be discussed on an adjusted basis to exclude the non-cash impairment charges taken during fiscal year 2008. All of the non-GAAP measures discussed today 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 of the assist in understanding the operating performance of the company and its operating segments, as well as the comparability of results, and it provides into the ability of the company to fund such things as debt reduction, acquisitions, and shared repurchase programs. The non-GAAP information discussed today may not be consistent with the methodologies used by other companies. Other non-GAAP information is reconciled with reported GAAP results on the last pages of this presentation. For more information please refer to our recent press release, quarterly report on Form 10-Q and annual report on form 10-K filed with the Securities and Exchange Commission, all of which are available on our web site at www.hbfuller.com under the Investor Relations section. I will now turn the call over to Michele.

Thank you Steven, good morning everyone and thank you for joining us. Before I begin discussing the quarter I would like to address the non-cash asset impairment charges we took in the fourth quarter. During the quarter, due to a combination of factors including the ongoing weakness in the US housing market, the fall in global demand for industrial products generally and the decline in the public equity markets caused us do to reassess the value of goodwill on the balance sheet of our Specialty Construction branch business as we are required to do under accounting procedures. Through this process we determined the goodwill associated with that business was impaired. In addition, we made the determination that two smaller venture capital investments we made several years ago were also impaired given the macroeconomic environment and the outlook for those specific businesses. Together this resulted in non-cash pre-tax charges totaling $87 million of which $85 million was due to the impairment of the Specialty Construction branch goodwill. The vast majority of the goodwill impairment is related to the Roanoke acquisition completed in 2006. It is important to mention that these are non-cash charges that do not affect our cash flow or our ability to generate cash flow going forward. Therefore, given the extraordinary and non-cash nature of these charges all financial information we discuss today will be adjusted to exclude these charges. Now I will turn to a discussion of our financial results and future outlook. These are extraordinary times and the fourth quarter of 2008 was a very challenging quarter. While raw material costs still lingered at peak levels demand began to fall and fall significantly. The drop in demand began in the second half of October and accelerated in November. Although we were successful in raising prices and reducing…

The company would like to provide everyone the opportunity to ask a question, so if you could please limit yourself to one question at a time, it would be greatly appreciated. You may re-queue as often as you would like, time permitting. (Operator Instructions) Your first question comes from Jeff Zekauskas from J.P. Morgan.

Your prices were up roughly 5.5% this quarter. Do you expect your prices to be up that much or greater in the first quarter of next year?

Well clearly when you look at it from a year-over-year comparison, I would say that pricing in the first quarter in the first half of the year is going to be one of the few positive comparisons year-over-year; so first quarter ’09 versus first quarter’08. Clearly on the other side, on the negative, we will compare ourselves with currency volumes and raw materials that show a much starker comparison. As for our pricing is concerned, I would say that your [inaudible] and commercial ability, in keeping over our prices at the current levels has been regained in the fourth quarter. You saw a significant sequential improvement versus the third quarter, and our goal in ’09 is to increase our spread by capitalizing on raw material reductions and to join costs to serve reduction initiatives with our customers. That is reformations, working on the logistics, forecasting complexity. Now how effective we will be in doing that clearly is still out in the open, that is why we are not giving guidance, but clearly our committal is to make sure that we manage that raw material price and volume equation in the best possible way both for our customers and for ourselves.

Maybe if I can just rephrase my question. On the sequential basis in the first quarter, do you think prices will be flat to up or flat to down?

I would say more flat.

Secondly just in looking at some of your geographic results, it looks to me as though in some geographies raw materials are falling at a faster rate and other geographies are higher, or maybe you still have high cost inventory, guess Europe seems to be the problem area. Can you comment on that?

I am going to give you parts of the answer and then maybe Jim wants to add something, but yes, we have different inventory accounting ways in North America versus the rest of the world. And, yes there are different raw material dynamics in the world. Not only because there are different suppliers, there are different dynamics right now going on in terms of price negotiations, but there are also different balances in terms of volume capacity and complexity of the raw materials that we buy. As we always said, a business is a ward of complexity and you win profitability and goals by being able to handle that.

Jeff if you are referencing LIFO adjustments specifically I don’t have the number in front of me, but I think our LIFO expense in the fourth quarter was minimal; so that didn’t really have an impact in Q4. If you look out into 2009 one thing I could say is that each of the regions have very similar outlooks for the raw material cost reductions, so they’re looking at the future in a very consistent basis, so all of the regions are looking for significant raw material cost reductions of about the same order of magnitude.

Lastly, by my calculations I have your raw material costs in the fourth quarter about up 10%. Does that seem right to you?

Clearly we had still a carry over effect from materials in the fourth quarter; specifically, that is why I was speaking about the phasing for next year. We are going to compare with the first quarter where in ’08 we really didn’t have inflation while our first quarter of ’09, even if it will see raw material reductions sequentially, will still be higher than the corresponding quarter of last year. Now going exactly to your question in terms of numbers, the number we have is 18% in the fourth quarter.

Your next question comes from Michael Sison with KeyBanc Capital Markets.

I have a couple of quick questions. On raw materials, as raw materials give back, you were up $75 in ’08, if they fall $75 million in ’09 and I don’t know if that is the right number, but of that decline based on your new pricing mechanisms, would you be able to keep the bulk of that? Or is it maybe 50% of that? Can you give us a little bit of understanding of how much of that spread you can keep?

Mike, as I said before to Jeff our goal is to increase our spread. It is not just in making sure that we get all of those raw material reductions and fast and still with good quality and delivery from our partner suppliers, but clearly we want to make sure that we hold onto our prices as much as possible. But, we are going to do that together with our customers and making sure that we foster the right collaborations with them, looking at all of our alternatives and win win solutions. As I said that can be working on several components of the cost of macroeconomics. It is not just the base price. At this point in time I am not in a position to provide guidance as far as how much we would be able to keep of that and it will also be driven by the macroeconomic environment. Clearly the volume reductions, the economic activity in November and December, which continues in January, was so weak that clearly it is generating a lot of intense conversations with our customers as well as our suppliers and we are making sure that we manage those in a way that in the end we end up winning.

In terms of timing, it sounds like the declines in raw material costs won’t really hit your results until the second or third quarter?

Well raw materials are starting to come down, but again the point that I am trying to make as far as the phasing is really the year-over-year comparison. Before they go down to first quarter levels, it is going to take some time and obviously you will have your biggest pressure on the contribution in gross margin percentage would be in the first half of the year for ’09.

I was encouraged to hear that, and I think I heard this right, adhesives in North America the volumes were largely flat in the fourth quarter? My question is can you give us a little bit of a feel how the adhesives part of your business should hold up in difficult times? Are you seeing any weakness year over year in December, January, February or is this a business that should be more resilient, generally speaking, heading into recessionary conditions?

Well more than what the market is doing, I am going to speak about what we are doing because it is a controllable that I actually feel pretty good about. Yes, our business revenue was flat year-over-year in North America and yes, there are a lot of actions being put in place by our new North America VP Jim Owens. He is really constructing a very strong team several new accounts have been landed; core profitable business is also being protected in a smart way; new products platforms are gaining successful traction. That is why I am optimistic on this controllable item. Clearly that optimism is a bit muted by the current macroeconomic environment which is of concern and we have to be very realistic. The reason why I spoke in my speech about the balanced approach is because we believe there are also opportunities in this market environment both organic and external and we want to make sure that we have a balanced approach, because lots of things have bee put in place, specifically on the growth side, and we want to make sure that we are very, very cautious before we go to an indiscriminate cost cutting approach putting costs of revenue generation items at risk.

Your next question comes from David Begleiter from Deutsche Bank.

Michele halfway through the fourth quarter, do you think you will make less money than you earned in Q4?

Well look, we are getting away from guidance specifically, because the environment is extremely turbulent and I don’t think we will really do any service to our shareholders by giving a specific forecast. Still, as I said before, November was very, very bad, December was even worse and January we don’t see really from a top line perspective really huge changes in the pattern. Now we are already speaking of two months, or three, that are in our first quarter. Clearly if we have to speak of phasing and we also return to what I just said earlier in terms of the first half and even more in the first quarter, currency being a negative year-over-year, a significant negative; volume being hopefully the lowest point today and it doesn’t get worse, and raw materials comparing to a very, very tough first quarter of ’08 we are much lower. You understand that there is going to be under performance in the first quarter of ’09.

Can you at least say you will be profitable in Q1?

Well clearly that is our intention at this point in time. I would say that we can speak about that, we can speak about being profitable, but I think we have to be extremely cautious as far as how profitable we are going to be.

Very good and just on SG&A for the full year will that spending be up or down for the full year versus 2008?

I can tell you that what we are doing currently is making sure that we keep truthful to our five-year plan and we keep investing judicially. Not just in CapEx, not just in acquisitions, but also in SG&A. The closest that those SG&A expenses are to commercial and technical areas that are generating revenue, the more we are keeping there. Now clearly, if the macroeconomic situation should deteriorate further and force us to take more substantive cost measures obviously we will have to consider that. The contingency plans are very well done, they are there, but there is a lot of pain. Even on the pain there is discrimination between things that propel goals and things that don’t propel goals.

Your next question comes from Rosemarie Morbelli from Ingalls & Snyder. Rosemarie Morbelli - Ingalls & Snyder : Michele could you give us a little more details on those contingency plans and how bad things should need to be before you put them into effect?

Rosemary I don’t think we are going to get any price for coming out with ideas that nobody has thought of. You look at all of my colleagues in the chemical industry and see that everyone has gone for drastic layoffs, 8%, 10%, 15%. Those that had made very expensive acquisitions have to make that even more. They are having even more liquidity concerns. The reason why we are being boss right now is because we took actions early on. In the beginning we were portrayed as being pessimistic and having a doom and gloom view on the economy. Well we did something with that. We are very proud of that and that helps us keep in the balance. Now clearly if the situation continues farther and actually aggravates we will have to reconsider part of it and leave it on the contingency plans. Clearly those plans are all around costs, both on the FL and MOA carrier, on the SG&A, on everything and clearly are paid for because it would mean putting a halt to or delaying some of our growth initiatives. If you allow me, I am not going to give specifics of those contingency plans, by a team that over the last two years you have seen our process discipline and execution capability and also that we have done a lot on SG&A. So, it means we know how to deal with this and not necessarily always calling off dramatic restructuring, but doing it in a judicious, fair way. Rosemarie Morbelli - Ingalls & Snyder : Without giving details, do you have a feel for how much cost you could save by implementing them? I mean I know you do, but are you willing to share that with us?

Well I think that there is still a lot that can be done, but it all depends on the level of pain and the patience that you have and the belief that this market will turn around and that ultimately also our volume price and raw material efforts will pay back. I committed with everybody in the executive committee on believing on a five-year plan. Clearly the environment has gotten much worse, but we are not deviating from that. We are going to transform H.B. Fuller. We see lots of good leading indicators, as I said, muted by the environment, but we are holding, as much as possible, on pulling those drastic cost reduction plans. Now that doesn’t mean that we are not working on efficiencies as we have been doing all along during these past two years, but we are doing that in a very surgical and strategic way. Rosemarie Morbelli - Ingalls & Snyder : Just quickly, do you have feel for the inventory situation at your customer’s sites? When do you think they will be done and will have to actually buy something regardless of the demand level?

That is a good question Rosemarie. Well look, I think that in November and in December, and remember December is part of our first quarter, we saw dramatic inventory reductions. Also because of year ends [indiscernible] of our customs. But, overall I think that in this current environment everybody is looking for cash and everybody is being smarter and more aggressive at watching inventory as a key component of net working capital. So, I don’t think that we will really be down in the first quarter. I think that through out the first half and maybe all of 2009 we will see a lot more attention of inventories at our customer level. That is why it would be more critical for us and our customers to work together on costs to serve the reduction initiatives which include inventory also, but making sure that we don’t sacrifice service levels because we still need to sell and they still need to buy.

Your next question comes from Christopher Butler from Sidoti & Company. Christopher Butler - Sidoti & Company LLC : My first question is concerning the goodwill write down. I know earlier this year you had made some comments that Roanoke was performing better and you had better expectations for that. The write down that we are looking at was that specific to something going on with Roanoke here in the quarter or was that more an indication of some of the other businesses that are included with it in specialty were deteriorating?

Thank you Chris, what I can tell you is that clearly the triggering event was the Q4 macroeconomic environment and the impact on our outlook for 2009. With that said, I am confirming what I said in previous calls, that the Specialty Constructions segment has been doing remarkable improvements. We have landed significant new business, but clearly that has not been enough to offset a goodwill revision that it was the right thing to do for us and for our shareholders. That does not at all mean that we are not actually continuing to make progress, but really that is always less than before because everybody is buying less. Jim, would you like to add some color on this?

No, I think that is right. I just want to further emphasize that the trigger was the, more generally, the economic conditions in the fourth quarter and the valuation of the equity markets. Those are the trigger events, not a specific change in our view of the prospects of our SCB business. Christopher Butler - Sidoti & Company LLC : Shifting gears here a little bit, you had talked about winning new business. It seems to me that this is an extremely difficult environment for everybody. Competitors of yours that may not have the financial strength are you seeing any benefit from those at this point, or is it still too early to expect something of that nature?

Well Chris, I think it is difficult, but I think it is possible and I know that it is happening. What we are doing on the top line is smart. It is really making us win with our customers. We are landing significant new business. Some, of course, is going to ramp up not just through ’09 but also through 2010, but it is clear that, as I said before, that in relative terms we are in a better position than several of our competitors. We are not in the middle of any major turmoil. We have not recently made acquisitions that significantly altered our cash position. We are not cash constrained. We have a lot of good momentum, with the new leadership put in place both in the commercial side of the organization and the technical side of the organization; so, yes of course it is all tougher. There is the steep incline due to the market, but I like what I see and I like what the team is doing.

Your next question comes from Dmitry Silversteyn from Longbow Research.

I have a couple of questions. You described a fairly negative environment here demand wise in the end of the 2008 calendar year and the beginning of 2009. Given the fragmentation in the adhesives and sealants market and how many different niches and markets that you address and your competitors address have there been any markets that are doing better in this environment or any markets that are doing particularly weak? In other words, what should we be concentrating on as we look out to 2009 for signs of a turn around or a conversely exacerbation of current conditions?

Well thank you for your question Dmitry. Some markets clearly are closer to, I would say, daily consumer goods. They aren’t as cyclical. Like we are speaking the number of [inaudible] the textiles are clearly holding better. That doesn’t mean the customers there are not also watching cash and reducing inventory, but in relative terms those are the markets that are holding better than others. Everything else is really pretty dire, and still, in that environment, what we are staying to everyone on our team is that we can still get into new market segments, more profitable market segments. We can still gain a competitive position it the marketplace and we can still do a much better job than in that past at managing, in a profitable way, our core business. I would say yes, the outlook is pretty tough out there. We have to be extremely realistic. We have to be very, very vigilant, we have to be very prudent; that is why we are not providing guidance, but we are making sure we are taking a hell of a lot of action on all components of our P&L and balance sheet.

Michele, just to make sure I am understanding what you are saying, it sounds like the consumer related markets are doing better than the industrial related markets. Is that a good summary?

Yes.

So as we look to consumer confidence and hopefully improved spending patterns, that could be an early indication that your business is getting some feet under it?

Well that is a partial indicator, because that is the non-controllable, the macro environment. I think the good companies don’t just go up and down with the market, but try to do better and that is how we are committed.

Okay and speaking of competitive situations and companies going up and down, with the volume losses that you and the others in the industry are experiencing, and perhaps others even worse than you, have you seen any less disciplined behavior coming from competitors in terms of pricing? Pricing was difficult to come by and I was gratified to see that it accelerated as 2008 came to an end, but as we get into 2009 with raw material prices coming down and with demand seeming to be evaporating how concerned are you that you will be able to maintain prices enough not just to maintain margin, but actually to expand margin and maybe even expand profit dollars year-over-year?

Well actually what we have seen in the fourth quarter is not only much more disciplined behavior on the pricing side from our competitors, because everybody, not only us, were hit dramatically by the Q3 and Q4 run up in raw materials and the big time dive in margins; so nobody really had any options but to go up in price. Also, we have seen a more discipline behavior from payment terms receivables. I think that is related to the fact that several of our smaller to medium size competitors are cash constrained, as well the sum of the key players in the chemicals industry that made big deals at very high multiples are going through the normal merger turmoil; plus on top of that are facing situations where they have to recover those EBITDA multiples and they have to raise prices and they have to watch their cash.

Okay so if anything the combination of the largest players may have added more discipline to the market.

Yes, that is what we have seen so far. Now what will happen in ’09, I don’t know, but from what I see our teams are acting in a very professional manner and they are making sure that, as I said before to Jeff and to Mike, we do our best to increase our spread. Clearly one thing is the spread and one thing is the gross margin. That would also be impacted by volume.

Your next question comes from Steven Schwartz from First Analysis.

I just have a question on the balance sheet and what is happening with cash flows and so forth. It looks like your cash balance dropped by $128 million, but you reduced your debt by $100. What happened to that other $27, $28 million? That was about 10% or 12% of your former cash balance.

The bulk of that is currency translation, so the bulk of our cash is invested in the Euro zone, and so affects translation accounts were the vast majority of the difference.

Okay. What was your CapEx for the quarter?

It was $20 for the year, so $6.5 I believe.

Usually our first quarter is a draw on cash. Considering this environment do you foresee yourself going to your revolvers in this quarter?

Well no is the answer to that. For various reasons we anticipate our cash flow from operations is going to be quite a bit more favorable in the first quarter of this year than last. But the answer to your question is no.

Your next question comes from Jeff Zekauskas from J.P. Morgan.

In terms of the new business that you have picked up, what is the magnitude or how did you acquire it, or why do you seem to be picking up a little bit of share?

Well you know in some cases it is finally getting to new market segments. It has taken a bit too long for my personal taste, but it is now coming and we are gaining some good momentum there. In some of the cases it is gaining new applications of accounts; so that is not really the data share from some other business competitors. In some other cases they are awarding us more business because we are working better. Some of that business is sizable, but because it is sizable it is going to ramp up in ’09 and ’10. The good positive thing is that some of the projects that in many cases we started three years ago are coming to fruition. That gives us a lot of confidence and suggests to us that before we are really pulling the trigger, like everybody else, on massive restructuring actions we have to think about it really well.

Also in terms of the tax rate, the geographic distribution of your revenues didn’t really shift very much. Can you just explain, in a little more depth, why the tax rate was up, whatever it was, 2000 basis points sequentially?

Sure I will try to do that. In the fourth quarter we had several discrete items that had a fairly significant impact on our tax rate. For example we have a deferred tax asset in Brazil, which we talked about in the third quarter, the Brazilian currency devalued substantially and so we had a loss. That is one example. We had some other discrete items that flowed through; so I think the best way to look at the tax rate in the fourth quarter is really to look at our outlook or our guidance of tax rate for 2009. Michele mentioned earlier that we expect our tax rate next year to be 31%. If you took out all of the discrete items of 2008 we probably had a structural tax rate of about 30%; so we are expecting our tax rate to be slightly higher in ’09 versus ’08 if you take out all the discrete items. There is really kind of two things. The way I would explain the dynamic of our tax rate is that geography does matter. So the more income we earn in Europe, for example, the lower our tax rate. Also, the last dollar we earn typically has a lower income tax rate than the first dollar; so as our profitability declines, like it did in the fourth quarter, we tend to thicken our tax rate. Does that help?

Yes, that is very helpful. Thank you very much.

We have no further questions at this time.

Thank you for joining us today. Please have a good day.

Thank you ladies and gentlemen this does conclude today’s H.P. Fuller Fourth Quarter 2008 Investor Conference Call.